Insurers, Subrogation And Costs - Does Recoverability Come Down To Bookkeeping?
Cuthbert v Gair [2008] EWHC 90114
Introduction
Where a party's rights are subrogated to an insurer who
subsequently instructs a solicitor, a legal fiction exists to
ensure that the solicitor's costs are recoverable as costs of
the insured.
In the recent case of Cuthbert v. Gair [2008] EWHC
90114, the courts were required to consider what costs were
recoverable by an insurer who, having exercised a right of
subrogation, had incurred costs by directly outsourcing work which
it would normally have done itself and which could have been done
by a solicitor.
In this article, we consider the details of the case and the
impact that the decision may have.
Background
The original dispute began as a claim for damages for personal
injuries which the Appellant, Ms Cuthbert, had suffered at an
equestrian event at the premises of the Respondents, Mr and Mrs
Gair.
The Respondents reported the events to their insurers, SLE
Worldwide. The insurers engaged a firm of loss adjusters,
Questgates Ltd ("Questgates"), to investigate the case.
The insurers subsequently instructed a firm of solicitors.
Ms Cuthbert ultimately decided to discontinue the claim, at
which point the Respondents requested a detailed assessment of
their costs.
The Respondents claimed, amongst other costs, reimbursement for
the works performed by Questgates on the basis that it was a
"disbursement" and recoverable under statute. In support
of its claim the Respondents had submitted two invoices from
Questgates. The first invoice concerned works undertaken before the
solicitor was instructed. The second invoice concerned works
undertaken before and after the solicitor was instructed.
The Appellant argued that Questgates' costs were not
recoverable.
The Respondents replied stating that the invoices payable to
Questgates were costs "of and incidental to" the
proceedings and were therefore recoverable under statute.
A costs order was made in favour of the Respondents for
£1,850 + VAT in respect of the fees payable to Questgates.
The Appellant appealed against this order and it is this appeal to
which this article relates.
The Appeal
The Appellant claimed that Questgates' costs were not
recoverable. The basis of the Appellant's claim was as
follows:
that a person who acts without a solicitor cannot, as a matter
of law, recover fees payable to third parties for work which a
solicitor could have done if instructed; and
that the claim was for the Respondents' insurers' costs
not the Respondents'...
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