02 September, 2014
Qualified One Way Costs Shifting (QOCS) formed part of the recent reforms and was designed to afford Claimant's costs protection in the event their claim was unsuccessful. Whilst the implications between Claimants and Defendants have been well documented, the Court of Appeal confirmed that the nightmare interpretation of QOCS is lawfully correct when they considered this matter for the first time. The decision in Wagenaar v Weekend Travel Ltd  EWCA Civ 1105 is likely to send shockwaves throughout the legal profession and causes a real logistical problem for Defendants thinking about bringing a Part 20 claim against a third party.
The facts of the case involved a damages claim following an accident whilst on a ski holiday. The Claimant sued only the travel company but not the ski instructor. The Defendant, believing that liability for the accident, if any, lay with the ski instructor, brought the instructor into the action as a third party.
At Trial the Defendant was successful in the main action and the Claimant's allegations were dismissed. Consequentially the Defendant's claim against the instructor failed. The Claimant walked away empty handed and had the benefit of QOCS protection. The practical effect of QOCS upon the Defendant was that it had to bear its own costs. The Judge at first instance ordered that QOCS applied to the whole claim so the third party also had to bear their own costs. A decision many thought fair on the Defendant.
However the Court of Appeal confirmed that this decision was incorrect and Defendants' worst nightmares have been realised. The Court of Appeal confirmed that QOCS applies between the Claimant and the Defendant but not between the Defendant and the third party. This means that the Defendant who was successful in the main action must bear their own costs and meet the costs of the third party. Defeat from the jaws of victory some might say.
The consequences of this Judgment are likely to have a substantial impact on how Defendants proceed in future and significant tactical care should be taken before bringing a Part 20 claim against a third party. Going forward Defendants may choose to wait until the outcome of the main claim, before issuing separate proceedings for an indemnity and contribution against a third party.