Christopher Boxall discusses ‘QOCS: Seismic Changes incoming from 6th April 2023’

In QOCS cases issued on or after 6th April 2023, Defendants can enforce costs orders up to the aggregate amount of money in terms of any orders for, or agreements to pay or settle a claim for, damages, costs and interest.

Defendants will also be able to enforce costs orders against costs orders made in favour of the Claimant.

This represents a seismic shift to the existing QOCS regime and a wholesale reversal of the appellate Court decisions in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 and Ho v Adelekun [2021] UKSC 43.

I attended trial last week to act for the Defendant in a personal injury claim where there were concerns that the Claimant’s injuries had been significantly exaggerated. I arrived at Leeds County Court carrying plenty of ammunition with which to challenge the Claimant in cross-examination. However, they never set foot inside the witness box. The Claimant, at the door of court, accepted a longstanding Part 36 offer made by the Defendant’s insurer prior to issue of proceedings.

Applying the usual consequences for late acceptance of Part 36 offers, a Defendant would recover the costs they had incurred post-expiry of their offer (which would, in this case, include all costs incurred post-issue of proceedings).

However, this was a personal injury claim to which Qualified One-Way Costs Shifting (‘QOCS’) applied. The Defendant’s costs were not recoverable, thanks to a series of appellate court decisions which have minimised the circumstances where a Claimant’s QOCS protection can be lifted in order to enforce costs consequences arising from rejection or late acceptance of Defendant Part 36 offers:

• Cartwright v Venduct Engineering Ltd: Defendants could not enforce costs against damages recovered via settlement (eg Part 36 or Tomlin Order);
• Ho v Adelekun: Defendants could not set off costs against costs orders made in favour of the Claimant.

These decisions significantly diluted the potency of Defendant Part 36 offers. In Ho, even the Supreme Court acknowledged that the position could lead to results that would be considered counterintuitive and unfair. My case last week is arguably an example of that.

It was therefore unsurprising when, as part of a Ministry of Justice Consultation in May 2022, the Civil Procedure Rules Committee proposed radical changes to the current QOCS regime. On 2nd February 2023, a Statutory Instrument was laid before Parliament confirming the proposed changes.

The Changes – The Civil Procedure (Amendment) Rules 2023

For claims issued after 6th April 2023, CPR 44.14 will be amended to read as follows (amendments underlined):

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, 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 includes 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.

Discussion

Four key points arise from the amendment:

• Cartwright has been explicitly reversed – CPR 44.14(1);
• Ho has been explicitly reversed – CPR 44.14(4);
• Rise of the general enforcement cap: Defendants can now enforce costs orders up to the level of damages and costs recovered by Claimants. Previously, enforcement had been capped at the level of damages/interest recovered.
• The rule changes are not retrospective and will only apply to claims issued on or after 6th April 2023.

For Defendants, these changes will put some bite back into their Part 36 offers and dramatically increase their ability to recover costs, with set-off against the Claimant’s recoverable costs now permitted. By way of illustration, had these rules applied to my case last week, the enforceable element of the Defendant’s costs order would have completely eroded the combined sum that the Claimant recovered in damages and costs.

Conversely, the changes deal a devastating blow to Claimants and their representatives. The decision in Ho (which ultimately proved to be the catalyst for these changes) has ultimately led to a complete reversal of two favourable appellate decisions so far as Claimants are concerned.

Claimant representatives will evidently have more skin in the game moving forward. In cases funded by conditional fee agreements, the prospect of the Claimant’s legal costs being eroded to meet Defendant costs orders will be of particular concern.

Litigants and litigators on both sides of the aisle will need to factor in these changes when considering case strategy and settlement.

Given the detrimental effect of the changes for Claimants and their representatives, the Courts can expect to see a spike in claims being issued before 6th April 2023 to preserve the QOCS protections of the existing regime for those cases.

Further, the existence of two starkly different QOCs regimes (at least in the short to mid-term) is bound to prompt satellite litigation. Watch this space.

Christopher is an experienced fraud practitioner. He regularly acts for most major insurers in relation to road traffic claims where fraud is suspected or explicitly alleged. He is well-known for his robust approach to such cases, and is routinely called upon to assist at all stages of litigation, from pre-action advice, conferencing and settling pleadings, through to trial advocacy.

Christopher has extensive experience of multi-track and fast-track cases involving complex indemnity issues, staged accidents, ‘stooge’ vehicles, low-speed impact (LSI), phantom passengers, exaggerated and high-value credit hire and exaggerated personal injury claims that require consideration of Section 57 Criminal Justice and Courts Act 2015.

If you would like to book Christopher, please contact one of his clerks:

Senior Clerk – Andy Reeves on 0113 213 5252

Talia Webster on 0113 202 8609

Joshua Duree on 0113 213 5246

Mike Alexander on  0113 2135254