Costs: Court Of Appeal Allows Costs Set-off In QOCS Case

• Published date: 04 June 2020
• Author: Mr Jonathan Shaw
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Clyde & Co

The Court of Appeal has recently considered whether CPR 44.14 bars the ability of a defendant to set off costs orders in its favour against those costs orders owed to a claimant under rule 44.12. The Court of Appeal stated it was compelled to follow the previous decision in Howe v Motor Insurers Bureau (No.2), which concluded costs set-off to be possible under QOCS.

However, the Court of Appeal judgment expressed reservations regarding that decision, finding that but for the binding precedent in Howe the decision reached may have been a different one.

We understand that permission to appeal to the Supreme Court has been granted, and therefore, this decision is unlikely to have resolved the issue.

Background

On 15 January 2014, Miss Adelekun ("the Respondent") submitted a claim following a road traffic accident involving Mrs Ho ("the Appellant"). The Appellant's insurers did not admit liability and the matter exited the RTA Protocol. Proceedings were issued on 7 January 2015. On 19 April 2017, Mrs Ho's representatives made a Part 36 offer of '30,000 to settle Miss Adelekun's claim. Two days later the offer was accepted, and a Tomlin order was then made by consent on 24 April 2017.

There was a dispute regarding the Respondent's costs, as the approved Tomlin Order stated, "the defendant do pay the reasonable costs of the claimant on the standard basis to be the subject of detailed assessment if not agreed". The Appellant argued that the fixed costs regime should apply; the Respondent that reasonable costs, to be assessed if not agreed, should be recoverable.

The Court of Appeal found that the fixed costs regime should apply as the case remained in the fast track at the time of settlement. The Respondent was thus entitled to '16,705.15 in respect of her costs.

The parties disagreed as to whether the Respondent should be ordered to pay the Appellant's costs of the initial application hearing in the County Court, and whether the Appellant should be able to set off the costs due to her against liability to the Respondent for the costs of the claim generally.

Submissions

The Appellant argued she should be able to set-off her entitlement to costs against her liability for costs; the Respondent argued that the court had no jurisdiction to sanction a set-off or in any event it was not appropriate to order a set-off in these circumstances.

Under CPR 44.12, the Court may "set off the amount assessed against the amount the party is entitled to be paid and direct that...