Costs News

27 January 2021
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CJC working group calls for “active review” of QOCS regime

There should be an “active” review of qualified one-way costs shifting (QOCS), a Civil Justice Council working group has concluded, but it was unable to agree on whether reform was needed.

The group – made up of a mix of claimant and defendant lawyers alongside judges and chaired by DWF partner Nicola Critchley (pictured) – was tasked with recommending further reforms for low-value (under £25,000) personal injury claims.

It looked at how to resolve meritorious claims more quickly and with reduced costs while also preventing unmeritorious claims.

Its report, published last month, said that, in the absence of members agreeing on most issues relating to QOCS, “it is recommended that the situation is actively reviewed, to see if sufficient guidance and clarification is provided by the courts”.

The three main areas of concern were the working of QOCS where there was late discontinuance of a claim; the definition of 'fundamental dishonesty'; and the definition of 'substantial injustice'.

The group's report said: “There are strong divergent views on these issues within the group and further time is needed to see whether the existing rules and developing case law satisfactorily resolve these or whether there will be a need for clarification through statutory provision or amendment to the rules.

“If reform is anticipated, full consultation would be appropriate to fully inform decision-making.”

The group identified concerns that, as a consequence of QOCS, “more cases are being brought that would not have been run under the old rules, with a number only discontinuing when the listing fee becomes payable.

“There is unanimity amongst the group, however, that it would not improve matters if the court was required to approve a notice of discontinuance within 28 days of trial in injury claims. They do not feel this would be an effective solution but rather that it would add extra complexity, additional cost and take up court resource.

“It is also felt that it would be difficult for litigants in person (LiPs) to comprehend and follow the procedure. It is also pointed out that there would be a risk of satellite litigation if a procedure was be introduced that was different from all other claims.”

Other than that, there was no consensus on the other issues. Some members felt that further guidance was needed on fundamental dishonesty, particularly in light of the likely increase in LiPs resulting from the impending whiplash reforms – they noted there have been at least 39 reported decisions since a working definition of fundamental dishonesty was provided by HHJ Moloney QC in Gosling v Hailo and Anor in 2014, with the degree of dishonesty required a key problem.

But others in the group believed the fundamental dishonesty provisions, under both section 57 of the Criminal Justice and Courts Act 2015 and in creating an exception to QOCS protection, “have bedded down and are working well”.

There was some support for a corresponding provision of fundamental dishonesty applicable to defendants, while others said defendants who acted dishonestly should expect sanctions under the existing rules and noted that the idea was rejected by the government when the 2015 Act went through Parliament.

There was disagreement whether official guidance was required on the term "substantial injustice" within section 57 that would preclude the court otherwise dismissing a claim for fundamental dishonesty, or whether to leave it to the courts.

More broadly, the group said that any move to push non-whiplash small personal injury claims into the new Official Injury Claim Portal should be taken with “great care, avoiding a ‘one-size fits all’ approach”.

It went on: “This includes the setting of FRC [fixed recoverable costs], which needs to be properly considered in the light of adequate data. Where LiPs are using the process, there must be clear guidelines, particularly for LiPs in how to handle ‘mixed’ claims, i.e. those for both personal injury and non-injury related damage.”

The group also highlighted a range of worries about the whiplash reforms due to come into force in May.

It also called for a major public awareness campaign on insurance fraud.

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