Litigation Funding – After The Event Insurance

A recent Supreme Court case has considered whether insurance premiums in respect of cover taken out to protect against the liability for expenses in a court action can be recovered as an expense of litigation.

The Facts

The case related to an unfortunate family dispute.  The pursuer provided funds to his son to purchase a property.  The son proceeded to purchase the property and take title in his own name, claiming the funds were a gift.  The father, whom the court sided with, advanced the funds to buy a house for him and claimed that title should be transferred into his name.

The potential cost of the Supreme Court case was significant.  As a result, the father took out After the Event (ATE) insurance providing cover of up to £100,000 if he lost and was found liable for his son's legal expenses.  The cost of this cover was significant in its own right at £40,000.