Jacob Corstorphine (an infant who proceeds by his mother and litigation friend Laura Ellis) v Liverpool City Council
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos,Lord Justice Hamblen |
| Judgment Date | 26 February 2018 |
| Neutral Citation | [2018] EWCA Civ 270 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2016/0851 |
| Date | 26 February 2018 |
[2018] EWCA Civ 270
Sir Geoffrey Vos, CHANCELLOR OF THE HIGH COURT
and
Lord Justice Hamblen
Case No: A2/2016/0851
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LIVERPOOL CIVIL AND FAMILY COURT
RECORDER EDGE
Claim No. 2YN19822
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Hogan (instructed by EAD Solicitors) for the Appellant
Tim Kenward (instructed by Legal Services, Liverpool City Council) for the Respondent
Hearing date: 13 February 2018
Judgment Approved
Introduction
This appeal concerns the application of the qualified one-way costs shifting (“QOCS”) regime in CPR 44.13 to 44.17 in respect of an unsuccessful claim by the Appellant for damages for personal injury.
The Appellant Claimant contends that the judge was wrong to conclude that the QOCS regime does not apply to the claim brought by the Appellant against the Second and Third Defendants, who were joined to the proceedings following a Part 20 claim being brought against them by the Respondent First Defendant. In consequence, it is said that he wrongly ordered the Appellant to pay the costs of the Second and Third Defendant which the Respondent had been ordered to pay.
Factual background
On 31 August 2010 the Appellant suffered serious personal injury on an allegedly dangerous tyre swing located within a playground, at Calderstones Park in the City of Liverpool (“the Incident”). The Respondent was the occupier of the playground and owed a duty of care at law and under section 2 of the Occupiers Liability Act 1957. The tyre swing had been designed and manufactured by a company named FHS Holztechnik, the Second Defendant, and purchased by the Respondent from Blakedown Landscape Operations, the Third Defendant.
Procedural Background
On 23 August 2012, the Appellant by his Litigation Friend entered into a Conditional Fee Agreement (“CFA”) with his solicitors. The CFA was said to cover the Appellant's claim for damages for personal injury against the Respondent and provided for a success fee.
On the same date, the Appellant by his Litigation Friend entered into a policy of After the Event Legal Expense Insurance (“ATE”). The “Opponent's Name” in the policy was stated to be the Respondent. The policy provided cover against “Opponent's costs” that the Appellant was ordered to pay, subject to a limit of £25,000.
On 28 August 2012 the Appellant served on the Respondent Notice of Funding of Case or Claim stating that:
“all claims herein … [are] now being funded by … a conditional fee agreement dated 23.08.12 which provides for a success fee [and] an insurance policy issued on 23.08.12 Policy no. C101 1525 [provided by] Windward Insurance PCC Ltd …”.
On 18 November 2012 proceedings were issued against the Respondent (“the Primary Claim”), alleging that the Respondent was liable by reason of breach of section 2 of the Occupiers Liability Act 1957 and in negligence.
On 1 April 2013 the QOCS regime came into effect.
On 21 October 2013, the Respondent issued a Part 20 claim against the Second and Third Defendants (“the Additional Claim”). By a court order of 15 August 2014 the Second and Third Defendants were also joined to the Primary Claim. The Primary Claim and the Additional Claim were ordered to be tried together.
In July 2015 the case proceeded to a 4 day trial before Mr Recorder Edge. A written judgment on liability was handed down on 19 October 2015, dismissing the Primary Claim and, in consequence, the Additional Claim.
On 8 February 2016 Mr Recorder Edge gave a further written judgment on the issues of costs and made the costs order which is the subject of this appeal. 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 one(s). He ordered that:
(1) 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;
(2) The Appellant pay the Second and Third Defendants' costs of the Primary Claim;
(3) The Respondent pay the Second and Third Defendants' costs of the Additional Claim.
In reaching these decisions, the judge held that the QOCS regime in CPR 44.13 to 44.17 did not apply to the Appellant.
The QOCS regime
The background to and the nature of the QOCS regime is helpfully summarised in the judgment of Longmore LJ in Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132 at [2]–[8]:
“2. Before 2000, the personal injury claimant in this case, Ms Catalano, would almost certainly have been entitled to legal aid and, in the event that she lost, would have been entitled to costs protection under s.17 of the Legal Aid Act 1988.
3. After the Access to Justice Act 1999 she was not entitled to legal aid but could fund proceedings through a conditional fee agreement (“CFA”) and obtain costs protection by purchasing after the event insurance (“ATE insurance”). Typically such insurance covered not only liability for the other side's costs but also any liability to pay the premium in the event that the insured lost (payment of the premium was usually deferred until the end of the case). In the event that the insured won, the premium would be recoverable, in principle, from the other side as costs. Either way the claimant usually paid nothing – either for the other side's costs or for the premium. In effect the whole cost of ATE insurance was funded by unsuccessful defendants and their insurers. The same was true of any success fee agreed in the CFA.
4. In Jackson LJ's 2009 Review of Civil Litigation Costs, he recommended that success fees under conditional fee arrangements and ATE premiums should no longer be recoverable as costs from the defendant but he recognised that some form of costs protection would be required in personal injury cases. His intention was that claimants should have protection similar to that enjoyed under the pre-2000 legal aid provisions:-
“In personal injuries litigation it must be accepted that claimants require protection against adverse costs orders. Otherwise injured persons may be deterred from bringing claims for compensation. I recommend a form of qualified one way costs shifting in personal injury cases, as set out in chapter 19 below”. (Final Report chapter 9 para 5.8)
“I therefore propose that all claimants in personal injury cases, whether or not legally aided, be given a broadly similar degree of protection against adverse costs. In order to achieve this result I propose that a provision along the following lines be added to the CPR:
“Costs ordered against the claimant in any claim for personal injuries or clinical negligence shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including:
(a) the financial resources of all the parties to the proceedings, and
(b) their conduct in connection with the dispute to which the proceedings relate.” (Final Report chapter 19 para 4.7)
5. Parliament accepted the principle of Jackson LJ's recommendation; after the event insurance premiums ceased to be recoverable as costs after 1 April 2013 save where the policy had been purchased before that date: s.46(3) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”). Any agreed success fee was to be recoverable out of the damages recovered by the claimant, subject to a cap: s.44(2) of LASPO.
6 By the QOCS rules ( CPR 44.13–44.17) claimants are, contrary to Jackson LJ's original proposal, given costs protection regardless of their resources. The effect of QOCS is that orders for costs made against a claimant in a personal injury action may be enforced only to the extent that the amount does not exceed any damages and interest awarded to the claimant: CPR 44.14(1). A claimant who loses on liability (or discontinues) will not therefore have to pay the successful defendant's costs. (There are exceptions for claims which are fundamentally dishonest or are struck out).
7 Overall the 2013 reforms are therefore favourable to defendants and their insurers, since the cost of defending unsuccessful claims should be significantly less than the amount of ATE insurance premiums and success fees formerly recovered by successful claimants.
8 The transitional provision ( CPR 44.17) provides that QOCS does not apply where the claimant has entered into a pre-commencement funding agreement. A pre-commencement funding agreement is a conditional fee agreement or after the event insurance policy entered into before 1 April 2013. CPR 48.2 relevantly provides:
“(1) A pre-commencement funding arrangement is –
a) in relation to proceedings other than insolvency-related proceedings, publication and privacy proceedings or a mesothelioma claim –
i) a funding arrangement as defined by rule 43.2(1)(k)(i) where –
(aa) the agreement was entered into before 1st 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; or
(bb) the agreement was entered into before 1st April 2013 and advocacy or litigation services were provided to that person under the agreement in connection with that matter before 1st April 2013;
ii) a funding arrangement as defined by rule 43.2(1)(k)(ii) where the party seeking to recover the insurance premium took out the insurance policy in relation to the proceedings before 1st April 2013.”
A pre-commencement funding agreement (“PCFA”) therefore includes under (1)(a)(i) a CFA which provides for a success fee and under...
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