On 6 April 2023 new qualified one-way costs shifting (QOCS) rules will come into force. There is a significant change to CPR 44.14 which will require both Claimants and Defendants to review their tactics but it could also have an effect on retainers offered to Claimants.

Qualified one-way costs shifting (QOCS) has been with us for some years now. What has always struck me is that, in order to achieve this huge change in the field of personal injury costs, it required little more than a small addition to CPR 44. Whilst the catalyst for the change was the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), there was no actual direct part of that Act, or any other piece of primary legislation which required amending in order to for QOCS to be implemented.

This welcome simplicity has had many benefits, but a consequence is that there has been a growing number of cases where the plain rules regarding QOCS have been taken very literally and this has seen some decisions going against Defendants which, but for the QOCS rules, would be seen as very unjust.

In various authoritative Judgments, it has been found that the QOCS protection afforded to Claimants ensures that Defendants cannot enforce cost orders in their favour:

• Where a matter settles by way of a Tomlin Order (Cartwright v Venduct Engineering Ltd),
• Where cases are settled by way of Part 36 offer (Harrison v University Hospitals of Derby & Burton NHS Foundation Trust), or;
• Where it would otherwise be capable of being set off against the claimant’s costs (Ho v Adelekun).

Whilst Defendants have jumped up and down at these decisions, Claimants have simply said that these results should be expected and that the Rule makers and Parliament always intended to give Claimants significant costs protection to this extent.

It was the case of Ho v Adelekun which bought about the change and now appears to have been a Pyrrhic victory for the Claimants. The Supreme Court accepted the Defendants overall view that the rules were leading to decisions which may be considered unjust or counter intuitive. They recommended the rules be re-visited and the Rules Committee has obliged.

The new Rule 44.14 states as follows. (Updates are underlined)

            (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 damages or agreements to pay or settle a claim for, damages, 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.

(2) (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.

(3) (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.

These changes are not going to be retrospective. They will only apply to claims issued after 6 April 2023.

So, what will change? Clearly, any part 36 offers made by the Defendant will now have much more weight. Under the existing rules a Defendant’s part 36 offer has not carried much bite. This will affect not just the substantive litigation on damages but also where costs themselves are in dispute.

Defendants will be more encouraged to defend claims and interim applications. Under existing rules there are occasions where economic realities mean a defendant will not reject an offer or resist an interim application. The new rules will see less of those occasions given the economic benefits and risks will change.

Claimants themselves will have to bear these potential extra costs. Any insurance polices they take out are likely to increase. The relative certainly they have had in regard to costs will be significantly eroded. Given the potential set off of costs between cost orders, Claimant solicitors may have to think about amending their retainers if, up to now, they have been particularly generous, expecting the Defendant to never be able to enforce any costs order.

Anyone who practices in personal Injury will need to get to grips with this change as soon as possible.