Costs judge rules QOCS applies in detailed assessment proceedings: Challis v Bradpiece [2024] EWHC 1124 (SSCO)

A recent decision by a costs judge that QOCS applies to detailed assessment proceedings prevents a defendant from enforcing an order for costs against the claimant.

Qualified one-way costs shifting (QOCS) has applies to personal injury claims since 1 April 2013 and provides that a winning defendant cannot enforce an order for costs against a losing claimant without permission of the court, save for in limited circumstances. One exception to QOCS is where the claimant fails to beat a Part 36 offer made by the defendant.

Detailed assessment (DA) is a procedure where the court determines the level of costs to be paid by the unsuccessful party to the successful party if the parties are unable to reach agreement.

A recent costs judge decision Challis v Bradpiece [2024] EWHC 1124 (SSCO) has extended to application of QOCS to DA proceedings arising out of personal injury claims.

Facts of the case

The claimant pursued a personal injury claim resulting from clinical negligence. The claim was settled by way of a Tomlin order, which stipulated that the claimant’s costs would be assessed in a DA if they could not be agreed. No agreement was reached, and this led to DA.

At DA, the claimant was awarded less costs than had been offered by the defendant in a Part 36 offer made in respect in costs. The defendant was therefore entitled to an order for his costs of the DA process. The issue to be determined by the costs judge was whether the defendant could enforce those costs against the claimant and whether the QOCS regime applied to detailed assessment proceedings arising out of a personal injury claim.

Arguments

The fundamental issue was whether DAs arising from personal injury claims fell within the definition of ‘proceedings which include a claim for damages … for personal injury’ within CPR 44.13 (1)(a). If they did, QOCS applied. If they did not, QOCS did not apply.

The defendant contended that DAs did not fall within the definition, maintaining that DA proceedings are distinct and separate and require a separate originating process from the substantive personal injury proceedings. The defendant also argued that applying QOCS to DAs would undermine the legislative intent to incentivise early settlement and fair costs management.

The claimant referred to previous decisions where “proceedings” in CPR 44.13 had been interpreted broadly to apply to appeals and mixed claims. They argued, if QOCS did not apply to DA proceedings, a claimant could be left with a net liability for the defendant’s costs which would be completely contrary to the purpose of QOCS.

Judgment

The Judge confessed that the arguments were finely balanced and his mind had wavered several times before making his decision. He preferred the claimant’s arguments and held that QOCS does apply to DA proceedings and that the defendant was unable to enforce his order for costs against the claimant.

He found most compelling that the intention of QOCS was to prevent a net costs liability for personal injury claimants. However, recognising the contentious nature of the decision, the Judge granted the defendant permission to appeal.

Commentary

The decision will disappoint defendants but SCCO decisions are persuasive and not binding. An appeal would have provided binding authority but it has been reported that the defendant’s appeal has been withdrawn. No doubt, the decision will be cited by claimants and refuted by defendants until a biding decision is made on this issue.