In Green Clean Waste Management Ltd v Leahy (2) the Court of Appeal has accepted that an ‘after the event’ (ATE) insurance policy can in principle provide security for costs in litigation. Despite this affirmation of Judge Hogan’s decision in the preceding High Court case, Judge Kelly of the Court of Appeal found that the specific ATE policy in question did not provide sufficient security for costs arising from the case.
Giving the decision on behalf of the Court of Appeal, Judge Kelly sought to examine the specific contents of the ATE policy rather than returning to the principle underpinning such policies as was elaborated on in the High Court proceedings. Judge Kelly acknowledged that ATE insurance was a phenomenon developed in the UK that had crept into this jurisdiction. As such he relied on Judge Akenhead’s decision in Michael Philips Architects Limited v Riklin (4) in which the content of ATE policies was addressed when deciding applications for security for costs.
Examining the policy in detail Judge Kelly noted that Judge Hogan had only concerned himself with the prospects clause contained in the policy to the detriment of other considerations, including the existence of a ‘no win no fee’ arrangement and associated compliance issues with Section 68 of the Solicitors (Amendment) Act 1994. Judge Kelly raised the additional concern that the policy was “highly conditional and could be avoided for a substantial number of reasons over which the defendant had no control or, in some instances, no knowledge”.
Overturning the decision of Judge Hogan in the High Court, Judge Kelly concluded that the ATE policy relied on by the plaintiff did not provide sufficient security to the defendant to warrant refusal of an order for security for costs. Arriving at this decision, Judge Kelly reiterated his concerns regarding the ‘no win, no fee’ arrangement, compliance with the Solicitors (Amendment) Act, 2004 and the conditionality of the policy:
"Even if such proof [of the no win no fee agreement and its compliance with section 68] had been placed before the court, the policy here is so conditional (even with the 'prospects clause' neutralised) that it does not provide sufficient security to the defendant to warrant refusal of an order for security for costs. The policy is voidable for many reasons which are outside the control, responsibility or, by times, knowledge of the defendant. None of these were taken into account by the trial judge whose sole concern was the 'prospects clause'.”
Click here to read a previous PILA Bulletin Article on the High Court decision.
Click here to read a summary of Judge Kelly’s decision and reasoning, and added commentary by Solicitor Gearóid Carey of Dublin Law Firm Matheson.