Reasonable and Proportionate Recovery of Premiums: Mitchell v Gilling-Smith [2017] EWHC B18 (Costs)

On 6 June 2017, Master Leonard heard the case of Mitchell v Gilling-Smith [2017] EWHC B18 (Costs) and, on 21 August, handed down judgment, approving the recovery of a £10,000 ATE premium, incurred by the claimant solicitor, on the basis that it was both reasonable and proportionate.

Proceedings were issued by the claimant, as a result of negligent medical treatment of an ovarian endometrioma, suffering a severe abdominal infection, abdominal bleeding, pelvic inflammation, and (following further surgery) an incisional hernia. Settlement was agreed at £200,000.

Issues, however, arose in this case, by consequence of the claimant’s entry into a conditional fee arrangement with their solicitors, who also recommended the purchase of an ATE insurance policy, in July 2014, providing cover up to £100,000. The ATE premium totalled £13,500, split up into £10,000 for medical experts’ reports, and £3,500 for other disbursements and opponents’ legal costs.

After April 2013, ATE premiums incurred are irrecoverable under costs orders, unless the claimant can satisfy the provisions found within under section 58C of the Courts and Legal Services Act 1990 and Regulation 3 of the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No 2) Regulations 2013:

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In this instance, the claimant solicitor instructed Professor Cheong, a consultant in gynaecology and obstetrics, to conduct an initial report, which stated that the treatment received by the Claimant had not been to an adequate standard. Further, Condition and Prognosis reports were subsequently received from both Professor Cheong and also Mr Smith, a consultant colorectal and general surgeon.

In the claimant’s bill of costs, the defendant argued that it only included one fee for Professor Cheong for reporting on liability, totalling just £1,750.

Given the claimant sought to recover the premium of £10,000, the defendant stood in stanch opposition, submitting that, even though the conditions under the regulatory exceptions were met, there was ‘very real doubt’ that the premium was both ‘reasonably incurred’ and ‘reasonable in amount

Assessing proportionality, firstly, at the High Court, Master Leonard applied the relevant test, for post-March 2013 proceedings, located in CPR 44.3(5), as follows: 

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Held, at paragraph 57:

... my conclusion is that even assuming that it stands to be considered in isolation, an ATE premium of £10,000 could not be characterised as disproportionate in the context of a Clinical Negligence claim that settled, in the circumstances I described above, for £200,000’.

Subsequently, turning to the question of whether the premium was reasonably occurred, the costs judge reasoned, at paragraph 58:

 ‘I do not accept the assertion in the Points of Dispute that “the risks being insured against are…controlled entirely by the solicitor (for it is the solicitor who decides if or when to instruct an expert to prepare a report)”. Any requirement for independent medical evidence is dictated by the needs of the case, not by the whim of the conducting solicitor. It is not suggested, nor could it realistically be suggested, that it was not necessary to obtain independent medical evidence in this case’.

He went on to say, at paragraph 67:

‘The proposition that it is incumbent upon a claimant to refrain from taking out ATE insurance until some undefined point at which the level of risk to be insured has become entirely clear, seems to me rather to miss the point of taking out insurance at all’.

Finally, on assessment of the defendant’s argument that the premium sought was unreasonably incurred, in paragraphs 84 and 85, Master Leonard opined:

‘... it seems to me that the Defendant has failed to discharge the evidential burden identified in Kris Motor Spares, or to give me the sort of good reason for disallowing all or part of the ATE premium contemplated by Langstaff J in Pollard. I am, rather, invited on little or no relevant evidence, to conclude that some element of doubt has been established and to reduce or disallow the premium on the basis that it seems, in broad terms, to be too high. That seems to me to be precisely the approach against which Langstaff J warned.

For those reasons, the challenge to the ATE premium fails and it is allowed in full’.

The full judgment can be accessed here.