Corstorphine v Liverpool City Council [2018] EWCA Civ 270

The facts

The claimant appealed against the decision that qualified one-way costs shifting (QOCS) did not apply to their personal injury claim. The claimant pursued a claim against the defendant due to suffering injury as a result of an allegedly dangerous tyre swing in a playground. The defendant was the local authority responsible for the playground.

In August 2012, prior to the QOCS regime coming into effect, the claimant entered into a conditional fee agreement (CFA) with their solicitors along with an after the event (ATE) insurance policy.

The claimant brought proceedings against the defendant in November 2012 and the defendant brought a Part 20 claim against the company that had designed and manufactured the tyre swing and the company that they had purchased the swing from. The two Part 20 defendants were then joined to the primary claim as second and third defendants and all claims were heard together.

At first instance

The judge dismissed both claims and held that QOCS did not apply between the claimant and the first defendant because there was a pre-commencement funding agreement (PCFA) within the meaning of CPR, r. 48.2. It was stated that the PCFA also encompassed the claims against the second and third defendants because it related to “the matter that is the subject of the proceedings in which the costs order is to be made.”

As a result, the claimant was ordered to pay the costs of the first, second and third defendants in respect of the primary claim. It was held that the second and third defendants’ costs of the additional claim should be paid by the first defendant who could then add them to their costs of the primary claim because the claims were based on interconnected facts and issues.

Court of Appeal decision

The Court of Appeal noted that proceedings against the second and third defendants were commenced after the QOCS regime had come into effect. As a result, there was no CFA or ATE policy that applied to the claims against them which meant that if QOCS did not apply, the claimant would have no costs protection in respect of these claims.

The Court of Appeal held that the words “in relation to the matter that is the subject of the proceedings” under CPR, r. 48.2(1)(a)(ii) meant the underlying dispute. It was stated that at the time of the inception of QOCS the claimant had no vested rights or expectations in respect of any claims against the second or third defendants. At this stage, the only claim and underlying dispute was against the first defendant and this alone was the subject matter of the PCFA and retainer between the claimant and their solicitors.

As a result, the Court of Appeal stated that the matter which was the subject of the proceedings was the claim for damage against the first defendant. It was held that the judge should have concluded that QOCS applied to the claims made against the second and third defendants. The claimant was not liable to pay the second and third defendants’ costs of successfully defending the claim. Also, the second and third defendants’ costs of the additional claim were not to be added to the first defendant’s costs.

What this means for you

In this case, QOCS applied to the claims against the second and third defendants but did not apply to the claim against the first defendant because there was a PCFA in respect of this claim.

The Court of Appeal took a common sense approach as the claimant was under a CFA and had ATE insurance in respect of the action against the first defendant but did not have the same arrangement in place in respect of the claims against the second and third defendants.

The Court of Appeal carefully construed the meaning to be given to “in relation to the matter that is the subject of the proceedings” under CPR, r. 48.2(1)(a)(ii). It can be seen that at the time when the CFA and ATE was entered, the claimant was only pursuing the first defendant and therefore the underlying dispute was only between them and the first defendant. At the time when the second and third defendants became part of the dispute, the QOCS regime was in place.

The purpose of QOCS is to protect personal injury claimants from adverse costs orders. Only in certain circumstances will QOCS be disapplied, such as in cases of fundamental dishonesty or where the claim has been struck out.

It is important to check the date when the accident occurred as the QOCS regime applies to all claims where the accident occurred on or after 1 April 2013. It should be noted that claimants can still seek non-fixed costs in fast track matters for accidents that occurred before 31 July 2013 but will not be entitled to recover any additional liabilities (success fee and ATE insurance premium).