Cost of retrospective ATE cover in appeal proceedings not recoverable
Where ATE insurance is purchased by a successful Appellant within Appeal proceedings which retrospectively covers the cost of the first instance proceedings, should the full cost of the premium be payable by the Respondent?
On the eve of an appeal hearing, the Claimant purchased an after the event insurance policy. The policy covered adverse costs both within the appeal and the first instance action. The Claimant had, to this point, been uninsured against the costs of the first instance proceedings.
The Court of Appeal held by a majority of two to one that the word ‘proceedings’ within s.29 of the Access to Justice Act 1999 (which permits the recovery of the cost of “an insurance policy against the risk of incurring a liability in those proceedings”) was to be construed in such a way as to differentiate first instance proceedings from appeal proceedings. As such, the costs being insured against insofar as the same related to the costs of the first instance proceedings were costs of separate proceedings.
Lord Justice Rix considered that allowing the recovery of such retrospective cover may result in “costs of trial [being] increased retrospectively, to the prejudice of the opposing party.”
This element of the ATE premium was therefore not recoverable.