Coventry v Lawrence Limbo

Following on from our article in August discussing the recent Supreme Court decision in Coventry v Lawrence (see the Forbes website for a full copy of the article “The Supreme Court Rules That Success Fees and ATE Premiums May Be Illegal”) we examine the practical position for Defendants during this period of limbo.

As you will recall, the Supreme Court took a surprising step and refrained from ordering the payment of a recoverable pre 1st April 2013 success fee and ATE insurance premium against a losing party declaring that the pre-Jackson right of recoverability could amount to a breach of Article 6 of the European Convention of Human Rights – a right to a fair trial.

Lord Neuberger stated that the liability for costs was inconsistent with the paying party’s Convention Rights. However, he refrained from making a final decision on the point. He stated that it would be wrong to do so without allowing the Government the opportunity to address the Court on the issue. The Supreme Court has therefore adjourned the matter. Should it be concluded that the pre-Jackson right of recoverability does breach Article 6 of the European Convention of Human Rights, a Declaration of Incompatibility may follow. However, it is expected that the issue will not be decided until next year.

It has been reported that some losing Defendants are paying only base costs, and withholding success fees and ATE premiums until the outcome of the case is known. Courts are unlikely to adjourn cases pending the outcome and one should bear in mind the warning in Denton about taking opportunist points. Only on Wednesday, Mr Justice Hildyard in the High Court rejected an argument that the case should impinge on his decision.

It is not cost effective to seek an adjournment of a costs matter pending the outcome of the case as further interest would inevitably be incurred. A less risky and more practical option therefore is to use the case to a Defendant’s advantage in negotiations. Defendants can attempt to seek a discount where success fees and ATE premiums are particularly high and significantly outweigh damages.

Claimant solicitors will be aware that ultimately any right of recourse would be against the Government and not the Claimant.  However, given the amount of the tax payers money at stake, we are extremely doubtful that the bold step would be taken to compensate insurers from the public purse.

 

Sarah Wilkinson

About Sarah Wilkinson

Solicitor in the Insurance department
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