New Test of Proportionality and ATE Premiums in Clinical Negligence – Court of Appeal Guidance

The case of West & Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 relates to two Clinical Negligence claims whereby the court set down how to determine proportionality in post-Laspo cases and the recoverable element of the ATE premium in Clinical Negligence claims.

In the first case, (West) damages were recovered at £10,000. The ATE was claimed at £5,088 in a bill totaling £31,714.44. In the second case (Demouilipied), the matter concluded with damages being awarded at £4,500 and a bill of costs being submitted for ££18,376.36 with a recoverable ATE element of £5,088.00. Both ATE premiums were block rated premiums.

ATE premium

Firstly, regarding the ATE premiums, it was held that the case of Rogers and Merthyr Tydfil [2007] 1 Costs LR 77 was still good law. Black rates policies are based on a cross-section of a book of business and are not bespoke policies calculated on the level of risk.  Any comparison made between a block rated premium and the value of the claim is not a reliable measure of reasonableness.

A block rated premium which has been determined reasonable cannot then be considered disproportionate and further reduced.

Proportionality

The Court of Appeal considered Proportionality and gave a basic outline on how proportionality should be assessed.

First of all, the judge should go through a line by line assessment of each item. The judge can assess the proportionality of each item at the same time.

Following the line by line assessment, the remaining total figure which the judge considers reasonable, will have involved an assessment of every item of cost, including court fees, ATE premium, etc. The total figure must then be assessed with reference to both CPR 44.3(5) and CPR 44(1).

If the total figure is considered proportionate by the judge, then no further assessment is required.

If the judge considers the total figure to still be disproportionate, then a further assessment is required whereby the court should consider each phase, category or specific period where particular costs were incurred, or particular part of the profit costs. When undertaking the assessment of the total figure, the court should exclude any ‘unavoidable’ costs should as court fees, the reasonable element of the ATE premium, VAT, etc.

Once the total figure is reduced, the resulting figure is, therefore, the proportionate figure. There will be no further stage of standing back and undertaking a further review by reference of proportionality.

Discussion

This is a welcome judgement in that it provides some guidance as to how the court should deal with the test of proportionality. The question still arises although in terms of what is actually proportionate. This will be one for the judge conducting the assessment as to what they believe is reasonable. As such, proportionality is still as subjective to the assessing judge as it ever was.

Some certainty arises however regarding costs that are ‘unavoidable’. It has been confirmed that court fees, the recoverable portion of ATE premiums in Clinical Negligence cases and VAT are unavoidable and not to be considered when deciding proportionality. The term unavoidable, however, could potentially have further scope, e.g: are experts’ fees unavoidable? I expect we will see further cases challenging the scope of whether a cost is unavoidable or not.

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