Masthead Local Govt - Litigation

QOCS and Part 20 defendants

Cutbacks iStock 000013353612XSmall 146x219The Court of Appeal recently considered the application of the Qualified One Way Shifting Regime (QOCS) to a case involving a local authority and Part 20 Defendants added to the proceedings. Esther Pounder reports.

In Jacob Corstorphine (A Child by his Mother & Litigation Friend Laura Ellis) v. Liverpool City Council [2018] EWCA Civ 270 the claimant/appellant, a child, was injured on a tyre swing in a playground for which the respondent local authority was responsible. In August 2012 he entered into a conditional fee agreement (CFA) (a pre-commencement funding agreement: PCFA) with solicitors to cover his intended personal injury claim against the local authority, and an after the event (ATE) insurance policy providing cover against any order for him to pay the local authority's costs.

The claim was issued in November 2012 and on 1st April 2013 the QOCS regime came into effect.

In October 2013, the local authority issued a Part 20 claim against two further parties: the company that had designed and manufactured the tyre swing, and the company from which the swing had been purchased.

Those Part 20 defendants were joined to the primary claim as second and third defendants. The primary and additional claims were tried together.

The case came before Recorder Edge at first instance who dismissed both claims. He ruled that, as costs follow the event, the claimant/appellant should pay the costs of the successful parties. He held that QOCS did not apply and ordered the claimant/appellant to pay the defendant/respondent’s costs of the primary claim, including any costs of the other parties which the council had been ordered to pay, along with the second and third defendants’ costs of the additional claim given that it was so closely connected with the primary claim. This meant that the claimant/appellant faced a bill of more than £200,000 for both first, second and third defendants’ costs for the primary claim.

The Grounds of Appeal

The claimant/appellant appealed the costs order; on two grounds:

(1) The judge erred in finding that the claimant/appellant’s PCFA encompassed the claims brought against the second and third defendants, with the result that he was not entitled to the benefit of QOCS in respect of their costs of the primary claim (Ground (1));

(2) The judge erred in the exercise of his discretion in directing that the first defendant/respondent was entitled to recover as part of its own claim for costs against the claimant/appellant, those costs it had been ordered to pay the second and third defendants (Ground 2).

The Court of Appeal

Under the transitional provisions of LASPO, QOCS does not apply where the claimant has entered into a PCFA. The essential issue for the Court arising from Ground 1 therefore was the interpretation of CPR 48.2(1)(a)(i)(aa), which says such an agreement must have been entered into before 1 April 2013 “specifically for the purposes of the provision to the person by whom the success fee is payable of advocacy or litigation services in relation to the matter that is the subject of the proceedings in which the costs order is to be made” [my emphasis]

The appellant argued that the “matter” the PCFA concerned was the claim against the respondent, but not the other defendants as they only became involved after QOCS came into effect. The respondent contended however that it meant the “underlying dispute” which was the claim for damages for personal injury and included both the primary and the additional claims. The claimant’s PCFA was entered into in relation to that “matter” and therefore the QOCS was not applicable and the claimant did not have the benefit of this regime in relation to the additional claims.

Lord Justice Hamblen, giving the ruling of the court, agreed with the appellant, noting the comments on Lord Sumption in Plevin v Paragon Personal Finance Ltd that the purpose of the transitional provisions was to preserve vested rights and expectations.

Hamblen LJ said: “As has been explained, the purpose of the QOCS regime is to protect personal injury claimants from adverse costs orders. Originally that protection was provided by legal aid. Later it was provided by the complicated regime of CFAs and ATE policies. Now it is provided by the QOCS regime.

In the present case, we are concerned with proceedings involving additional parties which were commenced after the QOCS regime came into effect. There is no CFA or ATE policy which applies to the claims against those parties. Unless the QOCS regime applies, the Appellant will have no protection against adverse costs orders in respect of such claims. Although it is suggested that a further or amended CFA and ATE policy could have been entered into, that assumes that it would have been lawful so to do after 1 April 2013. Even if it was, the Appellant might legitimately have taken the view that there was no need to do so once the QOCS regime applied.

At the time of the inception of QOCS, the appellant had no vested rights or expectations in respect of claims against the second or third defendants. Its sole rights and expectations concerned the claim against the respondent, which alone was the subject matter of the PCFAs.

At the time of the PCFAs, the ‘underlying dispute’ was the claim against the respondent, which was the only existing claim at that time. Similarly, it alone was the subject of the retainer…”

It was found therefore that the judge at first instance should have concluded that the QOCS regime applied to the claims made against the second and third defendants. That would have been a highly material factor to be taken into account in determining whether the appellant should be liable to pay to the respondent the costs it had to pay the second and third defendants. Recorder Edge’s order had made the appellant “indirectly liable for costs which could not be enforced against him directly”.

Hamblen LJ also cited Wagenaar v Weekend Travel Ltd [2015] 1 WLR 1968 in which it was held that where the QOCS regime applied to the main claim but not to the third party proceedings, a successful defendant would not be able to enforce its costs order against the claimant and so the costs of the third party proceedings would lie where they fell.  He observed that “it would be surprising if a different result was to follow in a case such as the present where, although the QOCS regime does not apply to the claim against the defendant, it does apply to the claim against the additional parties”.

Comment

This is an important decision which helps to further clarify the position on QOCS. Claimants can now be confident that they will receive QOCS protection where parties have been added to proceedings after 1 April 2013.

Esther Pounder is a barrister at 9 Gough Square. She can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..

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