What is Changing on 6 April 2023?
Old Rule CPR 44.14(1)- “…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 damages and interest made in favour of the claimant”
CPR 44.14(1)- “…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”
This change reverses the Supreme Court decision in Ho v Adelekun  UKSC 43 which established that defendants could not set off costs against the claimant under the qualified one-way costs shifting scheme. The new rule expressly permits off setting against damages, costs and interest recoverable by the claimant.
In 2018 the Court of Appeal in Cartwright v Venduct Engineering Ltd established that neither a Part 36 settlement or Tomlin order was considered to be an order for damages and interest. The rule change will reverse this decision too by introducing the words “any orders for or agreements to pay or settle a claim for, damages, costs and interest….”.
Claimant recovers £50k in damages and £100k for costs incurred up to August 2023.
The Defendant also has a costs order from August 2023 as the Claimant did not beat their Part 36 offer made.
Under the old rules- The Defendant could only enforce up to £50k (potentially eliminating damages unless the Claimant has ATE).
Under the new rules- The Defendant can enforce up to £150k (potentially eliminating damages and costs unless the Claimant has ATE).
Should Non-PI Lawyers pay attention?
Often claims for negligence, breach of contract, unfair prejudice etc include an allegation of injury. Such allegations may seem to lack credibility and may be overlooked, but they have important implications in terms of QOCS.
In the two examples below, the PI element of the claims were dismissed.
- Claims under the Data Protection Act and the Human Rights Act for misuse of private information.
- Breach of contract not pursued. Misfeasance failed at trial. Misuse of private information succeeded.
- Claim for PI arising out of the incident rejected at trial.
- C awarded £9,000 damages. Ds had offered £18,000.
- D ordered to pay 70% of the costs up to date of the offer and C to pay the costs thereafter.
- C argued that because the claim included damages for PI she was protected by QOCS and D could not enforce for more than £9,000.
- HHJ Luba QC agreed.
- Upheld by the COA- in most mixed claims QOCS will apply.
- D lost his hackney carriage vehicle license from the Council. He complained to the Local Government Ombudsman who found the Council had given him wrong advice. On a second appeal, he was given a new licence.
- D brought a claim alleging discrimination, negligence (re the advice) and breach of duty in carrying out statutory duties.
- He alleged that the Council’s actions caused a depressive disorder involving mild to moderate depression.
- D succeeded at first instance and was awarded damages, but this was overturned on appeal on the basis that there was not a duty of care to avoid psychiatric harm and that such harm was not reasonably foreseeable.
- C awarded £0 damages.
- QOCS applied to this mixed claim.
- D costs therefore limited to £0.
Could there be a rush to issue before 6 April 2023?
What advice will you give clients if a claim includes a potential PI element, but is not primarily a PI claim?
What does this mean for Claimant lawyers on a CFA lite i.e. we only charge you what we recover?
Is there now an increased exposure for ATE insurers?
Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –
- the claimant has disclosed no reasonable grounds for bringing the proceedings;
- the proceedings are an abuse of the court’s process; or
- the conduct of –
- (i) the claimant; or
- (ii) a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct, is likely to obstruct the just disposal of the proceedings.
- Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.
- Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –
- (a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or
- (b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.
- Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made.