Suzanne West v Stockport NHS Foundation Trust
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton MR,Lord Justice Irwin,Lord Justice Coulson |
| Judgment Date | 17 July 2019 |
| Neutral Citation | [2019] EWCA Civ 1220 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2017/0928 A2/2017/0930 |
| Date | 17 July 2019 |
[2019] EWCA Civ 1220
THE MASTER OF THE ROLLS
Lord Justice Irwin
and
Lord Justice Coulson
Case No: A2/2017/0928 A2/2017/0930
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MANCHESTER COUNTY COURT
HHJ Smith
M16X154
M16X151
Royal Courts of Justice
Strand, London, WC2A 2LL
Nicholas Bacon QC and Rupert Cohen (instructed by Kain Knight Costs Lawyers, as agents for Slater and Gordon (UK) Ltd and Forster Dean Solicitors) for the Appellants
Roger Mallalieu (instructed by Acumension Ltd) for the NHS Trust
Hearing dates: 18 & 19 June 2019
Approved Judgment
Sir Terence Etherton MR, Lord Justice Irwin and
) Introduction
These appeals raise a number of specific issues arising out of the respondent's successful challenge to the amount of the ATE insurance premium recoverable by the appellants. By common consent, however, the issues also raise a number of wider points relating to reasonableness and proportionality and the proper approach to the assessment of costs.
The potential significance of these appeals led to this court's order that there be a fact-finding hearing, before two assessors, which resulted in a detailed report (“the Assessors' Report”) being provided to the court for the purposes of the appeals. Details of that exercise are set out in Section 6 below. As a consequence of that report, this court has been able to reach a number of conclusions which were not previously open to first instance judges grappling with these and related issues.
We begin by setting out the unique position of ATE insurance premiums in clinical negligence cases ( Section 2). Then, having set out the factual backgrounds to the appeals of Ms West and Mr Demouilpied ( Sections 3 and 4), we identify in Section 5 some of the wider concerns that have arisen on costs assessments relating to such premiums.
In Section 6 we deal with the Assessors' Report, which is attached in its entirety at Annex 1. At Section 7 we identify what seem to us to be the substantive issues that arise on these appeals. We then deal with questions of reasonableness at Section 8 and issues concerned with proportionality at Section 9. At Section 10 we set out what we consider to be the right approach to costs assessments generally. At Sections 11 and 12 we set out our conclusions on the two appeals before us. At Section 13 we outline what we consider to be a realistic way forward for the future in disputes about ATE insurance premiums. We are very grateful to both counsel for their assistance in arriving at these conclusions.
) The ATE Insurance Premium
ATE insurance became popular following the severe restrictions on the availability of legal aid introduced some 20 years ago. Concerns were expressed, however, about the recovery of ATE premiums from unsuccessful defendants. In his Review of Civil Litigation Costs Sir Rupert Jackson recommended that ATE insurance premiums should cease to be recoverable from unsuccessful defendants. This recommendation related to all civil litigation. Although that recommendation was generally accepted by the Government, an exception was made for clinical negligence cases. The explanation for that stance can be found in paragraph 6 of the Government's formal response to Sir Rupert's recommendations ( Reforming Civil Litigation Funding and Costs in England and Wales (Cmnd 8041) (2011)), which said:
“ Refinement to the proposals for public policy reasons
The Government is aware of specific concerns in relation to the funding of expert reports in clinical negligence cases. These expert reports can be expensive and we need to provide a means of funding them to ensure that meritorious claims can be brought by those who cannot afford to pay for these reports upfront. To address this, the Government is making one change to Jackson LJ's key recommendation. The Government intends to have a tightly drawn power to allow recoverability of the ATE insurance premiums to cover the costs of expert reports only in clinical negligence cases. The details would be set out in Regulations.”
We also note that, in paragraph 24 of the same document, there was express reference to the difficulties involved in pursuing a clinical negligence claim without an expert's report. Again, the response concluded that ATE insurance premiums, limited to the cost of such reports, would “remain recoverable”.
Section 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 repealed Section 29 of the Access to Justice Act 1999 and inserted a new Section 58C into the Courts and Legal Services Act 1990 which took effect on 1 April 2013. That provides:
“58C Recovery of insurance premiums by way of costs
(1) A costs order made in favour of a party to proceedings who has taken out a costs insurance policy may not include provision requiring the payment of an amount in respect of all or part of the premium of the policy, unless such provision is permitted by regulations under subsection (2).
(2) The Lord Chancellor may by regulations provide that a costs order may include provision requiring the payment of such an amount where—
(a) the order is made in favour of a party to clinical negligence proceedings of a prescribed description,
(b) the party has taken out a costs insurance policy insuring against the risk of incurring a liability to pay for one or more expert reports in respect of clinical negligence in connection with the proceedings (or against that risk and other risks),
(c) the policy is of a prescribed description,
(d) the policy states how much of the premium relates to the liability to pay for an expert report or reports in respect of clinical negligence (“the relevant part of the premium”), and
(e) the amount is to be paid in respect of the relevant part of the premium.
…
(5) In this section—
“clinical negligence” means breach of a duty of care or trespass to the person committed in the course of the provision of clinical or medical services (including dental or nursing services);
“clinical negligence proceedings” means proceedings which include a claim for damages in respect of clinical negligence;
“costs insurance policy”, in relation to a party to proceedings, means a policy insuring against the risk of the party incurring a liability in those proceedings;
“expert report” means a report by a person qualified to give expert advice on all or most of the matters that are the subject of the report;
“proceedings” includes any sort of proceedings for resolving disputes (and not just proceedings in court), whether commenced or contemplated.”
Following one false start, the relevant Regulations were introduced by SI 2013/739. They were entitled the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (Number 2) Regulations (“the Regulations”). Regulation 3 provides:
“(1) A costs order made in favour of a party to clinical negligence proceedings who has taken out a costs insurance policy may include provision requiring the payment of an amount in respect of all or part of the premium of that policy if –
(a) The financial value of the claim for damages in respect of clinical negligence is more than £1,000; and
(b) The costs insurance policy insures against the risk of incurring a liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence (or against that risk and other risks).
(2) The amount of the premium that may be required to be paid under the costs order shall not exceed that part of the premium which relates to the risk of incurring liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence in connection with the proceedings.”
As Lewison LJ noted in McMenemy v Peterborough and Stamford Hospitals NHS Trust [2017] EWCA Civ 1941, [2018] 1 WLR 2685, at paragraph 40, the Regulations effected three particular changes, namely the removal of the absolute bar against recovery of ATE insurance premiums in the event that the expert's report was not in fact obtained; the introduction of a minimum financial value of the claim before an ATE insurance premium was capable of being recovered; and the removal of the contemplation that the cost of the report may not be allowed under the costs order.
The Explanatory Memorandum which accompanied the Regulations said at paragraph 7.3:
“However, the Government has allowed for a permanent limited exception for clinical negligence cases, where ATE insurance premiums covering the cost of expert reports will still be recoverable. This is because expert reports are often necessary to establish whether there is a case for bringing proceedings, but can be expensive. Currently ATE insurance can insure against the risk of incurring liability to pay the costs of such reports, but with the substantial withdrawal of legal aid in personal injury (including clinical negligence) cases, a funding mechanism available to claimants to purchase those reports is required. As a result, the practical effect of this exception is it will allow claimants to purchase expert reports for clinical negligence claims and the premium in respect of incurring the costs of those reports will remain recoverable from defendants.”
Paragraph 7.4 of the same Memorandum dealt with the need to control costs. It stressed that the Regulations restricted the recoverability of the insurance premium “to the risk of incurring liability to pay for an expert report or reports determining liability and causation only”. This was contrasted with, for example, reports dealing with quantum. In this way, it was said that “claimants will still be able to progress their claim, whilst ensuring that the costs paid by...
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