Qualified One Way Costs shifting was said to be the death of claimant personal injury lawyers.
It may have been.
But… other civil litigators are lining up to profit.
What is QOCS?
Qualified One Way Costs Shifting was introduced by the Civil Procedure (Amendment) Rules 2013 and set out in CPR r 44.13 to CPR r 44.17.
The general principle is that for personal injury claims (including clinical negligence and claims on behalf of deceased persons) if the claim fails, you will not be required to pay the defendant’s costs.
It’s different because it removes the need to take out After-The-Event Insurance to offset the risk of litigation (i.e. paying the defendant’s costs). The reasoning is that the ATE premium was so high, that by removing it, this results in effectively the same result for insurers.
This cannot be true, as previously you faced paying the ATE premium + costs. Now you just face the claimant’s costs, and are unlikely to recover any of your own. i.e. you will still be paying out quite a lot of money.
One thing that has been overlooked by this is PI cases are VERY expert heavy. These disbursements are expensive and normally covered by ATE insurance in the event a claim does not succeed. The removal of ATE means the claimant will need to meet the costly expert fees if they lose.
So, does that mean you can run a PI claim to trial and avoid paying if you lose?
Effectively, the answer is yes. While there is a costs order against the claimant still, QOCS affects enforceability.
The spanner in the works is you may be required to pay the defendant’s costs if:
- you lose interim applications;
- your conduct is poor or dishonest; and
- you fail to beat a Part 36 offer.
There is one pain in the backside that QOCS will not apply to PAD applications, but generally you can obtain no order as to costs, unless you have behaved like an idiot (CPR r 31.16 is not hard to follow).
It is possible to control the first 2 points; however the only factor to fear is failing to beat a part 36 offer.
Part 36 offers
Any claimant who succeeds at trial but fails to beat a defendant’s Part 36 offer will be ordered to pay all of the defendant’s costs from the date of expiry of the Part 36 offer.
The grey area in this? The Order is only enforceable without leave of the court up to the level of damages awarded by the court.
You will therefore have experienced an increase in early Part 36 offers. My defendant friends are telling me how they are paying in excess of their recommended calculation of damages just to provide a risk to the claimant of continuing with their claim.
Tell me about some of the areas which are unclear
(1) Enforceability – this approach allows flexibility to the court. For instance, it could award some or all costs even against a claimant who beats a part 36 offer, based on their conduct (e.g. a refusal to mediate).
(2) Discontinuance is not readily addressed under CPR r 38.6. Say for example you are destined to lose and considering discontinuance after the pre-trial revew. What point is there in discontinuing when you can go through the trial and lose without having to pay costs?!!! Although you may need to pay in mixed claims (e.g. injury and property/credit hire), pure PI claims are exempt.
(3) It does not appear, at least to my small brain, that CRU has been properly considered when looking at CPR r 44.14. How does this come into the approach, when looking at offers and if the money has already been spent at the time of trial and the defendant succeeds?
(4) CPR r 41.16 requires “fundamental dishonesty”. This needs better defining. Everybody understands fraud, but fundamental dishonesty is a very wide description. For example, does this include the phantom passenger(s) but the driver was genuinely injured?
So why do you assert claimants are waiting to abuse QOCS
The MOJ want to roll it out across civil litigation.
Now think about it in general civil litigation terms. Some worked examples may assist:
(1) Basic contract claim – rises or falls based on UCTA, particularly B2B contracts – no expert is required and it comes down to contractual interpretation.
Why the hell not run it to trial? It just needs pleadings, witness statements and disclosure. This is clearly not a dishonest claim and is a high risk to both sides. If the defendant fails to make any offers then the claimant should go through with their risky claim if QOCS applies.
(2) Nuisance law claim – maybe even a GLO claim against a large manufacturer – obtain an expert report or two, secure witness evidence, go through disclosure and then move towards trial. Nuisance law is protean, and so long as an expert it on board, why the hell not run it to trial? It can be another high risk claim ran in good faith.
(3) Breach of a JCT contract worth millions. If no arbitration or adjudication clause then move it into litigation. Normally the risk is huge, but here, the claimant is able to offset the risk of defendant costs (and note that junior counsel fees for construction and engineering are VERY expensive). Why the hell not run it to trial?
(4) A person crashes their car into your wall while suffering from an illness. Potential automatism or inevitable accident defence available. The defendant will have the burden to prove their defence. Simply go towards trial and make the defendant positively prove their defence. If they succeed then they will still have to pay thousands to their medical expert and lawyers, whereas you walk away without paying a penny because you reasonably pursued a valid claim.
These are just some examples. Do the courts really want to see an avalanche of claims reaching trial because the claimant has little to lose?
I would run all of the above examples to trial if QOCS applied. I cannot say the same if my client was facing the defendant’s costs.
Other claimant solicitors will do the same. Fee earners will have a mixed caseload. One side of their caseload will be X% winnable claims; the other side will be Y% QOCS claims whereby they are high risk but do not meet the criteria of being fundamentally dishonest. It will only increase the litigation as these would be run to trial, and most Part 36 offers will be accepted.
The MOJ have underestimated the number of neighbour dispute claims (mainly boundary line disputes).
If these people discover they can pursue claims in good faith without having to pay the defendant’s costs, there will be some very disgruntled judge reporting back to the MOJ!
Over and out.