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In Ho v Adelekun [2021] UKSC 43, the Supreme Court considered whether and to what extent Defendants can offset ‘costs against costs’ in a QOCS case.
Overturning the Court of Appeal, both below and in Howe v MIB (No.2) [2017] EWCA Civ 932, the Supreme Court accepted 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”.
In a unanimous decision, the Court held that CPR 44.14(1) operated as a “cap” and that whilst the Defendant could set off its own costs against the costs it was ordered to pay to the Claimant, this could not exceed the total of damages and interest awarded to the Claimant.
The Court accepted that a set off between costs orders was a means of enforcement and permitted in this context, but subject to this damages cap.
The reasoning in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 was not disturbed and it was reaffirmed that damages and interest payable under a settlement “did not count” for the purposes of CPR 44.14(1). So, in the majority of PI cases which settle without a court order for damages, there will be no set off at all.
Interestingly, the Supreme Court was prepared to recognise that their conclusion “may lead to results that at first blush look counterintuitive and unfair” and could not help but observe that “no one has claimed the QOCS scheme 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…”.
Further, the Supreme Court doubted whether it had been appropriate for a procedural question of this kind to be referred to them at all and suggested that the Civil Procedure Rules Committee was better constituted to put right any ambiguities in the rules. They commented that they would leave it to the CPRC to amend the relevant rules if the Court’s interpretation did not best reflect the purpose of QOCS and the Overriding Objective.
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