Supreme Court Costs Office
Senior Costs Judge Hurst
Date: 15/05/03

The Issues:Under The Accident Group scheme, solicitors agreed to act as appointed representatives of TAG and to use a standard CFA. The solicitors were also required to appoint Accident Investigators Ltd to investigate the claim and to pay AIL a fee, which was passed to TAG. A number of defendant insurers argued the CFA’s were unenforceable and the ATE premiums, which were included within a basket of services provided by TAG for a premium of between£840 and £997.50 were unrecoverable.

Held:

(1) The defendant cannot look behind an ATE insurance policy (ie. examine the charge for the individual items making up its total) except in exceptional circumstances.

(2) The TAG premium was however exceptional, and the Court would therefore analyse how much of the premium was recoverable.

(3) Many of the items included in the TAG scheme premium could not be regarded as a premium within the meaning of s.29 of the Access to Justice Act 1999. The amount recoverable in all the circumstances and cross-checked against alternative funding options, was £450 inc. IPT for those premiums taken out in 2000 and £485 inc. IPT (depending on the insurer) for those taken out in 2001.

(4) It was reasonable in relation to that scheme to allow (para. 288):Brokerage commission of 16% plus Coverholder commission of 32.5% plus TAG acquisition commission of 25%

(5) The AIL fee of £310 plus VAT was not a disbursement incurred on behalf of the Client, but was a referral fee, and was therefore not recoverable.

(6) It was not a breach of the indemnity principle for the panel solicitor to agree with TAG that he would not pursue the Client for any disbursements in excess of those recovered. There was no reason why these CFAs were unenforceable and costs and disbursements were recoverable.

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