Tag: QOCS

QOCS and Fundamental Dishonesty: where are we now?

Katie SpencerLeave a comment

The rules surrounding qualified one-way costs shifting (QOCS) were first introduced in April 2013, with the general rule being that a Claimant who has suffered a personal injury cannot be ordered to pay the costs of a Defendant, even if they lose their claim. QOCS applies in all personal injury claims, apart from when the Claimant is found to be fundamentally dishonest.

Fundamental dishonesty is an argument that can be raised by a Defendant when they believe the Claimant has not been truthful when bringing a claim.

Howlett v Davies [2017] was the first Court of Appeal case where the exception to QOCS was considered, supporting the procedure that should take place when a Claimant has been fundamentally dishonest. In this case, the Claimants alleged that they were passengers in the vehicle at the time of a road traffic accident. However, this was disproven factually as they were found to be lying regarding their presence. The Claimants were found to be fundamentally dishonest within the meaning of CPR 44.16(1) and costs were awarded against the Claimants as an exception.

Changes to the rules on QOCS were introduced on 6 April 2023, applying to any cases issued thereafter.

A main effect this has had relates to Part 36 offers; Part 36 offers now have the added incentive that costs after the 21-day period can be enforced against damages, without an Order from the Court.

It has been over 10 years since the rules on QOCS were introduced and more than a year since the changes were implemented, so where are we now?

In the recent personal injury case of Hamed v Ministry of Justice [2024], the Judge found the Claimant to be dishonest when exaggerating the injuries sustained. Therefore, no damages were awarded and QOCS were disapplied pursuant to the provision of CPR 44.16.

Practice Direction 44, Paragraph 12.4 states:

“In a case to which rule 44.16(1) applies (fundamentally dishonest claims) –

(a) the court will normally direct that issues arising out of an allegation that the claim is fundamentally dishonest be determined at the trial;

(b) where the proceedings have been settled, the court will not, save in exceptional circumstances, order that issues arising out of an allegation that the claim was fundamentally dishonest be determined in those proceedings;

(c) where the claimant has served a notice of discontinuance, the court may direct that issues arising out of an allegation that the claim was fundamentally dishonest be determined notwithstanding that the notice has not been set aside pursuant to rule 38.4;

(d) the court may, as it thinks fair and just, determine the costs attributable to the claim having been found to be fundamentally dishonest.”

 

Different courts are therefore adopting a consistent approach to exceptions to QOCS, despite the rule change of April 2023. The same outcome was drawn in both Howlett v Davies [2017] and Hamed v Ministry of Justice [2024].

Similarly, in the case of Shaw v Wilde [2024], the Defendant raised the argument that the Claimant had been fundamentally dishonest where the Claimant had lied to experts and the Court about the extent of his injuries. It was found that the Claimant should pay the Defendant’s costs due to this dishonesty. Again, CPR 44.16(1) was used to support this decision.

In conclusion, despite the progression of time, the rules surrounding QOCS and Fundamental Dishonesty are applied consistently.

Annual open meeting of the Civil Procedure Rules Committee – 13 May 2022  – Costs update

Andrew McAulay1 Comment

The CPRC annual open meeting took place today via Teams in keeping with the format of the previous two years.

The meeting was opened by the Master of the Rolls, The Rt. Hon. Sir Geoffrey Vos, who spoke about the Civil Justice Committee’s current holistic review of costs as a whole in light of the various radical changes coming forward. The group will look at the recent changes to guideline hourly rates, costs budgeting (which he said remained controversial and needs another look), costs in the pre action space, and upcoming fixed costs changes. It was confirmed that there may be recommendations to the CPRC following the CJC’s report as it is important to look at how these issues interact and to ensure that things are working smoothly.

The open meeting includes time for questions and, perhaps unsurprisingly, there were plenty of costs issues raised, particularly in respect of the upcoming changes to fixed costs. The following costs matters were discussed and the full minutes will likely be published in June:

Fixed Recoverable Costs

There are currently 2 open consultations in respect of QOCS and vulnerability. Comments are due in by 20 June. Thereafter, the rules are scheduled to be approved at or by the CPRC December 2022 meeting, with a view to implementation in April 2023. Additional questions were asked regarding late acceptance of Part 36 offers and whether the new FRC rules would include any penalties. It was confirmed that this was not covered by the consultation.

QOCS/Part 36

A question was asked regarding any proposed changes to the QOCS position where there is late acceptance of a Defendant’s Part 36 offer. It was confirmed that the QOCS review looks at the position arising from Ho v Adelekun only.

Guideline Hourly Rates

Various questions regarding the increased GHRs were raised, including whether this would lead to an increase in the £1,500 cap for Provisional Assessment costs and whether periodic reviews/updates are anticipated to prevent stagnation.  It was confirmed that the CJC’s costs group, led by LJ Birss, is looking at costs as a whole and Guideline Hourly Rates is one of the specific areas that will be considered along with pre action costs, budgeting and fixed costs. They will report soon and invite consultation responses with a final report due in the autumn. That report will not include detail of any proposals but will look at broader principles.

Aldred v Cham

Changes to CPR 45.29(h) were agreed in principle at last year’s open meeting but have not yet been implemented. The detail of that proposal can be found here. It was confirmed that that decision was subject to the wider work of the fixed costs committee on CPR 45 in its entirety. The Aldred point will be dealt with in those changes due in April next year.

Fee Remissions

There are conflicting judgments regarding the recoverability of Court fees between the parties when a party has chosen not to seek a fee remission. The lacuna committee considered the issue but work is currently paused as the MOJ considers the policy implications.

N260

Some minor changes to the N260 were suggested during the consultation on the electronic statement of costs. These fall into two categories, firstly, changes arising from the GHR report involving a certificate to show where the work was carried out and, secondly, minor changes to make the form more user friendly. There is currently no time frame for those changes.

Belsner v Cam Legal Services Ltd

The issues arising from Belsner v Cam will again fall within the CJC costs group’s work on pre action costs.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Consultations open in respect of QOCS and Vulnerable Parties

Andrew McAulay1 Comment

Following the fixed costs consultation published in September 2021, two further consultations have now opened in respect of provisions for vulnerable parties and the QOCS issues arising from Ho v Adelekun [2021] UKSC 43.

The consultations close on 20 June 2022 and details of how to respond can be found here.

QOCS consultation

We looked at the judgment in Ho v Adelekun back in December. The case clarified the position in respect of the interplay between CPR 44.12 and CPR 44.14, and the effect of QOCS on a Defendant’s ability to offset an order for their own costs against the Claimant’s costs. You can read that article here.

The decision confirmed that Defendants can only enforce their costs orders up to the amount ordered for the Claimant’s damages and interest (CPR 44.14 (1)). It was suggested at the time that this may lead to results that appeared unfair and that the CPRC may need to consider the issue to put right any ambiguities.

The proposed changes seek to address those concerns by adding the amount of any costs order to the sums set out in CPR 44.14 (1) and by including ‘deemed orders’ under Part 36:

Full details can be found here.

Vulnerable Parties Consultation

The vulnerable parties consultation proposes to add additional provisions for an amount in excess of fixed costs to be claimed where a party or witness is vulnerable, where that vulnerability has caused additional work to be required, and the claim is for an amount at least 20% greater than the applicable fixed costs.

Such claims will be assessed and, if the assessed sum is less than 20% greater than fixed costs, the court will make an order for the lesser amount of fixed costs or the assessed costs.

Full details can be found here.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

CPRC Costs Sub-Committee provides update on fixed costs

Andrew McAulayLeave a comment

The minutes of the CPRC’s March 2022 meeting were published today and can be found here.

The Costs sub-Committee confirmed that work has commenced in respect of the extended fixed costs regime which was reported last year. The committee’s first meeting was held last month but a precise timetable has yet to be fixed.

The Sub-Committee will also be considering FRC in the context of vulnerable witnesses/parties and there is likely to be a substantive review of the structure of CPR 45.

It was also confirmed that a consultation is anticipated in respect of Qualified One Way Costs Shifting (QOCS).

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Ho v Adelekun – update

Andrew McAulay2 Comments

The long awaited judgment in Ho v Adelekun [2021] UKSC 43 was handed down in October with the appeal being unanimously allowed.

The judgment clarifies the position in respect of the interplay between CPR 44.12 and CPR 44.14, and the effect of QOCS on a Defendant’s ability to offset an order for their own costs against the Claimant’s costs.

The issue arose from a personal injury claim which settled by way of Part 36 acceptance. A dispute ensued regarding whether fixed costs applied and the Defendant was successful on that point in the Court of Appeal. The Defendant was awarded their costs in the sum of £48,600. The Claimant had recovered damages of £30,000 and fixed costs of £16,700. As QOCS applied, and there was no order for damages, the Defendant could not offset their costs against the Claimant’s damages but argued that they could still offset part of their costs against the Claimant’s costs under CPR 44.12. 

CPR 44.14 states :

44.14 – Effect of qualified one-way costs shifting

(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 and interest made in favour of the claimant.

(2) 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.

(3) 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

The judgment confirms that off-setting under CPR 44.12 constitutes an enforcement for the purpose of CPR 44.14, above. As such, a Defendant’s costs can be set-off against opposing costs orders but only to the extent that those costs do not exceed the amount ordered for the Claimant’s damages and interest (absent any QOCS exceptions such as fundamental dishonesty). In this case, as there was no order for damages, there could be no offset against costs and the Defendant would recover nothing.

The word ‘order’ is key, any other form of settlement will mean that the Defendant cannot recover any of its costs unless an exception applies. A Part 36 acceptance or a Tomlin order where the damages provision is not within the order will not suffice. Similarly, where there is an order for damages but those damages are small, a Defendant’s costs (which may significantly exceed those damages) will be capped at that damages amount, even where the Claimant has recovered some costs.

The judgment has serious implications for Defendants and it was conceded that it may cause results that look ‘counterintuitive and unfair’. At paragraph 9, it was suggested that the issue may need to be reviewed by the Civil Procedure Rules Committee to put right any ambiguities. The minutes of the CPRC November meeting are now available here and confirm that the review is likely to be delayed until after the work on fixed recoverable costs is concluded.

This article originally featured in our November newsletter which can be found here. It has been updated to include the outcome of the recent CPRC meeting.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

No Qualified One-way Costs Shifting protection for counterclaiming defendant

Robert PattersonLeave a comment

Qualified One-way Costs Shifting (QOCS) protection applies to claimants in proceedings which include a claim for damages for personal injuries. While there is no argument that the term ‘claimant’ can mean a person bringing a counterclaim, how the court should interpret the term ‘proceedings’ for the purposes of CPR rule 44 is open to debate.

Indeed, this question has been subject to two contrary authorities at Circuit Judge Level.

In Ketchion v McEwan (26 June 2018), HHJ Freedman found that the term ‘proceedings’ must be given a wide meaning with the result that QOCS protection is extended to the costs of both the main action and the counterclaim. The natural result of that decision was that the unsuccessful defendant could avoid costs orders arising from both the claim and the counterclaim

Taking a contrary view, HHJ Venn in Andrew Waring v Mark McDonell (6 November 2018) interpreted ‘proceedings’ more narrowly as meaning the claim or the counterclaim, thereby treating the claim and the counterclaim as separate proceedings; the defendant would therefore have QOCS protection in respect of the counterclaim, but not the claimant’s successful claim

The decision in Waring has now been supported by HHJ Gargan in Jim Sutcliffe v Aftab Ali (15 January 2021). The Judge found that treating the claim and the counterclaim as separate proceedings better reflected the underlying principles behind the QOCS reforms, as to do otherwise would encourage defendants to bring weak or tenuous counterclaims to provide a defence to any costs claim by a successful claimant.

Robert Patterson is an Associate in our Costs and Litigation Funding team. If you have any questions please contact him on 0113 3363337 or at robert.patterson@clarionsolicitors.com.

This article was featured in our March 2021 newsletter, see the full newsletter here.

Confused by QOCS? A brief summary of everything you need to know…

Joanne ChaseLeave a comment

Qualified One way Costs Shifting (QOCS) was introduced in April 2013 for personal injury matters and it is essentially a rule that means a successful defendant cannot recover their costs from an unsuccessful claimant except in specific circumstances (such as the claim being fundamentally dishonest).

2018 saw 3 decisions of interest; one from the Court of Appeal, and 2 County Court decisions that conflicted each other. It is likely that the issues in the County Court decisions will be tested again, hopefully with binding authority.

Court of Appeal – 28/06/18: Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654

This was a NIHL (Noise Induced Hearing Loss) claim where the claimant pursued 2 defendants (as is often the case with industrial disease matters).

The claimant successfully negotiated settlement against defendant 1, and dismissed the claim against defendant 2. Defendant 2 argued that their costs (following the discontinued claim) could be enforced against the claimant up to the level of damages recovered from defendant 1. It was argued that the purpose of QOCS was to ensure that the claimant was no worse off after litigation had been conducted than before it had started. The court of appeal agreed – defendant 2 was entitled to their costs, limited to the amount of damages recovered from defendant 1.

This decision confirmed that a claimant was not entitled to QOCS protection when they issued against a defendant (in a multi defendant case where they succeeded against a different defendant) and their claim was ultimately unsuccessful (prior to this decision, the rule had been if no fundamental dishonesty had been proven by a successful defendant, then the claimant would be protected by QOCS in this scenario – the county court decision of Bowman).

The Cartwright decision means that litigators now need to be extremely vigilant when deciding against which defendants to issue their claim. If they do not adequately consider and evaluate the risks against each and every defendant, there is potential for a professional negligence claim.

The second issue decided in Cartwright was whether a successful QOCS defendant could enforce a tomlin order (remembering that a tomlin order is a record of settlement and not an order of the court). The rules state that QOCS applies to orders for costs made against the Claimant and therefore Cartwright found that defendants would not be able to enforce a tomlin order or Part 36 agreement in order to benefit from QOCS on the basis they are not orders made by the court. The order must either have been made at trial, or be within a consent order or provisional damages order.

Ketchion v McEwan – Jun 2018 (County Court decision)

This was an RTA matter where the claimant brought a claim for financial loss (but not personal injury). The defendant denied liability and issued a part 20 counterclaim for personal injury. The matter proceeded to a fast track trial – the judge found the defendant to be 100% at fault and therefore entered judgment and dismissed the counterclaim.

The claimant sought their costs but the judge ordered that the defendant was protected by QOCS (given the existence of his unsuccessful counterclaim). Therefore, despite the claimant succeeding in full, their costs were not recoverable as the defendant had QOCS protection. The claimant sought permission to appeal but this was dismissed – the judge found that the rules referred to “proceedings” and that this captured the claim AND counterclaim. It should not be limited to just the claim – any successful claim could be precluded from recovering costs by an unsuccessful counter claim.

Waring v McDonnell – Nov 2018 (County Court decision)

This was a claim involving 2 cyclists. One brought a claim for personal injury, the other a counterclaim for personal injury. The counterclaim was unsuccessful and the court found that the defendant/Part 20 claimant was not protected by QOCS. This decision was to deter the bringing of frivolous counter claims in order to avoid a costs order/benefit from QOCS. It was found that the defendant was not an unsuccessful claimant, but an unsuccessful defendant and that he would only have been entitled to QOCS protection if he had brought his own PI claim.

So, what’s next? 

It is recognised that there is currently some tension in the drafting of the QOCS rules, and that they need to be re-worded in order to iron out issues.  Currently, the term “proceedings” in Cartwright encompasses multiple defendants, however, in the county court decisions, “proceedings” do not include counterclaims.

There is also an increasing trend in defendants arguing fundamental dishonesty in order to set aside QOCS. There is currently limited authority on what constitutes fundamental dishonesty, however, the Court of Appeal decision of Howlett v Davies & Another [2017] EWCA Civ 1696 concluded that fraud did not have to be pleaded for the Court to make a finding of dishonesty. The defendant merely had to have given adequate warning to the claimant of their intention to submit evidence that could lead to the Court making such a finding, such as within their defence.

Finally, there is talk about extending the QOCS regime to non-clinical professional negligence claims, and also private nuisance proceedings. It, therefore, appears that QOCS is going to expand beyond the realms of personal injury in the not too distant future.

Joanne Chase is a Senior Associate Costs Lawyer in the Costs and Litigation Funding Department at Clarion Solicitors.

You can contact her at joanne.chase@clarionsolicitors.com and 0113 336 3327, or the Clarion Costs Team on 0113 246 0622.