30 January 2017

Plevin & Costs: When is top up ATE recoverable?

If a claimant with a pre-1 April 2013 After The Event (ATE) insurance policy at first instance, proceeds to an appeal and a top-up of the ATE premium (after 1 April 2013) is required to cover the appeal, is that top up premium recoverable from the other side if the claimant succeeds at appeal?

This is one of the questions posed in the 2nd Edition of the Supplement to the White Book, “Costs & Funding following the Civil Justice Reforms: Questions & Answers”.  On 6 February the Supreme Court will consider it in the case of Paragon Personal Finance Limited v Plevin.  The issue concerns the recoverability of ATE and the proper construction of section 46(3) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.  This section was introduced as a result of the ‘Jackson Reforms’ in costs to the effect that parties should no longer be able to recover ATE insurance premiums from opposing parties.

The key issue which flows as a result is whether a party with pre-existing ATE can, in the context of an appeal, recover from the opposing party the premium taken out for the appeal, where that was taken out, or ‘topped up’ after 1 April 2013 (being the date when the Jackson Reforms came into effect).

In Plevin, the claim was issued in 2009 and Mrs Plevin had the benefit of ATE insurance.  She lost at first instance, in 2013 she appealed to the Court of Appeal and this was followed in 2014 by an appeal by Paragon to the Supreme Court.  In the costs proceedings that ensued, Mrs Plevin sought recovery of the two top up premiums that had been taken out in relation to each appeal, where each of those premiums had been taken out after 1 April 2013.

Before 1 April 2013, the Access to Justice Act 1999 allowed litigants to recover the cost of ATE insurance policies as part of their litigation costs.  This was part of a wider social policy to promote access to justice in the light of shrinking legal aid.  However, as the impact of conditional fee agreements and ATE insurance bedded in, it became apparent that the level of litigation costs had risen rapidly.  Accordingly, with effect from 1 April 2013, ATE was no longer recoverable from the opposing party in litigation.  In order to protect parties who were already engaged in litigation proceedings from injustice, transitional provisions were enacted that allowed ATE taken out prior to 1 April 2013 to remain recoverable.

However, what is the situation for those cases where further ATE was taken out in relation to an appeal which did not form part of the original premium?  In the context of costs, trials and appeals have consistently been treated as separate proceedings, albeit part of the same wider action, such that they are treated distinctly rather than as a cumulative whole.  Indeed, it is hard to see why top up ATE taken out in relation to an appeal entered into after the Jackson Reforms had come into effect should remain recoverable.  It is not a liability that had been incurred before the legislative changes and therefore would not cause prejudice given that the change in law had by this point taken effect.  It is arguable that a litigant considering whether to launch an appeal should not be in a better position than a litigant choosing whether to commence proceedings, given that each decision has its own costs consequences.  As against this, Mrs Pllevin will of course say that it would be unfair to allow her the benefit of ATE for her original claim, but not for the two appeals that saw the claim reach its conclusion – and that those appeals should be regarded as intrinsically part of the original claim.  The Supreme Court’s decision is therefore awaited with much interest in order to provide guidance in this thorny area.

Share this article on social media

About the Author
Fiona Hayles, Partner
view my profile
email me

Got a question?

Send us an email

x

Stay up to date

with our recent news






























x
LOADING