Qualified one way costs shifting

Qualified one way costs shifting (qocs) was introduced in April 2013. The basic principles of which are, or should be, well known to anyone dealing with personal injury claims. 

In a nutshell where the claimant is awarded damages and interest, enforcement of any costs award in the defendant’s favour, usually orders for costs following interim applications or failing to beat a P36 offer made by the defendant, can be enforced up to the level of damages and interest awarded to the claimant. 

If the claimant is unsuccessful with a claim for personal injury the claimant will not be liable for the defendant’s costs, CPR 44.14(1). Not liable in the sense that the claimant would usually still be responsible for payment of the defendant’s costs however the defendant could not enforce for payment of those costs without permission of the court being obtained. 

There are also exceptions to the general rule which would allow enforcement without the permission of the court where the claimant has disclosed no reasonable grounds for bringing a claim CPR 44.15(a), the proceedings are an abuse of the courts’ process  CPR 44.15(b), the conduct of the claimant or someone acting on the claimant’s behalf with the claimant’s knowledge of such conduct is likely to obstruct the just disposal of proceedings CPR 44.15(c) or where a claim is found to be fundamentally dishonest CPR 44.16(1).

These facts have been clear from the outset of the introduction of qocs. However there have been grey areas which, in a series of rulings from the courts, have clarified the scope of qocs and enforcement. 

Set-off

It can often be the case that the award of costs to a defendant will outweigh the level of damages and interest recovered by a claimant. Either through damages and interest being modest, the level of costs incurred increasing substantially at the trial preparation and/or trial phases or where the arguments on a case become less about damages and more about costs specifically with well-placed P36 offers. 

CPR 44.12 allows for costs awarded to the respective parties to be set-off. There was some debate as to whether this would be classed as enforcement and on appeal at first instance the court in Darini and another -v- Markerstudy Group (unreported), 24 April 2017, held that a set-off of costs was a type of enforcement.

The Court of Appeal, in a further hearing dealing with costs following on from the appeal in Howe -v- MIB, has however confirmed that a set-off of costs is not enforcement. Therefore, in situations where the recoverable costs entitlement for the defendant is likely to exceed the level of damages and interest awarded to the claimant, it is important to seek a set-off of costs awarded to the respective parties to maximise the actual recovery of costs and the net liability for the defendant.

Multiple defendants

The Court of Appeal has also recently clarified that, in claims where the claimant has issued proceedings against multiple defendants, those defendants against whom  the claimant has lost or discontinued and obtained an order for costs against the claimant can proceed to enforce the recovery of those costs against any damages and interest awarded to the claimant from any other defendant, Jeffrey Cartwright -v- Venduct Engineering Limited [2018] EWCA Civ 1654.

There is however an important caveat that any damages and interest must have been awarded by the court for CPR 44.14(1) to apply. Therefore, where settlement is confirmed in a Tomlin Order as opposed to a Consent Order, the defendant would be precluded from enforcing against the claimant.

Does qocs apply?

It is important to be aware of when qocs applies which may not be immediately obvious. Qocs applies to personal injury claims post April 2013, unless the claimant has a pre-April 2013 CFA and/or ATE in place.  

Although qocs restricts enforcement against a claimant, no such restriction would apply if another party is ordered to pay costs. This could be another defendant, the claimant solicitors following a wasted costs order or indeed any party aside from the claimant. Consideration should therefore be given as to whether the claimant’s solicitors, as opposed to the claimant’s conduct, has led to a costs order. 

Further qocs also only applies to claims for personal injury, where a claim is pursued for something other than or in addition to personal injury such as pure financial loss qocs will not apply, CPR 44.16(2)(b) and Faiz Siddiqui -v- The Chancellor, Masters and Scholars of The University of Oxford [2018] EWHC 536 (QB).