News | General

An Introduction To Qualified One Way Costs Shifting – ‘qocs’

28 March 2013

Introduction

1st April 2013 will see many changes to how costs in civil litigation is managed and assessed and one of the most significant changes will be in personal injury cases where successful Defendants will only be able to recover costs in personal injury claims up to the aggregate damages and interest recovered by the Claimant except in some limited situations.

This mechanism is in place to compensate Claimants for no longer being able to recover the cost of ATE premiums, although an exemption does apply in relation to ATE premiums for covering the cost of initial expert evidence in clinical negligence claims.

Scope and Interpretation

For the purposes of QOCS a ‘Claimant’ means a person bringing a claim, or an estate on behalf of which a claim is brought and includes a person making a counter claim or an additional claim.

The new CPR 44.13 states that QOCS applies to proceedings which include a claim for damages for personal injuries, claims under the Fatal Accidents Act 1976 or claims which arise out of death or personal injury and survives for the benefit of an estate.

QOCS does not apply to applications for pre action disclosure or to proceedings where the Claimant has entered into a Conditional Fee Agreement (CFA) or After-The-Event Insurance (ATE) prior to 1st April 2013.

Effect of QOCS

CPR 44.14 now provides for orders for costs made against a Claimant to be enforced without permission of the Court, but only to the extent that the aggregate amount in monetary terms does not exceed damages and interest received by the Claimant.

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.  Any order for costs which is enforced up to the level of damages shall not be treated as unsatisfied or an outstanding judgment for any Court record.

Exceptions to QOCS where permission of the court is not required

CPR 44.15 provides for costs orders against Claimants to be enforced to their full extent without permission of the Court where proceedings have been struck out due to the Claimant failing to disclose reasonable grounds for bringing the claim; the proceedings are an abuse of the Court’s process or the conduct of the Claimant (or a person acting on behalf of the Claimant with the Claimant’s knowledge) is likely to obstruct the just disposal of the proceedings.

 

Exceptions to QOCS where permission is required

CPR 44.16 provides for orders for costs made against a Claimant to be enforced to the full extent of such orders with permission of the Court.

Such enforcement can take place when the claim is found on the balance of probabilities to be fundamentally dishonest.  Also full enforcement can take place with permission of the court when the proceedings include a claim which is made for the financial benefit of a person other than the Claimant or dependent (except for gratuitous provision of care, earnings paid by an employer or medical expenses) or if part of the claim does not qualify for QOCS protection.

In proceedings that include a claim for the financial benefit of a person other than the Claimant, such as subrogated claims and claims for credit hire, the Court may make an order for costs against that person for the whole or part of that claim.

Conclusion

The introduction of QOCS protection is essentially the trade-off for removing the recovery of success fees and ATE insurance premiums. 

There is concern that QOCS protection may lead to more spurious claims although given the exemptions outlined above the Claimant is not risk free of adverse costs order and of course may well be conducting the case without the benefit of ATE insurance. Claimants who pursue unjustified claims will do so at a considerable financial risk.

Part of the aim of the new rules is to encourage Defendants to make realistic Part 36 offers at an early stage to avoid unrecoverable costs escalating and certainly it appears that much may be gained by taking that approach.

The fact that QOCS protection is lost if a claim is struck out, but remains if the claim discontinues, does raise the interesting prospect of parties trying to beat each to discontinue or strike-out claims.