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QOCS Protection – Can QOCS apply where the client has or had a pre-commencement CFA?

QOCS Protection – Can QOCS apply where the client has or had a pre-commencement CFA?

Since their inception, the application of Qualified one-way costs shifting (QOCS) has been somewhat of a “knotty problem” for the profession, a position which was found to be leaning more towards paying parties following the judgement of Master Haworth in the matter of Landau v The Big Bus Company Ltd & Pawel Zeital (SCCO, 31 October 2014).

In the matter of Landau, the claimant had signed a conditional fee agreement in August 2011 in respect of a personal injury claim which arose out of an accident in 2009. The personal injury claim was rejected by the High Court in October 2013 ([2013] EWHC 3281 (QB)), however Permission to Appeal was granted, and as the original CFA did not provide for any appeal made by the claimant, the 2nd CFA was entered into in November 2013.

Unfortunately, on 31 July 2014 ([2014] EWCA Civ 1102) the Court of Appeal dismissed the appeal and referred the question of whether the costs orders made against the claimant in respect of each defendant were subject to QOCS to the SCCO, with the matter coming before Master Haworth.

The starting point within that decision was with the transitional provisions, which provide that QOCS are retrospective except where CPR 44.17 applies, which section states

“This section does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement (as defined in rule 48.2).”

and the Master also had regard to the wording of CPR 48.2(1)(i)(aa), applicable to an

“…agreement… entered into before 1 April 2013 specifically for the purposes of the provision… 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”.

Having considered the same, the Master ruled that

“It was clearly Parliament’s intention that a pre-commencement CFA entered into in respect of the ‘matter’ would disapply QOCS in any ‘proceedings’ arising out of that matter.”

and accordingly the rule could easily have been formulated differently, had the intention being to the contrary.

Being ever cautious, Master Haworth further ruled that an appeal did not constitute separate proceedings, insofar as section 2, CPR 44 was concerned, and expressing sympathy for the claimant (who did not have ATE insurance as they held the reasonable belief that they would be protected by QOCS), noting

“…whilst it may be unreasonable, unfair and inconvenient to deny the claimant the benefit of QOCS in this case, for the reasons given on a true construction of the relevant provisions of CPR in this case, QOCS does not apply…”.

Thus, upon the question as to whether or not QOCS which did not apply at first instance could apply upon any subsequent appeal, under the auspices of a separate, subsequent agreement, Master Haworth ruled that they could not.

And so to “Round 2″…

The issue raised its head once more in the matter of Julie Casseldine v The Diocese of Llandaff Board for Social Responsibility (a charity) (3 YU 56348; County Court at Cardiff, 3 July 2015, District Judge Phillips), a matter in which the claimant had been injured during the course of her employment as a team leader at a day nursery.

Initial instructions were delivered Thompsons and the CFA was entered into in March 2012 but terminated by Thompsons in January 2013. The claimant then went on to instruct SRB Solicitors, with whom she signed a second, subsequent CFA in August 2013.

Unfortunately, whilst proceedings were issued in December 2013, the same were dismissed in December 2014, with the claimant seeking QOCS protection in respect of the adverse costs, and the issue been referred to District Judge Phillips, Regional Costs Judge, for determination as the defendants sought to disapply that protection following the decision in Landau.

Having considered the arguments of the parties, District Judge Phillips concluded that whilst the first CFA came within the definition of a “…pre-commencement funding arrangement…”, the matter of Casseldine could be distinguished from the determination of Master Haworth in the matter of Landau on the basis that

“…proceedings were never commenced in relation to the first CFA, but only the second…”


“So far as the first CFA was concerned, it was the solicitors (Thompsons) who terminated the CFA, and therefore had no entitlement to payment of any success fee or costs”.

and further that the Landau matter had been the subject of two sets of proceedings and two CFAs, the first of each being the substantive claim and the second of each being the Appeal, a scenario very different to the instant matter, and further that the “…word ‘proceedings’ must be decided in the context in which the words appear” and thus, contrary to the opinions of Master Haworth, could have different meanings in different situations.

District Judge Phillips also found (concurring with claimant’s counsel), perhaps most importantly that there was a “quid pro quo” in the abolition of recoverable additional liabilties and the protection offered by QOCS and that a claimant’s inability to recover such additional liabilities in the event of success was an “…important consideration…” in the overall determination of this issue.

Thus, District Judge Phillips found that the claimant in this instance had not entered into a pre-commencement funding arrangement and was, thus, entitled to QOCS protection, even though she had entered into another CFA prior to 1 April 2013 as that prior agreement had been terminated.

From this latest judgement, therefore, there is clear guidance (albeit non-binding) that even where the claimant has entered into a pre-1 April 2013 CFA they may be able to benefit from protection provided by QOCS, but only on the basis that a subsequent post commencement CFA has been entered into, the former CFA having been terminated and thus there being no cost entitlement under the same.

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