In an important decision in November 2016, the Insurance Appeals
Tribunal (the "IAT") published in the press the text of
its decision in relation to the jurisdiction to award costs in an
appeal from a regulatory decision and appeal to the IAT under the
Insurance Act 1978 (the "Act").
Normally in civil litigation the rule is that costs follow the
event, and the substantial winner is entitled to an award of costs
representing the costs reasonably incurred in the prosecution or
defence of the proceedings. The issue arose after the unsuccessful
appeal of a party who had been sanctioned by the Insurance Tribunal
as to whether the same general rule applied under the statutory
formula , which is worded in a wider and more permissive way,
allowing the IAT the power to award costs as it "thinks
fit" under section 44 D (1) of the Act.
Although it is unsurprising that the different and wider
language attracted a more generous and flexible approach, there is
no general rule that the winner gets his, her or its costs.
It will always be a matter of discretion, and so the point will
be open for argument in every case. On an appeal from a regulatory
decision, this may be important, because the factors which may be
taken into account in deciding the right order in any case will
always be variable. But the strengths of the case made on appeal,
the degree of general application of principle decided, and the
merits of the case will all be factors to weighed. The IAT is
supposed to be more user friendly and industry based, so that the
process is less like a court procedure. Parties should not be
discouraged from taking reasonable points on appeal by the threat
or risk of an adverse costs order.
In the particular case, even though the breach of the
undertaking involved was fairly obvious and straightforward, no
order for costs was made against the unsuccessful appellant.
The same approach might well be taken in relation to regulatory
proceedings in other contexts. For example under section 29 the
Proceeds of Crime ( Supervision and Enforcement ) Act 2008, a
similar provision applies which permits the tribunal to award
costs; however, there is a separate provision which identifies the
factors to be taken into account when exercising that power,
including whether the party has acted unreasonably, frivolously or
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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