Kerry Underwood

QOCS, APPEALS, SET-OFF & KAFKA

with 12 comments


A claimant loses a personal injury claim and a costs order is made in the usual way but the judge also finds fundamental dishonesty and thus allows enforcement of the costs order totalling £7,210.00.

 

The claimant appeals against the finding of fundamental dishonesty, but not the loss of the claim, and wins and so the finding of fundamental dishonesty is quashed and the claimant is awarded costs of the appeal of £12,500.00.

 

The original order against the claimant in respect of the costs of losing the personal injury claim remains in place but is now unenforceable.

 

The Appeal Judge makes no reference to CPR 44.12 which reads:-

 

Set Off

44.12

  • Where a party entitled to costs is also liable to pay costs, the court may assess the costs which that party is liable to pay and either –

 

  • set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay any balance; or

 

  • delay the issue of a certificate for the costs to which the party is entitled until the party has paid the amount which that party is liable to pay.”

 

Thus the court here chose not to exercise that discretion, although it appears that this provision, which very obviously applies to the facts of this case, was not drawn to the judge’s attention.

 

Could the defendant, successful in the primary claim, set-off the £7,210.00 owed to it, under the common law doctrine of set-off?

 

Yes, in my view – see Kai Surrey v Barnet & Chase Farm Hospitals NHS Trust [2015] EWHC B16 (Costs).

Nothing in CPR 44.12 overrules the common law.

 

This has the curious effect of the claimant successfully appealing against a finding of fundamental dishonesty, and therefore enforceability of a costs order, nevertheless having to pay those first instance costs by way of set-off against its costs for successfully pursuing the appeal.

 

Heads you lose; tails you do not win.

 

Only Kafka, Lord Justice Jackson or the Rules Committee could have written this. For me, The Metamorphosis, The Interim Report, The Trial, the Civil Procedure Rules, The Castle and the Final Report are barely distinguishable, but I know which are better written.

 

 

These are the facts of Meadows v La Tasca Restaurants Ltd, Manchester County Court, Claim no. B27YX178, 21 June 2016.

 

The defendant did not seek CPR 44.12 Set-Off and nor did it utilise the common law right of Set-Off.

 

Kafka did not get round to writing this one up, so I have done it for him.

 

Please see my related blogs:-

 

KERRY ON QOCS: BOOK UPDATE AND LINKS

 

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Written by kerryunderwood

October 11, 2016 at 12:23 pm

Posted in Uncategorized

12 Responses

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  1. On the facts of the case, this would leave the Claimant with £5290.00 in respect of recovered profit costs? In this hypothetical situation, the Claimant now has a liability in relation to his own lawyers in the sum of £7210.00 (the same as the Defendant’s enforceable costs order). I suppose the gain for him is the setting aside of the order suggesting that he is fundamentally dishonest.

    Jonathan Massey

    October 13, 2016 at 10:50 pm

  2. Yes.

    kerryunderwood

    October 19, 2016 at 2:11 pm

    • But QOCS now applies to appeal proceedings (as per Parker v Butler [2016]) and therefore permission is still needed to enforce the costs of the original action.

      Additionally CPR r 44.12 requires the Court to set off the costs, or delay production of a certificate until (in this case) the Claimant, pays the costs to whcih they are liable, which they won’t do.

      I’ve posed the same question to Mr. Exall on his blog. Does the purposive interpretation of QOCS trump CPR r 44.12? I can’t imagine that the scenario will crop up too often but it’s to my mind a clear tension in the rules…quelle surprise!

      nikgittins

      November 3, 2016 at 2:27 pm

      • The claimant won the appeal proceedings, so the fact that QOCS applies to such proceedings is not relevant here.The position is that the defendant has a costs order in relation to its successful defence of the substantive action, which decision was not appealed against.

        That order is unenforceable due to QOCS, but that does not prevent the doctrine of set-off applying, as is made clear by the CPR themselves. Absent an order in the terms referred to by you, my view is tat the paying party can still rely on the common law doctrine of set-off, and the courts have upheld that approach in legal aid matters, where costs orders are also made, but generally not enforceable.

        This subject is dealt with at length in my book : Kerry on Qualified One Way Costs Shifting, Section 57 and Set-Off, available from Amazon.

        Kerry

        kerryunderwood

        November 3, 2016 at 2:39 pm

  3. Dear Kerry

    I’d welcome your views on this situation. The claimant has suffers an injury and issues proceedings against 2 defendants one a local authority the other a housing association as result of a defective path. Both defendants defend the claim and are careful not to bring Part 20 claims against each other. The case goes all the way to trial and the claimant succeeds against D1 and is awarded damages and costs. He fails against D2 who gets the usual costs order but on the face of it QOCS applies.
    D2 say what about set off against the costs and damages you have recovered from D1?

    44.12 suggests set off applies as between the claimant and defendant when there are opposing costs between them ie any interlocutory orders in D1s favour can now be set off against the cost C now seeks.

    Does it extend to D2 costs of succeeding at trial? Surely QOCS applies. None of the usual QOCS exceptions apply to the case.

    Could D2 look to D1 under some sort of sanderson Bullock type order?

    Regards

    John

    John Bennett

    October 27, 2016 at 3:17 pm

    • John

      I deal with precisely this point in my post: QOCS, Part 36, Two Defendants: Some Problems, which I suggest you read.

      My view is that set-off only applies between parties direct, that is that D2 could not seek to obtain the money due under its unenforceable costs order by way of set-off against damages or costs payable by D1 to the claimant.

      You refer to CPR 44.12, which is indeed the Civil Procedure Rule dealing with set-off.

      However my view is that none of this overrides the long established common law principles of set-off.

      There is a first instance decision where the court did allow set-off by a successful defendant in relation to the damages and costs payable by the unsuccessful defendant to the claimant, but as indicated, I believe that decision to be wrong.

      If you have not yet bought it, I deal with the whole issue of set-off in detail in my book Kerry on… Qualified One-Way Costs Shifting, Section 57 and Set-Off available from Amazon here.

      Kerry

      kerryunderwood

      November 4, 2016 at 2:06 pm

      • Thanks

        I’ve bought it. It’s a great read

        John

        November 4, 2016 at 2:44 pm

      • Thanks! Let me know how you get on please.
        Kerry

        kerryunderwood

        November 4, 2016 at 2:48 pm

  4. Dear Kerry
    Thank you for your earlier input. I’ve not heard anything back on the point I raised above. Hopefully no news is good news.
    I would however welcome your views on another issue. We have recently lost a case at trial. The defendants were awarded their costs with the usual QOCS provisions applying. Surprisingly they are still pressing ahead with detailed assessment. There are no exceptions to QOCS in this case. Its seems a pointless exercise. Do they know something we don’t about the possibility of the QOCS rules changing in the future so they’ll be able to enforce them?

    Would the set off rules apply if the Claimant was unlucky enough to suffer an injury at the hands of the same defendant, win that claim and then be faced with having to pay the costs of the previous unsuccessful claim?

    Regards

    John

    John

    February 8, 2017 at 2:49 pm

    • John

      Re: detailed assessment: do you think there are any grounds for the successful party seeking a wasted costs order against you? That is a potential reason for proceeding to Detailed Assessment, so as to quantify the costs.

      Good point re set-off. Yes- dealt with in my book at pages 211-214- it is somewhat complicated- but all set out there.

      Book can be ordered from Amazon or kerry.underwood@lawabroad.co.uk

      Kerry

      kerryunderwood

      February 12, 2017 at 8:26 am

  5. ID Cases – Multiple Defendants QOWCS Question

    A Claimant pursues 10 Defendants for NIHL and disclosure settles claims against 6 Defendants and recovers damages of £5,000 including interest. He files Notices of Discontinuance against the other 4 Defendants.

    Are the 4 successful Defendants entitled to their costs? If so are these capped at £5,000 i.e. the level of damages and interest recovered?

    My view is that they are :-

    Principle for costs : Under CPR 38.6 the 4 Defendants are entitled to assessed costs as a matter of right unless the court orders otherwise.
    Quantum of costs : Under 44.14 Its states costs are limited to amount recovered in damages and interest.

    Does anyone disagree?

    Many thanks

    Adam

    Adam

    March 17, 2017 at 12:22 pm


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