Qualified One-way Costs Shifting (QOCS) was introduced in April 2013 as part of Jackson reforms and is designed to protect an unsuccessful personal injury claimant from the risk of paying adverse costs. It should not operate if the claimant had a funding arrangement in place before April 2013 and it does not apply if the claim is not one for damages for personal injury. In Wagenaar v Weekend Travel in 2015 the Court of Appeal clarified that the protection afforded by QOCS was not applicable as between the main defendant and a part 20 defendant, even though the underlying accident involved personal injury. The decision on 26 February 2018 in Corstorphine v Liverpool City Council is an important re-examination of this area.
Jacob Corstorphine was seriously injured on a tyre swing in a Liverpool park in 2010. He made a claim against the council which was funded by a conditional fee agreement entered into in 2012 and proceedings were issued against Liverpool in 2012. In October 2013, Liverpool issued part 20 proceedings against others (including the manufacturer of the swing). This additional claim was subsequently joined to the primary claim.
At trial in 2015, the claimant failed on liability and the primary claim was dismissed along with the additional claim. A further judgment on costs was given in February 2016. The judge ordered that the claimant to pay the defendant’s costs in the primary claim and those of the others defendants in the additional claim. He reasoned that because there was a pre-commencement funding arrangement in place – the 2012 CFA applying to the claim against Liverpool – QOCS could not therefore apply to the additional claim.
The claimant appealed and the judge’s decision was overturned by the Court of Appeal. He argued that the 2012 CFA related only to the claim against Liverpool. His subsequent additional claim was funded only after the commencement of the QOCS regime and it should therefore benefit from its protection. Hamblen LJ pointed out that the Court was “…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.”
The wording of the transitional provisions of the CPR should be interpreted narrowly. The relevant part of CPR 48.2 defines a pre-commencement CFA as one “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”. The “matter” which the 2012 CFA concerned was only the claim against Liverpool. It could not be interpreted to include the part 20 additional claims against the other defendants.
This decision is not at odds with Landau v Big Bus Company as that case turned on a slightly different point. The question in Landau was whether the pre-commencement funding arrangement which prevented the application of QOCS should mean that it (QOCS) would not apply to an appeal begun after commencement but in the same claim? Landau decided that QOCS could not apply to the appeal because the appeal and the first instance decision could be regarded as the same “proceedings” for the purposes of CPR 48.2.
The effect of Corstorphine is probably two-fold. First, it appears to demonstrate something of a purposive approach to the rules on QOCS so as to ensure a wide application. Hamblen LJ said that “The consequence of concluding that the QOCS regime applies to the claims against the Second and Third Defendants is that the Appellant is entitled to QOCS protection in respect of adverse costs orders in respect of those claims. The effect of the judge’s order is effectively to deprive them of that protection.”
Second is that defendants might be well-advised to review at what stage additional / part 20 claims were added to any unresolved pre-Jackson claims – ongoing cases involving minors may be the obvious ones – in order to understand if their costs exposure has changed because of this decision.