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Clarifying QOCS Protection in Transitional Cases: Pre- and Post-April 2013 CFAs, Summaries of Civil procedure

Birmingham City University Civil procedure

Insight into the Court of Appeal's judgment in Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132, which brings much-needed clarity to the application of Qualified One Way Costs Shifting (QOCS) protection in cases where there were pre- and post-April 2013 Conditional Fee Agreements (CFAs). the previous uncertainty surrounding the issue, as demonstrated in the cases of Landau v The Big Bus Company and Casseldine v The Diocese of Llandaff Board for Social Responsibility. It explains the distinction between a narrow and expansive definition of proceedings and the potential risks of 'cherry picking' or 'having one's cake and eating it'. The document also discusses the impact of LASPO on the volume of cases and the uncertainty faced by counsel. useful for university students studying law, particularly those focusing on civil procedure, costs law, or legal practice.

What you will learn

What is the distinction between a narrow and expansive definition of proceedings in the context of QOCS protection?

Typology: Summaries

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Court of Appeal provides much needed clarity

on QOCS where there has been pre and post 1st

April 2013 CFAs

Darren Lewis, Barrister, St John’s

Chambers and Counsel in Casseldine

Published on 31 July 2017

Case note: Catalano v Espley-Tyas Development Group Ltd [2017]

EWCA Civ 1132

Introduction

1. The Court of Appeal Judgment in Catalano v Espley-Tyas Development Group Ltd

[2017] EWCA Civ 1132 has delivered some much needed clarity to litigants as to when

Qualified One Way Costs Shifting protection is afforded in case where there was a pre

1st April 2013 and Post 1st April 2013 Conditional Fee Agreement (aka “a pre

commencement funding arrangement”).

2. Prior to Catalano litigants were faced with two conflicting authorities Landau v The Big

Bus Company, 31 October 2014, Senior Courts Cost Office, Master Haworth and

Casseldine v The Diocese of Llandaff Board for Social Responsibility LTL 3/8/2015. (the

latter being a case where the author represented the Defendant).

QOCS where there has been a pre and post 1st April 2013 CFA

3. By now most readers practicing in the civil litigation field will have read dozens of

articles on what QOCS is and the limited occasions it is disapplied. In the present case

the Court was only concerned with cases where there had been at least one pre 1st April

2013 CFA and one post 1st April 2013 CFA and what that meant for QOCS protection.

4. The relevant CPR provisions are:

44.17 This Section does not apply to proceedings where the claimant has

entered into a pre-commencement funding arrangement (as defined in rule

48.2).

Partial preview of the text

Download Clarifying QOCS Protection in Transitional Cases: Pre- and Post-April 2013 CFAs and more Summaries Civil procedure in PDF only on Docsity!

Court of Appeal provides much needed clarity

on QOCS where there has been pre and post 1

st

April 2013 CFAs

Darren Lewis, Barrister, St John’s

Chambers and Counsel in Casseldine

Published on 31 July 2017

Case note: Catalano v Espley-Tyas Development Group Ltd [2017]

EWCA Civ 1132

Introduction

The Court of Appeal Judgment in Catalano v Espley-Tyas Development Group Ltd [2017] EWCA Civ 1132 has delivered some much needed clarity to litigants as to when Qualified One Way Costs Shifting protection is afforded in case where there was a pre 1 st^ April 2013 and Post 1 st^ April 2013 Conditional Fee Agreement (aka “a pre commencement funding arrangement”).
Prior to Catalano litigants were faced with two conflicting authorities Landau v The Big Bus Company, 31 October 2014, Senior Courts Cost Office, Master Haworth and Casseldine v The Diocese of Llandaff Board for Social Responsibility LTL 3/8/2015. (the latter being a case where the author represented the Defendant).

QOCS where there has been a pre and post 1st^ April 2013 CFA

By now most readers practicing in the civil litigation field will have read dozens of articles on what QOCS is and the limited occasions it is disapplied. In the present case the Court was only concerned with cases where there had been at least one pre 1st^ April 2013 CFA and one post 1st^ April 2013 CFA and what that meant for QOCS protection.
The relevant CPR provisions are: 44.17 This Section does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement (as defined in rule 48.2).

CPR 48.2 defines a pre commencement funding arrangement as 48.2 (1) A pre-commencement funding arrangement is— (a) in relation to proceedings other than insolvency-related proceedings, publication and privacy proceedings or a mesothelioma claim – (i) a funding arrangement as defined by rule 43.2(1)(k)(i) where – (aa) the agreement was entered into before 1 April 2013 specifically for the purposes of the provision to the person by whom the success fee is payable 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; or (bb) the agreement was entered into before 1 April 2013 and advocacy or litigation services were provided to that person under the agreement in connection with that matter before 1 April 2013; (ii) a funding arrangement as defined by rule 43.2(1)(k)(ii) where the party seeking to recover the insurance premium took out the insurance policy in relation to the proceedings before 1 April 2013; (iii) a funding arrangement as defined by rule 43.2(1)(k)(iii) where the agreement with the membership organisation to meet the costs was made before 1 April 2013 specifically in respect of the costs of other parties to proceedings relating to the matter which is the subject of the proceedings in which the costs order is to be made;

Previous uncertainty

In the case of Landau v The Big Bus Company, 31 October 2014, Senior Courts Cost Office, Master Haworth ruled the QOCS regime did not apply when the Claimant had entered into a CFA prior to 1st^ April 2013 which was subsequently terminated saying in relation to Counsel’s Submissions:

’11. He argued that pre-commencement funding arrangements in relation to CFAs are defined not by reference to “the proceedings in which costs order is made” but by reference to the “matter that is the subject” of those proceedings pursuant to Rule 48.2(1) (i) (aa). He argued that the distinction between “proceedings” and “matter” was deliberate and that the latter expression is wider than the former.... “It was submitted that it was Parliament’s intention that a pre-commencement CFA entered into in this respect of a “matter” would disapply QOCS in any “proceedings” arising out of that “matter”

and then

“17. To my mind, Rule 48.2(1)(i)(aa) is clear that it refers to the “matter that is the subject” of proceedings and not “proceedings” in which the costs order is made. I accept the submissions of the Second Defendant that this distinction is deliberate one of the draftsman and that the reference to “matter that is the subject” of proceedings is wider in context than “proceedings” in which the costs order is to be made. Had that been the intention of the Civil Procedure Rule Committee the Rule could easily have read “entered into before 1 April 2013... in relation to the proceedings in which the costs order is to be made” .” “18. In my judgment, the reference to the “matter that is the subject” of the proceedings implies and acknowledges that the “matter” might give rise to more than one set of “proceedings”. I accepts the Second Defendant’s submission that it was clearly Parliament’s intention that a pre-commencement CFA entered into in the respect of the “matter” would disapply QOCS in any “proceedings” arising out of the matter...”

Catallano

In Catalano the Claimant’s Solicitors had terminated the pre 1st^ April 2013 CFA (just as Thompsons had in Casseldine.) They then entered into a post 1st^ April 2013 CFA and claimed QOCS protection for their client.
The Court of Appeal recognised that the danger of cherry picking was a real one and should be guarded against. It also found that for the Claimant to be correct it would be necessary to read words into the Rule that were not there.

“23 In these circumstances, unless Mr McGee is right to read the words “a funding arrangement” as “an un-terminated funding arrangement”, there was undoubtedly a pre-commencement funding arrangement within CPR 48.2(1).

We cannot accept that Mr McGee is right. Not only does he seek to read a word into the rules which is not there, but such a construction would lead to a situation where a claimant could have the best of both worlds. A claimant could make an agreement providing for a success fee and purchase ATE insurance and wait until shortly before trial to re-assess his or her prospects. If they appeared to be high, such claimant could continue and claim the cost of the ATE premium and the success fee as costs from the defendants; if they appeared to be low, he or she could cancel the original CFA, make a second CFA and then discontinue the claim a day later and escape the costs consequences. 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 is also important to note that, while CPR 44.17 provides that QOCS does not apply where a claimant has entered into a pre-commencement funding arrangement before 1st April 2013, the rule defining a pre-commencement funding arrangement is (unsurprisingly) the mirror image of the statutory provision which first prohibits the recovery of a success fee as costs but then preserves the position for CFAs entered into before the statutory provision comes into force – which was 1st April 2013.”
The Court went on to explain that success fees were recoverable for litigation services that were provided under pre 1st^ April 2013 CFAs even if they were terminated and to suggest otherwise would require words to be inserted into rule 44.6 that were not there. It confirmed

“27. In any case, therefore, in which litigation services have in fact been provided under a CFA made before 1st April 2013, success fees can continue to be recovered as costs and QOCS will not apply even if the CFA is terminated and a second CFA is made. It follows that Ms Catalano’s appeal will have to be dismissed...”

Whilst in Casseldine, the Solicitors on the First CFA did not seek to recover their costs, notionally they could have. The Court of Appeal cautiously doubted District Judge Phillips finding that the Solicitors would not be able to recover its costs and additional liabilities and therefore doubted whether Casseldine was good law.
Any litigation services provided under a terminated pre 1st^ April 2013 CFA and additional liabilities are notionally recoverable and therefore QOCS protection will be

disapplied to the whole proceedings not withstanding that a pre 1st^ April 2013 CFA is terminated.

Remaining problems

There remains uncertainty as to those cases where a pre 1st^ April 2013 CFA is entered into and no litigation services are provided before terminating it and subsequently entering a post 1st^ April 2013 CFA. The Court of Appeal doubted whether there would be many cases like this. Given the discussion above about the bulge of work and mass sign up of Claimants to CFAs the author respectfully suggests this might be a bigger problem going forward than the Court of Appeal anticipated. Certainly it can be contemplated that after signing up a glut of cases no recoverable litigation services are provided for a period of time and then on file review by another fee earner a view is taken on poor prospects and the old CFA terminated and a new one entered into or the Claimant is left to find a new Solicitor on a new CFA.
It will be very important to explore the previous litigation services provided when Claimant Solicitors take on new clients and are informed they were previously represented on a claim arising out of the same facts.
This may not be the last we hear on these transitional provisions.

This article is provided free of charge for information purposes only, it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.

DARREN LEWIS

ST. JOHN’S CHAMBERS

Tel: 0117 923 4700

30 th July 2017