Qualified One-Way Costs Shifting 2 months on: A Barrister’s View
Henry King, Barrister, 12 King’s Bench Walk
In the event, 6 April 2023 came and went. Many claims were issued in the weeks in the run up to the QOCS changes. Some prematurely. Others not. The full impact of the changes will be played out in years rather than months. This short piece attempts to address in summary form what might be done about it from a claimant perspective.
Two key points colour the analysis:
- A claimant who runs a personal injury action to trial and loses is still fully protected by QOCS¹.
- The vast majority of cases settle (figures of over 90% have been mentioned to me in the past).
¹Where there are no interlocutory successes for the claimant along the way. Should the claimant have obtained a costs order following (say) a contested relief from sanctions application, a Defendant will be able to enforce against that costs order.
At first blush, the rule change presents a great difficulty for those representing claimants. This is particularly so given the forthcoming changes whereby fixed recoverable costs will apply to most civil claims valued at less than £100,000 in October 2023.
However, if one takes a step back, a different perspective is that it merely changes the tactics of the case along the way.
Given that most cases settle, the following considerations apply:
- Drop hands offers will still exist. They do in all other forms of litigation. They cut both ways. Defendant insurers often forego a claim to costs to close the file, rather than engage in a bloody minded pursuit of costs.
- Further, Bullock / Sanderson orders will still exist. Indeed, those arguments will take on even more prominence in multi-Defendant cases. This will likely and unfortunately lead to increased uncertainty (although see below).
- Unquantified costs orders will potentially become a claimant’s friend. Defendants generally dislike uncertainty. Defendants often complain that their costs are reduced significantly beyond claimants’ costs. A quantified (but low) “recovery” by way of carving out in a settlement negotiation could be attractive (provided it is unavoidable in the first place).
- It has been discussed by many that these changes paradoxically mean that a claimant is positively incentivised to run a matter to trial. That gives rise to opportunity for commercial offers to avoid the incurrence of irrecoverable costs.
There is a large question mark as to whether costs would be enforceable against Tomlin orders. The point of a Tomlin order (in its true form) is a stay of the action, and confidential settlement terms between the parties as was recognised by the Court of Appeal in Cartwright v Venduct  EWCA Civ 1654 at paragraph 48. Whether a defendant can enforce its costs against a confidential settlement remains to be seen and will likely be the subject of an appeal in due course.
Accordingly, what we know at this moment is limited. However, whilst it might feel unwelcome, it is not exclusively bad news.
Authored by DAS
About DAS Group
The DAS UK Group comprises an insurance company (DAS Legal Expenses Insurance Company Ltd), a law firm (DAS Law), and an after the event (ATE) legal expenses division.
DAS UK introduced legal expenses insurance (LEI) in 1975, protecting individuals and businesses against the unforeseen costs involved in a legal dispute. In 2018 it wrote more than seven million policies.
The company offers a range of insurance and assistance add-on products suitable for landlords, homeowners, motorists, groups and business owners, while it’s after the event legal expenses insurance division offers civil litigation, clinical negligence and personal injury products. In 2013, DAS also acquired its own law firm – DAS Law – enabling it to leverage the firm’s expertise to provide its customers with access to legal advice and representation.
DAS UK is part of the ERGO Group, one of Europe’s largest insurance groups (the majority shareholder in ERGO is Munich Re, one of the world’s largest reinsurers).