QOCS Case Law – Enforcement of Adverse Costs – Ho (Respondent) v Adelekun (Appellant)  UKSC 43
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What is QOCS?
The costs protection afforded under Qualified One-Way Costs Shifting (QOCS) applies for post April 2013 onwards cases which feature personal injury. It also applies to proceedings brought under the Fatal Accidents Act 1976 and proceedings which arise out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934 (CPR 44.14(1)(c) and CPR 44.17). The rules for QOCS can be found under CPR 44.13 to 44.17.
The broad-stroke of the regime is that a successful defending party cannot recover costs of such a defence. In circumstances in which the Claimant has received a degree of damages, the defending party is able to enforce any costs order up to the level of such aggregated damages under CPR 44.14(1).
Exceptions to the regime can further be found within CPR 44.15 and CPR 44.16. Examples of this are where a party has been found to be fundamentally dishonest, the proceedings are considered to be an abuse of process or where the conduct of the Claimant is considered likely have obstructed the just disposal of the proceedings. Many examples of this can be found in recent QOCS case law.
QOCS Case Law
Given the limits on enforcement of costs entitlements, there is a clear motivation for parties to seek to narrow the costs protection offered by the regime, e.g. by way of widening what is meant by fundamental dishonesty. This has been shown in key QOCS cases including Brint v Barking, Havering and Redbridge University Hospitals NHS Trust  EWHC 290 (QB).
Parties have also sought to otherwise challenge the application of the regime in Part 20/Counter-claim cases. Key case law in respect of the same includes the recent decision in Waring v McDonnell  EW Misc B11 (CC).
A recent line of probative attack designed to loosen how QOCs applies has now been considered by the Supreme Court in Ho (Respondent) v Adelekun (Appellant)  UKSC 43 (‘Ho’).
QOCS Case Law: Ho (Respondent) v Adelekun (Appellant)  UKSC 43 (‘Ho’).
In Ho, the Supreme Court considered the interpretation of CPR 44.14(1), the monetary cap provision which, as summarised by the Supreme Court at para 5, provides that ‘… defendants’ costs may be enforced up to an amount equivalent to the aggregate of court orders for damages and interest in favour of the claimant’.
In Ho, the Claimant sought to recover sums in excess of fixed costs, but ultimately lost this argument in the Court of Appeal whom, as a result, awarded the Defendant’s costs of addressing the same dispute. The Lord Justice did state in Ho v Adelkun  EWCA Civ 517 however, that they were inclined to side with the Claimant but were bound by another Court of Appeal decision made in Howe.
The Defendant encountered limits in its enforcement of said costs, owing to the QOCs provision within CPR 44.14(1), and otherwise, in light of the fact that a Part 36 offer could not be treated as akin to an order for damages under the same provision (para 14).The Defendant, thus, sought to argue before the Supreme Court that it was entitled to leverage CPR 44.12, the costs set-off provisions, and to thus, set-off costs owed to the Defendant against costs owed to the Claimant before engaging the QOCs provisions.
Set-off under CPR 44.12 is not conceptually new and can be found within legislation such as section 51 of the Senior Courts Act 1981 (para 26). Any widening of the rules could have the impact of tipping the litigation landscape in favour of either Paying or Receiving Party’s (para 30/31). The Defendant sought to argue that CPR 44.14(1) ultimately referred to the ‘net’ sums owed by the parties (taking into account the monies owed by the Claimant to the Defendant and vice versa) in setting a monetary cap on enforcement.
Such a construction of the rules enabled the Defendant to argue that CPR 44.12(1)(a) could first be utilised to first set-off any costs owed between the parties prior to the monetary cap under CPR 44.14(1) kicking in.
The question was one of construction of the language of CPR 44.14(1), the rule itself being agreed to be a mechanism allowing for limited Court discretion (para 33). It was accepted that CPR 44.14(1) did not act as a ‘total ban’ of the setting-off of costs, but rather, capped the monetary amount of any such enforcement.
Whether QOCs was a ‘complete code’ and therefore excluded the possibility of set-off of costs under CPR 44.12 was a particular point of contention, given that if a party were to be able to leverage both CPR 44.12(1)(a) in addition to seeking to enforce costs under CPR 44.14(1), it would, in effect, be able to enhance its ability to enforce costs.
The Court noted that CPR 44.14(1) allowed a Defendant to enforce costs ‘… by any means available, including set-off against an opposing costs order, but only up to the monetary amount of the claimant’s orders for damages and interest’ .
The Supreme Court rejected the suggestion that the two regimes operated distinctly, and instead, sought to reaffirm the fact that both QOCs and set-off operate hand-in-hand, subject to the monetary cap present within the QOCs rules as to any enforcement of costs entitlement.
Specifically the Court rejected the suggestion that CPR 44.14(1) only applied to any net costs liability (ie once any opposing orders had been netted off by way of a costs against costs set-off.
Furthermore, the enforcement of costs against costs was a form of enforcement covered by the QOCs regime in the same way that the regime applies to the setting-off of costs against damages.
The Defendant, therefore, whilst it had a costs order in its favour, was unable to tunnel around CPR 44.14(1) and was limited in its enforcement to the total aggregate damages awarded. The primacy of CPR 44.14(1) and the monetary cap therein was thus reaffirmed.
Being unable to set-off costs against costs in some instances may produce an unfair result – In this case, the Defendant had a substantial yet worthless cost entitlement and it could do little about it. The Claimant largely did not have to entertain paying the Defendant.
However, despite scope for occasional injustice, it is important to remember that the QOCs regime, however imperfect, works entirely as intended in the great majority of straightforward cases.
The rules balance the terrain following the large scale abolition of the recoverability of additional liabilities, thus any attempt to dilute the regime is necessary to be treated cautiously, an approach which was clearly taken by the Supreme Court in this matter.
Whilst the CPR may consider the rules further in the future, it is clear for now that QOCs will continue to work precisely as set out in CPR 44.14(1), that is, a Defendant may recover no more than the aggregate damages and interest amount, save as to where the Defendant is able to invoke an exception to QOCs under CPR 44.15/CPR 44.16.
How can ARC Costs Assist?
QOCS is an incredibly complex area of costs law however, the ARC Costs team of costs draftsmen and costs lawyers are always happy to help with costs challenges, and can provide information on the application of Qualified One-Way Costs Shifting.
Whether you have been ordered to pay costs or wish to enforce your costs, we can assist.
We can be contacted via email at firstname.lastname@example.org, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.
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