Qualified one-way costs shifting (QWOCS) gives a personal injury claimant protection from paying the defendant’s costs to the extent that those costs exceed any damages and interest awarded. But what if a costs order has been made during the proceedings in favour of the defendant. Can the defendant offset his costs against costs awarded to the claimant? The Court of Appeal has answered that with a reluctant ‘yes’ in the case of Ho v Adelekun (No.2) [2020] EWCA Civ 517 in a judgment handed down on 9 April 2020.
Miss Seyi Adelkun, the claimant, accepted a Part 36 offer of £30,000 to settle her claim arising out of a road traffic accident. A dispute arose as to whether the terms of the settlement entitled her to conventional costs on the standard basis (as she said) or fixed costs (as the defendant said). That dispute was resolved in the defendant’s favour by the Court of Appeal in Ho v Adelkun (No. 1) [2019] EWCA Civ 1988.
The defendant, having been successful on the appeal, was awarded her costs. She claimed that, pursuant to CPR 44.12, she could offset those costs against the costs awarded to the claimant in the main action.
The claimant disagreed. The claimant argued that the QWOCS regime in Section II of CPR Part 44 is a self-contained code. This code, the claimant contended, gives complete protection from having to pay costs unless any of the limited exceptions set out in Section II itself apply. As none of the exceptions were relevant here, the Miss Adelekun argued that the defendant’s costs order could not be set off against her own costs.
This came back before the Court of Appeal in Ho v Adelekun (No. 2). The issue was whether the QWOCS provisions trump the general power of the court to set off one costs order against another.
The court felt constrained to find against the claimant due to an earlier unreported Court of Appeal decision in Howe v MIB. However there was a clear reluctance to do so. Lord Justice Males said there was ‘considerable force’ in the claimant’s argument that the wording of CPR 44.14 precludes a set-off in a QWOCS case. He said that there was a ‘powerful case’ for calling into question whether Howe v MIB had been rightly decided. All members of the court agreed that the Rules Committee should consider whether the rules should be clarified.
The Court of Appeal also gave the claimant permission to appeal to the Supreme Court. Although the Court of Appeal felt constrained to follow its earlier decision the Supreme Court will be under no such constraints.
For the time being it seems that costs orders can be set off against each other in a QWOCS case. Whether this remains the case after the Supreme Court and the Rules Committee have got to grips with the issue is debatable.