After The Event (ATE) insurance policies protect Claimants from adverse costs and their own disbursements. The recovery of an ATE premium from a minor Claimant’s damages as an expense incurred by a Litigation Friend on the Claimant’s behalf pursuant to CPR r.21.12 can often face Judicial objection. Judges can often form the view that there was no reason for this expense to be incurred due to issues of risk or that the Claimant would have the benefit of Qualified One-Way Costs Shifting (QOCS).

A judgment regarding the recoverability of an ATE premium was given in the case of In X (by way of litigation friend) v H&M Hennes and another [2022] Lexis Citation 102. In this appeal, His Honour Judge Lethem KC (sitting at the County Court at Central London) overturned the decision of Deputy District Judge Blake (DDJ Blake) that the cost of the ATE premium of £336 was not to be deducted from the child’s damages of £1,750, even though a 25% deduction for a success fee was.

DDJ Blake's decision was appealed on 3 grounds:

1. That the DDJ was incorrect in his approach to the assessment of the insurance premium in assessing them as too high. This was impermissible following the Court of Appeal's decision in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.
2. The DDJ erred in trying to address the reasonableness of the premium recovery from the Claimant’s damages from a solicitor and own client context and failed to consider the dictum in Herbert v Hill Law Limited [2019] EWCA Civ 527. Moreover, it was inconsistent of the Court to disallow the premium, particularly in circumstances where there was no suggestion that the litigation friend was not acting in the best interests of the Claimant.
3. Finally, the error of discretion by the Judge, who was wrong to find the insurance premium was not reasonably incurred and reasonable in amount. The Court's attention was drawn to the 25% success fee being allowed, meaning the DDJ had to accept there an insurable risk. The finding that the risk was so small it was unreasonable to be insurable was inconsistent and incorrect.

HHJ Lethem allowed the appeal on grounds 2 and 3. It was held that the ATE premium should have been deducted from the Claimant’s damages and that DDJ Blake had failed to properly apply r.21.12(4), and failed to have a proper regard to the assumptions and presumptions that arise from that provision via CPR r.46.9.  There was a failure to properly apply r.21.12 and an inherent contradiction in factual findings, with the DDJ having granted the 25% success fee in recognition of the litigation risk, and then not granting the deduction for ATE premium which existed to guard against such risk.

With this judgment in support, if the requirements of CPR r.21.12 are followed, there should be no reason why the ATE insurance premium should not be deducted from the Claimant’s damages, allowing Claimants to remain protected and thereby enhancing access to justice.