Costs – After-the-event insurance – Premium – Appellant successful in appeal – Order for costs against respondents – Whether recover able costs to include premium paid by appellant for ATE insurance in respect of appeal – ATE premium not awarded
The appellant was successful in an appeal to the Supreme Court against a decision of the Inner House of the Court of Session in proceedings concerning the beneficial ownership of a residential property. The Supreme Court held that the Inner House of the Court of Session had been wrong to overturn the findings of fact made in the appellant’s favour by the Lord Ordinary at first instance, which had been based on his the judge’s assessment of the parties’ credibility as witnesses after hearing them giving evidence: see [2013] UKSC 58.
The respondents had been legally aided on the appeal but the appellant had not; instead, he had taken out after-the-event (ATE) insurance against his potential liability for the respondents’ costs if he were to lose his appeal to the Supreme Court. The appellant sought an order that the Scottish Legal Aid Board pay his costs, pursuant to section 19(1) of the Legal Aid (Scotland) Act 1986, including the premium of £40,000 that he had paid for the ATE insurance, as “expenses incurred… so far as attributable to any part of the proceedings in connection with which another party was a legally assisted person”.
Held: The appellant was awarded his costs with the exception of the ATE premium.
The Scottish Legal Aid Board should be required to pay the appellant’s costs both in the Inner House and in the Supreme Court with the exception of the ATE premium. The relevant court rules allowed the recovery of expenses that were reasonably incurred and the ATE premium was reasonably incurred. However, as a matter of principle, that premium was not properly an item of expenses (in the Scottish terminology) or costs (English equivalent) which was recoverable from the other party. In the absence of any express provision permitting it, the ATE premium was not recoverable since it was simply not part of the expenses or costs of the appeal as a matter or ordinary language. In the absence of agreement or a specific statutory sanction to that effect, imposed either expressly or through valid delegated legislation, a successful party to litigation could not recover an ATE premium, however reasonable it was to have incurred it, as part of his costs or expenses of legal proceedings. The position in that respect was the same both in Scotland and in England and Wales: McNair’s Executrix v Wrights Insulation Co Ltd 2003 SLT 1311, Callery v Gray (No 1) [2001] EWCA Civ 1117; [2001] 1 WLR 2112 and Callery v Gray (No 2) [2001] EWCA CIv 1246; [2001] 1 WLR 2142 (CA); [2002] UKHL 28; [2002] 1 WLR 2000 (HL) applied.
Andrew Smith QC and Jonathan Brown (instructed by McClure Naismith LLP, of Glasgow) appeared for the appellant; Lord Davidson of Glen Clova QC and Eric Robertson (instructed by Balfour & Manson, of Edinburgh) appeared for the first respondent; Richard Keen QC and Stuart Buchanan (instructed by BLM, of Glasgow) appeared for the second respondent.
Sally Dobson, barrister
Click here to read transcript: McGraddie v McGraddie and another
