The Supreme Court ruling last week in Ho v Adelekun has come under heavy attack from lawyers representing defendants, with one describing it as “a further erosion of access to justice for defendants”.
The court held that defendants cannot set off opposing costs orders in cases covered by qualified one-way costs shifting (QOCS), indicating it should be a matter for the Civil Procedure Rule Committee (CPRC) to address.
Matthew Hoe, director of litigation and dispute resolution at Taylor Rose MW – who acted for the defendant – said there were two “particularly alarming” aspects for defendants, insurers and compensators: the approach to the construction of the CPR and the likely effect on litigation and the costs of defending claims.
He explained: “The decision means, essentially, unless there is an order for damages or a finding of fundamental dishonesty, a claimant will not have to pay a successful defendant’s costs.
“Reaching the decision by focusing only on the words of the QOCS rules and not wider usages in the CPR will make the outcome of future cases about the CPR harder to predict.”
Mr Hoe, a member of the Forum of Insurance Lawyers’ costs sector focus team, added that it paved the way for claimants to pursue bad points – “as the claimant had originally done in Adelekun” – and so force defendants to incur costs the claimant will not have to pay, “perhaps thereby applying improper pressure to settle”.
He added: “An urgent review of the QOCS rules by the CPRC is required to ensure the intended checks and balances operate.”
Adam Burrell, a partner and head of costs at DAC Beachcroft, said the ruling was “a further erosion of access to justice for defendants”.
He continued: “The decision undermines the fairness of the QOCs regime and will produce results which are both counterintuitive and unfair. This is [also] a further erosion of the effectiveness of part 36 for defendants and renders it even less effective than it is now.”
As the facts of the case itself highlighted, once the underlying damages claim was settled, where there was no or a very low damages order, “there is no or little risk for claimants to raise spurious arguments to avoid fixed costs or claim excessive amounts”.
Mr Burrell predicted that the CPRC would now review the QOCS regime “as the effect of the judgment will have adverse policy consequences”.
He added: “One of the unintended consequences might be a growth in the pursuit of non-party costs orders or wasted costs against solicitors for pursuing cases purely for their own benefit rather than the benefit of their client.”
Jack Macaulay, a barrister at Crown Office Row, argued that the ruling went beyond what the QOCS regime was designed to achieve, “namely the protection of impecunious claimants from defendants’ costs”.
He went on: “The effect is to place costs orders in a claimant’s favour in a privileged position, more thoroughly insulated than even the claimant’s own damages. The chief beneficiaries are likely to be claimant solicitors, rather than injured claimants themselves. The black letter rules of the CPR are not so clear-cut as to compel such an unattractive result.
“The decision in Howe could have been left intact, with any revisions a matter for the CPRC – indeed, the Supreme Court itself suggested that this would normally be a more appropriate way of resolving ambiguities in the interpretation of the CPR.”