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Wigg & Co - re: claims direct cases (SCCO 19th July)

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These Test Cases were selected to enable a number of issues of principle to be decided, the most important of which being the whether the money paid to Claims Direct Plc by the Claimant in each case was a premium within the meaning of S.29 of The Access to Justice Act 1999 and, to the extent that it is such a premium whether or not it was reasonable.

The Claimant's position was that the money paid was all premium and not susceptible to further breakdown and was both reasonable and proportionate.

The Defendants argued that the recoverable premium was only the risk-bearing element, i.e. that part of the money paid which is directly referable to the amount paid to Underwriters (including appropriate brokerage and commission).

The Senior Costs Judge Master Hurst held that only a proportion of the money paid by the Claimant to Claims Direct Plc constituted a premium recoverable under S.28 of The Access to Justice Act 1999.

The Judge when deciding the premium was looking at costs claims within a range from 1,033.00 to 3,884.50 an average of 2,097.00 per case. He then considered the application of a success fee as in Callery -v- Gray (Nos. 1 and 2 ) (2002) 3 All ER 412 HL. He said that although he did not suggest either of these figures should be taken as a bench mark of what is proportionate it gave some indication of the likely level of additional liability in the test cases had they been funded in that way and settled at the Pre-Action Protocol stage.

Against premiums claimed at 1,250.00 and 1,495.00 he found that 621.13 inclusive if Insurance Premium Tax was appropriate. He made it clear that in his view the figure of 621.13 inclusive of IPT was a cap for what was reasonable, regardless of subsequent increases brought about by any agreement to pay greater amounts to the underwriters.


A total premium of 621.13 was made up as follows :-

Payment to underwriters 451.55 (140. brokerage and commission 
plus 311.55 risk bearing element)

Claims Direct Commission 110.00

MLSS for insurance services 30.00

IPT on 591.55 29.58
Total 621.13

Our Comment

We suggest that if this figure is appropriate for a claim where the average costs claims are 2,097.00 this is not an appropriate premium for costs claimed at a much larger range of costs and off the low radar screen. (Your comments and opinions are invited).

It was said that where an incident occurs, particularly a minor road traffic accident causing slight injury and where the liability insurer had from the outset accepted liability for the occurrence, it will generally be disproportionate and unreasonable to take out an ATE Policy. There may, however, be circumstances surrounding the incident, particularly if there is likely to be a live issue as to causation which would make it reasonable to take out ATE insurance.

Our Comment

In how many cases does an insurer unequivocally accept liability at the outset for an occurrence ? More usually the Claimant is left in the air with a half promise that an offer may be made after full investigations have taken place. In those circumstances would it be reasonable to take out ATE insurance ?

TAG Cases Settled

Sharratt v London Central Bus Company & Other Cases SCCO 16 February 2004. Following the mediated outcome TAG Panel Solicitor's costs on cases that had been held pending the outcome of the test litigation were to be settled subject to a discount of 25% being applied to agreed/assessed based costs in the bulk of the cases. This discount did not apply where the TAG Panel Solicitor himself promptly gave the requisite advice under regulation 4 of the CFA Regulations 2000. It was also agreed that the individual Claimants would not be asked to pay the shortfall in their costs. Other recovery issues remain outstanding.

Because the matter was not litigated the agreement is binding only on the parties to the litigation although it is likely that Cost Judges will follow the outcome.

Predictable RTA Success Fee Agreement

The Bar agreed to the inclusion of Barristers in the agreement on success fee levels in road traffic accident cases. 

1. Standard success fee shall be recoverable in road traffic accidents (RTA) claims funded by CFAs or CCFAs:

(1) Solicitor's success fees:

(a) 100% in respect of any case which concludes at trial
(b) 12.5% in respect of any case which concludes before trial.

(2) Counsel's success fee: 

(a) 100% in respect of any case which concludes at trial
(b)(i) 75% of any multi track case which concludes within 21 days before trial
(b)(ii) 50% in respect of any fast track case which concludes within 14 days before trial
(c) 12.5% in respect of:
(i) Any multi track case which concludes earlier than 21 days before trial
(ii) Any fast track case which concludes earlier than 14 days before trial.

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