ATE not consumer credit agreement, court rules

An after the event (ATE) policy is not a consumer credit agreement, the High Court has ruled.

Karen Jennifer Tilby had sought damages following a car accident involving a Perfect Pizza employee.

Tilby had a conditional fee arrangement with her solicitors Amelans, which took out a Temple Legal Protection ATE policy. This is a policy where the premium is not paid until the conclusion of the case.

Perfect Pizza settled with Tilby for £2,000 and agreed to pay her reasonable costs, which she claimed were £6,160, including the sum of the insurance premium.

Perfect Pizza argued that to allow payment of the premium at the conclusion of the case was to provide Tilby with credit and so was subject to the Consumer Credit Act [1974].

It argued that, since the credit agreement had not been properly executed, it was unenforceable.

However, Tilby argued that the policy was akin to a no-win no-fee agreement, not a credit agreement.

Judge Hirst found that the policy was not a consumer credit agreement because there was no significant deferment of payment. Perfect Pizza did not appeal.

Amelans partner Andrew Twambley said the firm was ecstatic over the win.

"This returns people to the place they were in, were legal aid not taken away," he said.