The purpose of the transitional provisions of LASPO, in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. In this case the appellant argued that the policy in relation to the appeal in the Court of Appeal and the Supreme Court were distinct “proceedings” and therefore there was no policy in place at the commencement date with the characteristic required by the Act, i.e. that it related to the appeals.
Background to the Appeal
This judgment relates to a review of the costs assessment that followed the decision of the Supreme Court in Plevin (Respondent) v Paragon Personal Finance Limited (Appellant) [2014] UKSC 61. The respondent’s solicitors were acting under a conditional fee agreement (“CFA”) with after-the-event insurance (“ATE”). The recoverability of a success fee under a CFA and the ATE insurance premium depended on the costs regime which was, subject to transitional provisions, brought to an end on 1 April 2013 by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”).
The respondent had entered into a CFA with her original solicitors, Miller Gardner, on 19 June 2008. Subsequently the CFA was varied in 2009 and in 2012 in response to organisational changes within Miller Gardner and was varied again in August 2013 and January 2014 so that the agreement covered work relating to the appeal. Likewise, the ATE policy was originally concluded on 29 October 2008 and was then ‘topped up’ for the appeals to the Court of Appeal and the Supreme Court.
Costs in the Supreme Court were assessed by Master O’Hare and Mrs Registrar di Mambo at £751,463.84, including £31,378.92 for the solicitors’ success fee and £531,235 for the ATE insurance premium. The appellant applied for a review of costs on two grounds: (i) in relation to the success fee, the CFA was not validly assigned to the firms that replaced the respondent’s original solicitors on the record; and (ii) in relation to both the success fee and the ATE premium, these were not recoverable because they were payable under arrangements made by the respondent after LASPO came into force.
Judgment
The decision reached was 4-1 in favour of the respondent (with all Judges in agreement over the issue of assignment). The only dissent was in relation to whether the top-up element of the ATE premium was recoverable inter parties.
Recoverability of the ATE Premium
The ATE policy was originally concluded on 29 October 2008. It covered legal expenses and liability for the other side’s costs up to and including the “trial period”. It was “topped up” for the appeal to the Court of Appeal and again for the appeal to the Supreme Court. The top-ups did not give rise to fresh contracts and instead were true amendments to the policy which continued in effect subject to the same terms as amended. But on both occasions, the amendment was made after LAPSO came into force. The critical question was therefore whether the two appeals constituted part of the same ‘proceedings’ as the trial.
The disagreement in interpretation arose from the fact that the wording of the transitional provisions relating to LASPO and ATE premiums differs slightly to that of the corresponding provisions relating to success fees. Section 46(3) refers to an insurance policy “in relation to the proceedings” i.e. the requisite link is with the proceedings themselves and not to the subject matter of the proceedings, as Section 44(6) of LASPO refers in the context of success fees.
Lord Hodge interpreted the transitional provisions as protecting only the pre-existing contractual rights in place before LASPO came into force. However, the panel agreed 4 to 1 that the purpose of the transitional provisions of LASPO is to preserve rights and expectations vested under the previous law and that that purpose would be defeated by a rigid distinction between the different stages of the same litigation. They argued that an insured claimant who succeeds at trial and becomes the respondent to an appeal is locked into litigation; if the top-up premium is not recoverable, it would retrospectively alter the balance of risks on the basis of which the litigation was begun. They therefore determined that the difference in language between sections 44(6) and 46(3) are not significant in this regard and that there is no reason why the legislation should have wished to limit the transitional provisions in section 46(3) to a particular stage in litigation, while extending those in sections 44(6) and 47(2) to arrangements relating to the underlying ‘matter’.
For full details of the judgment click https://www.supremecourt.uk/cases/docs/uksc-2014-0037-judgment.pdf