Qualified One-Way Costs Shifting (QOCS) is now firmly embedded in the litigation process.
As a result of the changes there is a clear shift in the behaviours of claimants and their solicitors.
Although the cost and role of the After the Event (ATE) insurers was much maligned prior to the LASPO reforms, they played an important role in the filtering of claims, often demanding at least a 50% prospect of success, before claims were pursued.
An unintended consequence of QOCS as many defendant law firms and insurers can attest to (at least anecdotally) is an increase in more speculative claims.
The withdrawal of a costs sanction where a claim fails, or the need to report to an ATE insurer, means that some law firms may be more willing to pursue litigation in the hopes of achieving a compromise, on a claim they would never previously have pursued.
What avenues are open to a defendant when faced with what they consider a speculative claim? On the assumption that a defendant will not wish to put forward a Part 36 offer or otherwise settle a claim, there are two potential avenues (CPR 44):
We have seen a spate of widely publicised fundamental dishonesty decisions – many of which this firm has been involved in.
Clearly however, this is a QOCS exemption applicable only in certain circumstances, QOCS having been considered earlier in this edition. Previous editions of Aware have also looked at this in depth.
The second limb above does pose some more interesting questions. Some of the grounds for having a claim struck out are self-evident. The claimant has pursued the wrong defendant, a stark evidential flaw is apparent, or there is a procedural breach or failure, which might trigger a strike-out application.
There are other areas where it may be worthwhile pursuing the argument that QOCS should not apply. In disease cases, limitation is often a significant issue between the parties. Often, a defendant will seek to have the issue determined at a preliminary hearing.
The advent of QOCS has seen cases now being pursued (and again this is stated with the caveat that this is anecdotal rather than on any statistical analysis), which may not previously have been, due to concerns in respect of limitation.
S11 of the Limitation Act states:
(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) or (5) below.
(4) Except where subsection (5) below applies, the period applicable is three years from:
(a) the date on which the cause of action accrued; or
(b) the date of knowledge (if later) of the person injured.
The question posed by this is, therefore, where a claim is struck out on the basis that it has been brought after the expiry of the limitation period and the court does not exercise its discretion under s33 of the Act, does this qualify as a QOCS exemption?
If the claimant’s cause of action has expired by virtue of the Limitation Act, then it does appear arguable that a failure at a limitation trial would fall under the definition of a QOCS exemption. To the writer’s knowledge, this has yet to be tested.
There are potential policy concerns that a court may take into account – what wider impact would the application of a QOCS exemption on limitation cases have?
However, the reported instances where a court might use its discretion – for example in claims of historical abuse, is a counterweight to such concerns.
We are considering here more minor claims of, say, deafness or HAVS, where the claimant has had long-standing symptoms and showed no inclination to pursue a claim in the past and where the defendant is now prejudiced by the long delay.
The application of QOCS exemption to such claims would naturally result in better screening of claims, with both the claimant and his solicitor more circumspect about pursuing a claim where the issues of limitation were starkly apparent.
Another aspect worth considering, is the interaction of QOCS and wasted costs orders. Can a party still pursue a wasted costs order under QOCS? Again, there is no real guidance on this, but it is certainly worth exploring in greater detail.
The basis of a wasted costs order can be found in s51 of the Senior Courts Act 1981, which states:
(7) In subsection (6), “wasted costs” means any costs incurred by a party:
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.
In the notes section of the White Book, it is noted that wasted costs orders can be made in proceedings where, ordinarily, costs orders would not be made.
The example of child law proceedings is made, where cases are often funded by legal aid.
What constitutes improper, unreasonable or negligent? Again, the White Book assists with definitions:
Improper covered but was not confined to conduct which would ordinarily be held to justify disbarment, striking out, suspension from practice or other serious professional penalty.
Unreasonable aptly described conduct which was vexatious, designed to harass the other side, rather than advance the resolution of the case, and it made no difference that the conduct was the product of excessive zeal and not improper motive.
Negligence should be understood in an un-technical way to denote failure to act with the competence reasonably expected of ordinary members of the profession.
Quoting again from the notes section of the White Book: “In cases where the allegation is that the legal representative has pursued a hopeless case, the question is whether no reasonably competent legal representative would have continued with the action.”
It is important to remember that the action being alleged must have caused the wasted costs to occur and there are often evidential difficulties in pursuing wasted costs actions. However as a counter to undesirable behaviours creeping into litigation, it may be worthwhile giving more detailed consideration to the pursuit of such an order in appropriate circumstances.
It is clear that the full ramifications of QOCS, such as a potential increase in litigation, settlement increase (perhaps for economic/commercial reasons), and behaviours of claimants and their legal representatives as they adapt to this new regime, are not yet fully known.
It is however a worthwhile exercise considering how to shape the new regime, taking actions that will allow the compromise of genuine claims, whilst still effectively routing out the speculative claims seen as an easy route to a payout for the claimant and/or his legal representatives.
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