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To QOCS or not to QOCS? An ATE insurance dilemma!

I imagine that all of us in the world of PI litigation and After The Event Insurance have been patiently waiting for the raft of satellite litigation to hit the already clogged up courts following the Jackson changes, but has that really happened as yet?

Currently not to the extent that some predicted, perhaps due to the courts being so busy, but no doubt we will see more in the coming months and years as more cases with QOCS protection come before Judges.

One issue that has been considered recently however, is will QOCS apply where there are two CFA’s in place: one signed and dated after 1st April 2013; and one signed and dated before 1st April 2013.

So what is the answer? Well, this came before Master Howarth (Senior Costs Judge) to determine in Landau v The Big Bus Co. (1) and Zeital (2) SCCO 1403806.

Here, the main action was a claim for personal injury following a road traffic accident. The claim failed at the first instance trial. At that time, the Claimant’s solicitors acted under a CFA, which pre-dated the Jackson changes. The Claimant also had the benefit of an After The Event Insurance policy which only covered the first-instance claim. It was agreed (and this tends to be standard wording used in the majority of CFAs) that the Claimant’s first CFA covered the claim and "an appeal by your opponent”. So, the original CFA would not cover an Appeal by the Claimant.

Permission was granted to the Claimant to Appeal and his solicitors entered into a new CFA which post-dated 1 April 2013.

The Appeal failed but the main issue for determination was that of costs, in particular whether or not QOCS applied in relation to the appeal.

The Claimant maintained that the new CFA related to a different set of "proceedings” pursuant to CPR 44.17, therefore Qualified One-Way Costs Shifting should apply in relation to the appeal.

The Defendants submitted that this was not the case, both due to the wording of CPR 48.2; and/or that as there was only one set of damages at stake, the entire case was one set of "proceedings”.

The Court held that QOCS does not apply.

At paragraph 18 of his Judgment, Master Haworth stated:

"I accept the Second Defendant’s submission 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.”

Seems all clear to me but in any event, Master Haworth also held that for the purposes of CPR 44.17, the appeal was part of the same "proceedings", and that where QOCS does not apply in the first instance in must also not apply in any subsequent appeal.

But what happens if the solicitor acting for a party changes post April 2013? They will no doubt enter into a new CFA with their client but if acting in relation to the same matter that is the subject of proceedings that were commenced under a pre 1 April 2013 CFA then QOCS should not apply?

This would seem to be the result of Master Howarth’s decision. Not so much a problem if the Claimant has an After The Event Insurance policy that remains on cover, but this could lead to unfortunate consequences, such as having to pay a very high ATE insurance premium from damages, if no After The Event insurance is in place. Unfortunately this is an event widely predicted when the rule changes were first proposed.

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