Solicitors’ PI and ATE Insurance: a cautionary tale

A recent decision in the Commercial Court is the latest chapter in the fallout from the “miners’ claims” concerning wrongful deductions made from compensation awarded to them. The Judgment sheds light on several issues that may arise when an ATE backed claim does not go according to plan. The case concerned a failed application for a Group Litigation Order to facilitate claims being made by a group of miners against a trade union, its claims handling company, and various firms of solicitors who had allegedly made wrongful deductions from compensation received by the miners under British Coal Compensation Schemes. When a substantial costs order was made against the miners following the failed application, their ATE Insurer, Templeton Insurance Ltd, purported to avoid the policy and refused to indemnify the miners. The GLO application was the subject of savage criticism by the Judge, Sir Michael Turner, and wasted costs applications were pursued against GWM, solicitors for the miners. GWM had given the miners a guarantee, assuring them that they would incur “no fee, no risk, no cost.” Accordingly, in the absence of any indemnity advanced by Templeton, GWM was “on the hook” and was obliged, through their PI insurer, QBE, to settle the costs claims made by the Respondents to the GLO application.

This subsequent Commercial Court case saw QBE successfully bring a subrogated claim, in the name of GWM, against Templeton who was held liable, both under the Civil Liability (Contribution) Act 1978 and in restitution, to pay to GWM the full amount that the miners were entitled to under the ATE policy, up to the £1 million policy limit.

The Judgment contains some important lessons and implications for both ATE insurers and solicitors.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com