Court has discretion to allow QOCs protection in mixed claim
Posted on 29th September 2022 at 12:47
By Sean Linley, Costs Draftsman
The High Court has used its discretion to give a Claimant Qualified One-Way Costs Shifting (QOCs) protection in a mixed claim. Mr Justice Bourne's judgment in Wokingham Borough Council v Arshad  EWHC 2419 (KB) (29 September 2022) addresses the approach which will be taken. Practitioners should remain aware that QOCs does not automatically apply to 'mixed' claims which entail personal injury (PI) and non-PI elements but it is the starting point (as per Brown v Commissioner of Police of the Metropolis and Anor  EWCA Civ 1724).
In Wokingham Borough Council v Arshad the claim related to a taxi driver who was told he needed a new vehicle because his existing vehicle was too old to be licensable. Mr Arshad proposed a vehicle to Council and asked if it would be approved and was told by the Council it would be appropriate. It transpired, however, that the advice given by the Council was inaccurate and his license was suspended as his vehicle was not fit for possible. Following a series of complaints, Mr Arshad was eventually able to appeal and was issued with a new license on 28 August 2018.
Mr Arshad brought a County Court claim with the following courses of action identified:
"i. Discrimination on the grounds of race or religion;
ii. Negligence (in the provision of advice that the Ford Galaxy would be an appropriate vehicle);
iii. Breach of duty (in the carrying out by the Council of their statutory duties relating to hackney carriage licensing)."
In addition, Mr Arshad contended that he had suffered personal injury with a Psychiatric report provided opining that his loss of licence and consequential loss of livelihood and status led to the onset of a Depressive Disorder involving mild to moderate depression without psychotic symptoms.
Mr Arshad did consult solicitors during the course of his claim but ultimately represented himself as he was unable to afford legal representation throughout the proceedings. Notably he represented himself both at Trial and at the Appeal.
The Initial Trial
At trial, the Court found that the negligence claim succeeded, however, only one head of claim was successful with general damages for personal injury awarded. The Claimant was awarded damages of £42.790.00 plus costs of £6,270.60. He was not ordered to pay any costs despite the failure of the other claims. The Defendant was given permission to appeal.
The Court held that it was fair, just and reasonable to impose a duty of care to avoid economic loss which was a reasonably foreseeable consequence of the negligence. It was, however, considered that the duty to avoid causing psychiatric harm was not reasonably foreseeable. Mr Justice Bourne held that:
"it seems to me that whilst any serious setback may be capable of causing a degree of psychiatric harm to anyone, psychiatric injury in this case was not so reasonably foreseeable as to make it appropriate for a local authority, giving discretionary pre-application advice on a licensing matter, to owe a duty of care not to cause pure psychiatric harm."
The Defendant's appeal was ultimately allowed and the award of damages set aside. This meant that the Defendant was the successful party and consequently would obtain an order for its costs.
The Application of QOCs
Whilst the Defendant was successful (on appeal) at defending the claim and did obtain a costs order, Mr Justice Bourne considered the application of QOCs.
It was noted that QOCs applied as per CPR r44.14(1):
“(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.”
The Court considered matters stating thus:
"So in this case where there is no award to the Claimant, the Defendant’s costs order cannot be enforced unless an exception applies. As I have said, an exception applies in this case by virtue of CPR 44.16:
“(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –
(a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or
(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.”"
As the claim included elements which were non-PI and therefore outside the scope of QOCs it was open to the Court to permit enforceability of the Defendant's costs order. As noted by the Court:
"This is therefore not a case in which the Defendant’s costs order is automatically not enforceable. Instead, enforceability is a matter for the Court’s discretion."
Mr Justice Bourne considered the Court of Appeal guidance in Brown:
"Coulson LJ referred to “mixed” proceedings, i.e. those with claims in additional to a personal injury claim, and said:
“57. But in such proceedings, the fact that there is a claim for damages in respect of personal injury, and a claim for damage to property, does not mean that the QOCS regime suddenly becomes irrelevant. On the contrary, I consider that, when dealing with costs at the conclusion of such a case, the fact that QOCS protection would have been available for the personal injury claim will be the starting point, and possibly the finishing point too, of any exercise of the judge's discretion on costs. If (unlike the present case) the proceedings can fairly be described in the round as a personal injury case then, unless there are exceptional features of the non-personal injury claims (such as gross exaggeration of the alternative car hire claim, or something similar), I would expect the judge deciding costs to endeavour to achieve a “cost neutral” result through the exercise of discretion. In this way, whilst it will obviously be a matter for the judge on the facts of the individual case, I consider it likely that, in most mixed claims of the type that I have described, QOCS protection will—in one way or another—continue to apply …
58. It is however important that flexibility is preserved. 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 (as Foskett J warned in Siddiqui  4 WLR 62 ).”"
Accordingly the Court concluded as follows:
"in this case the arguments in favour of a costs-neutral outcome do not consist only of the fact that Mr Arshad had an unsuccessful personal injury claim. He was the victim of negligence, although suffering loss of a kind which I have ruled was not reasonably foreseeable. The situation arose in part because of the defective nature of the Council’s policy. He was then also the victim of treatment which, for no apparent good reason, was different from that of other drivers in an analogous position. Meanwhile the fact that he had an unsuccessful personal injury claim, though not entitling him to automatic protection, still provides some protection under the rules by subjecting enforcement to the discretion under CPR 44.16. It does seem to me that the personal injury element was a substantial part of the claim. That claim failed not because it lacked factual merit, but because of the legal issues around claims for psychiatric harm which are challenging for lawyers, let alone for litigants in person.
Bearing in mind all the facts, and what I have been told about their impact on Mr Arshad and his personal and financial situation, I am not persuaded that it is “just” to permit any enforcement of the costs order against him.
It will be scant consolation to Mr Arshad, but I must end by recording my sympathy for the great difficulties which he has endured through no fault of his own."
Consequences, Implications and the Future of QOCs
The case reinforces the approach set out by the Court of Appeal in Brown chiefly that QOCs entitlement in mixed claims is not automatic. However, unlike in Brown, the case of Arshad shows the Court exercising discretion to allow QOCs protection in a 'mixed' claim. The decision is likely to be welcomed by Claimants though is ultimately important to all sides when considering the risks and ecomonicability of claims.
The importance of Arshad is that it demonstrates and shows QOCs protection in action in a mixed claim. It is also a reminder that where there is a PI element, the starting point will be that QOCs applies, though the Court will have discretion to disapply the same as per CPR 44.16.
QOCs continues to be a battleground for parties. Costs set-off remains a hot topic. The current position is that costs set-off is not allowed in principle as per the Supreme Court decision in Ho v Adelekun however, it's clear from the QOCs consultation announced earlier in the year that the government intends to amend the existing rules to re-allow costs set-off. In the meantime, it remains possible, in principle for a parties to consent to costs set-off.
What remains clear is that QOCs is here to stay for some time yet. Clarity on costs set-off is likely not far away but the Civil Procedure Rule Committee did previously indicate it was something to be looked after the wider work on fixed recoverable costs and extension to most litigation with a value of up to £100,000.00 had concluded.
The spectre of extending QOCs also casts a shadow with the Civil Justice Council reflecting that which was under consideration by the government. QOCs protection was mooted for other actions including actions against the Police and other public authorities, discrimination cases under the Equality Act 2020, human rights cases, housing disrepair, professional negligence claims (particularly those arising from personal injury claims), judicial review and private nuisance. There have been no active developments to facilitate an extension and indeed the most recent QOCs consultation suggests any possible extensions are still some way off.
QOCs remains a complex area. Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail email@example.com
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