PI Brief Update

QOCs and Tour Operators: Further Thoughts - Matthew Chapman, 1 Chancery Lane

12/10/14. This Note is a further rumination on Frances McClenaghan’s recent post about the Court of Appeal’s very recent decision in Wagenaar. It considers the tactical implications (for Tour Operators) of the QOCs rules (in respect of Part 20 recovery claims against local suppliers).

It is not uncommon for a Tour Operator, saddled with a package holiday personal injury claim, to bring Part 20 proceedings against a Third Party supplier (whether the supplier is the Hotelier, a local excursion provider or a skiing tuition company). Such Part 20 recovery claims mitigate the (perceived – at least, in some quarters) unfairness of the tour operator being expected to pick up the tab for the negligence of its local, in-resort supplier (as a result of regulation 15 of the Package Travel etc. Regulations 1992).

Equally, the commercial and litigation advantages of such recovery proceedings are (or were) fairly obvious. The tour operator could – by the Part 20 device – secure the co-operation (with evidence, witnesses and so forth) of the supplier and, if things went wrong at trial, there was a party to whom any liability could be shifted.

In addition, the cost of pursuing the Part 20 claim could be mitigated – if the Defendant were successful and the main action dismissed – by the recovery of costs from the unsuccessful Claimant/his insurers. In Wagenaar v Weekend Travel Ltd & Another [2014] EWCA Civ 1105 the Claimant sustained injury while enjoying a package skiing holiday with the Defendant. Like any self-respecting UK consumer she sued her tour operator when she returned home and the tour operator Defendant duly joined the alleged negligent ski instructor as a Third Party in a Part 20 claim. At trial, the claim was dismissed. The Part 20 claim was also dismissed.

It was ordered that the Claimant should pay the Defendant’s costs and the Defendant should pay the Third Party’s costs. So far, so good. However, the Judge then applied the Qualified One Way Costs Shifting (QOCS) provisions with the result that neither costs order was to be enforced. This left the Defendant out of pocket with respect to the main action and the Third Party out of pocket with respect to the Part 20 claim. The Defendant appealed on the basis – among other contentions – that QOCS did not apply to costs incurred before the QOCS reforms had come into force.

The Court of Appeal dismissed the Defendant’s appeal on this and the other grounds pursued. QOCS were procedural provisions and could be applied (albeit, restrospectively) to pre-QOCS costs. What about the Third Party’s argument that QOCS did not apply to Part 20 claims? The Court of Appeal agreed. It was held that the proper meaning of the word “proceedings” in CPR 44.13 had to be gleaned from the QOCS rules themselves. Rules 44.13 to 44.16 concerned Claimants who were making a claim for damages for personal injury, whether in the claim, in a counterclaim, or by an additional claim. In the context of the QOCS regime, the word “proceedings” in CPR 44.13 did not, therefore, embrace the entire litigation process in which commercial parties disputed responsibility for the payment of personal injury damages.

CPR 44.13 did not apply QOCS to the entire action in which a claim for damages for personal injury was made. In the circumstances, the Defendant could not recover costs from the unsuccessful Claimant (because of QOCs) and was stuck with the costs of the successful Third Party (because QOCs did not apply to the Part 20 claim). Will this make Defendant tour operators think more carefully in future about joining Third Party suppliers?

Matthew Chapman
1 Chancery Lane

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