Last week I attended the Association of Costs Lawyers’ London Regional Meeting. This consisted of a couple of interesting costs talks from some of the costs specialists at 12 King’s Bench Walk.
One of these considered the question of whether QOCS protection applies to detailed assessment. 12KBW have kindly given me permission to reproduce the notes from the talk below, which set out the competing arguments from a defendant’s and claimant’s perspective. (The hyperlinks are my own addition.)
A series of cases have established that QOCS makes it virtually impossible for Ds to recover costs from C when a claim settles; Cartwright v Venduct Engineering Ltd  EWCA Civ 1654;  1 WLR 6137, Ho v Adelekun  UKSC 43,  WLR 5132 and (very recently) University Hospitals of Derby & Burton NHS Foundation Trust v Harrison  EWCA Civ 1660.
Given that (a) the vast majority of personal injury claims settle; and (b) going to trial and having order for damages made against it is generally the last outcome that D would wish to seek, in practical terms the scope for defendants to obtain any effective costs recovery in a normal claim is on the face of it vanishingly small.
So far so good.
However, one large question remains.
Does QOCS protection apply to DAs?
e.g. PI claim settles. D makes an earlier effective Part 36 offer on costs. C proceeds to DA. C fails to beat D’s offer. D is therefore entitled to an order in its favour for the costs of the DA.
Can D recover those costs?
At first blush, the answer might seem to be a clear “no”, QOCs protection applies.
However, on closer consideration, there are powerful argument to the contrary.
Arguments for D
- QOCS applies – and only applies – to “proceedings which include a claim for damages … for personal injuries” within 44.13(1)(a).
- If DAs are not “proceedings which include a claim for damages … for personal injuries” then QOCS simply does not apply at all.
- It is well arguable that DAs do not fall within this definition.
(1) A DA is a distinct proceeding. It has distinct jurisdictional basis; Bayliss v Powys  EWHC (QB). Engagement of this jurisdiction requires a sperate originating process.
(2) That a DA is not simply a continuation of the substantive personal injury proceedings is made clear by the fact that a detailed assessment can be commenced even if the substantive claim settles without proceedings have been issued; CPR 46.14.
In such a case the commencement of DA proceedings under CPR 47.6 will be the only originating process and the DA proceedings will be the only proceedings.
(3) This distinction can be seen in the QOCS rules themselves.
CPR 44.14(2) provides that (emphasis added):
“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.”
This arguably reflects that the determination of costs is a separate process to the substantive PI claim to which QOCS protection attaches.
(4) Authority supports this. Per Carr J in Parsa v DS Smith Plc  Costs LR 331 at  in respect of an application in respect of fixed following late acceptance of a Part 36 offer:
“The substantive litigation had ended; the claim had settled in relation to all bar costs and had been stayed by the automatic operation of CPR 36.14 . It is clear from [Sharp v Leeds City Council  EWCA Civ 33;  4 WLR 98] and, in particular, the statement by Briggs LJ at , that when one speaks of the settlement of the claim for present purposes, one speaks of settlement of the claim for damages for personal injury, not settlement of the costs claimed arising upon the claim.”
(5) A DA is not a claim for (or including) damages for personal injury.
Indeed it is not a claim for damages at all. It is a claim for (the assessment) of costs.
(6) That the claim for costs arises out of a claim for damages for PI does not convert the costs claim into a PI claim.
A claim for damages for PI requires a claim to be compensated for physical/psychiatric injury itself.
It is for that reason that a prof neg claim arising out of a PI claim does not qualify as a claim for personal injury for the purpose of QOCS, or indeed for any other purpose such as limitation; Jones v GR Smith & Co (8 February 1993, unreported, CA).
(7) By r44.13(1)(c) QOCS does not apply to applications for pre-action disclosure.
This illustrates that:
(a) QOCS only applies to the substantive proceedings, not to any ancillary proceedings.
(b) Cs do not have absolute protection (leaving aside the enumerated exceptions) against Ds costs. C could lose a PAD application, ultimately recover no damages or costs, and thus be left with an enforceable net liability for D’s costs.
(8) An interpretation that assessments were covered by QOCS would be incompatible with the legislative intention.
Sir Rupert Jackson recommended that the beefed up Part 36 regime should apply to DAs, replacing the rule that the court should merely take offers into account, in order to incentivise early settlement of DAs; Final Report Chapter 4, 3.1 and 3.33, Chapter 45, 5.14-15.
This reflected a concern about “large payments of costs, if paying parties regard it as prohibitively expensive to challenge bills of costs” (Chapter 4, 3.33). Effective D offers in DAs are a necessary corrective to this.
(9) For like reasons, it would be contrary to the overriding objective.
Arguments for C
(1) “Proceedings” have consistently been interpreted broadly and purposively.
- Parker v Butler  EWHC 1251 (QB);  3 Costs L.R. 435 at [3-4, 17-20], Edis J:
- “In a case where a claimant has the benefit of qualified one-way costs shifting (‘QOCS’) at trial, is he subject to the ordinary rules as to costs on a first appeal to an appeal court at least where no other order is made under CPR r 52.9A?”
- An appeal between C and D in a personal injury claim is part of the proceedings which include a claim for personal injuries.
- To construe the word “proceedings” as excluding an appeal which was necessary if C were to succeed in establishing the claim which had earlier attracted costs protection would do nothing to serve the purpose of the QOCS regime.
- Wickes Building Supplies Ltd v Blair (No.2: Costs)  EWCA Civ 17;  1 WLR 1246 at [21, 28-29]) CA endorsed Parker v Butler
- Howe v Motor Insurers’ Bureau (No. 2)  EWCA Civ 932;  1 W.L.R. 923.
- The claim was dismissed due to being time-barred. The only issue therefore was costs and whether C was QOCS protected.
- Lewis J – Held C was QOCS protected and allowed the appeal: “rule [CPR Part 44.16(2) – Exceptions to QOCS where permission is required] is framed that the first instance judge must both (a) exercise a discretion and (b) conduct an evaluation of what is just on the facts of any particular case” .
- The Judge did not make an error of principle. What the argument amounted to was no more than an invitation to this court to consider the matter afresh. But that is no ground for impugning the exercise of a judicial discretion .
- Achille v Lawn Tennis Association Services Ltd  EWCA Civ 1407 per Males LJ at  “Case law has established that the term ‘proceedings’ as used in the QOCS rules does not bear this natural meaning in its full sense. It requires some qualification in this context in order to give effect to the purpose of the QOCS regime.”
(2) If QOCS did not apply to DA proceedings C could be left with a net liability for D’s costs. That would be completely contrary to the purpose and spirit of QOCS.
(3) Such an interpretation would go against the grain of the Supreme Court decision in Ho v Adelekun at [37-41]
- C was entitled to costs of £16,700. D’s costs of the appeal amounted to £48,600.
- C’s case settled under a Tomlin Order and therefore D would have nothing to enforce her costs against.
- C argued she was QOCS protected. D argued that it was possible to set off the two costs orders against each other.
- Held that costs orders made in C’s favour should not be taken into account when determining the limit up to which D may enforce an order for costs in its favour. C’s costs do not form part of the “pot” of money against which D may enforce its costs.
(4) D’s points re policy and legislative intention are in effect that same as those rejected in Ho.
(5) There is prima facie binding authority confirming that DAs are not standalone proceedings. See Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co  EWHC 1205 (QB) at per Foxon J at :
“There was a dispute between Mr Latham and Mr Hogan as to whether the service of notice of commencement of costs assessment proceedings was to be equated with service of originating process for the purposes of CPR 6.15. Mr Hogan pointed to the fact that CPR 47.6 refers to ‘commencement of detailed assessment proceedings’ and sets out how the ‘detailed assessment proceedings are commenced’. I accept that the detailed assessment of costs is a distinct phase of the proceedings, with a distinct process for commencement. However, I do not accept that this is equivalent to the commencement of originating process. By the time costs are assessed, in personam jurisdiction over the defendant has long been established, and the defendant has been fully engaged in the proceedings. The commencement of ‘detailed assessment proceedings’ is the next step in the proceedings, which a defendant against whom an adverse costs order has been made should be expecting. I accept that the service of notice of commencement bears some resemblance to the commencement of a claim, in that a failure to respond in time can generate a default liability, but that is also true of a failure to serve a defence in response to particulars of claim. For these reasons, I have approached the Appellant’s application under CPR 6.15 on the basis that the particular considerations engaged by applications relating to the service of originating process do not apply.”
(6) The specific and explicit exception for pre-action disclosure juxtaposed with the lack of any such exception for DAs support this. If the intention had been to exclude DAs as well as PAD applications, the rules would and could have said so.
(7) CPR r47.20(7): For the purposes of r36.17 (costs consequences of failing to beat a part 36 offer following judgment), detailed assessment proceedings are to be regarded as an independent claim:
- Best v Luton & Dunstable Hospital NHS Foundation Trust  EWHC B2 (Costs). This provides “For the purposes of rule 36.17, detailed assessment proceedings are to be regarded as an independent claim.”
- This suggests that for any other purpose DA proceedings are NOT to be regarded as an independent claim.
- The arguments for and against QOCS applying to DAs are more finely balanced that might perhaps first appear.
- This point will need to be resolved one way or another.
- Watch this space.