Claimant Estopped From Asserting QOCS Protection Following Dismissal Of PI Claim

Yvette Thomas v Southwick Car Centre Ltd involved a personal injury claim brought by Ms Yvette Thomas against Southwick Car Centre Ltd. The essence of the claim was that on 31 May 2012, Ms Thomas, whilst a lawful visitor to the Defendant’s premises, was stepping over a hosepipe when an employee of the Defendant lifted it, causing her to trip, fall and sustain injuries.

In 2012, Ms Thomas instructed Wilkin Chapman LLP (“WCL”) to pursue the claim. WCL acted for Ms Thomas on the understanding that they did so under the terms of a Conditional Fee Agreement (“CFA”) dated 3 August 2012. Ms Thomas also took out an “After the Event” (“ATE”) insurance policy in October 2012 to cover the litigation risks of her claim against the Defendant.

Ms Thomas’ claim was heard at trial by District Judge Goddard on 16 and 17 May 2017. DJ Goddard dismissed the claim in its entirety. Among his findings were that Ms Thomas and her witnesses had been untruthful in several respects and had exaggerated the extent of her injuries and losses.

Following the dismissal of her claim, cost orders were made against Ms Thomas on 9 June 2017 and 8 January 2021. The key issue in dispute between the parties is whether Ms Thomas has the protection of the Qualified One-Way Costs Shifting (“QOCS”) regime introduced to the Civil Procedure Rules on 1 April 2013.

Prior to 1 April 2013, successful claimants could recover CFA success fees and ATE insurance premiums from unsuccessful defendants. However, for CFAs entered into and ATE policies taken out from 1 April 2013 onwards, claimants instead have QOCS protection against adverse costs orders, subject to certain exceptions. Transitional provisions allow for recovery of success fees and ATE premiums where the CFA or ATE policy pre-dates 1 April 2013 (a “pre-commencement funding arrangement”).

Ms Thomas argued that she does not have a valid, enforceable pre-commencement funding arrangement and therefore has QOCS protection. The Defendant argued that Ms Thomas entered into a pre-commencement CFA and ATE policy in 2012, and is in any event estopped from asserting QOCS protection given her previous representations that QOCS did not apply.

Chronology of relevant events

• 3 August 2012 – Ms Thomas enters into a CFA with WCL.
• 10 October 2012 – Ms Thomas takes out an ATE insurance policy with ARAG plc.
• 20 October 2012 – WCL sends a letter of claim to the Defendant, stating the claim is being funded by a CFA and ATE policy.
• 28 May 2015 – Ms Thomas’ claim is issued in the County Court.
• 21 September 2015 – The claim is served along with notice of funding referring to the CFA and ATE policy.
• 21 December 2016 – Ms Thomas terminates WCL’s retainer and subsequently instructs new counsel, Mr Wayne Lewis.
• 16-17 May 2017 – The claim is heard at trial by DJ Goddard and dismissed.
• 31 May 2017 – DJ Goddard circulates his written judgment.
• 9 June 2017 – At the formal handing down of the judgment, Mr Lewis states to the court that it is “not a QOCS case”. DJ Goddard orders Ms Thomas to pay the Defendant’s costs.
• Early 2018 – Ms Thomas successfully complains to the Financial Ombudsman Service about withdrawal of cover under her ATE policy. The Ombudsman orders the insurer to reinstate the policy and indemnify Ms Thomas.
• 19 March 2021 – Ms Thomas first raises the argument that she has QOCS protection in supplemental points of dispute in the costs assessment proceedings.

The key issues for determination were:

1. Whether Ms Thomas’ August 2012 CFA and October 2012 ATE policy meet the statutory definition of pre-commencement funding arrangements.
2. If so, whether there are any grounds to conclude the CFA or ATE policy were void, non-existent or unenforceable such that they do not constitute valid pre-commencement funding arrangements.
3. If Ms Thomas does have QOCS protection, whether she is nonetheless estopped from asserting it.

The parties’ respective positions and arguments on each issue to be decided are as follows:

Issue 1: Does the Claimant have the protection of QOCS?

The Claimant’s position was that she did not have a valid, enforceable pre-commencement funding arrangement and therefore had QOCS protection. The Claimant argued:

1. The August 2012 CFA was not a real agreement. It was an “empty” or “shell” agreement under which no work was done until 2015 and which was superseded by the subsequent CFA with Mr Lewis.
2. The August 2012 CFA was unenforceable. The Claimant’s supplemental points of dispute stated: “The Claimant was led to believe she had entered into a CFA with her then Solicitors Wilkin Chapman around 31.07.12/03.08.12. However, on termination of that retainer and proceedings brought by Wilkin Chapman for recovery of fees from the Claimant, they apparently accepted there was no valid CFA at all – the CFA upon which they had sought to rely was unenforceable, therefore, null and void, ie did not exist…” [59]
3. The October 2012 ATE policy was dependent on a valid CFA. As the CFA was not valid, there was no cover under the ATE policy.

The Defendant’s position was that the Claimant had entered into valid pre-commencement funding arrangements and did not have QOCS protection:

1. The August 2012 CFA met the statutory definition of a pre-commencement funding arrangement under CPR 48.2(1)(a)(i). Work was done under the CFA before 1 April 2013, as evidenced by the letter of claim dated 20 October 2012.
2. The October 2012 ATE policy also met the statutory definition of a pre-commencement funding arrangement. It was taken out before 1 April 2013 and provided for recovery of the premium if the Claimant had been successful.
3. There was no evidence that either arrangement was void, non-existent or unenforceable. Unenforceability in any event would not preclude an arrangement from being a pre-commencement funding arrangement.

Issue 2: If the Claimant does have QOCS protection, is she estopped from asserting it?

The Defendant argued that the Claimant was estopped from asserting QOCS protection:

1. The Claimant had represented that QOCS did not apply. In the letter of claim dated 20 October 2012 and notice of funding dated 12 June 2015, the Claimant stated the claim was being funded by a pre-April 2013 CFA and ATE policy. On 9 June 2017, the Claimant’s counsel Mr Lewis confirmed to the court that this was “not a QOCS case”. [99]
2. The Defendant relied on these representations to its detriment. Mr Marshall’s evidence was that if the Claimant had claimed QOCS protection, the Defendant would have applied for a finding of fundamental dishonesty to disapply QOCS. The Defendant would also not have incurred the costs of detailed assessment proceedings. [101]
3. The Claimant was therefore estopped from resiling from the previously communicated position that QOCS did not apply.

The Claimant argued:

1. Estoppel cannot be used to validate an unenforceable or invalid CFA. The Claimant submitted that the decision in Price v Egbert H Taylor & Co Ltd (in which a claimant was estopped from asserting QOCS due to a representation that a pre-April 2013 CFA was in place) was “the application of estoppel to confirm a non-existent agreement and, as such (with great respect) “nonsensical”.” [103]
2. Estoppel cannot circumvent the statutory QOCS protection. [104]

Decision

Costs Judge Leonard found that both the CFA and ATE policy, on their face, met the statutory definition of pre-commencement funding arrangements. They were entered into before 1 April 2013 for the purposes of providing litigation services and insurance in relation to Ms Thomas’ claim. There was no basis to conclude either arrangement was void or non-existent.

The judge rejected arguments that unenforceability of a CFA or ATE policy means they cannot constitute pre-commencement funding arrangements. The statutory definitions do not require the arrangements to be enforceable. In any event, there was insufficient evidence to establish the CFA or ATE policy were unenforceable. In fact, Ms Thomas appeared to have secured an indemnity under the ATE policy through her complaint to the Financial Ombudsman Service.

Accordingly, Costs Judge Leonard concluded Ms Thomas did not have QOCS protection as she had the benefit of pre-commencement funding arrangements.

Even if that conclusion was wrong, the judge would have found Ms Thomas was estopped from claiming QOCS protection. Through the October 2012 letter of claim and notice of funding, and counsel’s statement on 9 June 2017 that it was “not a QOCS case”, Ms Thomas clearly represented to the Defendant that QOCS did not apply. The Defendant relied on those representations to its detriment, by not applying for a finding of fundamental dishonesty to disapply QOCS and incurring costs in the assessment proceedings. In those circumstances, it would be unconscionable to allow Ms Thomas to resile from her previous position and claim QOCS protection.

In summary, Costs Judge Leonard determined that Ms Thomas does not have QOCS protection as she had entered into valid pre-commencement funding arrangements prior to 1 April 2013. Further or alternatively, she was estopped from asserting QOCS protection given her previous representations that QOCS did not apply in this case.

Summary of Conclusions

“The Claimant, in August and October 2012, entered into two pre-commencement funding arrangements, as defined by statute. The first was the August 2012 CFA. The second was the October 2012 ATE policy.

“There is no basis for the conclusion that either the August 2012 CFA or the October 2012 ATE policy were in some way void or non-existent.

“A pre-commencement funding arrangement does not have to be an enforceable agreement. The word “enforceable” does not appear in the statutory definition of a pre-commencement funding arrangement, and it is not open to the Claimant to add it.

“There is in any event no adequate basis for concluding that either the August 2012 CFA or the October 2012 ATE policy were unenforceable. In fact, the Claimant appears, through the offices of the FOS, to have secured an indemnity, under the October 2012 ATE policy, for the Defendant’s costs.

“For all those reasons, my conclusion is that the Claimant does not have the protection of QOCS

“I not reached that conclusion, I would have found that the Claimant, in representing to the Defendant that this was not a QOCS case, (a) denied the Defendant the opportunity to apply for a finding of fundamental dishonesty, which application would have had every prospect of success, and (b) caused the Defendant to incur expenditure in these detailed assessment proceedings which would otherwise have been avoided. In consequence, I would have found that the Claimant was estopped from claiming the protection of QOCS.” [115-120]