It has been confirmed that for cases issued on or after 6 April 2023, a defendant will be able to enforce costs up to “the aggregate amount in money terms of any orders for or agreements to pay or settle a claim for, damages, costs and interest”.

This will reverse the effects of the leading cases of Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654; [2018] 1 WLR 6137 and Ho v Adelekun [2021] UKSC 43; [2021] 1 WLR 5132 which both set out that a defendant could not recover costs from a claimant.

The current position: Qualified one-way costs shifting (QOCS)

(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.

(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

(3) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.

Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 confirmed that this did not apply to enforcement against damages recovered via settlement. This approach was strengthened in the Supreme Court case Ho v Adelekun [2021] UKSC 43; [2021] 1 WLR 5132 which effectively states that QOCS makes it pretty much impossible for a defendant to recover costs from a claimant when a claim settles.

The current position is that defendants are therefore prohibited from recovering costs in most of the usual scenarios involving settlement to include when a claimant accepts a Part 36 offer out of time or when a claimant loses a costs dispute.

This is all set to change following a review of the rules of QOCS by the Rules Committee.

CPR 44.14 will from 6 April 2023 be amended as follows:

(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 or agreements to pay or settle a claim for, damages, costs and interest made in favour of the claimant.

(2) For the purposes of this Section, orders for costs includes orders for costs deemed to have been made (either against the claimant or in favour of the claimant) as set out in rule 44.9.

(2) (3) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

(4) Where enforcement is permitted against any order for costs made in favour of the claimant, rule 44.12 applies.

(3) (5) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.

What does this mean for defendants

• Defendants’ Part 36 offers will need to be considered more carefully by claimant solicitors.
  
  It is likely to affect how claimants solicitors approach settlement and what offers they accept or reject.
• Further consideration will be needed when making or resisting interim applications. 
• Costs disputes - a defendant will now be able to recover the costs of these.

It is likely that defendant solicitors will now see a surge in proceedings being issued with claimant solicitors wanting to issue before 6 April 2023.

How Capsticks can help

Aiming to be the firm of choice for medical malpractice and casualty insurers, we advise and support on all aspect of claims and inquests.

To discuss how any of these issues may affect your organisation, please get in touch with Natalie Simpkins.