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When will qualified one-way costs shifting apply?

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Posted by Jennifer Rhind on 15 October 2015

Jennifer Rhind Solicitor

Qualified one-way costs shifting, otherwise known as QOCS, was introduced for personal injury claims on 1 April 2013 following the Jackson Reforms. 

The aim of QOCS was to assist in establishing a balance for claimants who, following implementation of the Jackson Reforms, were no longer able to recover Conditional Fee Agreement (“CFA”) success fees or After the Event (“ATE”) insurance premiums from their opponent.

From 1 April 2013, if a claimant is unsuccessful with their claim, they will not be ordered to pay the defendant’s costs of successfully defending the claim, however, a defendant will still be ordered to pay a successful claimant’s costs.  Some exceptions to this rule are:

  • If the claimant fails to beat a defendant’s Part 36 offer, the defendant will be able to recover costs up to a maximum level of the claimant’s damages;
  • If the claimant’s case is struck out as there is no reasonable cause of action or it is an abuse of the Court’s process; or
  • If the claimant’s claim is found to be, on the balance of probabilities, fundamentally dishonest.

The Civil Procedure Rules stated that a claimant will not benefit from QOCS if there is any pre-commencement funding, e.g. a CFA or ATE insurance policy which has been entered into prior to 1 April 2013 and which is still in place and continuing after this date.  Therefore, what is the position if a claimant has entered into two CFAs; one pre-1 April 2013 and one post-1 April 2013.  Will QOCS apply or not?

Landau v (1) The Big Bus Company Limited (2) Zeital (SCCO 1403806, 31 October 2014, Unreported)

This was a personal injury claim arising out of a road traffic accident.  The Claimant had the benefit of a pre-1 April 2013 CFA and an ATE insurance policy.  The matter proceeded to trial and the Claimant was unsuccessful.  The Claimant appealed the decision.  The first CFA did not cover an appeal made by the Claimant so the Claimant entered into a second CFA post-1 April 2013.  The appeal was unsuccessful.

The question which arose and was considered by Master Howarth was whether or not QOCS applied in relation to the costs of the appeal.  The Claimant’s position was that the second post 1-April 2013 CFA relating to the appeal was a different set of proceedings to the first pre-1 April 2013 CFA and QOCS should apply.  The Defendants’ position was that the original trial and appeal were one set of proceedings and therefore QOCS should not apply.

Master Howarth’s decision was that QOCS should not apply as although the appeal was dealt with under a post-1 April 2013 CFA, the original claim was brought under a pre-1 April 2013 and under CPR 44.17, the appeal was part of the same proceedings.

Casseldine v The Diocese of Llandaff Board for Social Responsibility (Claim No. 3YU56348, 3 July 2015, Unreported)

This was a personal injury claim arising out of injuries the Claimant suffered whilst at work.  The Claimant instructed Thompsons Solicitors in March 2012 and entered into a CFA (“the first CFA”).  This CFA was terminated on 30 January 2013.  The Claimant then instructed SRB Solicitors who entered into a further CFA on 6 August 2013 (“the second CFA”).  The Claimant’s claim was issued in December 2013 and went to trial and was dismissed on 1 December 2014.

The issue of costs was referred to District Judge Phillips who was asked to consider whether QOCS applied given that the first CFA was entered into pre-1 April 2013.  The parties agreed that CPR 44.17 was relevant and the first CFA was within the definition of a pre-commencement funding arrangement.  The Defendant’s position was that as this was the case, then the Claimant should not be able to rely on the QOCS provisions.

Master Howarth’s decision in Landau v (1) The Big Bus Company Limited (2) Zeital was considered.  District Judge Phillips said that Master Howarth had concluded that “…the word ‘proceedings’ must be decided in the context in which the words appear.”

District Judge Phillips distinguished Master Howarth’s decision on the basis that the first CFA had been terminated prior to proceedings being issued and in fact, proceedings were not issued until after the second CFA had been entered into.  District Judge Phillips held that QOCS did apply and the Defendant was unable to recover their costs from the Claimant.  

About the author

Jennifer is a solicitor in the commercial litigation department.

Jennifer Rhind

Jennifer is a solicitor in the commercial litigation department.

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