A costs judge has rejected attacks by the defendant on a £10,000 after-the-event (ATE) insurance premium obtained by a claimant in a medical negligence case which eventually settled for £200,000.
Master Leonard said lawyers for a doctor who misdiagnosed an ovarian cyst argued that the risks being insured against by the claimant were “controlled entirely by the solicitor” and qualified one-way costs shifting meant there was no need to obtain any insurance at the outset of a case.
Rejecting this approach, Master Leonard said: “Any requirement for independent medical evidence is dictated by the needs of the case, not by the whim of the conducting solicitor.
“It is not suggested, nor could it realistically be suggested, that it was not necessary to obtain independent medical evidence in this case.
“As for the level of risk, that will also be dictated by the facts of the case, not least by the defendant’s response. At the time this ATE policy was taken out, the response of the defendant to the claim was an unknown quantity.
“The argument that the claimant and her solicitors should have understood that the case would ultimately settle is, again, based on hindsight and in any case is belied by the approach of the defendant, which relied upon a robust case on causation.”
Master Leonard, sitting at the Senior Courts Costs Office, rejected a further argument, that the claimant’s solicitors, Irwin Mitchell, should have known that the cost of the expert evidence covered by the recoverable part of the ATE premium would have been in the region of £2,000.
“On the contrary, if they had made that assumption they would probably have been wrong. If this case had not settled, it seems likely that there would have been a need for significant further expenditure on expert evidence in relation to causation.”
Master Leonard said CPR 44.3(5) provided that costs were proportionate if they bore a “reasonable relationship to the specified factors”.
He went on: “It seems to me that the wording of the rule leaves no room for the defendant’s attempt to measure the proportionality of the claimant’s ATE premium by reference to the amount ultimately paid for the expert evidence covered by it. That is not the test.”
Delivering judgment in Mitchell v Gilling-Smith  EWHC B18 (Costs), Master Leonard disagreed that the claimant had no right to rely on a block-rated insurance policy.
He said that when Rebecca Mitchell signed a conditional fee agreement (CFA) in July 2014, she took out an ATE policy with Allianz Insurance which provided cover up to a limit of £100,000 for medical experts’ reports, other disbursements and opponents’ legal costs.
The total premium was £13,500 plus tax, split into a recoverable premium of £10,000 for experts’ reports and £3,500 for other disbursements and opponents’ legal costs.
Referring to evidence from an Allianz underwriter, Master Leonard said that, subject to initial screening by the law firm, Irwin Mitchell had delegated authority to issue insurance policies to all clinical negligence clients at the point that they entered into a CFA.
He said that if Irwin Mitchell abandoned the block-rated approach for a “more selective” model, as suggested by counsel for the defendants Robin Dunne, cover for some cases would have to be refused and for others the cost of premiums would increase.
“Even if I were to accept that I should approach the claimant’s ATE policy as if it was (or should have been) individually rated, it seems to me that the defendant’s arguments would not stand up to analysis.
“I say that first because Mr Dunne did not identify any particular point at which the claimant’s solicitors might have been expected to have sufficient knowledge to know, with acceptable precision, what the prospective cost of expert evidence was likely to be.
“Nor did Mr Dunne suggest that if the claimant had waited before taking out the ATE policy, she could have reduced the premium payable.
“That is not the defendant’s case. Rather the points of dispute say that the policy should not have been taken out at all, without conceding when (if ever) it would have been reasonable to do so.
“I do not regard the defendant’s suggested approach as workable. The proposition that it is incumbent upon a claimant to refrain from taking out ATE insurance until some undefined point at which the level of risk to be insured has become entirely clear, seems to me rather to miss the point of taking out insurance at all.”
Master Leonard said he did not see the need to follow in the footsteps of Masters Gordon-Saker, Rowley, Haworth and Brown, and give his “considered view” on the application of the post-March 2013 proportionality test to additional liabilities, while awaiting guidance from the Court of Appeal.
“I say that because it seems to me that, even if Mr Dunne is entirely correct and the insurance premium incurred by the claimant can be considered in isolation in the way contended for it cannot be said to be disproportionate.”