Two appeal cases nearly exactly a year apart deal with subtly different points of claims for contribution between defendants and with costs protection. Both cases arose out of sport or adventure activities.
In the first, Wagenaar v Weekend Travel Ltd [2014] EWCA Civ 1105, the claimant was injured while skiing in France in 2007 and claimed (under the 1992 Package Travel Regulations) against the tour operator. The second case, South West Strategic Health Authority v Bay Island Voyages [2015] EWCA Civ 708, arose from an incident in a rigid inflatable boat in the Bristol Channel in 2008 (and was brought under the Athens Convention).
In Wagenaar, the claim was funded by a household legal expenses insurer and therefore the claimant had neither entered into a conditional fee agreement nor taken out After-The-Event (ATE) Insurance. Proceedings were issued in March 2010. The defendant tour operator’s solicitors subsequently joined the ski guide as a third party, seeking a claim for contribution. The tour operator entered into a conditional fee agreement (CFA) with counsel on 28 March 2013, days before the implementation of both Part II of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the 60th update to the Civil Procedure Rules on 1 April 2013.
The statute and the rule changes gave effect to recommendations for “interlocking reform” made by Lord Justice Jackson in his Review of Civil Litigation Costs that, respectively, the recoverability of additional liabilities in costs should be brought to an end and that a regime of qualified one-way costs shifting (QOCS) should be introduced for personal injury cases. [An associated ten per cent increase in general damages for personal injuries had been brought about by the Court of Appeal in Simmons v Castle [2012] EWCA Civ 1288.]
The claimant’s claim failed at trial, as did the defendant’s claim against the third party. The question for the Court of Appeal was what costs regime should apply in these circumstances?
The Court endorsed the judge’s finding that the claimant’s claim should be protected by qualified one-way costs shifting. There was no pre-commencement funding arrangement that would, under CPR 44.17 and 48.2, have prohibited that result. It followed that while Dr Wagenaar could be ordered to pay the successful tour operator costs, the rules on QOCS as set out at CPR 44.13 – 44.17 would operate to prevent such an order from being enforced. The Court expressly supported the judge’s finding that the QOCS rules should be interpreted as having retrospective effect, even despite the fact that most of the costs had been incurred before April 2013. Vos LJ observed that there was: “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.”
What then of the unsuccessful claim for contribution that the defendant had pursued against the ski guide? Given the retrospective effect of QOCS, would it follow that the tour operator, the unsuccessful claimant in that action, should be protected against the enforcement of adverse costs?
The Court found that it should not and it overturned the judge’s decision to that effect. The correct approach was to look at the scope of QOCS protection. Under CPR 44.13, QOCS applies to “proceedings which include a claim for damages (a) for personal injuries”. It was clear from this provision, and from the Jackson report, that only those suffering injury themselves were to be protected. Vos LJ held that QOCS should not apply to “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.”
The practical consequences were that the unfortunate defendant tour operator was not only unable to enforce costs against the unsuccessful injured claimant but in addition was not protected against the third party enforcing its costs in respect of the tour operator’s failed contribution claim.
Wagenaar does not appear to have been referred to in the second case of South West Strategic Health Authority v Bay Island Voyages (subsequently referred to as SWSHA v BIV). That may not be surprising, since it was pursued under UK regulations that gave effect to the Athens Convention of 1974 relating to carriage of passengers at sea and did not raise any questions of QOCS. What it has in common with Wagenaar is the question of classification of the contribution claims between defendants.
SWSHA v BIV was a claim by an employer against an organiser of motor boat trips. Dr Feest, an employee of the claimant health authority, pursued a claim against her employer for serious back injuries allegedly suffered during a motor boat trip provided by the defendant BIV as part of a team-building activity arranged by the Health Authority. SWSHA joined BIV as a third party in order to seek contribution, under section 1 of the Civil Liability (Contribution) Act 1978, should it be found liable to Dr Feest.
Proceedings between the two organisations came before the Court of Appeal in July 2015. Tomlinson LJ regarded the issues raised as “recondite but important”. The Athens Convention sets out an exclusive regime for claims “for damages for the death of or personal injury to a passenger... brought against a carrier“. The especially recondite point was prescription or limitation which, under the Convention, was that actions for damages for personal injury to passengers “shall be time barred after a period of two years” from disembarking and also that no action should be brought “after the expiration of a period of three year.” What was the effect of these provisions on the claim between the defendant SWSHA and BIV as third party?
The first point of note is that the Court held that the contribution claim was not an action for damages for injury brought by a passenger against a carrier. Hence the exclusivity of action set out in the Convention would not apply to the contribution claim between the defendant and the third party. This is perhaps much in the same way as the finding that special regime of costs protection via QOCS did not apply, in Wagenaar above, to the contribution claim.
What then was the effect of the two and three year time bars in the Convention? Dr Feest had started her claim more than two years after disembarking and SWSHA had started its contribution proceedings more than three years afterwards. Was it therefore stale?
The Court found that it was not. The periods in the Convention, on proper interpretation, did not extinguish rights but instead served as a procedural bar against pursuing them further. The periods in the Convention were expressed in terms very close to those used in the Limitation Act 1980, which provided (at section 14B, headed Overriding time limit for negligence actions not involving personal injuries) that claims “… shall not be brought after the expiration of fifteen years.” That term had been interpreted as being merely a procedural time bar and the same approach should be adopted to the periods in the Convention. Consequently, the right of action was not extinguished and SWSHA’s contribution claim against BIV claim could therefore proceed.
This very fine, almost academic, distinction was important. It meant the condition in the second limb of section 1(3) of the 1978 Act, which is set out below (bold emphasis added), had not been fulfilled because the claim was barred only by the expiry of the period and it had not been extinguished.
A person shall be liable to make contribution … notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based.
This subtle distinction between mere procedural bar and substantive extinguishing of rights thus permitted the Court to allow SWSHA’s appeal against the earlier decision by the Mercantile judge to dismiss the contribution claim as being time-barred.
What Wagenaar and SWSHA re-emphasise is the central importance of understanding that a contribution claim between those allegedly responsible for jointly causing personal injuries can and will be subject to quite different costs and procedural regimes than those which apply to the underlying personal injury claim itself. Both cases reinforce the dangers of not grasping this point. As Vos LJ observed in Wagenaar, there is very often “significant dispute between the insured parties as to who was to blame.”
Looking forward, the court fees associated with contribution claims arising from incidents causing personal injury will also be important. Under proposals for further increases in issue fees put forward by the Ministry of Justice in July 2015, the fees for issue personal injury claims are set to remain at five per cent of the amount claimed and will be capped at £10,000 (equivalent to an injury claim valued at least £200,000). In claims other than for personal injuries - which must surely cover contribution proceedings between alleged tortfeasors, such as in Wagenaar - the five per cent cap will be increased to £20,000. The Ministry’s brief consultation on the new fee increases closed on 15 September. Given the speed of its activity, it seems realistic to expect the new figures to be introduced quickly.
After these changes, a claim for personal injuries valued at £350,000 would be subject to an issue fee of £10,000 to be paid by the claimant and reimbursed by the defendant if it succeeds. A contribution claim for the same amount would however be subject to an issue fee of £20,000 (assuming a full indemnity was sought from the third party). This potential costs difference is a new factor that parties, defendants and liability insurers in particular, involved in injury claims will need to understand. It brings a further twist to the importance of thinking about costs regimes and costs outcomes early, especially as there will be a changing and heterogonous mix of pre- and post- QOCS personal injury claims in the civil justice system for several years to come.
Alistair Kinley is director of policy and government affairs at insurance and risk law firm, BLM.
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