The High Court has ruled that after-the-event (ATE) legal expenses insurance held by Greenclean Waste Management Limited is valid and does not amount to maintenance or champerty.
Mr Justice Hogan delivered the judgment on 5 June 2014 after the Supreme Court remitted the legal question to him. The Supreme Court had adjourned the defendant’s appeal on the merits of an earlier security-for-costs decision and directed the High Court to consider whether ATE insurance was illegal or unenforceable as champerty. DAS Legal Expenses Insurance Company Limited was joined as a notice party.
Greenclean is suing Maurice Leahy, practising as Maurice Leahy & Co. Solicitors, for alleged professional negligence concerning advice about a lease of industrial premises in 2001/2002. The company says the premises were in poor condition at the end of the lease and required a total refurbishment because of inadequate maintenance and wear and tear. It alleges the solicitors failed to advise it about its repair obligations, a relevant limitation period and a conflict of interest involving a former principal of the firm. The defendant denies negligence. These allegations were not decided in this judgment.
The judgment records that the lessor brought a separate action in 2006 over an alleged breach of covenant. That case settled for €310,000, with a contribution of about €150,000 towards costs.
The present ruling concerns the status of the insurance policy, not whether the negligence claim succeeds. In an earlier decision, the judge had refused to order security for costs after treating the ATE policy as sufficient security, subject to an undertaking by the insurer not to rely on a particular policy clause. The defendant appealed that decision; the appeal on its merits remains adjourned under the Supreme Court’s order.
The judge considered the policy’s links to a “no win no fee” agreement, its coverage of the insured’s and opponent’s legal expenses in specified circumstances, and its provisions allowing cover to end if prospects were judged more likely than not to fail. He acknowledged concerns about the premium’s size and its payment after a successful outcome or settlement. However, he concluded that the policy also covered some losses and could end before the case was determined, and that ATE insurance could support access to justice. On the policy before him, he found it did not amount to maintenance or champerty and was valid.
The judgment did not decide the professional-negligence allegations or determine the adjourned appeal on the merits of the security-for-costs issue.