Birley & Anor v Heritage Independent Living Ltd

Factual and Procedural Background

The appeal concerns costs arising from a claim involving a recruitment agency, Company A, and an individual, Plaintiff, who applied to be registered with Company A. Plaintiff had two prior convictions, which Company A allegedly disclosed to a third party in 2018. Plaintiff alleged breaches of data protection laws, misuse of private information, and breach of confidence. Company A denied wrongdoing, asserting the disclosure was inadvertent and that the Information Commissioner's Office concluded no offence occurred.

Pre-action correspondence began in January 2019, including anonymised letters and a letter of claim in October 2019, which raised claims including personal injury related to mental health harm from the disclosures. The solicitors indicated a Conditional Fee Agreement (CFA) with a success fee and reserved the right to take out after the event (ATE) insurance. They also asserted that Qualified One-Way Costs Shifting (QOCS) would apply to any personal injury claim.

A claim form was issued on 3 August 2021, including causes of action from the letter of claim and personal injury damages. The deadline for service was 3 December 2021. Plaintiff died on 27 September 2021, and Plaintiff's executors applied for a stay of proceedings until 3 March 2022, which was granted after the deadline for service expired. An amended claim form substituting the executors was filed and served by 28 February 2022.

Company A acknowledged service but applied to set aside service and strike out the claim for late service pursuant to CPR r3.4. The application was heard by District Judge Nicolle, who accepted Company A's submission that the claimants had failed to apply for an extension of time to serve the claim form and struck out the claim for lack of jurisdiction due to late service. The judge also found continuing with the claim was an abuse of process, disapplied QOCS, and ordered the claimants to pay Company A's costs.

The claimants appealed on three grounds relating to the validity of the strike out and costs orders. HHJ Owen heard the appeal, dismissing grounds concerning the power to strike out and award costs, but allowing the appeal on the abuse of process ground, finding no abuse of process had occurred. HHJ Owen reinstated QOCS and varied the costs order accordingly, awarding the claimants all the costs of the appeal below.

Company A obtained permission to appeal to the Court of Appeal, raising issues about alleged "cherry-picking" of pre-action protocols to benefit from success fees and QOCS simultaneously and whether such conduct amounted to abuse of process. Additionally, Company A had been dissolved shortly before the appeal hearing, and the insurers sought to continue the appeal under the Third Parties (Rights against Insurers) Act 2010, resulting in their joinder to the proceedings.

Legal Issues Presented

1. Whether cost provisions permitting recovery of a CFA success fee and an ATE insurance premium could apply simultaneously with QOCS in a personal injury claim that includes media-related causes of action.
2. Whether the claimants' failure to serve the claim form on time justified striking out the claim and disapplying QOCS on the basis of abuse of process.
3. Whether the court had jurisdiction and power to make costs orders following the strike out for late service.
4. Whether the claimants' solicitors' conduct, including alleged "cherry-picking" of pre-action protocols, amounted to an abuse of process.
5. Whether the insurers could be joined as parties following the dissolution of Company A under the Third Parties (Rights against Insurers) Act 2010.

Arguments of the Parties

Appellant's Arguments

• Company A argued that the claimants' solicitors had "cherry-picked" pre-action protocols to recover success fees and ATE premiums while also relying on QOCS protections, which was improper.
• They contended that the failure to comply with the Media and Communications (MAC) Protocol and other pre-action conduct amounted to abuse of process justifying strike out and disapplication of QOCS.
• Company A submitted that the claimants' failure to serve the claim form on time and lack of notification constituted deliberate or contumelious default.
• Regarding costs, Company A challenged the award of all appellate costs to the claimants, arguing the claimants had failed on significant grounds and had not raised abuse of process before the District Judge.
• Following dissolution, Company A’s insurers sought to continue the appeal under statutory provisions transferring rights to third parties.

Respondent's Arguments

• The claimants argued that the failure to serve the claim form on time was not deliberate or inexcusable and did not amount to abuse of process.
• They maintained that the claim included a genuine personal injury element (psychiatric injury) alongside media claims, justifying the application of QOCS.
• Claimants contended that the pre-action correspondence, although anonymised and imperfect, did not amount to abuse of process nor justify striking out.
• They argued that Company A had not explicitly applied for strike out on abuse of process grounds initially, limiting the basis for costs orders.
• Regarding the insurers’ joinder, the claimants accepted the statutory provisions but there was no outstanding dispute anticipated.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed the question of whether the relevant cost provisions allowing recovery of CFA success fees and ATE premiums could coexist with QOCS in a claim combining media and personal injury elements. It found that prior to April 2019, publication and privacy claims allowed recovery of success fees and ATE premiums, while QOCS applied to personal injury claims. Since the claim included psychiatric injury damages caused by wrongful disclosure of private information, it legitimately fell within both regimes. The court rejected the appellant's "cherry picking" argument, explaining the legislative scheme and statutory instruments allowed such concurrent application.

On the abuse of process and striking out issue, the court reviewed the procedural history and the District Judge’s findings. It agreed with HHJ Owen that the failure to serve the claim form on time, without more, did not constitute abuse of process. The court emphasised the high threshold for abuse of process requiring inordinate or inexcusable delay or wilful default, none of which was evidenced. The anonymisation of pre-action correspondence and other procedural errors were acknowledged as mistakes but not amounting to abuse or justifying strike out.

The court noted the importance of adherence to pre-action protocols but found the debate over which protocol applied was unproductive since the alleged abuses would amount to abuse regardless of protocol. It held that the claimants’ conduct was lax but did not cross the abuse threshold.

Regarding costs, the court upheld HHJ Owen’s broad discretion to award costs of the action and appeal. It found the claimants were the overall winners and that awarding them 100% of the costs of the appeal below was within the judge’s reasonable discretion, despite some unsuccessful grounds.

Finally, the court addressed the dissolution of Company A and the joinder of its insurers under the Third Parties (Rights against Insurers) Act 2010. It held that joinder was appropriate to resolve issues relating to costs orders and enforcement, ensuring all relevant parties were before the court.

Holding and Implications

The court DISMISSED THE APPEAL.

The court held that the cost provisions permitting recovery of CFA success fees and ATE insurance premiums can apply concurrently with QOCS in claims combining media and personal injury elements. It confirmed that failure to serve a claim form late, without deliberate or contumelious conduct, does not amount to abuse of process justifying strike out or disapplication of QOCS. The court upheld the discretion to award costs to the successful party and found no error in awarding all costs of the appeal below to the claimants.

The joinder of insurers following the dissolution of Company A was proper to ensure enforceability and finality of costs orders. The decision has direct effect on the parties regarding costs liability and procedural conduct but does not establish new precedent beyond the application of existing principles on abuse of process, QOCS, and costs recovery in mixed claims.