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Costs decision in relation to  McGraddie v McGraddie & Anor [2013] UKSC 58.

The defenders were legally aided in the Inner House and in the Supreme Court, but the pursuer was not. The pursuer took out After the Event Insurance against his potential liability for the defenders’ costs; he was subsequently ordered to pay the defenders’ costs. The premium which the pursuer paid for the ATE insurance was £40,000. The pursuer seeks an order that the Legal Aid Board pay his expenses including the £40,000 premium.  Held: the relevant provisions of the Supreme Court Rules and Practice Direction 13, and the Rules of the Court of Session allow expenses which are reasonably incurred. It was clear that the ATE premium was reasonably incurred. In considering whether an ATE premium was an item of expenses recoverable from the other party – in the absence of any express provision permitting it, one would not expect an ATE premium to be recoverable as it is simply not part of the costs of the appeal as a matter of ordinary language. This position is confirmed by both English and Scottish authority. This leads to the conclusion that, in the absence of agreement or a specific statutory sanction (either expressly or through valid delegated legislation) to the contrary, a successful party to litigation cannot recover an ATE premium, however reasonable it was to have incurred it, as part of his costs or expenses of legal proceedings.

For judgment, please download: [2014] UKSC 1
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII