Qualified One-Way Cost Shifting (QOCS) is a legal rule in the UK that was introduced in 2013 to limit the liability of a claimant for the defendant’s costs in personal injury and related claims.
For the time being claimants can settle claims in a number of ways before trial and still be able to rely upon QOCS protections.
Cartwright v Venduct Engineering Ltd  EWCA Civ 1654
Defendants could not enforce costs against damages recovered via settlement where deemed costs orders (Tomlin Orders and accepted Part 36 offers) are relied upon. They are not orders of the court for the purposes of QOCS. If it had been the intention for rule 44.14 to cover settlements of whatever kind, different words and greater guidance would have been required.
The Supreme Court held that setting off costs against costs is a form of enforcement, and therefore covered by the QOCS provisions just as a set off between costs against damages would be.
Further judgments at the end of 2022 reinforced these appellate decisions where lacunae were identified and clarity provided:
Chappell v Mrozek  EWHC 3147 (KB)
Master Stevens rejected the defendant’s argument that the Defedant’s entitlement to costs, arising from late acceptance of a Part 36 offer, could be enforced from the claimant’s damages.
University Hospitals of Derby & Burton NHS Foundation Trust v Harrison  EWCA Civ 1660
The Court of Appeal rejected the defendant’s argument that QOCS protection was lost when the court was called upon to make an order under r.36.22(9) providing permission to accept an offer.
April 2023 Amendments to CPR
In May 2022 the Civil Procedure Rule Committee recommended changes to QOCS following the Supreme Court’s comments in Ho .
On 2nd February 2023 The Civil Procedure Amendment Rules 2023 were laid before Parliament with the stated intention that they should come into force on 6th April 2023, amending the Civil Procedure Rules 1998 from that date.
Among many other changes, rule 24 of the Amendment Rules amends CPR 44.14 so that deemed orders can be enforced, and offset against an aggregate of damages, interest and costs. The proposed changes to rule 44.14 are underlined below:
(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for
damages, or agreements to pay or settle a claim for, damages, costs and interest made in favour of the claimant.
(2) For the purposes of this Section, orders for costs include orders for costs deemed to have been made (either against the claimant or in favour of the claimant) as set out in rule 44.9.
(3) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
(4) Where enforcement is permitted against any order for costs made in favour of the claimant, rule 44.12 applies.
(5) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.
Four key points arise from these amendments:
- The rule at new CPR 44.14(1) will allow a defendant to enforce their costs entitlement up to the extent of any aggregate settlement, to include all damages, costs and interest made in favour of the claimant.
- Cartwright has been explicitly reversed: the rule at new CPR 44.14(2) will allow a defendant to enforce their costs against any type of settlement, including deemed costs orders such as Part 36 and Tomlin Orders.
- Ho has been explicitly reversed: the rule at new CPR 44.14(4) will allow set-off of the defendant’s costs against the claimant’s costs.
- Rule 1(3) of the Amendment Rules confirms that the amendments set out in rule 24 are subject to transitional provisions. This means that they only apply to claims where proceedings are issued (not served) on or after the 6 April 2023.
The transitional provisions are helpful in providing clarity to the position as, in my experience, defendants have not settled costs on the basis that the changes could be retrospective.
In the short term, our advice to claimant firms would be to issue any claim before 6 April 2023, where possible, to ensure that your client retains the more favourable QOCS rules.
Any accusations by defendants that the issue of these claims was premature should be simply rebutted by the argument that it was reasonable to take advantage of the transitional provisions, and to do otherwise was not in the claimant’s best interest.
It is very likely that many claimant firms will seek to issue relevant claims before 6 April 2023 to preserve the QOCS protections of the existing regime for those cases. This increase in issued claims over the next 2 months is likely to have a detrimental effect on court capacity and waiting times. Given the existing backlog, this is not inconsequential.
Litigants and litigators on both sides will need to factor in the rule changes when considering case strategy and settlement post April 2023.
Defendants will be motivated to make early Part 36 offers, in some cases before any, or adequate, expert evidence has been obtained. These early offers will need to be given extremely thorough consideration and could result in many claims settling prematurely simply because of the very real concerns of the claimant regarding their potential costs liabilities.
These rule changes may well stimulate claimant lawyers to seek ATE insurance products that insure the claimant’s lawyers’ own fees, to ensure that these are not drained by setoff. The cost of this ATE insurance will not be recoverable.
Longer term, there could be an increase in satellite litigation. This could be prompted by the very different QOCs regimes running in parallel for a period of years, or due to unintended and unforeseen consequences of the changes.
QOCS was pivotal to the Jackson reforms of personal injury litigation that took place in 2013. These amendments constitute a significant change to the QOCS rules and reverse one Supreme Court decision and a number of Court of Appeal decisions.
Defendants will claim that the new rules “level the playing field” in personal injury litigation and bring back teeth to defendants’ offers to settle.
It is certainly evident that claimants will have more “skin in the game” moving forward. Claimants will have to consider carefully the costs consequences of any defendant’s offer as the costs protection provided by the current version of the QOCS rules will be lost.
These rule changes have made bringing a claim much more uncertain and will therefore raise further questions around access to justice.
If you have any queries or concerns regarding these changes, please contact us for a more in depth discussion.
Andrew Crisp is a Costs Lawyer in the Costs and Litigation Funding Department at Clarion Solicitors.
You can find out more about our services here or you can contact the Costs and Litigation Funding team at firstname.lastname@example.org.