COST BITES 151: DOES QOCS APPLY TO DETAILED ASSESSMENT? YES IT DOES – BUT THE DEFENDANT HAS PERMISSION TO APPEAL

In  Challis v Bradpiece [2024] EWHC 1124 (SCCO) Deputy Costs Judge Roy KC considered of whether a claimant had QOCS protection in detailed assessment.  He concluded that the claimant continued to have costs protection.  He accepted that the point was arguable and gave permission to appeal.

“I therefore find that QOCS precludes the defendant enforcing his costs of the DA.”

THE CASE

The claimant had settled a case by way of Tomlin order. There was a subsequent assessment of costs. The claimant failed to beat the defendant’s Part 36 offer in relation to the costs of the assessment.  The question arose as to whether the claimant had QOCS protection.

THE BACKGROUND

1. 1. In briefest summary, the claimant brought a claim for personal injury (PI) arising out of clinical negligence. This was compromised by the Defendant’s acceptance of a Calderbank offer. The settlement was embodied in a Tomlin order.

1. 1. There was therefore no order for damages in the claimant’s favour, provision for the payment of damages being contained in the schedule to the Tomlin order.

1. 1. The claimant was entitled to her costs. These could not be agreed. The matter thus came before me for a detailed assessment.

1. 1. It was not possible to complete the assessment within the one day allocated. The parties agreed that I should determine the outstanding issues on paper.

1. 1. After a long delay due to administrative errors (for which I repeat my previously expressed apologies) I did so. I then asked the parties either to (a) agree consequential matters; or (b) identify any disputed consequential matters and submit materials for me to determine them on papers.

1. 1. The parties duly did so. The result was that the claimant failed to beat the defendant’s Part 36 offer, thereby entitling the defendant to a costs order in his favour in respect of the costs of the DA. The only disputed issue is whether QOCS precludes enforcement of this order.

1. Given the difficulty and importance of this point I considered whether to order an oral hearing. However I decided not to given that: (a) neither party requested this, both being content for me to determine it on paper; (b any further delay would be highly undesirable; (c) there would be a risk of disproportionate costs; (d) the parties have filed comprehensive and extremely helpful written submissions; and (e) it is unlikely that mine will be the last word on this issue should the parties wish to continue to contest it.

THE JUDGE’S DECISION

The judge reviewed the defendant’s arguments and then set out the claimant’s arguments – which were preferred.

1. 1. There are, however, strong arguments to the contrary. These are as follows.

1. 1. (1) The term “proceedings” in 44.13(1)(a) has generally been interpreted broadly and purposively.

1. 1. In Parker v Butler [2016] EWHC 1251 (QB); [2016] 3 Costs L.R. 435 at [3-4, 17-20] Edis J held that QOCS extended to appeals. His reasoning was that:

(a) An appeal between in a personal injury claim is part of the proceedings which include a claim for personal injuries.

(b) To construe the word “proceedings” as excluding an appeal which was necessary if claimant were to succeed in establishing the claim which had earlier attracted costs protection would do nothing to serve the purpose of QOCS.

1. 1. This was endorsed by the Court of Appeal in Wickes Building Supplies Ltd v Blair (No.2: Costs) [2020] EWCA Civ 17; [2020] 1 WLR 1246 at [21, 28-29].

1. 1. In Howe v Motor Insurers’ Bureau (No. 2) ([2017] EWCA Civ 932; [2018] 1 WLR 923 the claim was against the MIB under regulation 13 of the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003. It was held thar QOCS applied. However: (a) the claim in Howe could more naturally be described as claim for damages for PI than could a claim for costs by way of DA; (b) the ratio in Howe was that EU principles of equivalence and effectiveness compelled this result. Those principles have no application here.

1. 1. In Achille v Lawn Tennis Association supra Males LJ at [22] emphasised the need for a purposive approach:

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. Thus it does not apply to a claim made by a defendant to a personal injury claim against a third party or against another defendant for contribution (Wagenaar v Weekend Travel Ltd [2014] EWCA Civ 1105; [2015] 1 WLR 1968) or to a counterclaim against a personal injury claimant (Day v Bryant [2018] EWHC 158 (QB)). These qualifications are appropriate because such claims or counterclaims have nothing to do with the purposes of the QOCS regime, which are, first, to promote access to justice in personal injury cases by removing the deterrent of potential liability for a defendant’s costs and, second, to deter frivolous personal injury claims.

1. 1. This led the Court in Achille adopt a wide definition. Males LJ held at [26] that:

… the term “proceedings” in CPR 44.13 refers to all of the claims made by a claimant against a single defendant, when one such claim is a claim for personal injury. Thus, in a mixed claim case, QOCS applies pursuant to the basic rule in CPR 44.14, unless one of the exceptions in CPR 44.15 or CPR 44.16 applies.

1. 1. I do however note that in the cases cited by Males LJ – Wagenaar and Day – purposive contextual considerations in fact told in favour of more restrictive interpretation of “proceedings“. It therefore cannot be said that authority is all one way in favour of a wide interpretation.

1. 1. (2) If QOCS did not apply to DA proceedings a claimant could be left with a net liability for the defendant’s costs. That would be completely contrary to the purpose of QOCS.

1. 1. (3) Such an interpretation would go wholly against the grain of the Supreme Court decision in Ho v Adelekun supra at [37-41]. In Ho:

(a) The claimant was entitled to costs of £16,700.

(b) The defendant’s costs amounted to £48,600.

(c) The substantive claimant settled under a Tomlin Order and therefore the defendant would have nothing to enforce her costs against.

(d) The claimant argued she was QOCS protected.

(e) The defendant argued that it was possible to set off the two costs orders against each other.

(f) It was held that the costs orders made in the claimant’s favour should not be taken into account when determining the limit up to which the defendant may enforce an order for costs in its favour.   The claimant’s costs did not form part of the “pot” of money against which the defendant may enforce its costs.

1. 1. (4) The Defendant’s points re policy, legislative intention and unfairness are in effect the same as those rejected in Cartwright and Ho.

1. 1. (5) There is prima facie binding authority confirming that DAs are not standalone proceedings. See Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB) at per Foxon J at [56]:

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.

1. 1. However, it seems to me that this is per incuriam. The court’s attention was not drawn to the rules that:

(a) DA proceedings have their own strict jurisdictional gateway, namely a costs order or proof of a deemed costs order; PD47 13.3, Bayliss v Powys [2021] EWHC (QB). The fact that the court has jurisdiction over a party for the purposes of substantive proceedings does not by itself provide any jurisdiction in respect of DA proceedings.

(b) By CPR 46.14 there can be jurisdiction for the purposes of DA proceedings even in the absence of any substantive proceedings.

1. 1. (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.

1. 1. (7) CPR 47.20(7) provides that: “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.” This suggests that DA proceedings should not be regarded as a separate claim for other purposes.

1. 1. See per Costs Judge Leonard in Best v Luton & Dunstable Hospital NHS Foundation Trust [2021] EWHC B2 (Costs):

26.  There can be no detailed assessment proceedings without an authority for assessment. As between parties, that will be either an order for the payment of costs by the paying party to the receiving party or a deemed order to that effect. One example of a deemed order is CPR 44.9(1)(b), which creates a deemed order for costs in favour of a claimant up to the point of acceptance of a Part 36 offer.

27.  The court’s jurisdiction to undertake a detailed assessment of costs rests upon that underlying authority.  CPR 47.20further empowers the assessing court to make an order as to the costs of the detailed assessment proceedings themselves. Those costs are normally summarily assessed at the conclusion of the detailed assessment proceedings (CPR 47.20).

28.  Where, as here, the authority for assessment is an order made in an underlying claim (in this case, as in Bourne, for damages for negligence), the detailed assessment proceedings remain part of that action. The receiving party’s claim for costs is not an independent claim: it is made under the order for costs made on the conclusion of the underlying claim.

1. 1. I note however that CPR 36.4 makes similar provision in respect of appeals notwithstanding that, as per Parker supra, an appeal is not regarded as a separate claim for QOCS purposes. It therefore seems to me that CPR 47.20(7) is simply defining the operation of Part 36 within DAs.

1. 1. Also, whilst I respectfully agree with Costs Judge Leonard’s essential analysis of the point before him, namely whether the costs of a DA could themselves form the part of the costs forming the subject matter of DA for the purposes of a Part 36 offer within a DA; (a) this analysis was made in a very different context; (b) the observation that a “receiving party’s claim for costs is not an independent claim” (as well as being in my view strictly obiter) does not necessarily mean that DA proceedings are not independent proceedings for the purpose of QOCS.

1. 1. I finally note that in PME v The Scout Association [2023] EWHC158 (SCCO) the parties agreed that QOCS applied to DAs. However, as the points was never argued in my view this takes the matter no further.

Conclusion

1. 1. In my view these competing arguments are very finely balanced. I confess that my mind has wavered several times before coming to my conclusion.

1. 1. After anxious consideration, I have decided that the claimant’s construction to be preferred.

1. 1. Of all the competing arguments, in my judgement the most compelling are that the defendant’s interpretation would (i) go wholly against the grain of the Supreme Court’s analysis in Ho; and (ii) potentially leave the claimant with a net costs liability for the defendant’s costs.

1. 1. This in my view would be contrary to the legislative intention. See, in addition to Achille, supra, Coulson LJ in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654; [2018] 1 WLR 6137 (emphasis added):

8. Although in some ways the QOWCS regime reflects the pre-1999 Legal Aid scheme, it represents a major departure from the traditional principle that costs follow the event and that, save in unusual circumstances, the losing party pays the winning party’s costs. The QOWCS regime provides that, subject to limited exceptions, a claimant in a personal injury claim can commence proceedings knowing that, if he or she is unsuccessful, he or she will not be obliged to pay the successful defendant’s costs …

23. The QOWCS 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.

1. 1. Coulson LJ made the same point in Brown v Commissioner of the Metropolitan Police [2019] EWCA Civ 1724; [2020] WLR 1257 at [14] (emphasis added):

Because orders for costs made against a claimant may be enforced without the permission of the Court only to the extent of any order for damages and interest made in favour of the claimant, a claimant is protected against any liability for the defendant’s costs which is greater than the amount (if anything) that the claimant has himself or herself recovered. In that simple way, it is designed to make claims for damages for personal injury cost neutral.

1. 1. Although, as per above, there are other discernible elements of the legislative intention that the claimant’s interpretation is not consistent with, this in essence simply reflects the effects of Cartwright and Ho. Given that those consideration did not lead to a different result in those cases, I do not see how they can lead to a different result here.

1. 1. I acknowledge that, leaving such matters aside, the defendant’s interpretation accords better with a purely grammatical construction of the rules.

1. 1. However, it would not be appropriate to leave these matters aside. Per Lord Burrows in Hassam & Anor v Rabot & Anor [2024] UKSC 11; [2024] 2 WLR 949 at [11] “the modern approach to statutory interpretation requires the courts to ascertain the meaning of the words used in the light of their context and the purpose of the provisions“.

1. 1. It follows that, as per Bennion, Bailey and Norbury on Statutory Interpretation (8^th edition, s.11.1) legislation is to be given a purposive construction:

(1) In construing an enactment the court should aim to give effect to the legislative purpose.

(2) A purposive construction of an enactment is a construction that interprets the enactment’s language, so far as possible, in a way which best gives effect to the enactment’s purpose.

(3) A purposive construction may accord with a grammatical construction, or may require a strained construction

1. 1. The claimant’s construction, whilst somewhat strained, is not overly so. I draw support for this from Costs Judge Leonard’s analysis in Best, supra. My ultimate conclusion is that it is not so strained a construction that I am compelled to reject it notwithstanding that it gives much better effect than the defendant’s to the legislative purpose as I discern it to be.

1. 1. I therefore find that QOCS precludes the defendant enforcing his costs of the DA.

1. For reasons which will be apparent from my analysis above, this is a point where the test for permission to appeal is very clearly met. I therefore grant the defendant permission should he wish to pursue the point further.