Changes To English Court Rules Take A Bite Out Of "loser-pays" Costs Scheme For Personal Injury Cases

• Law Firm: Cooley LLP
• Subject Matter: Litigation, Mediation & Arbitration, Personal Injury, Civil Law
• Author: Mr Rod Freeman, Jamie Humphreys, Corinne Robinson and Anushi Amin
• Published date: 21 April 2023

What's happening?

The rules governing liability for legal costs in death and personal injury cases in UK courts, are being changed to increase the amount of costs that defendants can recover from unsuccessful claimants. New rules impacting cost recovery will apply for claims issued on or after today's date, 6 April 2023.

What was the position on QOCS?

In the UK, legal costs associated with a claim are usually paid by the losing party. On 1 April 2013, the "Qualified One-Way Cost Shifting regime ("QOCS") was introduced as a modification to this approach in death and personal injury claims in order to maintain access to justice. Subject to certain exceptions, if a claimant loses any aspect of the case, any cost awards that are made in favour of the defendant can only be enforced up to the level of any damages and interest awarded to the claimant. Therefore, if the claimant is entirely unsuccessful, the defendant cannot recover any costs.

The impact of the QOCS regime on settlements was subsequently refined via case law:

1. The Court of Appeal ruled that defendants could not recover costs from any settlement reached with the claimant under Part 36 (as a reminder, Part 36 of the English Civil Procedure Rules prescribes rules for making settlement offers with advantageous cost consequences) or a Tomlin Order (a type of Court Order often used to record settlements) (Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654); and
2. The Supreme Court ruled that a defendant could not set off their costs against a claimant's costs (Ho v Adelekun [2021] UKSC 43).

As a result, it was almost impossible for defendants to recover their costs if they settled with the claimant.

QOCS was intended to act as a shield against excessive defense costs for genuine, but unsuccessful claimants. However, the Supreme Court has recognized that the rules could be considered "counterintuitive and unfair" in certain circumstances. They were therefore reviewed.

What's changing?

The new rules provide that defendants can offset their costs against the claimant's damages, interest, and...