Insurers who made direct offers to claimants without paying costs to their solicitors have been accused of deliberately undermining the system. North west firm Gavin Edmondson Solicitors told the Supreme Court that Haven Insurance had ‘taken advantage’ of its work to prepare cases for six individuals who then settled their claim.

The insurer yesterday told the court it had not ‘cheated’ solicitors out of money they were entitled to and that clients had been pleased with the speedy resolution of their claims.

The law firm said the pre-action protocol for low-value RTA claims had been established to serve the public interest and the rules created after lengthy discussions between insurance and lawyer representatives.

The court heard testimony from one the draftsmen who created those rules, who described Haven’s conduct as ‘astonishing’.

Representing Edmondson, Jonathan Crow QC of 4 Stone Buildings, said it was the stated aim of the protocol that the insurer pays fixed costs at pre-determined stages. ‘Quite deliberately the insurer has avoided the quid pro quo of using the protocol,’ he told the court. ‘Haven has acknowledged the claim, got to know the name, contact details and nature of the injury and been given a good estimate of the offer – all by the information provided by the efforts of Gavin Edmondson Solicitors which have been lodged into the protocol.

‘The insurers have essentially delivered the benefits of the protocol regime but saved themselves paying the costs.’

Crow said the ‘integrity’ of the claims regime was at stake and the court had to ensure that solicitors could continue to offer their services to people who would otherwise struggle without legal advice. Haven had initially apologised to Edmondson saying its conduct had been a ‘lapse’ of normal standards, Crow said. But he added: ‘There was deliberate deception. It emerged at trial that, far from being a lapse, this was actually a policy of the insurer and they were encouraging their staff to make these approaches. They had an active policy of subverting the protocol.‘

The court also heard that other insurers were likely to have repeated Haven’s direct settlements and the case could potentially see other claimant firms seek costs they had missed out on.

Crow told the court Edmondson was entitled to equitable intervention – where judges grant a remedy to provide a party with extra relief – and that equity was not ‘motionless’ in face of a changing legal landscape. ‘Equity jurisdiction is flexible and adaptable,’ he added. ‘[Haven] asks you to find equity is frozen in time and cannot and should not adapt to the new world of litigation funding.

‘There is absolutely no reason why equity should be frozen in 1779 or any of the other landmark cases [Haven brings up]. It is your responsibility to ensure the oxygen of equity continues to feed the blood so the body remains healthy.’

Gavin Edmondson claims against Haven for around £12,500 in fixed costs which it might have recovered had the claims been settled in accordance with the protocol. Its claim was dismissed at first instance, but the Court of Appeal allowed the firm’s appeal based on equitable interference. The hearing continues.