Macclesfield County Court
Date: 06/05/09

The Issues:The successful Claimant sought to recover his fixed recoverable costs in respect of an RTA including a “ClaimSafe” ATE premium of £367.50 (inc. IPT) arranged by Box Legal Limited. The Defendant believed that the Claimant’s solicitor might receive a commission in respect of the ATE policy, but had no evidence that any was paid. It therefore wanted the Claimant’s solicitors to disclose whether they would receive any commission, in order that the Court could then decide 'whether the cost of insurance cover was reasonable, relevant factors to be taken into account'....being….'the amount of commission payable to the receiving party or his legal representatives or other agents' (Part 44 Section 11.10 of the Practice Direction).

Held:

(a) £367.50 was a reasonable and proportionate premium and entirely unexceptional. There was no 'basket of services' being offered by a claims company (as in the Accident Group cases) to cause possible concern. Only in exceptional circumstances should the Court attempt to examine the various elements of an ATE premium.

(b) Contrary to the Defendant’s submission, the Court could not simply order the commission element to be revealed and then decide if the commission was reasonable. It would instead need detailed evidence of how all other parts of the premium were made up, and expert evidence of commission and premium rates in the ATE market as a whole.

(c) Some commission was no doubt legitimate, so at best the Court might only disallow £50 or so. Even across a substantial number of policies, the cost of such an exercise would be disproportionate to the amount at stake.

(d) The Court of Appeal had repeatedly warned against unnecessary, complicated and expensive exercises to “deconstruct” ATE premiums.

(e) Such an exercise would remove much of the advantage of certainty bestowed by the fixed costs regime.

Conclusion: The Solicitors’ Code of Conduct of course requires clients to be advised of any commission received. That advice (being between the solicitor and his client) will inevitably be privileged and therefore need not be disclosed to the Defendant.Where the policy is unexceptional and the premium is modest (as with the ClaimSafe policy), there is no reason to advise the Defendant as to whether or not you receive a commission payment from your ATE insurer, and it will certainly be unwise to reveal the level of any such payment. All requests for such information should be resisted, and the Reply to Commission Enquiry letter which we have prepared, can be used.

N.B The link below is to the full transcript of the hearing. The Judgment begins at Page 15.


Download Case Transcript (PDF)

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