Hurst rebuffs ATE attack

Consumer credit challenge: no normal insurance business practice yet in ATE market

The challenge to after-the-event (ATE) insurance based on the Consumer Credit Act 1974 has failed, with the senior costs judge saying the market is too new to lay down the law on how it should interact with the credit industry.The issue arose in Tilby v Perfect Pizza, which began in 2000 when Karen Tilby suffered whiplash in a road accident.

She entered into a conditional fee agreement with Manchester-based Amelans, taking out an ATE policy with Temple Legal Protection, with the premium due when the case ended.London firm Rollingsons, acting for the defendant insurer, argued that credit was created because it was normal to pay premiums at the beginning of a case.The firm relied on an earlier decision in Dimond v Lovell - where payment for car rental was deferred past the hire period - adding that because the agreement was not in line with the Consumer Credit Act, it was unenforcable without a court order.However, Judge Hurst ruled that a credit situation would only have been obvious if payment was deferred 'beyond the conclusion of the case for a significant period'.

Although before-the-event insurance had set procedures, he said: 'I am not not persuaded that there is, as yet, any normal insurance business practice which requires the after-the-event insurance premium to be paid at the inception of the policy.

In my view, this area of insurance is still in its infancy, and the practice and procedure is developing.' Peter Bancroft, senior litigation solicitor at Amelans, said: 'The ATE market can now breath a sigh of relief as the senior costs judge has approved the type of policy which the government anticipated when finalising the Access to Justice Act 1999.'Darren Mendel, the legal executive at Rollingsons handling the case, said: 'I don't think the decision will have an impact on other cases.

Each one is judged on its merit, as was this case, because the circumstances are specific to this policy'.See Editorial