“Suspicion and speculation” are not enough for a court to reduce a medical negligence ATE premium, a leading costs judge has said.
The insurance policy was issued after LASPO, but the premium was potentially recoverable because it covered the cost of claimant’s expert reports in a medical negligence case.
Master Leonard, sitting as a judge of the Mayor’s and City County Court, said the Temple Litigation Advantage premium was divided into two parts. The first part, which required a premium of £5,680 for £10,000 cover, insured against the risk of liability to pay for expert reports.
The second part, which was non-recoverable, required the payment of 3% of damages for an indemnity of up to £100,000, insured the opponent’s costs and other disbursements.
Ruling that the first part of the premium was recoverable in full, Master Leonard said: “The defendant is concerned that the recoverable ATE premium offered by Temple is not subject to real market competition and that ATE insurers are under commercial pressure to maximise recoverable premiums and minimise irrecoverable premiums.
“I need more than suspicion or speculation to reduce an ATE premium. In implementing the 2013 reforms parliament intended that that certain kinds of ATE premium should continue to be recoverable under orders for costs.
“For that intention to be achieved insurers must be able to offer a compliant product which is realistic and competitive. On the evidence Temple has come up with a compliant, competitive product, which the claimant has accepted.”
Delivering judgment in Heart of England Foundation NHS Trust  EWHC B6 (Costs) , Master Leonard said the defendant argued that the first of “two separate premiums”, insuring against the cost of expert reports, was not compliant with Section 58C of the Courts and Legal Services Act 1990 (as amended from 1 April 2013).
The claimant argued that there was only one premium, despite the use of the word ‘premiums’ in one of the headings, divided into “two components, one of which was recoverable and the other not”.
Rejecting the defendant’s argument that the first part of the premium could be regarded as “self-insured”, Master Leonard said it would be “inappropriate” to regard the policy as non-compliant “simply because there may be some ambiguity or imprecision in its wording”.
He went on: “In my view the question is whether, on a proper reading by reference to established contractual principles of interpretation, the policy does or does not comply with the statutory requirements.”
The costs judge said he did not think “that much really turns on whether one describes the policy as incorporating one premium in two parts or two premiums” and the policy was “compliant with the statutory provisions either way, because it provides the information that the statutory provisions require”.
On the defendant’s challenge to the amount of the premium, he said: “CPR 44.4 requires that on considering both reasonableness and proportionality I have regard to all the circumstances.
“For that reason, even if the defendant had not relied upon comparable market evidence to support the proposition that Temple’s ATE premium is not reasonable in amount, I would be unable to accept the defendant’s contention that the claimant cannot rely upon comparable market evidence to support the proposition that in fact it is.
“It is not suggested, nor should it be, that it was unreasonable for the claimant to arrange ATE cover at all. The reasonableness of the claimant’s choice of ATE cover must be measured by reference to what is available to her.”
Master Leonard said the comparable evidence offered by the defendant did not “offer any indication that the amount of premium incurred and claimed by the claimant is unreasonable”.
Master Leonard said that, whether or not the proportionality test should be applied to a “single item of cost”, and Lord Justice Jackson had indicated that it should not, judged against the criteria set out in CPR 44.3(5), the premium was not disproportionate.
He added: “The defendant points out that reduction on assessment is part of the ATE insurer’s ‘model’.
“It does not follow that I can reduce the recoverable ATE premium, as suggested, by in the region of 95% without affecting the viability of the insurer’s product. I do not find that credible.”
He ruled that the premium was recoverable in full.