The eyes of lawyers, insurers and costs experts will be fixed on the Court of Appeal for a vital ruling on recovery of costs. 

Master of the rolls Sir Terence Etherton, sitting alongside Lord Justice Irwin and Lord Justice Coulson, will hand down judgment in the rolled up appeal for Demouilpied v Stockport NHS Foundation Trust and West v Stockport NHS Foundation Trust. 

In both cases, the claimants appeal the ruling of His Honour Judge Smith from November 2016. The claimants had settled but a district judge reduced the amounts recoverable through after-the-event insurance premiums, and the High Court dismissed their initial appeal.  

The judge ruled there was an evidential burden upon the paying party to advance ‘at least some material’ to establish that a premium is unreasonable. A costs judge was not entitled, therefore, in the absence of such material, to reach a decision ‘instinctively’ that a premium is unreasonable. 

But the judge also made clear that if such material is provided, a costs judge may then adopt a broad brush approach and rely upon their experience in so doings so. A costs judge, it was ruled, is able to intervene without expert evidence if the challenge is to an individually rated premium based upon the underwriter’s assessment of the risk, as he or she is ‘well-equipped’ to do this. 

Nick McDonnell, costs lawyer and director at national firm Kain Knight, who is representing the claimants in the case, said: 'Today’s judgment is expected to provide eagerly awaited clarity on how lower courts should approach the reasonableness and proportionality of block-rated after the event (ATE) insurance premiums and how to apply the ‘new’ (post 1 April 2013) proportionality test generally in claims for costs.’