Keoghs handled a claim arising out of a road traffic accident in October 2013. Primary liability was admitted, but causation and quantum remained in dispute. The pre-accident vehicle value was paid prior to litigation starting. The claim was allocated to the fast track but the claimant was later permitted to increase his claim, just before the original trial date was listed, and include within it claims for recovery, storage and hire amounting to £25,392.00.
The claim proceeded to trial, where various irregularities resulted in the hire agreement being deemed unenforceable. The main arguments raised in relation to hire were under the Business Names Act 1985 on the basis that the claimant could not establish he was a sole trader and The Cancellation of Contracts Made in a Consumers Home or Place of Work etc Regulations 2008. Whilst District Judge Gill accepted the hire company was a sole trading company, the agreement was found to be unenforceable under the 2008 Regulations. The recovery and storage claims were also dismissed. The claimant was awarded £2,750.00 in respect of general damages. This award meant that the claimant had failed to beat the Part 36 offer.
The claim was subject to the fixed recoverable costs regime and, pursuant to the provisions of CPR 45.29F, the claimant was awarded costs in the amount of £3,952.00 including VAT to the date of expiry of the Part 36 offer; the defendant was awarded their costs from the date of expiry through to trial in the amount of £5,782.00 including VAT.
During the course of the litigation, two further costs orders had been made and costs summarily assessed - the claimant had an entitlement of £300.00 giving a total entitlement to costs of £4,252.00. The defendant had an entitlement of £4,492.30 giving a total entitlement to costs of £10,274.30.
By virtue of the claimant’s failure to beat the Part 36 offer, the protection otherwise afforded by Qualified One Way Costs Shifting (QOCS) was removed.
QOCS was introduced in claims with a personal injury element, with the aim of removing the need to obtain ATE insurance, as protection is afforded against payment of any adverse costs if a claim is lost. That protection is qualified however, and can be removed on a number of grounds – unreasonable prospects, conduct and fundamental dishonesty being a few. QOCS protection is also removed if a claimant fails to beat a Part 36 offer – Part 36 effectively “trumps” QOCS. In addition, any interlocutory costs orders made in favour of the defendant can be enforced at conclusion of the claim to the extent of the aggregate amount of damages and interest awarded to the claimant.
The removal of QOCS protection has the effect of enabling enforcement of the above costs orders. Whilst a costs order can and will still be made in favour of the defendant in the same way it always has been, the defendant would be unable to enforce that order if the claimant retained the protection of QOCS.
The rules governing QOCS can be found at CPR 44.13 to 44.17.
Pursuant to CPR 44.12, the claimant’s entire costs entitlement was set-off against the defendant’s entitlement, leaving the claimant with no entitlement to costs. The balance of defendant costs was therefore outstanding in the amount of £6,020.30.
It was further ordered that, pursuant to CPR 44.14(1), the defendant may enforce a further £2,750.00 of those costs against the full extent of the claimant’s damages.
This left a balance of defendant costs in the amount of £3,270.30 and in this regard it was determined unjust to further penalise the claimant for the bringing of the credit hire claim as this was “undoubtedly foisted upon him”.
Rather, the court chose to order that the defendant be at liberty to make an application that the outstanding balance of costs be paid by the credit hire organisation, by virtue of CPR 44.16(3) and CPR 46.2 (Costs Orders in Favour of or Against Non-Parties).
This is an excellent outcome and shows that with a well co-ordinated and thorough approach, both to the issues within substantive litigation and to the issues then to be addressed when costs are to be determined, it is possible to overcome some of the disadvantages that QOCS presents to paying parties. It also provides some clarity around the issue of set-off where QOCS has been dis-applied, as the rules are not entirely clear around what is and is not within a paying party’s remit in this regard.
We often find that district judges are not sufficiently well versed in the application of either fixed costs or QOCS and it is therefore pleasing to see a district judge who is both open to and conversant with these regulations and their application.
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