Application of QOCS in third party claims

It is almost five years since the Jackson Reforms and the introduction of qualified one-way costs shifting (QOCS) in CPR 44.13 – 44.17, but the issues surrounding the applicability of QOCS still persist.

QOCS was implemented to protect claimants in injury claims against adverse costs after the end of recoverability of premiums for insuring against this risk from defendants in successful cases. If claimants are ordered to pay the defendant’s costs, their liability cannot exceed their damages and therefore losing claimants, save in exceptional circumstances, are not required to pay anything towards the successful defendant’s costs.

That is straightforward in cases that are undertaken on conditional fee agreements (CFAs) post April 2013. It is not so clear in cases which are undertaken on pre-April 2013 CFAs but additional claims are then brought by way of Part 20 proceedings post April 2013.

The Court of Appeal in the recent case of Corstorphine (an infant who proceeds by his mother and ligation friend Ellis) v Liverpool City Council had to determine whether the claimant who brought an injury claim under a pre-April 2013 CFA with an insurance policy, but lost was liable to pay the substantial costs incurred by the second and third defendants in the additional claim which the first defendant was ordered to pay.

The claimant had brought the claim initially against the first defendant, Liverpool City Council and the CFA terms contained reference to the “matter” which was the personal injury claim. Subsequently, the first defendant brought a Part 20 claim against the second and third defendants, who were respectively the manufacturers and sellers of the defective tyre swing which was the subject of the proceedings. Later the claimant joined the second and third defendants as parties to the main action. These claims were all commenced post April 2013. Both cases were ordered to be tried together.

The main case brought by claimant was dismissed and, in consequence, the Part 20 claim brought by the first defendant against the others was also dismissed. The judge held that there was no reason to depart from the general principle that costs follow the event and that the unsuccessful party (the claimant) should pay the other parties’ costs, including those which the first defendant had been ordered to pay to the second and third defendants.

This was appealed on the grounds that the judge erred in finding the pre-Jackson CFA also covered the claims against the second and third defendants in the main action, though the claimant later agreed to pay their costs. The claimant also argued that the judge had erred in exercising his discretion in directing that the first defendant was entitled to recover as part of its own claim for costs from the claimant the costs which it had been ordered to pay the second and third defendants in respect of the part 20 claim.

It was contended by the claimant that the “matter” referred to in the CFA was the claim being brought against the first defendant and not the additional claims against the second and third defendants. The first defendant argued the “matter” meant the “underlying dispute” which was the personal injury claim and included the primary and additional claims and the pre-Jackson CFA covered all claims. This therefore meant QOCS did not apply.

It was held on appeal that proceedings involving additional parties were commenced post the introduction of the Jackson reforms on 1 April 2013 and after the QOCS regime came into effect. There was no CFA or ATE that applied to the additional claims and therefore the claimant was not liable to meet the defendants’ costs in respect of the additional claims.

The court made a point referring to the case of Wagenaar v Weekend Travel Ltd, that if QOCS had applied to the main proceedings in this matter then the claimant would not have been ordered to pay the costs ordered against the defendant in respect of third party proceedings. It would be surprising if a different rule was to be applied in the present case.

Claimants are therefore protected by QOCS in respect of third party claims as well in the post Jackson era.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*