Qualified One Way Costs Shifting (QOCS) are rules of Court introduced on 1st April 2013, that provide protection to Claimants against Defendants’ costs whilst still providing that Defendants are liable for Claimants’ costs.
Where can I find these rules?
What claims are covered by QOCS?
Does QOCS apply to all types of claim?
No - QOCS only applies to personal injury claims including fatal claims under the Fatal Accidents Act 1976 and the Law Reform (Miscellaneous Provisions) Act 1934.
Does QOCS apply to appeals?
Yes - as confirmed in the case of Parker v Butler (2016).
Does QOCS apply to Part 20 claims?
Yes - as long as the Part 20 claim is for personal injury. If, however, the Part 20 claim does not include personal injury, QOCS does not apply, as confirmed by the Court of Appeal in Wagenaar v Weekend Travel (2014).
Does QOCS apply to pre-action disclosure applications?
No – CPR 44.13(1) expressly excludes such applications from QOCS.
Does QOCS have any application to cases before 1st April 2013?
Yes - any cases where a costs order was made before 1st April 2013 but the order has not yet been satisfied will be caught by QOCS. This retrospective effect was confirmed by the Court of Appeal in Wagennar v Weekend Travel (2014).
Are there any cases where QOCS doesn’t apply?
Yes – any case where the Claimant entered into a Conditional Fee Agreement (CFA) or After the Event (ATE) insurance premium before 1st April 2013 is excluded from QOCS by CPR 44.17. This applies even where the Claimant subsequently entered into a post 1st April 2013 CFA or ATE, as confirmed by the Court of Appeal in Catalano v Espley-Tyas Development Group (2017)
What are the effects of QOCS
Does QOCS prevent the Court making a costs order against the Claimant who loses their claim?
Technically no – QOCS only prohibits the enforcing rather than the making of a costs order against a Claimant but, in practice, an order that can’t be enforced is no better than no order at all.
What happens where the Defendant is entitled to some costs where, for example, the Claimant wins but doesn’t beat the Defendant’s Part 36 Offer?
The Defendant can enforce their costs entitlement up to but not exceeding the amount of damages plus interest awarded to the Claimant – CPR 44.14(1). So, if the Claimant’s damages are £5,000 but the Defendant’s post Part 36 costs are £6,000, the Claimant’s damages will be cancelled out to meet £5,000 of the Defendant’s costs but the Claimant will not be liable for the remaining £1,000 of Defendant’s costs.
Exceptions to QOCS
Are there any exceptions to QOCS?
Yes, there are exceptions provided for in the rules for struck out claims - CPR 44.15(1), fundamentally dishonest claims - CPR 44.16(1), claims made for the financial benefit of other people – CPR 44.16(2) and claims which include non personal injury elements – CPR 44.16(3).
How does the exception to QOCS apply to a claim that has been struck out?
Where a claim has been struck out for disclosing no reasonable grounds for bringing the proceedings, as an abuse of process or due to conduct likely to obstruct the just disposal of the proceedings, any costs order can be enforced in full without the Court’s permission – CPR 44.15(1). For example, in Brahilika v Allianz Insurance (2015), the Claimant failed to attend the trial and the Court struck out the claim due to conduct likely to obstruct the just disposal of the proceedings – meaning that the Defendant could enforce the costs order against the Claimant.
Does the same exception apply if a claim is discontinued?
No – there is no exception to QOCS for a discontinued claim. However, a Defendant could potentially apply for the Notice of Discontinuance to be set aside under CPR 38.4 so that the Court could then consider a claim to strike out the claim.
How can a dishonest claim give rise to the loss of QOCS protection for a Claimant?
Where the Court finds, on the balance of probabilities, that a claim was fundamentally dishonest, the Court may order that costs against the Claimant be enforced in full – CPR 44.16(1).
What is the difference between fundamental dishonesty and dishonesty?
In Gosling v Hailo and Screwfix Direct (2014), fundamentally dishonesty was defined as dishonesty that went to the root of the whole or a substantial part of the claim as opposed to dishonesty relating only to a collateral matter or a minor self-contained head of damage.
Where a claim is discontinued, can the Court still find that the claim was fundamentally dishonest?
Yes – CPR 44 PD 12.4(c) confirms the Court can find a claim was fundamentally dishonest even after the claim has been discontinued.
How can a claim for the financial benefit of others give rise to the loss of QOCS protection for a Claimant?
Where proceedings include a claim for the financial benefit of a person other than the Claimant, the Court may allow a costs order against the Claimant to be enforced to the extent that the Court considers just – CPR 44.16(2). For example, in Waggett v Witold Warchalowski and Others (2015), a Part 20 Claimant lost QOCS protection for a Part 20 counterclaim that included a credit hire claim made for the benefit of the Second Defendant.
Does this include claims for dependents, gratuitous care, earnings paid by an employer or medical expenses?
No – all of these examples are excluded by CPR 44.16(2)(a).
What kinds of claims for the financial benefit of others are included?
Subrogated claims and credit hire are examples of claims where this exception may apply.
Can a costs order be made and enforced against the other party for whose financial benefit the claim was made?
Yes – the Court can make and enforce a costs order against a non-party in accordance with CPR 46.2 - Howlett and Howlett v Davies and Ageas (2017).
How can a claim that includes non personal injury elements give rise to the loss of QOCS protection for a Claimant?
Where a claim includes personal injury but also includes other non-personal injury claims (such as housing disrepair or professional negligence) the Court may disapply QOCS protection in whole or in part to the extent considered just - CPR 44.16(2)(b).
Are there any other possible exceptions to QOCS?
In Price v Egbert Taylor & Co. (2016), the Claimant’s letter of claim stated that there was a pre 1st April 2013 CFA in place. However, this was not the case and the Court held that the Claimant was stopped from relying on the costs protection of QOCS as the Defendant had relied upon the representation that there was a pre 1st April 2013 such that QOCS would not apply.