Learning Outcomes
This article explains the principle of Qualified One-Way Costs Shifting (QOCS) within the context of civil litigation costs. After reading this article, you should be able to understand the general rule of QOCS, the types of claims it applies to, the circumstances in which QOCS protection may be lost or limited by a claimant, and its interaction with Part 36 offers. This knowledge is essential for answering SQE1 questions concerning costs in personal injury claims.
SQE1 Syllabus
For SQE1, you are required to understand the rules relating to costs, including the specific provisions for Qualified One-Way Costs Shifting (QOCS). It is important to be able to apply these rules to practical scenarios, particularly in the context of personal injury litigation. As you work through this article, ensure you understand:
- The definition and purpose of Qualified One-Way Costs Shifting (QOCS).
- The types of proceedings where QOCS applies (CPR 44.13).
- The general effect of QOCS on a defendant's ability to recover costs from the claimant.
- The exceptions to QOCS protection, including fundamental dishonesty (CPR 44.16).
- Circumstances where permission is required to enforce a costs order against a claimant benefitting from QOCS (CPR 44.15).
- The interaction between QOCS and the costs consequences of Part 36 offers (CPR 44.14).
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- In which types of claims does Qualified One-Way Costs Shifting (QOCS) primarily apply?
- Under QOCS, if a claimant loses their personal injury claim, are they generally liable for the defendant's costs?
- What does 'fundamental dishonesty' mean in the context of QOCS?
- How does a defendant's successful Part 36 offer affect QOCS protection?
Introduction
In civil litigation, the general rule regarding costs is that the unsuccessful party pays the successful party's costs (often referred to as 'costs follow the event'). However, specific rules apply to certain types of claims, modifying this general principle. One significant modification is Qualified One-Way Costs Shifting (QOCS), introduced to protect claimants in specific proceedings, primarily personal injury claims, from the risk of facing large adverse costs orders if their claim is unsuccessful. This protection is aimed at improving access to justice.
The QOCS Regime: CPR 44.13 - 44.17
The rules governing QOCS are found in the Civil Procedure Rules (CPR) Part 44, sections 13 to 17.
Scope of Application (CPR 44.13)
QOCS protection applies automatically (meaning the claimant does not need to apply for it) to proceedings which include a claim for damages:
- for personal injuries;
- under the Fatal Accidents Act 1976; or
- under the Law Reform (Miscellaneous Provisions) Act 1934 (in relation to claims surviving for the benefit of the deceased's estate which include personal injury).
It also applies to appeals arising from such claims.
Key Term: Qualified one-way costs shifting (QOCS)
A costs protection regime primarily for personal injury claimants, where orders for costs made against the claimant may not be enforced beyond the amount of damages and interest recovered by the claimant, except in specified circumstances.
The General Rule and Its Effect (CPR 44.14)
The core principle of QOCS is set out in CPR 44.14(1). It states that, 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 damages and interest made in favour of the claimant.
In simple terms, if a claimant with QOCS protection loses their case and is ordered to pay the defendant's costs, the defendant generally cannot enforce that costs order to recover any money from the claimant. If the claimant wins but is awarded damages less than the costs order against them (e.g., due to failing on certain issues or late acceptance of an offer), the defendant can only recover costs up to the level of the damages and interest awarded to the claimant. The claimant's personal assets beyond the awarded damages are protected.
Worked Example 1.1
Chen brings a personal injury claim against David. The claim fails entirely at trial, and Chen is ordered to pay David's costs, assessed at £15,000. Chen recovers no damages or interest. Can David enforce the costs order against Chen?
Answer: No. Under CPR 44.14(1), David can only enforce the costs order up to the amount of damages and interest awarded to Chen. Since Chen was awarded nothing, David cannot recover any costs from Chen, despite the costs order being made.
Worked Example 1.2
Aisha brings a personal injury claim against Ben. At trial, Aisha wins and is awarded £10,000 in damages and interest. However, due to failing to beat Ben's earlier Part 36 offer, Aisha is ordered to pay Ben's costs incurred after the relevant period expired, assessed at £12,000. How much can Ben recover from Aisha?
Answer: Ben can enforce the costs order against Aisha, but only up to the amount of damages and interest awarded to her. Therefore, Ben can recover £10,000 from Aisha. The remaining £2,000 of the costs order cannot be enforced against Aisha personally due to QOCS protection. Aisha effectively receives no money from her successful claim.
Exceptions to QOCS Protection
QOCS protection is 'qualified', meaning it is not absolute. There are specific circumstances where the court's permission is not required for a defendant to enforce a costs order against the claimant, or where the court can grant permission for enforcement beyond the usual limit (i.e., beyond the damages/interest recovered).
Claim Struck Out (CPR 44.15)
Costs orders made against the claimant can be enforced (with the court's permission) where the claim is struck out on the grounds that: (a) the claimant has disclosed no reasonable grounds for bringing the proceedings; (b) the proceedings are an abuse of the court’s process; or (c) the conduct of the claimant or a person acting on the claimant’s behalf is likely to obstruct the just disposal of the proceedings.
Fundamental Dishonesty (CPR 44.16)
This is a significant exception. QOCS protection is lost entirely where the claim is found on the balance of probabilities to be fundamentally dishonest. If fundamental dishonesty is established, the court will normally order the claimant to pay the defendant's costs, and the defendant can enforce that order fully against the claimant's assets, without the limitation imposed by CPR 44.14(1).
Key Term: Fundamental Dishonesty
Dishonesty which goes to the root of either the whole claim or a substantial part of the claim. It requires more than mere inaccuracies or minor exaggerations.
The court must be satisfied that the dishonesty is 'fundamental'. This involves assessing whether the dishonesty goes to the core of the claim. For example, deliberately exaggerating injuries or staging an accident would likely be considered fundamentally dishonest. Simply failing to prove the claim, or minor inconsistencies in evidence, would not typically meet this threshold.
Worked Example 1.3
Raj brings a claim for whiplash injuries following a minor car collision. Surveillance evidence produced by the defendant shows Raj engaging in strenuous physical activity shortly after the accident, contradicting his witness statement about debilitating pain. The judge dismisses the claim and finds that Raj has been fundamentally dishonest about the extent of his injuries. The defendant's costs are £20,000. Can the defendant enforce the costs order against Raj?
Answer: Yes. Because the court found Raj to be fundamentally dishonest, QOCS protection under CPR 44.14 does not apply (CPR 44.16(1)). The defendant can enforce the full £20,000 costs order against Raj personally, seeking recovery from his assets if necessary.
Interaction with Part 36 Offers
Part 36 offers are formal settlement offers made under CPR Part 36, which carry specific costs consequences if rejected. QOCS interacts with Part 36 in a particular way, primarily governed by CPR 44.14(2).
If a claimant fails to accept a defendant's Part 36 offer and subsequently fails to obtain a judgment more advantageous than the offer, the usual Part 36 costs consequences apply (i.e., the claimant is generally ordered to pay the defendant's costs from the date the relevant period for acceptance expired). However, the QOCS rule in CPR 44.14(1) still limits the enforcement of that costs order. The defendant can only recover costs up to the level of damages and interest awarded to the claimant.
This means that even if a claimant makes a poor decision in rejecting a reasonable Part 36 offer, their liability for the defendant's subsequent costs is capped by the amount they recover in damages and interest.
Revision Tip
It's essential to distinguish between the making of a costs order and its enforcement when considering QOCS. QOCS does not prevent a costs order being made against a claimant (e.g., after rejecting a Part 36 offer), but it significantly restricts the defendant's ability to enforce that order and recover the money from the claimant personally.
Exam Warning
Do not confuse the effect of fundamental dishonesty with the effect of failing to beat a Part 36 offer under QOCS. Fundamental dishonesty removes QOCS protection entirely, allowing full enforcement of costs. Failing to beat a Part 36 offer does not remove QOCS protection; it simply means a costs order is likely to be made against the claimant, but its enforcement is still capped by CPR 44.14(1) at the level of damages/interest awarded.
Policy Considerations
The introduction of QOCS aimed to balance the scales between claimants (often individuals with limited resources) and defendants (often insurers or large organisations) in personal injury litigation. By removing the fear of potentially crippling adverse costs orders, QOCS encourages individuals with genuine claims to seek redress without the risk of financial ruin if the claim fails. However, the exceptions, particularly for fundamental dishonesty, act as a deterrent against fraudulent or grossly exaggerated claims.
Key Point Checklist
This article has covered the following key knowledge points:
- QOCS primarily applies to personal injury claims, providing claimants with costs protection.
- The general rule (CPR 44.14) prevents enforcement of costs orders against a QOCS-protected claimant beyond the damages/interest they recover.
- QOCS protection is lost if the claim is struck out for specific reasons (CPR 44.15) or found to be fundamentally dishonest (CPR 44.16).
- Fundamental dishonesty means dishonesty going to the root of the claim, allowing full enforcement of costs against the claimant.
- Failure to beat a defendant's Part 36 offer leads to adverse costs consequences, but QOCS still limits enforcement of those costs to the amount of damages/interest awarded.
Key Terms and Concepts
- Qualified one-way costs shifting (QOCS)
- Fundamental Dishonesty
