West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust  EWCA Civ 1220
After months of speculation the Court of Appeal finally gave their anticipated ruling in the cases of Demouilpied and West. Here Martin Harris, our Head of Operations in Manchester discusses the decisions and what it means to the industry as a whole.
The decision in West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust  EWCA Civ 1220 was been handed down on Wednesday to much fanfare and celebratory posts from the Claimant community but what if anything will change as a result of the Court of Appeal’s decision?
The facts of the cases have been widely published across the industry over the last 18 months or so and as such; I will not repeat the same in great detail here. In short, the crux of the issue to be determined by the Court of Appeal was whether a block-rated ATE insurance premium was proportionate and reasonable in low value clinical negligence cases.
In his first instance decision in West, District Judge Iyer reduced the recoverable element of the premium from £4800.00 to £2500.00. In Demouilpied, Deputy District Judge Beard reduced the recoverable element of the premium from £4800.00 to £650.00.
Both ATE policies were with ARAG and the matters were conjoined in order for the issue to be determined by the Court of Appeal. This resulted in hundreds, perhaps thousands of cases being stayed pending the outcome with ATE insurance premium challenges and proportionality arguments underpinning the points of dispute served by those acting for the NHS in the main.
The headlines all contained similar proclamations; “Claimants win crucial costs appeal on proportionality and reasonableness” ”Costs Victory for Clinical Negligence Victims”, “Success for Claimants in landmark ruling”.
The Court of Appeal allowed the Claimants’ appeal, finding that both judges at first instance had erred when determining the amounts recoverable.
Both premiums were allowed in full with the Court of Appeal providing some much needed guidance on how to deal with premiums on assessment.
ATE Premiums - What it means
Rogers v Merthyr Tydfil County Borough Council  EWCA Civ 1134 remains good law. Without strong expert evidence, it is not for the Judge or assessing officer to interfere with the level of the premium.
The question of reasonableness must take into account the wider insurance market.
A comparison between the level of the premium and the value of the claim is not a reliable measure.
Block-rated premiums ought now to prove much more difficult to challenge, evidence that a comparable premium was cheaper elsewhere will not suffice. An expert's report will be required to demonstrate unequivocally that the policy was directly comparable to the policy being challenged. This is likely to prove extremely challenging for the paying party.
A block-rated premium which has been determined to be reasonable cannot then be considered to be disproportionate and subject to any further reduction.
ATE Premiums - What it does not mean
That ATE premiums will be allowed without challenge or scrutiny. The decision is quite clear; whilst the issue as to reasonableness of premiums has ‘been put to bed’, the focus was very much on block-rated premiums. Expect challenges to bespoke policies in much the same way as before.
That the courts are somehow barred from considering the level or reasonableness of an ATE insurance policy. The policy in question was £4800.00 in regards to the recoverable element. There are higher premiums out there and it remains to be seen what challenges will be faced in recovering those.
Proportionality - The icing on the cake or the sting in the tail?
The Court of Appeal then went on to consider the issue of proportionality more broadly in an attempt to provide guidance on how the “new” (now in operation for over 6 years) proportionality test ought to be applied.
First, the judge should go through the bill line-by-line, assessing the reasonableness of each item. When doing so, the Judge remains free to address the proportionality of any particular item at that stage and reduce the same accordingly.
Following this, the Judge will arrive at a total figure that is considered reasonable which includes every item of cost, including court fees and the ATE premium.
The proportionality of that total figure must then be assessed by reference to both CPR 44.3(5) and CPR 44.4(1). If that figure is found to be proportionate, then there need not be any further consideration applied.
If the judge regards the overall figure as disproportionate, then a further assessment is required which is in keeping with the current approach. However; that exercise should not be line-by-line, but should instead consider various categories of cost, such as disclosure or expert's reports, or specific periods where particular costs were incurred. Those categories when considered ought to be reduced further if the Judge considers the same to be disproportionate.
Any reduction for proportionality should exclude those elements of costs which are properly regarded as ‘unavoidable’, such as court fees, the reasonable element of the ATE premium in clinical negligence cases, and the like. It is here that things become interesting. What exactly constitutes ‘unavoidable’ costs?
Court fees are unavoidable. Reasonable ATE premiums are unavoidable according to the Court of Appeal. What about expert evidence? Disclosure as ordered? The term is broad and I expect some interesting and creative interpretations of this in the coming months.
Business as usual or all change?
Dissuading a Judge from simply standing back and chopping a big number in half to reach a smaller number is a welcome if not overdue sentiment however; will it really change anything?
A Judge on provisional assessment will still assess the bill, return it to the parties and await the calculations. If the figure provided is too high, the judge will reduce it on the grounds of proportionality and provide that figure as the assessed bill amount. It is unlikely that we will start to see Judges showing their workings and as such, a huge proportion of assessments will likely see little change on the face of it. If challenged, I expect that judges will demonstrate on oral review that the approach taken was in line with the guidance now given by the Court of Appeal and thus falling within their wider discretion as alluded in West & Demouilpied.
Some predict a bigger problem ahead which may see even more inconsistency as judges grapple with categories of costs, unavoidable costs and a phased approach to proportionality on conclusion.
It is hoped that the guidance will assist and in particular, it is welcome news that so many stayed matters will hopefully now move to settlement however; there is a reason why the Court of Appeal usually shy away from providing such sweeping guidance and only time will tell whether this increases certainty or opens new avenues of dispute. Let’s hope for the former so that both sides can move forward with clarity and reasoned approach.
Martin Harris is a Costs Lawyer and our Operations Manager in Manchester.
If you would like to discuss any of the above in more detail, or any other Costs matters, contact Martin Harris on 0161 255 2788 or email him at firstname.lastname@example.org