1. Callery –v- Gray (2) (2001) 1 WLR2143
The Court of Appeal held that a Claimant may legitimately claim
the costs of ATE Insurance covering the risk of failing to beat a Part
36 offer or payment and the cost of ATE Insurance covering the
Solicitors own costs, i.e. Insurance against the risk of incurring a
cost liability that cannot be passed on to its opposing party.
2. Ashworth –v- Peterborough United Football Club Limited (SCCO
Transcript June 2002)
The claim was worth about £90,000.00 ……… the Claimants
reasonable and proportionate base costs were also about £90,000.00.
Master Wright was asked whether it was reasonable and/or proportionate
for the Claimant to purchase ATE cover in respect of both side’s costs
for a premium of about £47,000.00. He held that it was.
3. Onions-v-Sotherby’s (SCCO 2003: Not reported)
The Claimants sued the Auctioneers in respect of a painting sold
at Auction for £150,000.00 and later resold for £4,500,000.00. Just
before trial the claim settled for a seven figure sum plus costs. The
Claimant had purchased for £289,000.00 a C.F.A. Policy with the limit of
Indemnity of £1 million; the Defendants raised no Points of Dispute as
to the premium.
4. Pirie –v- Ayling (Senior Cost Judge – January 2003: SCC
Transcript)
Master Hurst held that an ATE Premium expressed to be “20% of
the compensation received; was unreasonable in any simple personal
injury claim where compensation exceeded £200,000.00. In this case the
Claimant received £13,000.00 and was therefore seeking to recover a
premium of £2600.00. Master Hurst allowed £367.50.
5. Wooldridge-v- Hays (Master O’Hare-March 2005)
An R.T.A. claim in which liability was admitted early on,
eventually settled for £600,000.00. It was initially financed by a BTE
Policy with the limit of indemnity at £25,000.00. When that run out the
Claimant purchased an ATE Policy for £7842.00, i.e. 10% of the limit of
Indemnity, plus a further 1% in respect of an automatic increase in
cover option plus IPT. The premium was allowed in full.
6. The recent test case in the Supreme Court Cost Office on ATE Premiums
is The RSA Pursuit Test Cases (Master Hurst 2005). The premiums were
calculated in a manner similar to the calculation of C.F.A. Success Fee
to which was owed a factor to take into account the likelihood that the
adverse liability risk (profit cost and disbursements) would exceed the
client’s Solicitors’ base profit cost plus a further sum to take account
of the Insurer’s Risk/Profit Margin, administrative costs and
commissions. The ratio of adverse liabilities of Solicitors’ base profit
costs was calculated from estimates made at the outset and the final
premium was based profit costs claimed by the Solicitors (whether or not
allowed). Master Hurst rejected arguments that the Policy was void for
uncertainty or champerty. However, he held that the premium methodology
was inherently floored because it relied on:
Estimates of the opposing party’s costs made at the outset, and on
Claims (not allowances) made in respect of the Insured’s Solicitors
base profit costs
Even though, as to both matters, more accurate information was
available later
This methodology was held to be unreasonable, giving the Insurers’
declared intention to charge a premium which was “exposure related”
rather than “experience related”.
