West and Demouilpied: ATE Premiums, Reasonableness And Proportionality

WEST v STOCKPORT NHS FOUNDATION TRUST [2019] EWCA CIV 1220

The long awaited and much anticipated judgment in the West and Demouilpied appeals has been handed down.

The appeals raised a number of specific issues arising out of the respondent’s successful challenge on an assessment of the claimant’s costs to the amount of the ATE insurance premium recoverable by the appellants.

They also raised a number of wider points relating to reasonableness and proportionality and the proper approach to the assessment of costs.

The appeals in both cases were allowed on the basis that (inter alia) the respondent had sought to rely upon a policy that was contractually unavailable the claimants and, arguably, in any event, not comparable.

Of wider interest and importance is the guidance the Court of Appeal has given in respect of the following issues:

  1. How should a reasonableness challenge to an ATE premium be made and resolved?
  2. Is a proportionality challenge limited to a consideration of the circumstances of the case in question pursuant to CPR 44.3(5), or can it go wider and deal with “all the circumstances” in accordance with CPR 44.4?
  3. If the ATE insurance premium is reasonable, should it also be subjected to a proportionality assessment?
  4. What is the proper approach to a costs assessment as regards reasonableness and proportionality?
  5. What is the way forward for future challenges to the reasonableness of ATE insurance premiums?

The Lord Justices recognised the unsatisfactory state of affairs where the level of recoverable ATE premiums in clinical negligence cases were being decided on an “ad hoc, case-by-case basis” based upon little more than the “instinctive or subjective reaction of the judge” undertaking the costs assessment “without reference to objectively ascertained comparable policies and premiums”.

“If a claimant’s right to recover the ATE insurance premium in clinical negligence cases is the subject of a capricious system of cost assessment, then a claimant may be denied the very access to justice which the exception at s.58C and the Regulations were designed to protect.”

Affirming that Rogers v Merthyr Tydfil County Borough Council [2006] EWCA Civ 1134 remains good law, they went on to address the wider issues identified:


How should a reasonableness challenge to an ATE premium be made and resolved?

  • If the ATE policy is a bespoke policy, then the grounds of challenge of the amount of the premium are relatively wide.
  • As regards a block-rated policy, the ability of the paying party to mount a sustainable challenge will be much more restricted
  • It will not usually be enough for the paying party simply to give evidence that another policy was cheaper.
  • District judges and cost judges do not have the expertise to judge the reasonableness of a premium and the viability of the ATE market will be imperilled if they regard themselves as better qualified than the underwriter to rate the financial risk the insurer faces.
  • It is for the paying party to raise a substantive issue as to the reasonableness of the premium which will generally only be capable of being resolved by way of expert evidence.

“The respondent’s strategy appears to be to offer something minimal to put the reasonableness or proportionality of the ATE premium in issue, and then assert that the burden of proof falls upon the individual claimant, who will usually be unable to deal with the wider questions that might be raised concerning the insurance market. On this aspect of the case at least, the respondent has access to much more information than an individual claimant, so that the respondent’s reliance on the burden of proof has potentially a distorting effect on the costs assessment.”

  • When dealing with a block-rated policy a judge should be very hesitant before concluding that the premium is in error, and should have good reasons for doing so.
  • A simple comparison between the value of the claim (either the claim made or the settlement sum) and the amount of the premium paid is not a reliable measure of the reasonableness of the ATE insurance premium.

“If the district judge or costs judge decides that there is substantive evidence which genuinely puts in issue the reasonableness of a premium, then he or she can require the claimant to address that evidence and decide the resulting debate on the evidence in the usual way. We stress, however, that that should only happen if the judge considers that a genuine point of substance, usually requiring expert evidence, has been raised by the paying party and not otherwise.”


Is a proportionality challenge limited to a consideration of the circumstances of the case in question pursuant to CPR 44.3(5), or can it go wider and deal with “all the circumstances” in accordance with CPR 44.4?

  • Questions of proportionality are to be considered by reference to the specific matters noted in 44.3(5) and, if relevant, any wider circumstances identified under r.44.4(1).

If the ATE insurance premium is reasonable, should it also be subjected to a proportionality assessment?

  • ATE premiums should be left out of account when determining proportionality.

“There are two reasons why a discount for proportionality is inappropriate. Firstly, being a block-rated policy, the amount of the reasonable premium bears no relationship to the value of the claim, much less the amount for which the claim was settled. Secondly, ATE insurance is critical to access to justice in clinical negligence claims, as was made clear by the Court of Appeal in Rogers and by the Government both in its formal response to Sir Rupert Jacksons’s recommendations and in the Explanatory Memorandum accompanying the Regulations”

  • When the judge comes to consider proportionality, there are some elements of costs which should be left out of account. The exceptions are those items of cost which are fixed and unavoidable, or which have an irreducible minimum, without which the litigation could not have been progressed.

What is the proper approach to a costs assessment as regards reasonableness and proportionality?

  • The judge should go through the bill line-by-line, assessing the reasonableness of each item of cost. If the judge considers it possible, appropriate and convenient when undertaking that exercise, he or she may also address the proportionality of any particular item at the same time.
  • At the conclusion of the line-by-line exercise, there will be a total figure which the judge considers to be reasonable (and which may, as indicated, also take into account at least some aspects of proportionality). That total figure will have involved an assessment of every item of cost, including court fees, the ATE premium and the like.
  • The proportionality of that total figure must be assessed by reference to both r.44.3(5) and r.44.4(1). If that total figure is found to be proportionate, then no further assessment is required.
  • If the judge regards the overall figure as disproportionate, then a further assessment is required.
  • That should not be line-by-line, but should instead consider various categories of cost, such as disclosure or expert’s reports, or specific periods where particular costs were incurred, or particular parts of the profit costs.
  • At that stage, any reductions for proportionality should exclude those elements of costs which are properly regarded as unavoidable, such as court fees, the reasonable element of the ATE premium in clinical negligence cases, and the like.
  • Specifically, therefore, if the ATE premium is assessed as reasonable, it will not fall to be reduced by any further assessment of proportionality.

“The judge will undertake the proportionality assessment by looking at the different categories of costs (excluding the unavoidable items noted above) and considering, in respect of each such category, whether the costs incurred were disproportionate. If yes, then the judge will make such reduction as is appropriate. In that way, reductions for proportionality will be clear and transparent for both sides.”

  • Once any further reductions have been made, the resulting figure will be the final amount of the costs assessment.
  • There should be no further stage of standing back and, if necessary, undertaking a yet further review by reference to proportionality as that would introduce the risk of double-counting.

So, after six years and three months since its introduction we finally have some guidance from the Court of Appeal on how to approach the “new” proportionality test. Will it make costs assessments any more predictable? It remains to be seen. It is possible, if not probable, at least in the early stages, that added to the rather circular arguments of whether a cost was i) reasonable ii) necessary and/or iii) proportionate will be, was it iv) unavoidable! Take for example an expert’s fee in a complex clinical negligence case. Hard to see how this could be regarded as any more avoidable than an ATE premium, or for that matter a court fee. Let’s say the fee is £5,000. The paying party successfully argues in the course of the line by line assessment that a “reasonable” fee would be £3,000. The argument is likely to have been based on the fact that a report could have been obtained for this amount. To all intents and purposes therefore, this was the amount which it would have been “necessary” to spend. Should this figure not therefore now be regarded as the “unavoidableirreducible minimum, without which the litigation could not have been progressed” and left out of account when determining proportionality?


What is the way forward for future challenges to the reasonableness of ATE insurance premiums?

  • Subject to any points which did not arise from the Assessment, or were not addressed in this judgment, the Lord Justices determined that the position in respect of the recoverability of block-rated ATE insurance policy premiums is now settled, whilst recognising that in the future points may arise as to the reasonableness of such premiums as they and the market change.
  • If and when future points arise as to the reasonableness of such premiums as they and the market change, these ought to be addressed by way of a group of test cases.

WEST v STOCKPORT NHS FOUNDATION TRUST and DEMOUILPIED v STOCKPORT NHS FOUNDATION TRUST [2019] EWCA CIV 1220