Kerry Underwood

QUALIFIED ONE-WAY COSTS SHIFTING APPLIES TO CLAIMANTS, NOT PROCEEDINGS

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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

Anne Morgan (on behalf of herself and of the estate of Mr Christopher John Morgan) v Dr Chongtham Singh, Sheffield County Court, (unreported)

a Circuit Judge on appeal considered whether Qualified One-Way Costs Shifting (QOCS) applied to the whole proceedings, or could be split between different claimants, the significance being that a claimant with a Conditional Fee Agreement with a recoverable additional liability is disqualified from QOCS protection, and this is generally known as a pre-Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) funding agreement.

Here Christopher Morgan had such a pre-LASPO Conditional Fee Agreement with a recoverable success fee and After-the-Event insurance premium, and such an agreement disqualifies a claimant from the protection of QOCS.

He died.

His widow entered into a post-LASPO Conditional Fee Agreement, without a recoverable success fee, both in relation to the action on behalf of the estate in her capacity as executrix, and in relation to her own action as a dependant.

She lost and a costs order was made against her in the usual way and the issue was whether or not she was entitled to the protection of QOCS, which would make the order unenforceable.

It was agreed that Mr Morgan did not have QOCS protection, but Mrs Morgan had neither a recoverable success fee, nor a recoverable ATE insurance premium. The post death premium was an unrecoverable new premium for a new policy and not a top-up.

Consequently, had Mrs Morgan won, she would not have been entitled to recover either the success fee or the insurance premium from the date of her husband’s death.

Mrs Morgan argued that that meant that she was not disqualified from the protection of QOCS.

The defendant relied on the concept that QOCS applied to the whole proceedings, or not at all, and that as the pre- death part of the proceedings was not QOCS protected, none of the proceedings was.

The District Judge, in a finding upheld by the Circuit Judge on appeal, held that QOCS applied to individual personal injury claimants and not proceedings, and consequently Mrs Morgan, not having the benefit of recoverability of the additional liabilities, was protected by QOCS.

 

The protection applies not to the proceedings, but to:

 

“… the enforcement of orders for costs made against a claimant’’

 within those proceedings (CPR 44.14).

 

There was nothing in the Civil Procedure Rules to prevent a finding that Mr Morgan was the claimant in the proceedings up to his death and Mrs Morgan thereafter in her capacity as executrix in the same proceedings, as well as on her own behalf as a dependant.

It was the status and legal entity of the claimant, and not the proceedings themselves, which had altered.

“Proceedings” can have different meanings in the context of different situations.

 

On appeal the defendant argued:

 

  • QOCS applies or does not apply to “proceedings” and that this was (as the respondent conceded) one set of “proceedings”. QOCS has to apply to all of the defendant’s costs or none of those costs.
  • QOCS had been treated as applying or not applying to a particular claimant when there was no basis in the rules for such an approach.
  • The decision gave the effect that a single costs order in favour of one party and against another party is partially enforceable and partially unenforceable. There is no basis for such a result in the QOCS rules.
  • CPR 44.17 should be construed so that it caught Mr Morgan’s pre-commencement funding arrangements even while Mrs Morgan was the claimant.
  • The decision imposed the worst of both regimes on the appellant in that he would have been liable to pay a success fee and for an ATE insurance premium had the claim succeeded, but he cannot recover the bulk of his costs now that it has failed.

 

The Circuit Judge rejected the appeal:

 

“The parties were new. The CFA was new. The constituent components comprising the balance of risk were new.”

 

He accepted that the Civil Procedure Rules did not deal with this point. (Holy Civil Procedure Rule Clarity- well there is a surprise Batman).

 

“It seems to me that the purpose of QOCS regime is to give protection to individuals rather than to the somewhat ethereal concept of ‘proceedings’. It is not ‘proceedings’ which require QOCS protection. It is individual claimants. It is not ‘proceedings’ which enter into pre-April 2013 CFAs and ATEs. It is individuals. It is not ‘proceedings’ against which costs orders are made. It is claimants. That is surely why CPR 44.14(1) and (2) speak of ‘orders for costs made against a claimant”.

 

A claimant cannot use QOCS to gain an advantage. That was not the position here.

 

Comment

A considered, sensible and just decision.

As I said at the outset, to overturn several hundred years of costs rules in half a page of Civil Procedure Rules was unlikely to introduce clarity.

When it comes to court rules, brevity = litigation.

Written by kerryunderwood

August 19, 2020 at 10:01 am

Posted in Uncategorized

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