The Court of Appeal has held qualified one-way costs shifting ("QOCS") applies to parties who are added to existing proceedings after 1 April 2013.

In Corstorphine (by his Litigation Friend) v Liverpool City Council [2018] EWCA Civ 270 the Claimant had suffered an injury on a tyre swing and issued proceedings against the Respondent ("the primary claim") in November 2012 funded by a Conditional Fee Agreement ("CFA") and After the Event Insurance Policy ("ATE"). In October 2013 the Respondent issued a Part 20 claim against the Second and Third Defendant ("the additional claim").

Under transitional provisions, the QOCS regime does not apply where the claimant has entered into a pre-commencement funding arrangement ("PCFA") prior to 1 April 2013.

At first instance the court dismissed the primary claim and the additional claim and disapplied the QOCS regime against the Second and Third Defendant. The Appellant was ordered to pay the costs of the Second and Third Defendant in addition to the costs for the Respondent.

The Appellant was refused permission to appeal on liability but was granted permission to challenge the costs order. The Appellant argued the PCFA encompassed the claim against the Respondent and not the Second and Third Defendant, on that basis the QOCS regime applied to the additional claim.

The Court of Appeal ruled in favour of the Appellant and held:

  1. The purpose of the QOCS regime is to protect claimants in personal injury claims from adverse costs orders;
  2. The CFA and ATE policy did not apply to the Second and Third Defendant;
  3. The Second and Third Defendant were not in contemplation when the Appellant sought and agreed to the CFA and ATE policy. They were later added into the proceedings by the Respondent;
  4. At the time the CFA and ATE policy were agreed the "underlying dispute" for the purposes of CPR 48.2(1)(a)(i)(aa) was the primary claim between the Appellant and the Respondent.

The judgment clarifies an important issue where the claimant has QOCS protection against some of the defendants but not others. Insurers brought into existing proceedings after 1 April 2013 will be subject to the QOCS regime.

The full judgment can be read here.