An unsuccessful personal injury Claimant wins an Appeal against a local authority over QOCS application.

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

On the 26th February 2018 the Court of Appeal overturned the lower court decision denying the Claimant QOCS protection and ruled that costs protection should be applied to parties that were added to a claim after the QOCS rules came into force.

The background to the appeal was that on 31 August 2010 the Appellant/Claimant, child, was injured whilst playing on a tyre swing in a playground. Liverpool City Council (the Respondent/First Defendant) 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 city council from Blakedown Landscape Operations, the Third Defendant.

The Appellant/Claimant by his litigation friend entered into a conditional fee agreement and into a policy of After the Event Legal Expense Insurance in August 2012. The CFA was said to cover the Claimant’s claim for damages for personal injury against the Respondent and the “Opponent’s Name” in the ATE policy was stated to be the Respondent. A Notice of Funding was served on Liverpool City Council. The initial claim had been issued against the Liverpool City Council before the QOCS regime. In October 2013, the Respondent/Council issued a part 20 claim against the manufacturer and seller of the swing, and the following year these Second and Third Defendants were joined to the claim (the additional claim).

In October 2015, after a four-day trial, Mr Recorder Edge rejected the claim for damages for personal injury (the primary claim) and, as a consequence, the additional claim too.

In February 2016 he gave a further written judgment on the issues of costs. The judge held that the QOCS regime did not apply to the Claimant where Defendants had been joined onto proceedings post-2013 and ordered the Claimant to pay the Defendant’s costs of the primary claim, including any costs of the other parties which the First Defendant/Council had been ordered to pay, along with the Second and Third Defendants’ costs of the additional claim.

The Appellant/Claimant was refused permission to appeal on liability but granted permission in relation to costs. The costs order made was challenged on two related grounds:
1. The judge erred in finding that the Appellant’s PCFA (pre-commencement funding agreement) 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.
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.

Lord Justice Hamblen, sitting in the Court of Appeal, emphasises that “the purpose of the QOCS regime is to protect personal injury Claimants from adverse costs orders. Originally that protection was provided by legal aid. Later it was provided by the complicated regime of CFAs and ATE policies. Now it is provided by the QOCS regime.”

He continued: “In the present case, we are 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. Although it is suggested that a further or amended CFA and ATE policy could have been entered into, that assumes that it would have been lawful so to do after 1 April 2013. Even if it was, the Appellant might legitimately have taken the view that there was no need to do so once the QOCS regime applied.”
In relation to Ground 1, Hamblen LJ concluded: “in my judgment the judge should have concluded that the QOCS regime applied to the claims made against the Second and Third Defendants. If so, that would have been a highly material factor to be taken into account in determining whether the Appellant should be liable to pay to the Respondent the costs it had to pay the Second and Third Defendants.”

On Ground 2, Lord Justice Hamblen said that “In an ordinary case of an additional claim which was closely interconnected with a primary claim, where both claims failed, the order made by the judge would be unexceptional… This is not, however, an ordinary case. 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. By ordering the Appellant to pay to the Respondent the costs of the Second and Third Defendants for which it is liable, the Appellant is made liable for virtually all those costs. In essence, it makes the Appellant indirectly liable for costs which could not be enforced against him directly.”

He added that “there was Court of Appeal authority that drew a clear distinction with regard to the QOCS regime between costs relating to the Claimant’s claim and those relating to third party proceedings… In a case in which the QOCS regime applied to the main claim but not to the third party proceedings, a successful defendant would not be able to enforce its costs order against the claimant and so the costs of the third party proceedings would lie where they fell. It would be surprising if a different result was to follow in a case such as the present where, although the QOCS regime does not apply to the claim against the defendant, it does apply to the claim against the additional parties.”

He concluded that the judge had failed to take into account the applicability of the QOCS regime to the claims against the additional Defendants.

In the circumstances, Lord Justice Hamblen – with whom Sir Geoffrey Vos, Chancellor of the High Court, agreed – set aside the original decision and varied “the costs order made in favour of the Respondent so as to exclude any costs of the Second and Third Defendants parties which the Respondent had been ordered to pay”.

The outcome of this case clearly is a victory for the Appellant/Claimant who was faced with the imminence to be presented with a costs bill encompassing all opposing parties.