In this article, we discuss the judgement handed down from the Court of Appeal in Corstophine (an infant) v Liverpool City Council  EWCA Civ 270.[i] This was a ruling on the recoverability of costs and the court was at liberty to consider whether the first instance judge had erred in ordering an unsuccessful personal injury claimant to pay costs to defendants added to proceedings after qualified one-way costs shifting (QOCS) had come into force.
The claimant was seriously injured on a tyre swing. In 2012, a claim was brought, on behalf of the claimant, against Liverpool City Council (Council). The claimant’s litigation was funded by a CFA, backed by ATE insurance. The Council subsequently made a Part 20 claim, in October 2013, ‘against the manufacturer and seller of the swing’. These parties were added to the primary claim as the 2nd and 3rd defendants, in August of 2014.
The case was heard in July of 2014 and the claim was dismissed. A further judgement was handed down, in respect of costs, in February 2016. It was held that there was no reason to depart from the ‘general principle’ of costs and it should stand that the ‘unsuccessful party pays the costs of the successful one(s)’. Recorder Edge, at first instance, ordered the following:
‘(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’.
As such, ‘in reaching these decisions, the judge held that the QOCS regime in CPR 44.13 to 44.17 did not apply to the Appellant’, in respect of the additional claim.
Recorder Edge considered that because the facts of the case were interconnected, any liability on the second and third defendant in the additional claim was contingent on the outcome of the primary claim. This was his reasoning as to why QOCS did not apply.
The claimant appealed the costs order on the following grounds:
‘(1) The judge erred in finding that the Appellant's PCFA 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’.
The appeal was heard by Lord Justice Hamblen LJ.
Firstly, the judge considered the 1st ground of appeal. Pursuant to CPR 48.2(1)(a)(i)(aa), in the wake of LASPO 2012, transitional provisions were created to clarify the costs implications of pre-commencement funding arrangements. According to (aa), litigation funding can be defined as a PCFA if:
The claimant submitted that the relevant ‘matter’ in this case, in respect of the PCFA, was the claim for damages against the 1st defendant for personal injury, entered into pre-LASPO, and not the additional claim against the 2nd and 3rd defendants.
Hamblen LJ, considered the judgement from the Supreme Court in the case of Plevin v Paragon Personal Finance  UKSC 23. The issue which arose in both Corsophine and Plevin ‘was whether the transitional provisions applied to variations made to a pre-1 April 2013 PCFA in order to cover the costs of appeals, which variations were made after that date and the inception of the QOCS regime’. Further, the judge, at paragraph 32, cited Lord Sumption in Plevin:
‘At the time of the inception of QOCS the Appellant had no vested rights or expectations in respect of claims against the Second or Third Defendants. Its sole rights and expectations concerned the claim against the Respondent, which alone was the subject matter of the PCFAs. At the time of the PCFAs the "underlying dispute" was the claim against the Respondent, which was the only existing claim at that time. Similarly, it alone was the subject of the retainer.’
Hamblin LJ re-emphasised the importance of QOCS in protecting claimants from ‘adverse costs orders’. He considered that when proceedings involve additional parties, joined to proceedings post-introduction of QOCS, if the regime is seen to be inapplicable, claimants are left with ‘adverse costs’.
The judge concluded, at paragraph 34, that QOCS protection applied to the additional claim against the 2nd and 3rd defendants, allowing the appeal on the first ground. The ‘underlying dispute’, per Sumption LJ in Plevin, formed the sole basis of the retainer and the claim against the 1st defendant was the ‘only existing claim at that time’.
Hamblen LJ went on to say that success on the first ground would be 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’ (the second ground).
On the second ground of the appeal, Hamblen LJ criticized Recorder Edge’s decision at 1st instance by saying that his order for costs ‘effectively deprives them [the claimant] of that protection … it makes the appellant indirectly liable for costs which could not be enforced against him directly’.
Hamblen LJ followed the Court of Appeal authority of Vos LJ, in Wagenaar v Weekend Travel Ltd  1 WLR 1968, in accepting the ‘clear distinction’ that QOCS applies to the main claim and not to 3rd party proceedings. Interestingly, Vos LJ also constituted the Court in Corstorphine. In any event, Hamblen LJ went on to say, at paragraph 38, that:
‘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’.
Held, at paragraph 39. allowing second ground of appeal:
‘… I consider that the judge [at first instance] has exercised his discretion on an erroneous basis in that he has failed to take into account a highly material factor, namely the applicability of the QOCS regime to the claims against the Second and Third Defendants. His decision should accordingly be set aside and this Court may itself exercise that discretion. In my judgment, for the reasons outlined above, the fair, just and proportionate order to make in the circumstances of the present case is to vary 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.’
Full text judgment can be found here.
[i] Neil Rose, ‘Court of Appeal overturns ruling denying claimant QOCS protection’ (27 February 2018 Litigation Futures) <https://www.litigationfutures.com/news/court-appeal-overturns-ruling-denying-claimant-qocs-protection> accessed 28 February 2018.