Kerry Underwood

QUALIFIED ONE-WAY COSTS SHIFTING AND MIXED CLAIMS

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These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Brown v Commissioner of Police of the Metropolis & Ors [2019] EWCA Civ 1724

the Court of Appeal held that a claimant could not rely on Qualified One-Way Costs Shifting automatically to avoid enforcement of adverse costs orders simply because one of the failed claims was for personal injury, which is QOCS protected.

The decision gives important guidance in relation to QOCS and mixed claims and in particular states that Practice Direction 44, paragraph 12.6, is wrong and “needs to be amended as soon as possible”.

The claimant brought various claims against the police, including breach of contract, misfeasance in public office, misuse of private information and personal injury.

The claim for damages for breach of contract was not pursued and the claim for misfeasance in public office was lost at trial, but the claimant won at trial on the claim for misuse of private information.

The personal injury claim was lost.

The police force had admitted liability in relation to breach of the Data Protection Act 1998 and the Human Rights Act 1998.

The claimant failed to beat the defendant’s Part 36 offer.

The claimant submitted that as her claims included a claim for damages for personal injury, it was QOCS protected and the trial judge agreed.

The police force appealed and its appeal was allowed by the High Court – [2018] EWHC 2046 (Admin).

The Court of Appeal rejected the claimant’s appeal, but it is not as simple as that.

The Court of Appeal held that the proper interpretation of CPR 44.16(2)(b) was clear; if the proceedings also involved “claims made by a claimant which are not claims for damages for personal injury”, the exception applied, causing the automatic QOCS protection to fall away and leaving costs in the discretion of the court.

For the exception, and therefore the disqualification of automatic QOCS protection to fall away, the personal injury and non-personal injury claims need not be separate and divisible, but must claim different types of loss.

QOCS protection only applies to personal injury damages claims but, as well as pain and suffering claims, these include claims for costs of medical treatment, adapting accommodation and all other claims consequential upon the injury, such as loss of earnings.

Property damage claims, such as vehicle repair or credit hire in road traffic accident claims are not consequential upon physical injury and thus are not automatically QOCS protected, and thus the costs are in the discretion of the court in such cases.

However, when exercising that discretion, the fact that QOCS applies to the personal injury claim “is the starting point, and possibly the finishing point too”.

If the proceedings can fairly be described overall as a personal injury claim then, unless the non-personal injury claims have exceptional features, such as gross exaggeration, the court’s exercise of its discretion should seek to achieve a cost neutral result.

Consequently, QOCS protection would still apply, on a discretionary basis, to most of the mixed claims described.

In so far as Practice Direction 44.12.6 suggests otherwise, it is wrong and needs amending.

 

“44.16

(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.

(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –

(a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or

(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.

(3) Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made.”

“16. Section 2 of Practice Direction 44 sets out some limited guidance in relation to QOCS. In respect of r.44.16 as a whole, paragraph 12.6 of the PD provides as follows:

 

“In proceedings to which rule 44.16 applies, the court will normally order the claimant or, as the case may be, the person for whose benefit a claim was made to pay costs notwithstanding that the aggregate amount in money terms of such orders exceeds the aggregate amount in money terms of any orders for damages, interest and costs made in favour of the claimant.””

 

In my book on the subject – Qualified One-Way Costs Shifting, Section 57 and Set-OffI was rather politer than the Court of Appeal simply stating that there was a “degree of contradiction” between CPR 44.16 and the Practice Direction 😊

 

Set-Off

It should be noted that although the Court of Appeal, correctly, refers to the result being cost neutral in the sense that the claimant should not have to pay more than the damages under the QOCS provisions, any costs awarded to the claimant can first be set-off against any costs due to the defendant, and this is under CPR 44.12, which is not part of the QOCS provisions, but is immediately before them and reads:

“(1) 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 –

(a) set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay the balance; or

(b) 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.”

Let us assume that the claimant is awarded £5,000 costs and £9,000 damages, but that there is also an order in favour of the defendant, for whatever reason, for example because it is a mixed claim as here, or because the claimant has failed to beat a Part 36 offer.

The defendant can first set-off all costs due to the claimant against the costs due to it, and can then attack the damages.

Thus, in this example, the maximum that the defendant could get by way of costs is £14,000, and not £9,000.

Written by kerryunderwood

December 5, 2019 at 7:30 am

Posted in Uncategorized

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