When Does Qualified One-Way Costs Shifting Apply?
What is QOCS (Qualified One Way Costs Shifting)?
If you are familiar with the Jackson Reforms, you will be well aware that Qualified One Way Costs Shifting (QOCS) was introduced in April 2013 following recommendations from Lord Justice Jackson and the new Civil Procedure Rules 44.13 to 44.17. The reason for the introduction of QOCS was to provide protection for the Claimant from Defendant’s costs when claiming for damages for personal injuries. Under the QOCS regime, a successful Claimant will be able to enforce their costs against the Defendant however, a successful defendant will be unable, in most cases, to claim costs from the Claimant in the event that their claim for personal injury is unsuccessful.
When Does QOCS Apply?
QOCS protection applies to all personal injury claims, including Clinical Negligence Claims which commenced after April 2013. The judgement in the case of Arabella Wagenar v Weekend Travel Limited & Anor  WLR(D) 389 provided clarification that QOCS would also be applied retrospectively to a pre-April 2013 claim for damages without a Conditional Fee Agreement (CFA) or ATE Premium.
Are there Exceptions to the Rule?
There are some instances where the QOCS rule does not apply and the defendant’s costs orders can be enforced. These circumstances are detailed under CPR 44, and include the following:
- When a Claimant fails to beat a Defendant’s Part 36 offer to settle (costs enforceable up to the level of damages recovered)
- Where the claim or Claimant has been found to be fundamentally dishonest.
- Where the proceedings are found to be an abuse of the Court’s process
- When the Claimant has not disclosed any reasonable grounds for bringing the claim
- Where the conduct of the Claimant (or someone acting on the Claimant’s behalf) causes an obstruction to justice of the disposal of proceedings.
Can QOCS Protection Apply in Cases which Commenced Before April 2013 with a Conditional Fee Agreement?
QOCS does not apply to proceedings where the Claimant has the benefit of a CFA or ATE insurance policy which was entered into before 1 April 2013. QOCS protection may apply in this type of case however, if there are additional claims within the proceedings. Guidelines for the interpretation of QOCS in these types of cases were shown in Jacob Corstorphine V Liverpool City Council  EWCA Civ 270. In this case, the Claimant entered into a Pre-Commencement Funding Agreement in relation to a personal injury claim and was afforded the benefit of QOCS as there were additional claims within the proceedings.
Corstorphine v Liverpool City Council – The Facts
In this case, the Claimant, a minor, was injured on a tyre swing in a playground and brought a claim against Liverpool City Council as the Claimant believed the tyre swing to be dangerous. Solicitors were instructed to act on the Claimants behalf in August 2012 and he entered into a Conditional Fee Agreement with the Solicitors. An After the Event Insurance policy was taken out by the Claimant to protect him from the Defendant’s costs.
Court proceedings were issued against the Defendant in November 2012. The Defendant then issued a counter claim against the designer of the tyre swing and a third defendant who had sold the swing to Liverpool City Council, meaning there were three Defendants in total.
At trial, it was held that QOCS did not apply, and the Claimant was ordered to pay all three Defendant’s costs as the Judge dismissed the Claimant’s claim and the Defendant’s counter claim.
The Claimant appealed the decision on the basis that the Judge had made a mistake in finding that the Claimant’s Conditional Fee Agreement included the counter claim brought against the Second and Third Defendant, and that the Judge had made an error in finding that the First Defendant was entitled to recover their costs.
Corstorphine v Liverpool City Council – The Court of Appeal’s Decision
The main issue for the Court of Appeal to consider was the meaning of ‘the matter that is the subject of the proceedings in which the costs order is to be made’.
Did the ‘matter’ mean the claim as a whole and therefore includ the secondary claim made against the Second and Third Defendant, or did it mean the claim for damages made against the First Defendant only?
The Court of Appeal held that, at the time the funding agreement was entered into, the claim was made against the First Defendant only and therefore, QOCS should have been applied in relation to the claims made against the Second and Third Defendant as the Claimant had no vested rights in relation to the claims made against these parties.
Finally, it was held that the trial Judge had made a mistake when applying the Court’s discretion to the protection provided by QOCS and therefore, on appeal, QOCS applied in this case.
How can we Assist?
QOCS is an incredibly complex area of costs law however, the ARC Costs team are always happy to help with costs challenges, and can provide information on the application of Qualified One-Way Costs Shifting.
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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