Cuthbert v Stephen Gair and Wendy Gair t/a The Bowes Manor Equestrian Centre [2008] EWHC 90114 (Costs)

A subrogation clause in an insurance policy does not amount to an assignment of the cause of action from the Insured to his Insurers. As a result, an Insurer’s costs of contracting out to Loss Adjusters part of its work to investigate claims made against its Insured are not recoverable. The Insured has no liability to Loss Adjusters for those costs, therefore no recovery for those costs can be made.  To read the judgment, click here.  

Cuthbert v Gair: Here, it was common ground that Questgates, a firm of loss adjusters, had been engaged by the Defendant’s Insurer (SLE Worldwide) to investigate the case before solicitors were formally instructed on the Defendant’s behalf. The court held that costs incurred relating to pre-action work undertaken by loss adjusters, when no solicitors had been instructed, could not be recovered as a disbursement, as the work would normally have been carried out by the solicitors. Loss adjusters’ fees after the instruction of a solicitor could also not be recovered, as there had been no formal agency agreement between the eventual solicitors in the case and the adjusters.

The court noted that, had the defendant’s solicitors sought the assistance of Questgate in the litigation on an agency basis, the defendant’s solicitors would have been entitled to recover the costs of Questgage, not as a disbursement but as a profit cost. Instead, this was ‘a simple case of an insurer contracting out to Questgates part of its work to investigate claims made against its insured. It is routine work, which many insurers up and down the country would undertake in-house. The mere fact that the insurer chose to contract out that work to Questgate does not render the costs recoverable…’