QOCS & The Transitional Provision of CPR 47.17

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01 August, 2017

In a Judgment handed down last week the Court of Appeal has sought to provide clarity on the transitional provision of CPR 44.17 in relation to Qualified One-Way Costs Shifting (QOCS) and pre-commencement funding arrangements.

Following Jackson LJ's Review of Civil Litigation Costs the rules surrounding the recoverability of costs in Personal Injury claims were amended meaning that, with effect from 1 April 2013, additional liabilities were no longer recoverable for a successful Claimant and, in turn, the unsuccessful Claimant was protected from any adverse costs order by QOCS (save in limited circumstances where a claim is found to be fundamentally dishonest or struck out). CPR 44.17 provided a transitional provision which 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)." That basically being defined as a Conditional Fee Agreement (CFA) or After The Event (ATE) insurance policy entered into prior to 1 April 2013.

This would all seem reasonably straight forward, but what of the cases where the matter is originally funded by a pre-commencement funding arrangement but then subsequently a second funding arrangement is entered into post-1st April 2013?

There have been a number of conflicting judgments at first instance on the point with Landau v The Big Bus Company and Casseldine v The Diocese of Llandaff being the two often quoted from each side of the argument.

Briefly those cases were decided as follows:

Landau v The Big Bus Company - here a 2nd CFA was entered into post 1 April 2013 for an appeal where the 1st CFA did not cover the appeal. It was held that the 2nd CFA did not bring with it QOCS protection as the 1st CFA was a pre-commencement funding arrangement and proceedings at first instance and on appeal were one and the same.

Casseldine v The Diocese of Llandaff - the 1st CFA, entered into pre-1 April 2013, was terminated by the Solicitors before a 2nd CFA was entered into, post-1 April 2013 with new Solicitors and proceedings commenced. The Court found that QOCS did apply and the Claimant was protected as proceedings were found to have only been commenced under the 2nd CFA.

The Court of Appeal have now provided some helpful guidance on the issue in the case of Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132. This case involved a claim for Noise Induced Hearing Loss. The Claimant originally entered into a CFA in June 2012, proceedings were issued and in July 2013 the Claimant and her solicitors subsequently entered into a new CFA, said to replace the previous one. The claim was discontinued shortly before trial with the Claimant believing she had QOCS protection. At first instance it was found that there was a pre-commencement funding arrangement and therefore this was a case which fell within the transitional provisions of CPR 44.17 and therefore QOCS did not apply.

The Court of Appeal agreed finding CPR 44.17 does not read "an un-terminated funding arrangement" and it would be wrong to read a word into the rules which is not there. It was further found that "such a construction would lead to the Claimant having the best of both worlds" where they could re-assess a case funded by a pre-commencement agreement immediately before trial and if they felt the prospects were high they could continue and seek to recover the additional liabilities, but if they were low they could simply enter into a new funding arrangement, discontinue and seek to benefit from the QOCS protection. "The framers of the rules could not have intended that a Claimant should be able to blow hot and cold in that way."

"The right construction of the rule, therefore, is to give the words "funding arrangement" their natural meaning and apply them to any pre-1st April 2013 agreement (whether terminated or not)".

It was noted that the circumstances in Casseldine were slightly different, as the Solicitor had terminated the retainer, but the Court commented that "If, however, work had been done (which is probable) we are doubtful that Casseldine can be supported on a true construction of CPR 44.17 and CPR 48.2".

Forbes comment

It is hoped that this will provide some definitive clarity on the transitional provisions of CPR 44.17 moving forwards. It shows a clear reluctance on the part of the Court of Appeal to imply terms into rules which simply are not there. It seems that this approach is a sensible one and it cannot be the case that the rules were intended to allow Claimant's to move to a new funding arrangement in order to run cases which would have otherwise been considered far too weak to pursue.

For more information please contact Nick Holgate by email or call 01254 662831.

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