QOCS – Qualified One-way Costs Shifting – was a key element of the Jackson reforms of 2013. Seven years on, technical issues as to its scope continue to reach the Court of Appeal. Last week the court had a second look at Ho v Adelekun, this time considering the question of set off within the QOCS rules.
The damages claim in Ho v Adelekun was settled by acceptance of a part 36 offer but the case first went to the Court of Appeal last November on whether the settlement was on the basis of fixed recoverable costs (FRC) or costs to be assessed. In a blog about that decision, we suggested that in finding that fixed costs applied, the court showed a welcome purposive approach to the scope of FRC regimes.
On 9 April 2020 the court gave its latest decision in this claim. The second point to reach the court was the extent to which set off (of costs and/or damages) was part of the QOCS rules? Frankly, at first sight this seems like a really arcane point for the costs ‘anoraks’ among us. But – as ever with costs points – it does have wider ramifications.
Set off is far from a difficult idea in principle. In a case where there are discrete costs orders in favour of both parties it simply involves the payment of the net liability by one party to the other. At the risk of stating the obvious, in a successful personal injury claim cost orders both ways may arise because although the claimant has succeeded and costs in his or her favour will ‘follow the event’, the defendant may have won on an interlocutory point and/or may (as in this case) have the costs benefit of late acceptance of a part 36 offer – neither of which is uncommon. Set off may also touch damages, for example in a modest value case with a late acceptance and in which the defendant’s costs since the offer exceed the claimant’s entitlement up to that point.
The question for the Court in Ho v Adelekun (No 2) was whether this sort of set off was permissible under the specific rules about QOCS? Unhelpfully, the section of the CPR dealing with QOCS doesn’t mention set off but refers instead to enforcement of costs. But in a short decision in 2017 in Howe v MIB (No 2) the Court of Appeal had dealt quite briefly with the point, finding that set off was not enforcement and therefore allowing for set off in QOCS cases.
Despite its brevity, there was no evidence that Howe was incorrectly decided and it was therefore binding on the current court. That meant there was jurisdiction to order the set off contended for by the defendant but, having done that, both Newey and Males LJJ suggested that the point ought to be considered by the Civil Procedure Rule Committee because “there are powerful arguments on each side of the issue as to what the law should be.”
So what to make of all of this? A short answer might be ‘Nothing to see here, move along please’, given that this latest decision hasn’t altered the law so set off in QOCS claims continues to apply.
However, the judgment illustrates some concern at the tension between general costs rules such as set off and the specific QOCS rules that the claimant unsuccessfully argued should be treated as a self-contained code. Although there might have been enough in this tension for the court to raise the prospect of the CPRC considering the matter further, in the present circumstances there would appear to be little prospect of that happening anything like quickly.