Catalano v Espley-Tyas Development Group Ltd

A pre-commencement conditional fee agreement remains a qualifying funding arrangement for the transitional QOCS rules even if it is later terminated and replaced. Where litigation services were provided under such an agreement before 1 April 2013, QOCS does not apply. The phrase “a funding arrangement” is not confined to an un-terminated agreement. This construction prevents a claimant from retaining the potential costs benefits of the former funding regime while using a replacement agreement to obtain QOCS protection if the claim is discontinued.

The claimant brought a personal injury claim for noise-induced hearing loss. She entered into a conditional fee agreement in June 2012, under which expert evidence was obtained, but entered into a replacement agreement in July 2013 after QOCS came into force.

She discontinued the action shortly before trial. The respondent claimed its costs under the deemed costs order. Deputy District Judge Harris held that the earlier agreement was a pre-commencement funding arrangement, with the result that QOCS did not apply.

The claimant appealed directly to the Court of Appeal. The central issue was whether termination and replacement of the pre-1 April 2013 agreement prevented it from engaging the QOCS transitional exclusion.

1. Appeal dismissed. The claimant had entered into a pre-commencement funding arrangement, so QOCS was excluded by CPR 44.17.
2. CPR 48.2(1)(a)(i) draws a wide definition. It includes both an agreement made before 1 April 2013 specifically for future advocacy or litigation services and an agreement under which such services were in fact provided before that date. The claimant’s solicitors had obtained expert evidence before the commencement date. That was sufficient to bring the agreement within the definition.
3. The court rejected the proposed qualification that the relevant agreement must remain un-terminated. The natural meaning of “a funding arrangement” covers a qualifying earlier agreement whether or not it is subsequently terminated. A contrary construction would permit an impermissible selection of benefits from both the former CFA and ATE regime and QOCS.
4. This reading was reinforced by the corresponding transitional provisions in Legal Aid, Sentencing and Punishment of Offenders Act 2012, section 44. The statutory preservation of recoverability for qualifying pre-commencement success fees and the CPR exclusion from QOCS were intended to operate consistently.
5. The court expressed no concluded view on cases where no work had been done under the first CFA, or where a first retainer had ended before commencement and new solicitors later entered a second CFA. It indicated that Casseldine might be difficult to support if work had been done, unless the later agreement retrospectively extinguished and replaced the earlier one. That possibility had been contemplated in Plevin v Paragon Personal Finance Ltd [2017] 1 WLR 1249.
6. The claimant was ordered to pay the respondent’s appeal costs, subject to detailed assessment if not agreed, with £10,000 on account.

• Court of Appeal (Civil Division) — dismissed the claimant’s appeal and upheld the exclusion of QOCS: [2017] EWCA Civ 1132.
• Manchester County Court — Deputy District Judge Harris, sitting as a regional costs judge, held that the pre-April 2013 CFA was a pre-commencement funding arrangement and that the claimant was liable for the respondent’s costs following discontinuance.