Judges in the Court of Appeal have urged rule-makers to look again at the nuances of qualified one-way costs shifting after a judgment over whether a defendant could set off their costs liability against the claimant.
Sir Geoffrey Vos, Lord Justice Newey and Lord Justice Males agreed in Ho v Adelekun that the court should order respondent Seyi Adelekun to pay the costs of a previous hearing where she was the unsuccessful party. The issue of costs remained to be determined to decide how the previous hearing - which itself was about costs - would be paid for.
Adelekun had originally been the claimant following a road traffic accident, where the case left the RTA protocol before the defendant offered to settle the case for £30,000 in what was described as a Part 36 offer. Last year, the Court of Appeal ruled the case should remain subject to the fixed costs regime, reducing claimant costs from £42,000 to £16,000.
The latest hearing was to decide whether Ho could set off her costs of winning that dispute against her overall costs liability. The court ruled in her favour, with judges saying they were bound by the decision in Howe v Motor Insurers’ Bureau, where the court allowed claimant costs to be set off against costs orders in favour of the defendant.
But the judges in Ho made clear they want the Civil Procedure Rules Committee to look again at whether costs set-off should be possible in a case subject to QOCS.
Males said there remained a ‘powerful case’ for calling into question the decision in Howe but agreed that, at this stage, costs set-off is compatible with QOCS.
He said there was ‘no question’ of the claimant being required to make a payment to the defendant. If an order for set-off was made, he accepted, the costs awarded to the claimant would be ‘substantially reduced and perhaps even extinguished’ by the costs payable to the defendant as a result of the claimant’s unsuccessful challenge to the applicability of the fixed costs regime.
The judge added that the decision ‘will leave the claimant with a potential liability in costs to her own solicitors, which (bearing in mind that the challenge to the fixed costs regime was in large part for their benefit rather than the claimant’s) the solicitors may or may not choose (or be entitled) to enforce’.