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'...