In a widely anticipated ruling, the Court of Appeal has held in Peterborough & Stamford Hospitals NHS Trust v McMenemy & Ors [2017] EWCA Civ 1941 that claimants who take out insurance as soon as they enter a conditional fee agreement (CFA) should be able to recover the cost of doing so.

The claimants in this case took out insurance as soon as solicitors were instructed. The claims settled before proceedings were issued or experts’ reports commissioned. The Court of Appeal held that entering into a block-rated ATE policy at the same time as entering into a CFA was a reasonable way to conduct litigation and that the premium was recoverable.

The court considered the intention of the government when it created the costs regime through the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) and concluded that it was well known at that time that ATE policies were taken out at the same time as entering a CFA. Therefore, it must have been the government’s intention to allow that practice to continue.

The test for the court was whether the costs incurred were reasonable, considering how likely it was that the claimants would need to incur the cost of an expert’s report, and if so, how much it would cost. The court referred to the government’s formal response to the Jackson report and considered it was clear that ministers had decided ATE insurance premiums relating to expert reports should be recoverable.This prevented access to justice being restricted for those who cannot afford the costs of such reports upfront.

The court added that it was “unfortunate” that the rules committee had decided that there was no need for rules or practice directions dealing with the recovery of ATE in clinical negligence cases and invited the committee to reconsider this issue.

Comment

This matter once again confirms the position on recoverability of ATE premiums in the few remaining areas of personal injury law left untouched by the raft of costs reforms following LASPO, including clinical negligence and mesothelioma claims. Until such time as further guidance is received, claimants will continue to be able to recover ATE premiums, including those taken out at the same time as entering into a CFA.