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Costs: Court of Appeal guidance on QOCS in mixed claims

Brown v Commissioner of Police of the Metropolis & Anor
Court of Appeal
18 October 2019

The Court of Appeal has recently addressed the issue of whether Qualified One-Way Costs shifting (QOCS) under CPR 44.13-44.16 could be disapplied for mixed claims, that is, claims for personal injury together with non-personal injury elements such as vehicle damage, credit hire and, as in this instance, police malfeasance claims. Piers Bazely reviews the decision in Brown v Commissioner of Police of the Metropolis & Anor (2019).

Background

The defendant police forces in the case (the respondents) unlawfully obtained and used private information about the claimant (the appellant), as a result of which she brought claims for damages under the Data Protection Act 1988 (DPA) and the Human Rights Act 1998 (HRA), and also for breach of contract, misfeasance in public office and the misuse of private information. Liability was conceded by the respondent under the DPA and HRA claims and the claim for damages for breach of contract was not pursued. The claims for misfeasance and misuse of private information proceeded to trial where the appellant lost on misfeasance but won on misuse of private information. In respect of the DPA and HRA claims, the appellant was awarded general damages in the sum of £9,000 to be split on a two thirds/one third basis between the first and second respondents. Claims for aggravated and exemplary damages were rejected.

The respondents had made a Part 36 offer to the total value of £18,000 and as such the appellant had failed to beat those offers. HHJ Luba QC held that the appellant was entitled to QOCS protection since the claims included an element of personal injury together with the non-PI damages elements. Crucially, the judge found that the two claims were directly linked and as a result, the respondents could only enforce their costs orders up to the value of the damages award.

The respondents appealed on the basis that the judge had erred in law in finding that Section II of CPR 44 provided an automatic right to QOCS protection. The respondents argued that because the appellant's claim included a non-PI element, thus a mixed claim, protection under QOCS was not automatic.

Qualified One-Way Costs Shifting

Qualified One-Way Costs Shifting provides a system whereby a claimant would not be liable for a defendant's costs where the claim is ultimately unsuccessful or, subject to an order for costs following a late acceptance of a Part 36 offer for example, will not exceed any sum for damages and interest recovered in the course of the proceedings. This is subject to various caveats such as fundamental dishonesty. This quid pro quo system was established to compensate a claimant for no longer being able to recover success fees and ATE policy premiums. Sir Rupert Jackson stated at chapter 9 of his Review of Civil Litigation Costs: Final Report that the system was "designed to put parties who are in an asymmetric relationship onto a more equal footing. It ensures that a party is not denied access to justice because of the prospect of incurring liability for adverse costs beyond its means".

Personal Injury and "mixed" claims

Under QOCS, the definition of a claim for damages for personal injury extends beyond pain and suffering to include heads of claim specifically linked to include loss of earnings and treatment costs. As such, heads of damages that are not directly linked to the personal injury element such as data protection, human rights or police malfeasance claims, as in this instance, constitute a "mixed claim" and it is these types of claims that the QOCS exemption at CPR 44.16(2)(b) is designed to encompass.

The Appeal in Brown

The Court of Appeal’s decision in Brown further amplifies the exceptions to QOCS at CPR 44.16(2)(b). The basic principles of QOCS are maintained but in addition this decision provides further clarification in respect of the concept of a mixed claim. The Court of Appeal found that QOCS protection did not automatically protect a claimant from adverse costs orders where the claim for damages included an element unrelated to the personal injury claim such as credit hire or vehicle damage, a mixed claim.

The Court of Appeal made reference to Jeffreys v Commissioner of the Metropolis (2017) and Siddiqui v University of Oxford (2018).

Morris J, in Jeffreys, a decision decided after Judge Luba's original judgment in Brown, concluded that because it was a mixed claim, as it included elements as described above but unconnected to the personal injury element, one of the express exceptions in QOCS had been triggered. As such she held that the automatic costs protection arising from QOCS fell away and thereafter it would be for the court's discretion as to whether to apply or disapply QOCS.

In Siddiqui, the claimant had made various claims against the university arising out of allegations of breach of duty in his undergraduate education, claiming those breaches led to a failure to gain entry into a leading US law school. The claim included various heads of damages to include personal injury. All of the claims failed and Foskett J found that the claim fell within the mixed claim exception at 44.16(2)(b) and ordered the claimant to pay 25% of the university's costs.

In Brown therefore, the Court of Appeal found that QOCS protection was only applicable to claims for personal injury as defined above. Other types of claims, again as described previously, did not carry any justification for automatic QOCS protection even when an element of the whole claim related to damages for personal injury, which was never the intention of the rule.

The decision as to whether QOCS is to be applied or disapplied will fall to the judge's discretion with each instance considered and taken on its own merit. Emphasis will be given to the basic principles of the QOCS regime in preserving costs neutrality. At paragraph 58 of the judgment Coulson LJ said, "It would be wrong in principle to conclude that all mixed claims require discretion to be exercised in favour of the claimant, because that would lead to abuse, and the regular 'tacking on' of a claim for personal injury damages (regardless of the strength or weakness of the claim itself) in all sorts of other kinds of litigation, just to hide behind the QOCS protection..."

Summary

Prior to the decision in Brown, a winning defendant might have been justified in concluding the recovery of his costs to be off the cards because of QOCS protection afforded to the claimant in personal injury claims with a mixed claim element. The decision now changes that premise for mixed claims that are successfully defended. In particular, the types of cases to be alive to include claims with an element of vehicle damage, credit hire and/or police malfeasance claims, even where there is a personal injury element included. Defendants dealing with such mixed claims can now be encouraged to seek an order for recovery of those costs where the circumstances arise, to include road traffic accident claims where there is an element of exaggeration in the non-PI heads of claim such as credit hire.

Since there is no limitation on claiming costs in the first instance, parties may also be encouraged to re-visit concluded cases dating back as far as 2013 in order to establish where a claim for costs can be made in these circumstances.

Post Script - Howe v Motor Insurers' Bureau

The Court of Appeal decision in Howe v MIB (2017), albeit from 2017, neatly compliments the decision in Brown, and paying parties maybe alerted to and reminded of the implications as set out in this case.  

The claimant had been injured by a wheel which came off an unidentified lorry in France. He brought an action against the MIB under regulation 13(1) of The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Board) Regulations (SI2003/37).  The claimant was unsuccessful and the issue arose as to whether he was entitled to QOCS protection. Stewart J held that the claim failed on limitation. He found that the statutory claim under the 2003 regulations was not one for damages for personal injuries. It followed that the unsuccessful claimant could not benefit from QOCS protection and he was ordered to pay 85% of the MIB’s costs. He appealed both on the merits and on the QOCS point

The Court of Appeal, with the assistance of Senior Costs Judge Master Gordon-Saker, held that this was a QOCS case.  This was not an action for “debt” and could properly be construed as being akin to an action for damages for personal injury.

QOCS and setoff

The court allowed the MIB to set-off costs orders made in its favour during the proceedings, even if QOCS would normally apply. The costs in this matter related to interlocutory orders since the substantive action failed.

Therefore where the defendant's costs outweigh the damages award, it will be permissible for the defendant to set-off initially against the damages and thereafter, against the costs awarded or agreed for the claimant.

The best practice here would be to include such an award in the Tomlin Order. Alternatively, and in the likely event that an agreement on this is not possible, offers should be made on the basis that no payment will be made for the claimant's costs (if agreed at that stage) until the defendant's costs are agreed and an off-set agreed in addition. It should therefore be made clear when commencing negotiations that any agreement for the claimant's costs will be subject to the set-off prior to such agreement and in accordance with Howe.

Contact

For further information, please contact Piers Bazely, Senior Costs Advisor on 0161 838 0320 or at Piers.Bazely@dwf.law

By Piers Bazely

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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