Costs News

24 March 2022
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Government decides against curbing QOCS in motor claims for now

The Ministry of Justice (MoJ) has decided against curbing qualified one-way costs shifting (QOCS) in motor claims, which had been suggested as a way to reduce fraud.

The news came in the long-awaited response to part 2 of the whiplash consultation that closed in January 2017 – part 1 led to the Civil Liability Act 2018 and last year’s reforms.

One of the changes canvassed in part 2 was a recommendation from the Insurance Fraud Taskforce that claimants should be required to seek the court’s permission to discontinue their claim if they wanted to do so less than 28 days before trial.

The working group suggested that, where fraud was raised in the defence, it was possible to take advantage of QOCS protection by running claims until shortly before trial, then discontinuing them and avoiding a finding of fundamental dishonesty and possible criminal proceedings.

The response paper recorded that the majority of respondents opposed the change, arguing that if there was an allegation of fundamental dishonesty, there was already recourse to have a discontinuance overturned by the court.

They also suggested that the proposal could lead to other problems, such as non-attendance, and that it should be recognised that there were legitimate reasons for late withdrawal of claim, for example, as a result of evidence provided by the defendant late on in the process.

It was also argued that insurers often settled at the last minute and that this behaviour helped drive the late discontinuance of claims.

Those in favour felt that late withdrawal led to unnecessary costs and that it was “difficult and risky” to obtain a fundamental dishonesty ruling. Claimants could also be disincentivised from bringing speculative claims in the hope of settling but then withdrawing late.

The MoJ noted that in 2020, the Civil Justice Council (CJC) considered the issue in its low-value PI working group report but was unable to establish a cross-industry consensus.

The MoJ concluded: “There is no clear agreement from stakeholders on this issue with good arguments both for and against making changes in this area put forward.

“In addition, despite a considerable amount of discussion, the CJC also could not come to a consensus on this point and recommended further detailed consultation before any changes are made.

“Therefore, the government does not propose to proceed with changes specific to this recommendation at this time but will continue to monitor behaviours in relation to QOCS and may return to this issue in future if there is a need to do so.”

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