A recent post looked at the arguments for and against whether Qualified One-Way Costs Shifting (“QOCS”) applies to detailed assessment proceedings. The recent decision of Costs Judge Leonard in PME v The Scout Association [2023] EWHC 158 (SCCO) is therefore interesting.
The underlying case concerned a claim for personal injury. The claim settled in the Claimant’s favour pre-issue, with agreement to pay the Claimant’s legal costs. In the absence of agreement in relation to costs, Part 8 costs-only proceedings were issued. During the subsequent detailed assessment proceedings, and related appeal, adverse costs orders were made against the Claimant. The Defendant did not seek to enforce the costs orders against the Claimant but sought a Non-Party Costs Order against the Claimant’s solicitors on the basis that they were the only party with a real financial interest in the detailed assessment proceedings.
The key passages, so far as QOCS is concerned, are:
“It is not, as I understand it, in dispute that because the Claimant has accepted a Part 36 offer from the Defendant, there is no order for damages in favour of the Claimant against which the Defendant could enforce an order for costs without the permission of the court (see Cartwright v Venduct Engineering Limited [2018] 1 WLR 6137, at paragraph 44). The effect of the decision in Ho (handed down on 6 October 2021) is that the Defendant is also unable to recover its costs by way of set-off against the damages or costs payable to the Claimant.
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It may also be the case that because of QOCS, any adverse costs orders made as a result of that solicitor’s efforts to maximise costs recovery will not be enforceable against the solicitor’s client. That is a consequence of the QOCS regime. It does not follow that the solicitor should pay instead.
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It may well be, as Mr Carpenter says, that the operation of the QOCS rules as clarified by Cartwright v Venduct Engineering Ltd and Ho v Adelekun confers an indirect benefit upon BBK, or any other solicitor acting under a “CFA lite” or capped CFA arrangement, in that they can pursue the costs of the claim at less financial risk than before QOCS was introduced. That would be because before QOCS they would, in the course of the detailed assessment proceedings have borne the cost of any adverse costs orders themselves rather than passing them on to their client. Now, absent an NPCO, they may risk only their own costs and expenses. That, again, is however just a consequence of the way the QOCS regime works.
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I appreciate that the Defendant’s inability (thanks to QOCS) to set off its own costs against the costs and damages recoverable by the Claimant has prompted this application.”
As can be seen, it appeared to be common ground that QOCS did apply to detailed assessment. It is notable that both parties were represented by very experienced Leading Costs Counsel. In any event, this is a non-binding decision, and the issue was not argued, and so carries very little weight on this point, but may indicate a potential consensus is some circles.
It is interesting that this issue arose against this particular factual background. This factual background presents, arguably, the strongest argument as to why QOCS does not apply to detailed assessment.
The personal injury claim itself settled prior to proceedings being issued.
CPR 44.13 provides (emphasis added):
“(1) This Section applies to proceedings which include a claim for damages –
(a) for personal injuries;
(b) under the Fatal Accidents Act 1976; or
(c) which arises out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934,
but does not apply to applications pursuant to section 33 of the Senior Courts Act 1981 or section 52 of the County Courts Act 1984 (applications for pre-action disclosure), or where rule 44.17 applies.”
Here, there were never any proceedings for personal injuries. The personal injury claim settled pre-proceedings by agreement. Part 8 proceedings were issued pursuant to CPR 46.14:
“Costs-only proceedings
46.14
(1) This rule applies where –
(a) the parties to a dispute have reached an agreement on all issues (including which party is to pay the costs) which is made or confirmed in writing; but
(b) they have failed to agree the amount of those costs; and
(c) no proceedings have been started.”
As the rule is headed, these are “costs-only proceedings”, they do not include any claim for damages for personal injury. This is not simply a matter of semantics. It is very difficult to see how, when “detailed assessment proceedings” (further proceedings?) are subsequently issued under CPR 47.6(1), these would, in turn, then include any claim for damages for personal injury. If that is correct, it would be peculiar if detailed assessment proceedings following proceedings for personal injury attracted QOCS but detailed assessment proceedings following costs-only proceedings did not. This points strongly to detailed assessment proceedings being stand-alone proceedings which do not attract QOCS (as they themselves do not include a claim for damages for personal injury, only a claim for costs).
