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As you will no doubt be aware the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) saw the demise of recoverable premiums in After the Event insurance, for the vast majority of case types. Defamation, however, did not suffer the same fate as many other case types. The ATE premium is still entirely recoverable in defamation cases.

It was decided that if recoverability was removed for defamation it would impede claimants of modest means bringing a meritorious claim. Additionally, the damages awarded in defamation cases are generally quite modest. Often claimants aren’t even seeking a monetary award. They are often pursuing an apology or for a publication to retract the incorrect or defamatory statement. The non-monetary nature of defamation claims also makes them ineligible for third party funding. This means ATE insurance will be relied on to limit the client’s exposure to further risk.

Due to the premium being recoverable, proportionality is not an issue in defamation as it is with other case types. Therefore, if your costs to damages ratio exceeds 1 to 2 it does not spell the end for your ATE search. The reason being that the cost of the premium is recovered from the other side. Unlike in other claims where premiums are fully deferred and contingent and not recoverable from the other side the premium must be sourced purely from the quantum.

Some further guidance on how ATE premiums are deemed as costs under CPR 44.1(1) emerged recently in BNM v MGN. In this case the appeal court rejected MGN’s argument that ATE insurance premiums were ‘expenses’ rather than ‘costs’ under the definition of costs in the new CPR 44.1(1). Thus, ensuring the recoverability of ATE premiums remained in force for such cases.

It must be stated that despite the recoverability for the premium the court will still apply a test of reasonableness to the costs. Kelly v Black Horse Ltd covered this point. It was held that such premiums must relate to the costs exposure they purport to cover.

Defamation cases form part of our workload here at TheJudge. If you have a defamation case and would like to talk about how After the Event insurance may be utilised please get in touch.