The
Court of Appeal has just dealt another blow to accident victims and those who
help them fight insurers for the compensation they deserve.
One
of the Court’s decisions in the case of Motto
v Trafigura is that what we term “costs of funding” should not be
recoverable from paying parties – normally defendants' insurers.
These
costs relate to setting up a conditional fee agreement (“CFA”), arguably all
the related work that is required once such an agreement is in place and, most
surprisingly, the time spent dealing with after
the event ("ATE") insurers whose policy against adverse costs complements the CFA. In contrast, the policy premium paid to
insurers is recoverable.
The
decision appears to settle an issue that has been undecided for a number of
years now. Up and down the country and
even within the Senior Courts Costs Office in London judges responsible for
assessing claims for costs between parties have been at liberty to take conflicting
views - and have done so.
The
basic principle that recoverable costs within litigation do not include any
time your solicitor spends helping them workout how it will be funded is
centuries old.
After
what proved to be the hideously complicated CFA Regulations arrived in 2000,
many costs judges were sympathetic to the argument that “times have changed”
and the requirements of Access to Justice
demanded that this ancillary work be done by the solicitor. Sometimes it runs into hundreds or thousands
of pounds in the course of a case.
And
why should that not be recovered from the person legally responsible for the injury? Without their error or omission, none of it
would be necessary.
But
no – the Court of Appeal has wound everybody’s clock back a few hundred years
and decided that this significant cost burden shall not be met by the losing
party, almost certainly the one who caused all the litigation to happen.
Time
will demonstrate whether this is another expense that claimant lawyers absorb
as part of winning work or whether – as the Appeal Court seems to suggest – it
is factored into overheads and passed on by an increase in the hourly rates
chargeable across the board.
One
can only hope that district judges up and down the land will be more receptive and
encouraged by the powers to be in London to accept that hourly rates should be
higher than they are. The present torpor
in the Lord Chancellor’s Department that sees us waiting until nearly Christmas
for the guideline rates that are to be applied throughout 2011(sic) has to be cured.
I
think it’s unlikely to happen and in fact we have here yet another bunch of flowers for the insurance industry. Slightly different market perhaps, but it’s
hard to ignore the point that the ATE premium in this case was allowed in full.
