Clarification on the correct application of qualified one-way costs shifting

This article explores the correct way Defendant’s added to a claim after April 2013 should approach qualified one-way costs shifting (“QOCS”) It explains how QOCS should be applied in respect of an unsuccessful claim for damages for personal injury. In particular, the article reviews the recent Court of Appeal decision in Corstorphine (An Infant) v Liverpool City Council. The Court ruled that costs protection should be applied even to Defendants who were added to the claim after the QOCS regime was introduced.

Introduction- QOCS

By now the qualified one-way costs shifting (“QOCS”) regime, contained within CPR 44.13 to 44.17, is well known to practitioners. In short QOCS came into effect in April 2013 and applies to personal injury claims. The basic principle recommended by Sir Rupert Jackson was that a successful Claimant would recover their costs from a Defendant in the usual way. However, if unsuccessful the Claimant will not be liable for the Defendant’s costs. There are certain exceptions to the QOCS provisions contained within CPR 44.15 and 44.16. Rachel Baker has produced a more detailed article, “Fundamental Dishonesty; Clarity from the Courts”, on this issue. http://becket-chambers.co.uk/2018/03/29/fundamental-dishonesty-clarity-courts/

This article explores the scenario where the Claimant brings an unsuccessful claim for damages for personal injury, which was issued before the QOCS regime, but where the Second and Third Defendants were added after the new rules came into effect in April 2013. In such a situation is the Claimant entitled to the protection afforded to them by QOCS?

Corstorphine (An Infant) v Liverpool City Council [2018] EWCA Civ 270

Factual background

Master Corstorphine suffered serious personal injury whilst playing on an allegedly dangerous tyre swing on 31st August 2010. The swing was located within a playground in Liverpool. The Respondent (and First Defendant) was the occupier of the playground. The Second Defendant was the company who had designed and manufactured the tyre swing. The Respondent purchased the tyre swing from the Third Defendant Blakedown Landscape Operations.

Proceedings were issued against the Respondent in November 2012, prior to the commencement of QOCS. The Claimant was funding the claim under a CFA, which included ATE insurance, to protect against the Respondent’s costs subject to liability. On 21st October 2013, the Respondent issued a Part 20 claim against the Second and Third Defendants. In August 2013 the Court combined the claims to be heard together.

The Appellant was unsuccessful in his claim for damages for personal injury. Following the trial Mr Recorder Edge gave a further written judgment on the issues of costs. He held that there was no reason to depart from the general principle that costs follow the event and that the unsuccessful party should pay the costs of the successful ones. He ordered that:

The Appellant pay the Respondent’s costs of the Primary Claim, including any costs of the other parties which the Respondent had been ordered to pay;
The Appellant pay the Second and Third Defendants’ costs of the Primary Claim;
The Respondent pay the Second and Third Defendants’ costs of the Additional Claim.
Effectively, the judge held that the QOCS regime did not apply to the Appellant as the Defendants had been joined into proceedings post-2013 but the claim was issued before they came into force.

The Appeal

Unsurprisingly, the Appellant appealed Mr Recorder Edge’s decision, which led to the matter being before the Court of Appeal on 26th February 2018. It was argued on behalf of the Appellant that the Judge had erred in his findings, with the result being that the Appellant was not entitled to the benefit afforded by the QOCS regime in respect of their costs. The Appellant had 2 main grounds for appeal:

(1)               The judge erred in finding that the Appellant’s CFA encompassed the claims brought against the Second and Third Defendants, with the result that he was not entitled to the benefit of QOCS in respect of their costs of the Primary Claim (Ground (1));

(2)               The judge erred in the exercise of his discretion in directing that the Respondent was entitled to recover as part of its own claim for costs against the Appellant, those costs it had been ordered to pay the Second and Third Defendants (Ground 2).

Conclusion

Ultimately Lord Justice Hamblen stressed that the overriding principle of QOCS was to protect a Claimant from adverse costs orders. As the Appellant did not have a CFA that applied to the added parties he was afforded no protection.

The appeal was allowed and the costs order was varied to exclude any costs of the second and third Defendants, which the Respondent had been ordered to pay. The appeal was a crucial victory for personal injury Claimants. The win preserves a Claimant’s costs protection and reiterates that QOCS should be applied to parties who were added to a claim even if the claim was issued before the new rules were introduced.