The Court of Appeal has held that as the protection of the qualified one-way costs shifting ("QOCS") regime under CPR Part 44 was available to a claimant within the main action, then the protection extended to their unsuccessful appeal.

With reference to CPR 44.13, the QOCS regime applies to proceedings which include a claim for damages for personal injury. 'Proceedings' was held to include both first instance proceedings and any subsequent appeal.

The Court of Appeal also found that the fixed costs regime under CPR Parts 45.17 to 45.19 did not apply to appeals and that the appropriate rules applying to the costs of an appeal were set out in CPR Part 52.19.

Background

The Respondent brought a claim against the Appellant under the Pre-Action Protocol for Low Value Personal Injury (Employers' Liability and Public Liability) Claims ("the Protocol") after an accident at work. Liability was admitted. However, the parties failed to agree damages, resulting in the Respondent issuing a claim under Stage 3. The Respondent was awarded £2,000 in damages and £1,080 in costs.

The Respondent appealed, submitting that the district judge had erred in allowing the claim to continue under the Protocol after the Respondent had served additional evidence. A circuit judge set aside the district judge's order on appeal, holding that proceedings under the Protocol should have been dismissed leaving the Respondent to start fresh proceedings under CPR Part 7.

The Appellant appealed to the Court of Appeal, which held that the circuit judge had been wrong and reinstated the order of the district judge.

Appeal

The Appellant applied for an order that the Respondent pay the costs of this appeal and of the hearing before the district judge. It was agreed by the parties that the Respondent should pay costs, but there was no agreement as to the appropriate regime, or whether any order for costs could be enforced.

The Court of Appeal was asked to determine:

  • whether fixed costs applied to the costs of the appeal, and if not, how those costs should be calculated; and

  • whether QOCS applied to the costs of the appeal.

The Respondent submitted that the claim had proceeded under the Protocol and therefore fixed costs applied under Section III of Part 45. Departing from the fixed costs regime would undermine certainty and encourage satellite litigation. The Respondent also submitted that if the Court held that CPR 52.19 applied, then costs should still be restricted to fixed costs. The Respondent was of limited means, the appeal costs were disproportionate compared to the claim value and employing fixed costs would facilitate access to justice.

The Appellant submitted that the fixed costs regime under Section III of Part 45 does not cover appeal costs as they are entirely separate and are dealt with under CPR Part 52. In addition, when the respondent had been successful before the circuit judge, he had applied for and been awarded (non-fixed) costs. The Respondent did not suggest at this point that fixed costs applied.

Regarding QOCS, the Respondent argued that he was protected by QOCS, and so the Appellant could not recover costs in excess of the £2,000 damages awarded.

The Appellant's case was that QOCS did not apply because the appeal was separate and distinct from the trial process.

Outcome

The Court of Appeal found as follows:

  • The fixed costs regime did not apply to appeals and that the rules governing appeals are set out in CPR 52. CPR 52.19(1) gives an appeal court a specific discretion to make an order limiting the recoverable costs of the appeal in "any proceedings in which costs recovery is normally limited or excluded at first instance". In this case the proceedings at first instance were under the protocol and thereby limited to fixed costs, as such CPR 52 applied.

    Handing down the leading judgment, Lord Justice Baker did not believe that this was a case where the court should exercise its discretion. The Respondent's appeal was described as "wholly unmeritorious" leading to the Appellant to "incur unnecessary additional costs". The "inequality in the parties' financial circumstances" and the "wider principles of access to justice" were not relevant and it was held that the Appellant was entitled to its costs of both appeals.

  • Nonetheless, the QOCS regime applied to the costs orders relating to the appeals. CPR 44.13 states the qualified one-way costs shifting regime applies to proceedings which include a claim for damages for personal injury. The word "proceedings" was to be interpreted to include both the first instance proceedings and any subsequent appeal.

    Therefore, the costs orders against the Respondent would not be enforceable by the Appellant.