Welcome changes are coming to the Civil Procedure Rules that will level the playing field in personal injury litigation and bring back teeth to defendant offers to settle.
Qualified one-way costs shifting or QOCS, is a part of the Jackson reforms and has been in force now for almost a decade. In exchange for losing recoverability of ATE premiums, claimants were given QOCS protection so that defendants were only permitted to enforce an order for costs in their favour in prescribed circumstances.
The current wording of CPR 44.14(1) only permits a defendant to enforce an order for costs against “any orders for damages and interest made in favour of the claimant”.
In Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654, Coulson LJ held that a Tomlin order or a deemed order following acceptance of a Part 36 offer were not “orders for damages and interest” within the meaning of Part 44.14(1).
In Ho v Adelekun [2021] UKSC 43, the Supreme Court decided that costs orders made in a claimant’s favour are not taken into account when determining the limit up to which a defendant’s costs order may be enforced. The defendant may only enforce any costs order up to the limit of the amount of an order for damages and interest.
In practice, these authorities meant a defendant could not set-off or recover costs from a claimant unless there was an order, made by the court, awarding damages and interest in the claimant’s favour.
In upcoming changes to the Civil Procedure Rules for claims issued after 6 April 2023, claimants will no longer be able to ignore the costs consequences of a defendant’s Part 36 offer as the costs protection provided by the current version of the QOCS rules will be removed. Similarly, any interlocutory costs orders against the claimant will also now be enforceable.
The new rule will allow a defendant to enforce their costs entitlement up to the extent of any order for, or agreement to pay, or settle a claim for, damages, costs and interest made in favour of the claimant.
The rule change does not stop there though. It also allows enforcement against costs ordered in favour of a claimant as well. So, for example, if an early Part 36 offer made by the defendant is accepted out of time some years later by the claimant, then damages and costs could be extinguished completely if the defendant’s costs post expiry are greater than the claimant’s damages and costs combined. A Part 36 offer is now a stronger weapon in a defendant’s armoury carrying real risks for claimants if not accepted in time.
The decision in Ho, regarding set-off, has also been codified in the rules at new CPR 44.14(4) allowing set-off of the defendant’s costs against the claimant’s costs.
The new rules will read as follows:
44.14
(1) Subject to rules 44.15 and 44.16, 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.
(2) For the purposes of this section, orders for costs includes orders for costs deemed to have been made (either against the claimant or in favour of the claimant) as set out in rule 44.9
(3) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
(4) Where enforcement is permitted against any order for costs made in favour of the claimant, rule 44.12 applies.
(5) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.
The rule change will be very welcome to defendants involved in personal injury litigation, bringing about certainty and protection where good offers are made.
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