The Divisional Court (Elias LJ and Cranston J) has rejected a challenge by two claimant lawyer associations (APIL and MASS), supported by the Law Society, to the Government’s decision to cut the standard costs recoverable in personal injury claims arising out of road traffic accidents.  The case affects over half a million claims each year.  It was listed for an urgent hearing on 1 March and judgment was handed down that afternoon after full argument.

Charles Béar QC and James McClelland (instructed by DAC Beachcroft) appeared successfully for the Association of British Insurers which intervened to resist the challenge.

The Government’s decision to cut costs was challenged on the basis that it had been reached at a Downing Street “summit” in 2012 to which the insurance industry only were invited.  In a significant judgment which examined the boundaries between national policymaking and judicial review, the Court rejected the claim that this was unlawful one-sided consultation.

The Court also accepted the arguments advanced by the ABI in particular that the challenge was out of time and that any remedy would be pointless given the extensive consultation on the detail of the cuts which had occurred since the Downing Street summit.

The Court’s decision paves the way for reforms which, it is estimated, will remove £1 million per day of costs from the motor insurance system.