An update on Qualified One-Way Costs Shifting (QOCS)

Qualified One-Way Costs Shifting or QOCS refers to measures provided for in CPR 44.13 designed to offer protection to personal injury Claimants from the risk of an adverse costs order. These measures were introduced on the recommendation of Lord Justice Jackson with the aim of softening the blow from reforms preventing recovery of ATE Premiums from opposing parties which came into force on 1st April 2013. 

From 1st April 2013, where an eligible Claimant is unsuccessful in his/her claim, they will not be ordered to pay the Defendant’s costs of successfully defending that claim, subject toa number of exceptions referred to in CPR 44.15 & 44.16. Four years into the regime and we have seen a number of noteworthy cases which provide some much needed clarity on issues such as exceptions to QOCS, the meaning of ‘fundamental dishonesty’, and the extent to which QOCS provides protection in particular circumstances. 

Gosling v Screwfix and Anr (unreported, Cambridge County Court, 29th March 2014)

This decision was among the first to provide guidance on what may constitute ‘fundamental dishonesty’ referred to in CPR 44.16(1).

The claim was comprised of separate claims for general damages for pain, suffering and loss of amenity and special damages. The overall claim was valued at £80k and included £17k for future care, relating to ongoing knee pain. The Claimant had dishonestly stated that he was suffering from severe, ongoing pain which required him to use a crutch. 

The Claimant, Mr Gosling, was found to have significantly exaggerated his symptoms and the court held that dishonesty, at the heart of the whole or a substantial part of any claim, could amount to fundamental dishonesty. Mr Gosling was ordered to pay the Second Defendant’s costs of the action on the indemnity basis. 

Rouse v Aviva Insurance Ltd, Unreported, 15 January 2016, Bradford County Court

This decision provides guidance on the relevant procedure for dealing with an application for a finding of fundamental dishonesty where a Claimant has discontinued.

It was the Claimant’s case that on 12th October 2011 he was travelling in a friend’s motor vehicle along the A59 behind a Ford Focus motor vehicle, insured by the Defendant, when a bird cage, which had been strapped to the Ford Focus, broke apart and struck the vehicle in which the Claimant was travelling. The Claimant claimed to have suffered soft tissue injuries which troubled him for approximately four months.

The Defendant took a cynical view of the claim, given the accident circumstances, and investigated it thoroughly. Not only did the driver of the Ford Focus give a statement that the birdcage had not fallen off his vehicle, nor had any constituent parts fallen off it, but he was prepared to argue that a friend had followed him to the auction he was travelling to and that, therefore, the Claimant could not have been behind his vehicle at the relevant time.

The Claimant chose to discontinue his claim just 3 days before Trial and the Defendant sought a finding of fundamental dishonesty under CPR 44.16.

District Judge Edwards held that the Claimant was not required to explain his discontinuance, the Court was not obliged to draw any adverse conclusions from it and the issue of exceptions, referred to at CPR 44.16(1), must be decided on the papers.

The Defendant Insurer appealed and His Honour Judge Gosnell, sitting in the Bradford County Court, held that where a Claimant discontinues and the Defendant seeks a finding of fundamental dishonesty under CPR 44.16, the relevant procedure is in the discretion of the Court - 

‘In my view, where the Rules do not say what the procedure should be but direct that issues have to be determined, it is within the court’s general discretion how to do that. If it could only be done on paper I would have expected the Rules to say so. Therefore, for the reasons that I indicate, in general terms, the court has the option how to adopt this procedure whether in writing, whether with a limited inquiry or whether with a full trial. In the particular facts of this case it seems to me that either a full trial or a limited inquiry at least giving the claimant and his witness the opportunity to give evidence is the right and fair way to move forward. Therefore, for those reasons I intend to grant the appeal.’

Robert Jeffreys v The Commissioner of the Police of the Metropolis [2017] EWHC 1505 (QB)

This decision provides guidance on the extent of QOCS protection where an overall claim is comprised of personal injury and additional elements.

The Claimant, who had been arrested and detained on suspicion of harassment, unsuccessfully brought a monetary claim for false imprisonment, assault and battery, misfeasance in public office and malicious prosecution. 

The matter came before HH Judge Freedland QC in Central London Crown Court in the first instance and the Defendant sought to disapply QOCS on the basis that this was not solely a personal injury claim. HH Judge Freedland was not persuaded by the Claimant’s argument that the personal injury claim was indivisible from the main action and held that the Defendant could rely on CPR 44.16(2)(b) which refers to claims made not for personal injury stating – 

‘It would be, in my judgment, quite wrong for this to be characterised as a personal injury claim alone. It plainly was not… The majority of the claim was malfeasance…

In my judgment, it is just and equitable in this case that there should be an order made against the claimant upon appropriate terms to be drawn up by the parties to the extent of 80% of the defendant’s costs. It is appropriate that I should apportion 20% to the personal injury element of the claim.’

The matter came before Morris J on appeal. The appeal was dismissed and it as held that there was no requirement for the personal injury and non-personal injury claims to be divisible before those exceptions outlined in CPR 44.16(2)(b) could be relied on.

Darini v Markerstudy Group (Central London County Court, 24th April 2017)

The Court overturned a decision permitting a costs order against a Defendant to be set-off against a costs order against QOCS protected Claimants.

The Claimants brought claims for damages for personal injury and loss as a result of a Road Traffic Accident. Proceedings were issued on 14th Oct 2014, the claims were subsequently discontinued with the notices of discontinuance resulting in a deemed costs order in favour of the Defendant under CPR 38(6)(1). On 16th July 2016 the Defendant applied to set aside the notices of discontinuance seeking a finding that the claims were fundamentally dishonest and an order that the claims be struck out.

The Defendant’s application to set-aside the notices of discontinuance was dismissed and the Defendant was ordered to pay the costs of that application summarily assessed at £4,118.40. The Deputy District Judge also ordered that those costs be set off against the costs order made in the Defendant’s favour, with any remaining balance in favour of the Defendant not to be enforced.

On appeal, HHJ Dight acknowledged that the set-off of costs against costs is a discretionary matter for the court but concluded that there was no room for such a set off under the QOCS regime stating -

‘It seems to me that one has to look at section 2 of Part 44 in that light. Section 2 (that is Rules 13, 14, 15 and 16) is, in my judgment, a self-contained code to the extent that it gives QOCS protection to personal injury claimants. It is to be contrasted to section 1 of Part 44 and, notwithstanding the absence of words such as “subject to”, it seems to me that it necessarily creates a different procedural environment for the costs of personal injury claims’.

Catalano v Espley-Tyas Development Group Limited [2017] EWCA Civ 1132

On appeal Lord Justice Longmore upheld the decision of Deputy District Judge Harris in the Manchester County Court. 

The Claimant had entered into a pre-April 2013 Conditional Fee Agreement (‘CFA’) referred to at CPR 47.19 (Transitional Provision) as a ‘pre-commencement funding arrangement.’ The Claimant had subsequently entered into a post-April 2013 CFA and sought to argue that as the original agreement had been terminated and been replaced by a second CFA, the Claimant had become entitled to the benefit of QOCS. 

That argument was rejected in the first instance and has now been rejected on an appeal from that decision. 

Lord Justice Longmore stated that the ‘right construction’ of the Transitional Provision was to apply it to any “funding arrangement” made before 1 April 2013, whether terminated or not and that if they were applied only to ‘un-terminated’ agreements, the Claimant could ‘have the best of both worlds.’

By Noel Heslin, Senior Legal Costs Consultant

DeNovo, The Legal Costs Experts

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