In  Chappell v Mrozek [2022] EWHC 3147 (KB) Master Stevens rejected the defendant’s argument that the claimant’s entitlement to costs, arising from late acceptance of a Part 36 offer,  could be enforced from the claimant’s damages.  The judgment examines the interrelationship between Part 36 and QOCS in some detail.

“I will adopt the drafting of the order attached to the claimant’s application notice, which is clear that monies to be paid to the claimant are the “settlement sum” agreed by the parties and that the costs order against the claimant made in respect of late acceptance is not to be set-off against any part of the ordered sums in the claimant’s favour.”


The claimant brought an action for damages for personal injury against the defendant.   The defendant made a Part 36 offer of £250,000 in May 2020. That offer was not accepted within the relevant period.  The case continued and the claimant accepted the offer of £250,000 in February 2022.

A summary of the case and the issues can also be found on the Kings Chambers website here. 


The issue related to the costs consequences of late acceptance. In particular whether QOCS prevented enforcement of any part of the costs liability by the defendant.  The defendant sought to enforce its agreed entitlement to costs by way of set-off against damages.


Some idea of the length and nature of the discussions can be seen in the Master’s observation that “The hearing bundle ran to an unremarkable 202 pages but the authorities bundle comprised a further 612 pages.”

The Master held that QOCS protected the claimant against enforcement of the defendant’s costs in these circumstances.


The Master first considered the implications of the Court of Appeal judgment in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654.

My conclusions on the correct interpretation of Cartwright
    1. It is clear from the foregoing that Cartwright is only a hindrance to me, rather than of assistance, if I consider the points argued before me from that case are not only binding, but are also ones with which I disagree. I do not want to detain myself with a detailed examination of the principles of ratio decidendi and obiter dictum, the learned articles on which took up many pages of the hearing bundle, when I am in agreement with the observations of Coulson LJ, and from a unanimous Court of Appeal. It is more important that I explain why the observations are helpful to me in dealing with the current issue between the parties.
    1. The “heart of the decision” in Cartwright, is to my mind, comprised of several observations and findings in order to reach the overall conclusion as follows:
i) The fundamental principles underlying QOCS
Whilst Coulson LJ considered this point in relation to issue one before the court (see paragraph 26 i) above), it is relevant to his findings on issue two and to this case. At paragraph 23 he said, ” The QWOCS regime is designed to ensure that a claimant does not incur a net liability as a result of his or her personal injury claim; that, at worst, he or she has broken even at the end of the action….But there is no reason why that regime should prevent B from its costs out of the damages payable by A”. After considering Sir Rupert Jackson’s recommendations contained in the Review at paragraph 31 and the need to provide incentives for claimants to accept reasonable offers, at paragraph 32 he noted that one-way cost shifting “requires a claimant, in the appropriate case, to pay to a successful defendant the amount of a costs order made in favour of that defendant, out of the sums payable by way of damages and interest to the claimant..”. He further noted at paragraph 30 that the final QWOCS rules were substantially different to those proposed by Sir Rupert and that the Explanatory Memorandum “was technically incorrect when it talked about set off, an error now corrected by the Court of Appeal in Howe v Motor Insurers’ Bureau (No 2)”.
ii) The appropriate technical construction of the CPR wording “any orders for damages and interest made in favour of a claimant” and its implication for forms of order not containing those words
Having set out why it is good and well-established policy that defendants should be able to set off costs orders, the court turned to consider types of order which might fall outside the rules. The tenor of the judgment is one where it is seen as regrettable, against the policy background, if claimants are able to carve out exceptions to the rules to avoid liabilities. The defendant in Cartwright had submitted ” it would be absurd if a claimant was liable to meet a defendant’s costs order if the damages and interest were the subject of a simple court order, but not so liable if they were the subject of a Tomlin order. He said that would elevate form over function and could not be what the rules intended”. The court noted that an essential component of a Tomlin order is the schedule which is not a court order, but an agreement of the parties (at paragraph 41).
At paragraph 44 it was clearly set out that a record of settlement reached between parties and intended to be of binding effect is not an order for damages and interest. Furthermore, “Such acceptance does not require any order from the court”. The practical difficulties of a court trying to identify sums agreed by way of damages and interest, “(which may not be expressly identified in the schedule…..may explain why settlements are not part of the QOWCS rules” was also mentioned at paragraph 40. It is noteworthy that the latter point impliedly accepts that, on occasion, a schedule may dissect damages from interest, but would not necessarily do so. I mention this because counsel for the defendant spent some time taking me to clauses in CPR 36 concerning provisional damages where acceptance of a Part 36 offer requires damages to be specified as well as interest, such that some of the issues in this case over the definition in CPR 44.14 fall away. However, this is not a provisional damages case, so just as Coulson LJ had to ignore the fact that some schedules to Tomlin orders may specify damages, rather than a globalised settlement sum, to focus on the specifics of the case before the Court of Appeal, so do I in reaching my determination. All of the points noted in the judgment on the issue of orders which reflect a settlement, rather than a matter on which a court has tried the issues, whether expressly by analogy to Part 36 settlements or not, would apply to the Part 36 settlement before me, by their very reasoning. The fact that Part 36 is referenced at paragraph 44 is illustrative of the nub of the problem, when considering the difficulty for the court in permitting enforcement of terms under Part 44.14, where those terms have been negotiated by the parties directly, and do not contain the precision of a judgment which identifies specific heads of damage.
iii) How the words, “any orders for damages and interest made” could be construed to include Tomlin orders or settlement agreements.
The court rejected submissions that the addition of wording, (whether implied or express) in CPR 44.14(1)to include, “a sum payable by way of damages which is compellable by court order”, would fulfil the original purpose of the rule and indeed encompass Tomlin orders as well. A conclusion was reached at paragraph 46 “At the very least,…the rule would have to refer, not only to an order, but to an agreed settlement”. Once again, the line of reasoning, even though it did not reference Part 36, would naturally encompass it.
iv) Whether the choice of wording in the QOCS rules was an oversight by the CPRC when drafting policy intentions, such that an improved purposive construction can now be adopted.
Coulson LJ was particularly concerned about the practical implications of allowing an expanded construction of the rule, as sought, which would cover “Tomlin orders, or out-of-court settlements” at paragraph 47. He referred to the fact that a judge does not expressly approve the terms of such an order and discussed at paragraph 48 that in some settlements the component parts are never articulated, such that the court could not identify the relevant figures for damages and interest. The practical difficulties of interpreting the rule more widely to incorporate settlements were stated at paragraph 50 to be far too numerous, absent more detailed guidance, for the courts to apply it. I consider it helpful to set out that concluding paragraph in full, with my own emphasis highlighted in bold; ” It is these practical difficulties which have confirmed my view that Mr William’s liberal interpretation of rule 44.14 (1) is wrong. Essentially, he has to argue that the CPRC intended that the rule should cover any circumstances in which a claimant recovers something, by whatever means, from a defendant. But not only does the rule not say that, but if that is what was intended, the rule would have needed to contain much fuller guidance as to what should happen to settlements and Tomlin orders: whether they were to remain confidential; the circumstances in which confidentiality would be removed; the way in which any global sum was to be apportioned, and so forth. In the absence of that sort of guidance, it cannot be said that this is a situation which the rules were intended to cover. So, it does not seem to me to have been an oversight or a lacuna in the CPR; if it had been the intention for rule 44.14 (1)to cover settlements of whatever kind, different words and greater guidance would have been required“.
    1. My overall conclusion is that the line of reasoning adopted by Coulson LJ in reaching a determination on the position of Tomlin orders under CPR 44.14, is so interwoven with reasoning touching upon other types settlement where the court has not conducted a judicial inquiry into the appropriate damages and interest components of the final court order, that his comments on Part 36 settlements do form part of the overall ratio of his judgment. Even if I was wrong on that, his findings would be highly persuasive, not only because they emanate from a more senior court, but also because they are reflected in the later Supreme Court decision to which I will now turn..
Adelekun v Ho (Association of Personal Injury Lawyers intervening) [2021] UKSC 43
In the Court of Appeal
    1. This case concerned a relatively low value road traffic accident damages claim where the defendant’s Part 36 offer to settle for £30,000 was accepted but the parties fell out over costs liabilities and enforcement terms. The first issue was whether fixed costs or standard costs applied, the claim having commenced in the portal for low value claims. The defendant was successful in the Court of Appeal in only being ordered to pay the claimant’s fixed costs amounting to £16,700 but the defendant had an appeal costs order in the sum of £48,600. The Court of Appeal refused to allow enforcement of the adverse costs liability against the claimant’s damages as they said, following Cartwright, that the settlement order drawn up following the Part 36 acceptance was not an order for damages and interest within the meaning of QOCS. The Court of Appeal however considered itself bound (it seems with some reluctance) by its earlier decision in Howe and therefore allowed set off, of the defendant’s appeal costs against the claimant’s costs of the main action. The net result was that the claimant retained her damages but recovered no costs, and the defendant received no appeal costs but avoided paying costs in the main action.
In the Supreme Court
    1. The claimant successfully appealed the set off in the Supreme Court. The Supreme Court held that QOCS was intended to be a complete code about the use which defendants could make of costs orders made against claimants. Further that the jurisdiction to set off one costs order against another was only permissible under rule 44.12 (1) if it did not exceed the aggregate amount in money terms for any orders for damages and interest. The net outcome of the decision was that the claimant kept both her damages and costs, whilst the defendant did not recover its costs. The apparent unfairness of this particular result was acknowledged in the judgment, but seen as part and parcel of the overall “swings and roundabouts” of the QOCS regime which was said to work well overall, but does lead to surprising results in some individual cases. I will set out a more detailed analysis below after summarising the parties submissions.
The defendant’s submissions
    1. The defendant maintained that this decision was irrelevant to my determination, as it centres on the possibility of setting off costs orders against each other, which is not the issue in this case. Furthermore, it was submitted, the Supreme Court was not invited to interrogate the correctness of the decision in Cartwright in the way I was now being asked to. As such, it was said that I could distinguish my decision on a reasoned basis, in order to find that costs orders could be set off against sums due in consequence of acceptance of a Part 36 offer. The defendant relied upon paragraph 14 of the judgment in this regard, where the parties agreement is recorded, that acceptance of a Part 36 offer does not result in an order for damages within the meaning of the QOCS regime.
The claimant’s submissions
    1. Whilst the claimant accepted the main focus of the Supreme Court had been on rules allowing costs set offs against each other, they maintained that the court had accepted the correctness of the decision in Cartwright. Furthermore, the claimant maintained that the relevant passages were not obiter but part of “the necessary building block to the decision in Adelekun“. In the alternative, it was submitted that even if the passages were technically obiter dicta, they are strong obiter dicta and should be given considerable weight in my ruling.
My conclusions on the correct interpretation of Adelekun
    1. It is apparent from preceding paragraphs that I have no difficulty with the construction of rule 44.14(1) reached by Coulson LJ in Cartwright and its applicability to Part 36 settlements. For completeness I have undertaken a review of the findings in Adelekun as well.
i) The fundamental principles underlying QOCS
The judgment commences with a review of the “inherent inequality of arms between claimants and defendants in personal injury claims and the evolution of procedural schemes to try and ameliorate the situation. At paragraph 4 the Supreme Court made plain that a court is in no way restrained from making any type of costs order it considers appropriate by the advent of QOCS, but enforcement of such orders is constrained by the rules. The judgment is permeated by references to the strict wording of the QOCS rules as being determinative of the approach towards enforcement of costs orders rather than any other source, even where this may produce unpalatable results. So at paragraph 37 it was held, ” ..we would accept that QOCS is intended to be a complete code about what a defendant in a PI case can do with costs orders obtained against the claimant”. And at paragraph 45, ” No one has claimed that the QOCS regime is perfect. It is, however, the best solution so far that the opposing sides in the ongoing debate between claimant solicitors and defendant insurers have been able to devise. It works to achieve the aims for which it was introduced in the great majority of straightforward cases in which one side or the other is entirely successful”.
ii) The interaction between CPR 36 and CPR 44
On the specific point about the interaction between Part 36 and QOCS, and whether QOCS constrains a set off, the court expressly recognised at paragraph 7 that there “are at least three types of case where it may be critical. They went on to describe one of these types of case as “where the claimant succeeds, but by way of settlement rather than at trial. In such a case there is no court order for damages or interest, even if the settlement agreement is annexed to a Tomlin order, and therefore no headroom below the cap available under QOCS for the defendant’s costs enforcement” and went on to cite Cartwright. Having recognised the issue, the court proceeded to determine it, having regard at paragraph 31 to “the decision in Cartwright…that damages and interest payable under a settlement did not count for the purposes of rule 44.14 (1)”. There was no discussion or finding that Cartwright had been decided wrongly, or was confined to a Tomlin order only case, even though the opportunity was there and the situation in that case was one of importance in setting the foundation for the ruling in Adelekun. In this, my interpretation accords with that of the claimant in this case.
iii) Policy intention and the overriding objective
At paragraph 9 the court had acknowledged “this court must decide the question of construction, leaving it to the CPRC to consider whether our interpretation best reflects the purposes of QOCS and the overriding objective, and to amend the relevant rule if, in their view, it does not.” Further, at paragraph 31 within its analysis, the court dealt with the respondent’s submissions as summarised at paragraph 30, that in a case where there has been no court order for damages, by following a purist interpretation of CPR 44.14 the court “would be giving a green light to the pursuit by claimants of weak interim applications and unmeritorious points. It would also remove any real incentive to settle before trial, if the adverse costs consequences of losing at trial (or failing to beat a part 36 offer) led to a purely unenforceable costs sanction.” At paragraph 31 the court held ” it is not necessary or appropriate to describe or examine those policy considerations in detail. First, as already emphasised, this court is not well placed to assess them reliably. If the true construction of the QOCs scheme … has adverse policy consequences, that is a matter for the CPRC to put right.”
    1. The clear message that I take from Adelekun is that the court was not prepared to imply or infer words into Part 44 to expand the scope for enforcement, where the brief wording of the rule might otherwise seem to produce an unfair result on occasion. It is correct that there was no in depth examination of Cartwright, but it seems that was because the Court of Appeal had chosen to follow the plain language of the rule without adornment, which was consistent with the construction adopted by the Supreme Court. The Supreme Court was however not slow to overturn the Court of Appeal in Howe on a purposive construction basis. I take the view that if the Supreme Court had considered the language of Part 44 was inconsistent with Cartwright, despite the parties not contesting it, they would have overturned that decision too as the decision was referenced when determining the correct construction of the rule overall, but this is not critical to my overall determination. The most important point, to my mind, is that the Supreme Court did not consider it appropriate to add words to the QOCS scheme which is currently set out “with commendable brevity” (as noted at paragraph 19), to expand its scope, preferring that words should be given their straightforward meaning and any amplification or further finesses should only be introduced by the CPRC.
MRA v The Education Fellowship Board [2022] EWHC 1069 “MRA”
    1. The defendant also sought to rely upon the recent MRA decision where late acceptance of a Part 36 offer by a protected party resulted in a costs order against the claimant, which was ordered to be set-off against damages. Having studied the case which runs to 82 paragraphs, I am struck by the following:
  • The headnote clearly states that “the parties had not agreed who should pay costs after its expiry, the court had to decide whether it would be unjust to order the Claimant to pay costs after expiry”. CPR Part 36.13 (5) contains clear provisions about how the parties should approach the court to determine a costs order if they cannot reach agreement themselves. That is not the situation in the case before me.
  • At paragraph 40 there was a brief reference to argument between the parties that had the claimant not been a minor or lacking in capacity, the court would not need to have approved damages and would not necessarily have been exposed to the QOCS risk of set-off of any costs order against such damages. Whilst counsel for the claimant suggested a form of wording that might avoid a QOCS set-off arising “It was generally agreed between counsel that perhaps this aspect of argument was not one which needed at this stage to be considered further”.
  • At paragraph 65 under the heading “Decision”, the Master clearly stated, ” I am not here going to decide the effectively “parked” argument……to the effect that there were differences in treatment of protected parties versus non-protected parties which rendered them more exposed to the situation here under QOCS. This was not fully argued before me…”.
  • As a matter of pure precedent I am not bound by the decision in any event.
Overall conclusions
    1. At the start of my conclusions I have to recognise that each party was seeking what it considered a principled outcome to the position they found themselves in. It is unfortunate that due to timetabling and availability constraints it has taken some little while for their dispute to reach this court for resolution.
    1. Turning to the substance of the dispute, I have concluded that the Government policy statements about the introduction of QOCS provided no hint that Part 36 offers accepted out of time should be subject to enforceable adverse costs set-offs. This is despite the intense involvement of interested parties when the rules were being drafted. I am therefore reliant on evolving case law to assist in the correct approach to the issue before me, as well as my obligation to reach a decision in accordance with the overriding objective.
    1. Although the defendant has tried hard to persuade me that the decision in Cartwright is both wrong, and not binding upon me, as such observations made which could be material to the case were expressed obiter, I am unable to accept those submissions. I have set out my reasons at paragraph 35.
    1. Similarly, I am unable to accept that the Supreme Court’s decision in Adelekun did not touch on matters relevant to my construction of the QOCS rules as I have explained at paragraph 41.
    1. Having reached my conclusions on the two leading cases on the subject from the Court of Appeal and the Supreme Court there is no need for me to consider any other decision of the lower courts, to which I was taken but which I have not considered necessary to summarise in this judgment, where a judge has felt uncomfortably constrained by those authorities .
    1. Even if I did not consider myself bound by Cartwright and Adelekun, I do not consider the application of those decisions to be unfair and totally arbitrary in the particular way characterised by the defendant. It was well understood when QOCS rules were introduced, that they reflected a global policy intention which would reduce adverse costs paid by defendants in injury litigation overall on a swings and roundabouts basis; they marked a radical departure from the previous position on costs recovery. The language in both CPR Part 36 and Part 44 clearly demarcates between the position where the court’s permission is required for a particular type of costs order to be made following judicial scrutiny, and those where it is not. This is consistent with the overriding objective to allow matters to be resolved expeditiously, save expense and manage court resource effectively, so that parties are not forced through time-consuming and expensive court processes unless absolutely necessary.
    1. It is understood that the defendant’s early offer was made with a view to saving their overall costs outlay, should it have been accepted at that very early stage in proceedings. At the time the offer was made, adverse costs orders by way of set-off were being enforced by the courts, following the decision in Howe v MIB. The defendant’s offer can only have been made on a commercial basis to try and dispose of the claim as neither party had had the opportunity to fully evaluate losses. The offer could have been withdrawn at any time,(and there was a 4 month gap between handing down of the Adelekun decision and the claimant’s late acceptance) but the necessary corollary to that under the rules, was that costs protection would be lost. Therefore as soon as the Supreme Court decision in Adelekun was handed down in October 2021 the defendant could have decided to withdraw the offer. The offer however was not totally worthless in terms of both costs protection and an incentive to the claimant to settle. It stopped recovery by the claimant of their costs from expiry of the relevant period 21 days after the offer had been made. Acceptance of the offer also saved the defendant from paying the significant costs of completing expert evidence, trial preparation and trial.
    1. Although I was encouraged to think that the claimant might have dishonestly inflated his claim, the suspicions of the defendant which I set out at paragraph 8 are nowhere near meeting the threshold required by the court at CPR 44.16 (1) to implement costs sanctions against him, and quite correctly counsel did not seek to suggest otherwise; he simply contended for me to find a way to ordering a more equitable outcome for the defendant than the resulting judgments in Cartwright and Adelekun might otherwise encourage me to adopt.
    1. If the parties had not agreed costs liabilities between themselves, the provisions of CPR 36.13(5) as applied in the MHA case, would have required them to ask me to make such order as I considered just, having reviewed the underlying damages claim and settlement offer in some detail. The defendant did not choose this route. I cannot say whether it would have made a difference to the overall outcome, but it is simply another factor weighing against the overall sense of injustice which has been portrayed to me.
    1. In alternative submissions, as I set out at paragraph 10 v), the defendant encouraged me to consider two pragmatic enforcement orders which could be made in his favour, if I did not accept that Part 36 acceptances are to be interpreted as falling within “an order for damages” within the meaning of CPR 44.14. One such alternative was to make an express “order for damages” pursuant to CPR 36.14(7) rather than simply adopting the wording of the rule that there be “judgment for the unpaid sum”. The other option was to use my inherent case management powers pursuant to CPR 3.1(2)(m) being, it was submitted, a “step” taken by the court to further the overriding objective. I consider that both of these options would be inappropriate given the clear statements from the Court of Appeal and the Supreme Court in Cartwright and Adelekun that any construction of the QOCS rules as currently drafted which may have given rise to unintended consequences is a matter for rule changes by the CPRC, not judicial intervention.
    1. Finally, I consider it important to recognise the unfairness to the claimant, and those trying to advise him as well, if my finding was against him. At the time his acceptance of the Part 36 offer was served there had been a recent, clear Supreme Court authority as to the enforceability of adverse costs orders in QOCS cases. The claimant’s letter of acceptance made it plain that his legal team was fully conversant with the Adelekun decision and that they recognised an agreement on costs liability was required as the acceptance was out of time. On the latter point the defendant confirmed that they accepted the claimant’s suggested costs liability so the only issue was the QOCS set-off. The defendant’s decision to challenge the position judicially has resulted in the claimant being denied any payment of his agreed damages to date. That is unfortunate and the notes in the White Book to CPR 36.14 contain case authority for the proposition that the claimant is entitled to receive the offered sum without awaiting set-off of an unquantified costs liability and that the court has no jurisdiction to extend the 14 day period for such payment which is set by the rules.
Terms of my Order
  1. Accordingly, I will adopt the drafting of the order attached to the claimant’s application notice, which is clear that monies to be paid to the claimant are the “settlement sum” agreed by the parties and that the costs order against the claimant made in respect of late acceptance is not to be set-off against any part of the ordered sums in the claimant’s favour. The defendant’s application is dismissed.