Personal injury and clinical negligence litigation likely to rise in advance of QOCS changes on 6 April 2023
Qualified One Way Costs Shifting (‘QOCS’) was introduced on 1 April 2013 as part of the Jackson costs reforms following the removal of a claimant’s right to recover success fees and ATE insurance premiums from the defendant. The intention of the Civil Procedure Rule Committee was to ensure both parties had a financial interest in the outcome of a claim. The relevant rules are set out in Civil Procedure Rule 44.
QOCS applies in personal injury and clinical negligence claims (except claims for mesothelioma) and the regime generally limits a losing claimant’s liability to pay the defendant’s costs. QOCS does not prevent costs orders being made in favour of defendants but limits the extent to which such orders can be enforced. Generally, defence costs may only be enforced up to the aggregate amount of court orders for damages and interest made in favour of the claimant. However, defence costs may be enforced without limit if the claim is struck out or if the claimant is found to have been fundamentally dishonest or where a claim has been pursued for the benefit of a third party.
However, the effectiveness of QOCS (and Part 36) in settling disputes has been diluted by a series of decisions which held that QOCS does not apply to claims settled by Tomlin Order or by Part 36 offer (even where accepted out of time) nor to interim payments of damages and that the off- setting of defence costs against claimant costs is also limited to the amount of damages awarded to the claimant.
The new QOCS regime
In May 2022, the Ministry of Justice announced a consultation on proposed changes to CPR 44 to undo the unintended consequences of the decisions on QOCS. These proposals were approved by the Civil Procedure Rule Committee and, with effect from 6 April 2023, CPR Rule 44.14 is to be amended as follows :
‘ …orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for, or agreements to pay or settle a claim for, damages, costs and interest made in favour of the claimant.’
Thus, settlement agreements and Part 36 acceptances will now fall within the QOCS regime and recoverable defence costs are now capped at the aggregate amount of damages, interest and costs recovered by the claimant.
Practical considerations
- The changes to CPR 44 only impact claims issued after 6 April 2023. It is anticipated that there will be an increase in personal injury/clinical negligence claims issued prior that date to ensure they are subject to the existing regime.
- The costs of issue on such claims are open to challenge on assessment, particularly if time is cut short for responding to a claim under the relevant Pre Action Protocol before proceedings are issued.
- Practitioners will have to juggle 2 sets of rules on QOCS for some time to come.