Magic

A breeze crosses the porch
Bicycle spokes spin ’round
Jacket’s on, I’m out the door
Tonight I’m gonna burn this town down
And the girls in their summer clothes
In the cool of the evening light
The girls in their summer clothes
Pass me by
 
-Girls in their Summer Clothes, Bruce Springsteen and the E Street Band
 
Like buses, consultations tend to come not at all, or in number. In addition to the consultation on vulnerability and fixed costs, a further consultation is taking place in relation to Qualified One Way Costs Shifting (QOCS). The closing date for the consultation is now just a couple of days away, on 20th June 2022. A copy of the consultation paper can be found here: Consultation on changes to the Qualified One-Way Costs Shifting (QOCS)
 
The impetus for the consultation comes from the recent decision of the Supreme Court in the case of Ho v Adelekun [2021] UKSC 43. The paper summarises the current position in these terms:
 
12. Ho concerns the question of whether QOCS constrains in any way the defendant’s liberty to seek, or the court’s discretionary power to permit, a ‘set-off’ between opposing costs orders, that is orders in favour of the claimant and the defendant respectively. In their judgment, the Supreme Court found that the defendant’s ability to offset costs awarded to the defendant against both damages and costs awarded to the claimant is not available, and that the offset is limited to damages awarded.

13. In giving the judgment of the Supreme Court, Lord Briggs felt bound by the drafting of the CPR to decide the case in this way, but noted that the decision appeared to be ‘counterintuitive and unfair’.10
 
14. It is not just the decision in Ho that creates problems with the meaning of the QOCS regime. The earlier Court of Appeal decision in Cartwright (as cited by the Supreme Court in Ho) caused difficulties in that it stated that the acceptance of a Part 36 offer does not create an enforceable order for the purposes of QOCS.11 That decision was manageable in practice because parties could then agree an offset against costs.
 
15. The Ho decision now makes it clear that any offset must be limited to damages only and not costs, so the decision in Cartwright cannot now be managed between the parties in the same way. Thus, the combined outcome of both of these cases is to undermine the effectiveness of QOCS and Part 36 in resolving disputes.
 
In effect, the paper proposes to overturn the decision in Ho, by means of secondary legislation. The proposed new rule is as follows:
 
(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, 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.
 
The principal effect of the rule change, will be to restore the status quo ante, as it was immediately before the decision of the Supreme Court, so that where for example a claimant accepts a defendant’s part 36 offer out of time, then costs orders will be made in favour of the claimant and in favour of the defendant, and the defendant can setoff its own entitlement to costs, against its liability to pay the claimants costs. This will decrease the “pot” available for claimants solicitors. Although they will doubtless feel a keen sense of injustice, such a feeling would be misplaced.
 
The decision in Ho was always an odd one, and a surprising one: for my part at the time I had anticipated that the court would be mindful of the fact that in essence, their task was to adjudicate upon whether the rules constrained the court to hold harmless the claimants’ solicitors against the solvency risks of their client, or to put it another way, whether the solicitors equity in the costs award, should defeat the defendant’s entitlement to a defence of set off. As along ago as the nineteenth century, the courts had set themselves firmly against elevating the solicitors interests above those of the litigants in a series of cases dealing with the solicitors lien.
 
This is not the end of controversy around issues concerning QOCS however. There remain numerous points that fall to be worked out, still, nearly a decade after the rules came into force. Moreover, although the current government may show no interest in extending QOCS beyond the sphere of personal injury litigation, there remains a pressing need to do so, to more classes of consumer claims and asymmetrical litigation, where I venture to say there is not only a justice gap created by the demise of Legal Aid, but a chasm between the notional rights people possess under many statutes, and their (in)ability to enforce them without an adequate funding mechanism to protect the little guy against the costs of the big battalions.

One thought on “Magic

  1. Extension of QOCS is probably the single biggest opportunity to increase access to justice in the UK.

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