Wagenaar v Weekend Travel Ltd

This appeal raises two important issues: First, a question as to the vires of the provisions relating to Qualified One-Way Costs Shifting (“QOCS”) introduced into the CPR by Rules 44.13 to 44.17 in April 2013 as a result of the reforms that were proposed by Sir Rupert Jackson’s Review of Civil Litigation Costs Final Report (the “Jackson Report”); and secondly an issue as to whether QOCS applies not only to claims for damages for personal injuries brought by a claimant against a defendant, but also to claims for an indemnity or contribution brought by such a defendant against a third party, should the rules relating to QOCS be held to be valid.

In this action, the claimant, Dr Arabella Wagenaar (the “claimant”) sued the Defendant, Weekend Travel Limited (the “defendant”) under Regulation 15 of the Package Travel, Package Holidays and Package Tour Regulations 1992 (the “Regulations”), which provides that the party to a package holiday contract providing the holiday is liable to the consumer for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be performed by another supplier of services. The claimant claimed damages for the personal injuries that she had sustained in a skiing accident on 8^th March 2007 that took place whilst she was on a package holiday arranged by the defendant in Chamonix, France (the “accident”).

Some time later, the defendant joined the claimant’s ski instructor, Ms Nawelle Serradj (the “third party”), as a third party to the claimant’s claim. It was alleged by the defendant that, if the accident was caused by negligence at all (which was denied), the third party’s negligence had in fact been the proximate cause of the claimant’s accident.

On 19^th September 2013, HH Judge Iain Hughes QC dismissed the claimant’s claim against the defendant and the defendant’s claim against the third party after a lengthy trial. He gave judgment on costs on 31^st October 2013 after receiving written submissions and refusing an oral hearing. He ordered (a) that the claimant should pay the defendant’s costs, but that such order was not to be enforced against the claimant pursuant to the provisions of CPR 44.13 and 44.14, and (b) that the defendant should pay the third party’s costs, but that such order was not to be enforced against the defendant pursuant to the provisions of CPR 44.13 and 44.14.

There are two appeals before the court. First, the third party contends that the judge should not have held that the rules on QOCS applied to the CPR Part 20 proceedings between the defendant and the third party, and that there should not have been a stay on the order for costs in her favour. Secondly, the defendant contends that the judge should not have held that QOCS applied to the case at all. It raised three main points as follows: first, it said that the QOCS provisions are ultra vires section 51(3) of the Senior Courts Act 1981 (the “SCA 1981”) which provides that “[t]he court shall have full power to determine by whom and to what extent the costs are to be paid”; secondly, the defendant contended that the rules on QOCS should not have had retrospective effect on the defendant, since most of the costs in question had been incurred before they came into force on 1^st April 2013; and thirdly, it argued that in any event, the defendant’s junior counsel had a pre-commencement funding arrangement in place within CPR Rule 48.1 so that the former costs rules should apply to that arrangement.

I will return to the detail of the points made in support of the appeals, but should first set out some of the relevant factual and procedural background.

On 8^th March 2007, the claimant was severely injured in the accident. On 5^th March 2010, the claimant issued a claim form in the Winchester County Court against the defendant (and another defendant against whom the claim was not pursued) alleging that the accident was caused by its negligence and in breach of the Regulations. On 24^th October 2011, the claim was transferred to the Winchester District Registry of the High Court, and a split trial was ordered.

On 2^nd November 2011, the defendant was granted permission under CPR Rule 20.7 to make additional claims against the third party and against a fourth party, Ski Sensations, against which the claim was later discontinued. On 4^th May 2012, the defendant served its additional claim (under CPR Part 20) against the third party (and the fourth party) claiming an indemnity and/or a contribution in respect of the claimant’s claim on the grounds that, if the accident had been caused by negligence at all (which was denied), it was caused by the negligence of the third party. On 17^th August 2012, District Judge Stewart ordered that there should be a split trial, with the issue of liability to be determined as a preliminary issue, and that the claim and the CPR Part 20 claim should be heard concurrently.

On 28^th March 2013, junior counsel for the defendant entered into a conditional fee agreement with Stones Solicitors LLP, the solicitors for the defendant (the “CFA”).

On 19^th September 2013, the judge delivered a 71 page reserved judgment, after a 7-day trial, in which he dismissed the claimant’s claim and the defendant’s Part 20 claim against the third party. He invited written submissions on costs which he duly received.

On 31^st October 2013, the judge handed down his judgment on costs in which he held, in broad outline, that the rules on QOCS were retrospective in effect, and that there was no relevant pre-commencement funding arrangement since the claimant’s claim had not been funded by an after the event (“ATE”) insurance policy but by the claimant’s legal expenses insurance with DAS Legal Services as part of her household insurance policy with NFU Mutual, the premiums for which were paid “before the event”. The judge, therefore, applied the QOCS rules and made an order that the claimant should pay the defendant’s costs, but that that order was not to be enforced. As regards the claim by the defendant against the third party, he held that CPR Rules 44.13 and 44.14 applied to CPR Part 20 claims in the same manner as they applied to the primary claim between the claimant and the defendant. His reasoning was based on the fact that CPR Rule 2.3(1) defined a “claim for personal injuries” as meaning “proceedings in which there is a claim for damages in respect of personal injuries to the claimant or any other person”, and that included the CPR Part 20 claim in this case. Moreover, CPR Rule 20.2(1)(b) defined an “additional claim” as any claim “other than the claim by the claimant against the defendant” and that must include CPR Part 20 claims (and counterclaims). Since CPR Part 44.13(1) applied QOCS to “proceedings which include a claim for damages … for personal injuries”, that must also include the CPR Part 20 claim in this case, and CPR Part 44.13(2) defined “claimant” to include a person bringing an additional claim, which the defendant in this case was doing. Since none of the QOCS exceptions applied, the defendant would pay the third party’s costs but the order was not to be enforced. The judge thought that his conclusion accorded with the overriding objective, since any other result would have created a serious injustice for the defendant, who would have had to pay his own costs and those of the third party, notwithstanding that it had successfully defended the claim.

It is convenient to set out the parts of the CPR that have been relevant to the arguments of the parties as follows:-

This argument was intimated in only the barest outline in the defendant’s grounds of appeal and skeleton argument. It nonetheless gathered airspeed as the hearing progressed. The claimant’s counsel, Mr Andrew Eaton Hart, objected to the way the argument had developed, but did not, as he might have been justified in doing, apply for an adjournment so that he could better prepare his response.

Mr Mark Cannon QC and Mr Andrew Nicol, counsel for the defendant, submitted that section 51 of the SCA 1981 did not allow the introduction by secondary legislation of a restriction on the High Court’s discretion as to by whom or to what extent the costs of litigation are to be paid. That was, as I have already said, because section 51(3) provides that “[t]he court shall have full power to determine by whom and to what extent the costs are to be paid”.

In order properly to understand section 51(3) of the SCA 1981 in its current form, it is necessary to explain, at least in outline, how it developed. For this purpose, I draw in part on what Lord Goff of Chieveley said (with which the whole Committee agreed) in the House of Lords in Aiden Shipping Co. Ltd. v. Interbulk Ltd. [1986] 1 A.C. 965 at pages 974H to 975H. The substantive words of the present section 51(3) were first introduced by section 5 of the Supreme Court of Judicature Act 1890 as an amendment to the Supreme Court of Judicature Acts 1873-1875. They were then contained in section 50(1) of the Supreme Court of Judicature (Consolidation) Act 1925 and then in the original version of section 51(1) of the Supreme Court Act 1981. That section provided as follows:-

“(1)

Subject to the provisions of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts, shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid.

(2)

Nothing in subsection (1) shall alter the practice in any criminal cause or matter, or in bankruptcy.

(3)

Provision may be made by rules of court for regulating any matters relating to the costs of proceedings in the civil division of the Court of Appeal or in the High Court, including the administration of trusts and estates” (emphasis added).

The same emphasised words were then taken out of section 51(1) and placed in their own sub-section 51(3), when the Supreme Court Act 1981 was amended by the Courts and Legal Services Act 1990 (the “CLSA 1990”). The section was again amended in ways that are not relevant to what we have to determine by the Crime and Courts Act 2013. In its present form, section 51 of the SCA 1981 provides as follows:-

“(1)

Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in – (a) the civil division of the Court of Appeal; (b) the High Court; (ba) the family court; and (c) the county court, shall be in the discretion of the court.

(2)

Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings, including, in particular, prescribing scales of costs to be paid to legal or other representatives …

(3)

The court shall have full power to determine by whom and to what extent the costs are to be paid. …” (emphasis added).

When Lord Goff considered the meaning of the emphasised words in Aiden Shipping, in the context of an argument that a limitation should be implied so as to restrict the court’s power to award costs against non-parties to the litigation, he said this at page 975E-H:-

“It is, I consider, important to remember that s 51(1) of the 1981 Act is concerned with the jurisdiction of the court to make orders as to costs. Furthermore, it is not to be forgotten that the jurisdiction conferred by the subsection is expressed to be subject to rules of court, as was the power conferred by s 5 of the 1890 Act. It is therefore open to the rule-making authority … to make rules which control the exercise of the court's jurisdiction under s 51(1). In these circumstances, it is not surprising to find the jurisdiction conferred under s 51(1), like its predecessors, to be expressed in wide terms. The subsection simply provides that ‘the court shall have full power to determine by whom ... the costs are to be paid’. Such a provision is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule-making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles on which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. Such a policy appears to me, I must confess, to be entirely sensible. It comes therefore as something of a surprise to discover that it has been suggested that any limitation should be held to be implied into the statutory provision which confers the relevant jurisdiction”.

Against this background, Mr Cannon QC submitted that a substantive change was made by the CLSA 1990 when section 51 was amended, and that section 51(3) of the SCA 1981 is now, in effect, the dominant provision in relation to costs. He says that the requirement that the court shall have “full power to determine by whom and to what extent the costs are to be paid” means that primary legislation is required if the court’s discretion to award costs is to be curtailed in any particular circumstances. Rules of court, he says, will not do. As a result, CPR Rules 44.13 to 44.17 are ultra vires and cannot be given effect. Mr Cannon accepts that this submission, if correct, would have extensive ramifications, not only in the many cases in which QOCS has been given effect since 1^st April 2013, but also in several other areas in which the award of costs has been limited by rules of court. We were not given any comprehensive list of such occasions, but Floyd LJ suggested that CPR Rule 27.14 provided an example. Rule 27.14(2) provides that the court may not, in a case allocated to the small claims track, order a party to pay a sum by way of costs, fees and expenses except for fixed costs and other specified exceptions. If rules of court could not make provision as to the extent of costs that are to be paid, this Rule too might be regarded as ultra vires.

At the end of the argument, the court asked the parties to provide further submissions on the debate that took place in Parliament when the CLSA 1990 was passed, apparently removing the express qualification “subject to rules of court” from the words that are now in section 51(3) of the SCA 1981. Extensive written submissions were filed by each side. There were, however, no express references in the Parliamentary debates to the drafting decision to put part of the previous section 51(1) of the Supreme Court Act 1981 in a separate section 51(3), or to the apparent removal of the qualification that previously applied expressly to it in section 51(1) of the Supreme Court Act 1981, namely “subject to … rules of court”. There were references in a speech by the Attorney General in the Commons debate in Standing Committee D on the 10^th May 1990 to the Bill subjecting itself to rules of court in the context of the costs provisions in the proposed new section 51 that was to be added by the CLSA 1990, but I do not think these are sufficiently specific to assist much one way or the other in interpreting the meaning of the new section 51(3) of the SCA 1981. Mr Cannon also referred to the draft of a new section 51(4) which was, in the event, never enacted, but would have specified the classes of persons against whom costs orders could be made. I do not think the debate about the inclusion of that proposed sub-section informs what we have to decide.

Mr Cannon QC submitted that, in any event, the three requirements for the admission of statements in Parliament were not satisfied. He said that (a) the legislation in this case was not ambiguous or obscure, and did not lead to an absurdity, (b) the material relied upon did not consist of one or more statements by a minister or other promoter of the bill, and (c) the effect of the statements was not clear (see Pepper v. Hart [1993] AC 593 at pages 640B, 631D and 634D, and R v. Environment Secretary, Ex p. Spath Holmes Ltd. [2001] 2 AC 349 per Lord Bingham of Cornhill at page 391). Mr Eaton Hart submitted that the statements of the Attorney General and another statement of the Lord Chancellor should be admitted, accepting the principles as to the admission of Parliamentary materials put forward by Mr Cannon.

On this issue, I think that Mr Cannon is right to say that the conditions for the admissibility of the Parliamentary materials concerning the debates on the 1990 Bill are not met. Whilst I think there is a potential ambiguity in section 51(1)-(3), and there are statements by a Minister or promoter of the Bill, I do not think that the effect of those statements is clear or at least not clearly relevant to the actual question before us. The Attorney General might just have been making a general remark about the section 51 being subject to rules of court, which of course in general terms it is; there is no warrant for construing what he said as referring specifically to section 51(3), still less as referring to the change that led to the removal of the words in the old section 51(1) to a new section 51(3). The other statements referred to by the parties come nowhere near being clear statements on the point in question. In these circumstances, I think we are left to construe section 51 of the SCA 1981 as best we can without regard to the Parliamentary materials that the parties so helpfully uncovered.

In my judgment, Mr Cannon’s argument to the effect that section 51(3) of the SCA 1980 must now be construed without the qualification that it is “subject to … rules of court” is ingenious, but wrong. I would provide three short reasons.

First, the amendments that changed section 51 of the Supreme Court Act 1981 into the current provisions of section 51(1), (2) and (3) of the SCA 1981 seem quite obviously to have been intended to provide some more modern and perhaps clearer drafting. Had a substantive change to the costs regime been intended, another formulation would inevitably have been used. The primary provision said now to be in section 51(3) of the SCA 1981 would have been placed, free of any qualification, in section 51(1), and the fact that the qualification was only applicable to some elements of the costs regime would have been made clear. Instead, the jurisdiction as to costs is in the widest terms in section 51(1) of the SCA 1981, and is made subject to the power of the rules committee to make court rules. It is said, in effect, that the basic rule is that the costs of proceedings are in the discretion of the court, subject to rules of court. Those rules must be able to cover the availability of an award of costs, the amount of such costs, and the way in which the court’s discretion should be exercised in relation to costs. The rules committee can, as Lord Goff said, “make rules which control the exercise of the court’s jurisdiction under section 51(1) [now section 51(3)]” and which “control the exercise of the discretion (if it thinks it right to do so)”. Mr Cannon is wrong to say that there is some kind of limit in the statute preventing the rules committee abrogating the discretion entirely in particular kinds of cases.

Secondly, because the primary provision of section 51(1), (2) and (3) of the SCA 1981 is now, as it was under the old section, section 51(1), it would be inconsistent to construe section 51(3) as providing the court with “full power to determine by whom and to what extent the costs are to be paid” free of the qualification that section 51(1) provides, namely that the discretion to award costs is subject to the rules of court. Section 51(1) provides that “the costs of … proceedings … shall be in the discretion of the court” subject to rules of court. Section 51(3) could not consistently provide that the court had “full power to determine by whom and to what extent” those same costs were to be paid without the same qualification.

Thirdly, section 51(3) is also subject to section 51(2) of the SCA 1981. The predecessor of section 51(2) was section 51(3) of the Supreme Court Act 1981. Section 51(2) qualifies and explains section 51(1). It says that “[w]ithout prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings” including certain specified matters. In the previous section 51(3) of the Supreme Court Act 1981, it referred to “any matters relating to the costs of proceedings”. The change seems to me to be inconsequential. Section 51(2) makes clear that all matters relating to the costs of the proceedings in the courts mentioned in section 51(1) may be the subject of rules of court. Section 51(3) cannot cut across that express statutory provision, and must be read subject to it and to the same qualification in section 51(1).

It is worth mentioning also that, as was pointed out in argument, the introduction of the QOCS regime is part of a wholesale reform of the funding of personal injury litigation. It is just one of a raft of interconnected changes. If QOCS were to be struck down, there would need to be a complete rethink of the entire Jackson reform programme as it affects personal injury litigation. It will be noted also that the changes in respect of the recoverability of success fees under conditional fee agreements and of ATE premiums were effected by primary legislation as they needed to be: see sections 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which amended the CLSA 1990.

In the circumstances, it seems to me that the court’s full power to determine by whom and to what extent the costs of any proceedings are to be paid under section 51(3) of the SCA 1981 is to be read subject to the power of the rules committee to make rules of court applicable to particular circumstances concerning the availability of an award of costs, the amount of such costs, and the exercise of the court’s discretion in relation to costs. CPR Rules 44.13 to 44.17 concerning QOCS were rules that the rules committee was fully empowered to make.

Under this ground of appeal, Mr Cannon argued that the effect on the defendant of applying QOCS to this case was unfair and prejudicial and, perhaps more importantly, avoidable. He submitted that the defendant had taken all its litigation decisions before the new rules were even published, and that imposing them on the defendant some 6 weeks after their introduction was inappropriate. The rules should not have been retrospective.

It is, of course, true that the effect of the introduction of QOCS on the defendant has been unfortunate, since if the matter had been tried 2 months earlier, the costs consequences of the outcome of the litigation would have been quite different. But this unfortunately is an inevitable consequence of procedural reform. There has to be a cut off point and someone will always be on the cusp of it.

In my judgment, however, the legal point is unsound. It is well established that the presumption against retrospection does not apply to legislation concerned with matters of procedure, and that provisions of that nature are to be construed as retrospective unless there is a clear indication that that was not the legislature’s intention (see Halsbury’s Laws of England, 5^th edition, volume 96 at paragraph 1189). There is nothing in CPR Rules 44.13 to 44.17 to indicate that they were not intended to be retrospective. Indeed, they show clearly that they were. The amendments are expressed to take effect on 1^st April 2013, and there are transitional provisions in CPR Part 44.17 that apply in particular cases – namely where the claimant has entered into a pre-commencement funding agreement.

The defendant’s final argument on its appeal is that its junior counsel’s CFA should, at least, survive the QOCS reform, because of the provisions of CPR Rules 48.1 and 48.2. It is submitted that Rule 48.1 makes clear that the provisions of CPR Parts 43 to 48 “relating to funding arrangements” should apply in relation to pre-commencement funding arrangements as they were in force immediately before 1^st April 2013: i.e. before QOCS were introduced. Since the CFA is such a pre-commencement funding arrangement, at least the fee due under that arrangement should be recoverable as it would have been before QOCS came in. The defendant, of course, only succeeded in its defence of the claimant’s claim so it is presumably only that part of the defendant’s junior counsel’s fee that is in issue here.

The specific QOCS regime has, as I have already mentioned, only one specific transitional provision in Part 44.17, which provides that the regime does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement. That does not apply to this case since, as the judge found, the claimant had not entered into any such arrangement. Mr Cannon’s point is that the entirety of the new costs regime in CPR Parts 43 to 48 is to be disapplied in respect of the CFA by CPR Rule 48.1.

The fallacy in this argument was pointed out by Mr Eaton Hart. It is that CPR Rule 48.1 only disapplies the provisions of CPR Parts 43 to 48 “relating to funding arrangements”, not relating to costs generally. The QOCS provisions in new CPR Rules 44.13 to 44.16 do not relate to funding arrangements at all; they relate to the costs orders that can and should in future be made in personal injuries claims. Accordingly, CPR Rules 48.1 and 48.2 do not have the effect of carving out the defendant’s CFA from the general QOCS regime, and this limb of the defendant’s argument must, I think, be rejected.

I turn now to deal with what was thought at the outset to be the main point in these appeals. I have already explained the judge’s reasoning for reaching the conclusion he did. I should say at the outset that, at first sight, I thought the judge’s decision surprising since it seemed to apply the full rigours of QOCS to each and every part of an action in which anyone makes a claim for damages for personal injuries, even if the parties concerned are merely arguing about the economic consequences of having to fund such damages. I understand that the judge thought that, in this case, the result achieved a just solution. He thought here that each of the defendant and the third party bearing their own costs was a better solution than the defendant being required to bear its own costs as against the claimant (under the unchallenged application of the QOCS regime) and being required to pay the third party’s costs, when it had successfully seen off the entire claim.

The question is, however, as the judge also recognised a more fundamental one. If QOCS is intended to apply to all parties to any proceedings in which any claim for damages for personal injuries is made, it will have far-reaching economic repercussions in many fields – medical negligence claims, road traffic claims and industrial accident claims to name but a few.

I should start by referring briefly to the Jackson Report, pursuant to which QOCS was introduced. I shall not repeat here the careful discussion in Chapters 9 and 19 of the Jackson Report. Suffice it to say that the rationale for QOCS that Sir Rupert Jackson expressed in those sections came through loud and clear. It was that QOCS was a way of protecting those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded defendants. It was, Sir Rupert thought, far preferable to the previous regime of recoverable success fees under CFAs and recoverable ATE premiums. There is nothing in the Jackson Report that supports the idea that QOCS might apply to the costs of disputes between those liable to the injured parties as to how those personal injury damages should be funded amongst themselves.

Against that background, the first and fundamental issue is as to the correct construction of CPR Rules 44.13 to 44.17. It is here that, in my judgment, the judge fell into error. His starting point seems to have been a search for an applicable definition of the word “proceedings” in CPR Rule 44.13, since that rule makes it clear that QOCS applies to “proceedings which include a claim for damages … for personal injuries”. The judge then considered the definition of “claim for personal injuries” in CPR Rule 2.3. Whilst that definition is no doubt instructive, it is not directly relevant, since the precise term “claim for personal injuries” is not used in CPR Rules 44.13 to 44.17. Moreover the fact that the term is widely defined to mean “proceedings in which there is a claim for damages in respect of personal injuries …” does not much inform the proper meaning of the word “proceedings” in CPR Rule 44.13.

In my judgment, the proper meaning of the word “proceedings” in CPR Part 44.13 has to be divined primarily from the rules on QOCS themselves. The whole thrust of CPR Rules 44.13 to 44.16 is that they concern claimants who are themselves making a claim for damages for personal injuries, whether in the claim itself or in a counterclaim or by an additional claim (as defined in CPR Rule 20.2(2)). This can be seen from a number of the provisions including the following:-

It is true, however, that the word “proceedings” in CPR Rule 44.13 is a wide word which could, in theory, include the entire umbrella of the litigation in which commercial parties dispute responsibility for the payment of personal injury damages. I do not think that would be an appropriate construction. Instead, I think the word “proceedings” in CPR Part 44.13 was used because the QOCS regime is intended to catch claims for damages for personal injuries, where other claims are made in addition by the same claimant. There may, for example, in the ordinary road traffic claim, be claims for damaged property in addition to the claim for personal injury damages, and the draftsman would plainly not have wished to allow such additional matters to take the claim outside the QOCS regime.

Thus, in my judgment, CPR Rule 44.13 is applying QOCS to a single claim against a defendant or defendants, which includes a claim for damages for personal injuries or the other claims specified in CPR Rule 44.13(1)(b) and (c), but may also have other claims brought by the same claimant within that single claim. Argument has not been addressed to the question of whether QOCS should apply to a subsidiary claim for damages not including damages for personal injuries made by such a claimant against another defendant in the same action as the personal injury claim. I would prefer to leave that question to a case in which it arises. CPR Rule 44.13 is not applying QOCS to the entire action in which any such claim for damages for personal injuries or the other claims specified in CPR Rule 44.13(1)(b) and (c) is made.

I am fortified in my view as to the proper construction of the rule implementing the QOCS regime by a consideration of the effect of the judge’s construction on some of the more normal cases which I have already mentioned. In medical negligence claims, a claimant may sue a doctor, a health authority and the manufacturer of some piece of medical equipment. It would be strange if there could be no costs orders enforced between the defendants at the end of a long battle in the cross contribution claims between them where it was ultimately proved that the doctor and the health authority were blameless but the injury was caused by a defective piece of medical equipment. In such a case, the claimant’s damages might be agreed, and the argument might be almost wholly between the defendants – or possibly third parties, if any of them were not originally sued.

In road traffic cases, the typical situation is equally revealing. Injured passengers in a car may sue the driver of the car in which they are injured. That driver may seek to pass on the blame in CPR Part 20 proceedings to any number of other insured parties, such as another driver involved in the collision, or a local authority responsible for maintenance of the road. Again, there might be little argument as to the claimant’s entitlement to damages, but significant dispute between the insured parties as to who was to blame. It would be surprising if there could be no effective costs orders made between defendants in their contribution claims (if there was ultimately more than one) and between defendants and the third parties in the additional claims made.

The injustice in this case, to which Mr Cannon specifically pointed, was that the third party could not be joined as a defendant by the claimant because of jurisdictional issues, so the defendant had to join the third party if it wanted to make her liable. But that is not a special case. The defendant was a commercial party in the business of supplying packaged skiing holidays. The fact that its insurance was for some reason vitiated in this case is nothing to the point. It chose, in its own commercial interests, to bring the third party into the proceedings as a third party because, no doubt, it thought it commercially to its advantage to do so. In doing so, it would have weighed up the pros and cons including the costs consequences, which, on the defendant’s own case, it expected to be the ones normally to be expected in litigation before these courts (before QOCS were introduced). The defendant could have chosen to resist the claimant’s claim on its merits and saved itself the trouble and expense of joining the third party and the risk of an adverse costs order. It did not do so. Accordingly, I find myself unable to agree with the judge that the outcome, even in this case, of the construction that I have adopted creates a serious injustice for the defendant. The public policy that has led to the QOCS regime cannot be regarded as creating injustice in any sense, whether or not the defendant is in any particular case actually covered by insurance; and the result in relation to the costs of the CPR Part 20 claim is precisely what the defendant ought to have expected when it joined the third party.

I did not gain much assistance from the cases that the parties cited that were decided under the Legal Aid Act 1974, where there was a limited right to enforcement of costs orders against legally aided parties. That was a quite different statutory regime. Nor do I think that the cases concerning costs orders that were made generally in third party proceedings (mostly before the CPR) can be determinative of what was essentially a matter of construction of CPR Rules 44.13 to 17.

In my judgment, therefore, the judge was wrong to hold that the QOCS regime applied to the proceedings between the defendant and the third party in this case. In these circumstances, the costs order that the judge made as between those parties must be set aside. Mr Cannon submitted that in the event that we reached that conclusion, we should exercise our discretion afresh and conclude that the justice of the case demanded that there be no order for costs, because the defendant was justified in joining the third party, who might have been shown to have been responsible for the accident, the defendant’s liability being purely statutory under the Regulations.

I do not see any reason why the normal provisions of CPR Rule 44.2(2)(a) should not apply in this case as between the defendant and the third party. The defendant chose to join the third party and failed in its third party claim against her. The defendant should pay the third party’s costs.

For the reasons I have sought shortly to give, I would dismiss the defendant’s appeal in its entirety and allow the third party’s appeal. I would order that the defendant should pay the third party’s costs to be assessed on a standard basis if not agreed.

I agree that the appeal should be dismissed for the reasons given by Vos LJ. I agree also with the order he proposes. I would only wish to add one observation in relation to whether the QOCS regime applies to the defendant’s additional claim against a third party. Whilst the judge clearly considered that the application of the regime to the additional claim achieved a just result in the present case, the consequences of his construction of the QOCS rules would lead to unfair results in other cases. Thus, in a case where the claimant succeeds against the defendant in a claim for personal injuries, but the defendant’s additional claim against the third party fails, one would expect the defendant to pay both the claimant’s costs and the costs of the third party. Yet, on the judge’s construction, because the additional claim is made within proceedings which include a claim for damages for personal injury, the defendant must be relieved of the obligation to pay the third party’s costs. That result is at least as unfair, and probably more so, than that which the judge sought to avoid by adopting the construction which he did.

I agree with both judgments.