In order to fall within the current Legal Aid, Sentencing and Punishment of Offenders Act (‘LASPOA’) rules, is it necessary to not only commence the After the Event (‘ATE’) insurance policy prior to 1st April 2013 (or the date which is ultimately decided for implementation of LASPOA) but also for proceedings to have actually started? The question arises because of the precise wording of s.46(3) of LASPOA:

46: Recovery of insurance premiums by way of costs

(1) In the Courts and Legal Services Act 1990, after section 58B insert –

“58C Recovery of insurance premiums by way of costs:

(1) A costs order made in favour of a party to proceedings who has taken out a costs insurance policy may not include provision for requiring the payment of an amount in respect of all or part of the premium of the policy…

(2) …

(3) The amendments made by this section do not apply in relation to a costs order made in favour of a party to proceedings who took out a costs insurance policy in relation to the proceedings before the day on which this section comes into force.

This setion refers to proceedings at two points so does that suggest proceedings must have commenced in order to recover the ATE insurance premium?

I take the view (and the vast majority of people I speak to form the same view) that the intention of Parliament is for recoverability to remain in place for parties who take out the insurance in relation to contemplated proceedings as well as commenced proceedings. The alternative interpretation of the reference to proceedings, requiring proceedings to have been issued or even served prior to the deadline in April, would create manifest unfairness.

Moreover, I am comforted by s.46(1) (5) of LASPOA which, in my view, clarifies the position by defining ‘proceedings’ as including ‘whether commenced or contemplated’.

However, unless clarity is provided by the Government, liability insurers will no doubt be keen to exploit any ambiguity after the deadline for implementation. Surely for the small amount of time and energy it would take to clearly state the position, it is worth the Government doing so to prevent the inevitable costs war which will follow.

Of course, if they do say that recoverability is limited to cases that have issued proceedings in time (which I sincerely hope they don’t), there will be a massive surge of claims being issued. Moreover, if such an announcement is made and solicitors don’t issue proceedings (choosing instead to conduct the litigation at a traditional pace rather than rush to Court), could they be criticised by their clients for failing to act in their best interests?

Liability insurers may relish the idea of the alternative interpretation but cases that have been issued attract higher premiums so defendants may end up paying more ATE premium in aggregate anyway.

The simple answer must be for the Government to announce clearly that all claimants contemplating litigation can purchase recoverable ATE insurance premiums until enactment. I accept this could lead to a tail of recoverable premiums that may last until 2017 but the alternative would produce too much injustice and too many unnecessary consequences.

Liability insurers won the war over Jackson, let us clear the battlefield in peace and move on.