QOCS bite back!

QOCS bite back!


Author: Paul Eccles

The recent Court of Appeal case, Wagenaar -v- Weekend Travel Limited and Serradj [2014] (Wagenaar) highlights the importance of costs consideration for defendants in personal injury claims.

The facts

In this case, the claimant brought a claim against the defendant tour operator for injuries suffered whilst on a ski holiday in France. The claimant alleged negligence on the part of the defendant's supplier, a third party ski instructor.

The defendant then brought a Part 20 additional claim against the third party ski instructor for indemnity and contribution against the third party.

The decision

Both claims were dismissed and in the first instance, the judge ordered that the defendant was awarded its costs against the claimant and that the third party was awarded her costs against the defendant. However, the judge went on to apply qualified one way costs shifting ("QOCS") to both claims. This meant that both parties were liable to pay their own costs.

QOCS was introduced as a part of the Jackson Reforms in April 2013. If a claimant wins a case, they recover their costs, but claimants do not pay costs orders in favour of the other side, except up to the extent of any damages and interest awarded.

The defendant and the third party appealed against the decision on the basis that the QOCS provisions were ultra vires (or "beyond powers") and that the QOCS provisions did not apply to the additional Part 20 claim.

The Court of Appeal rejected the argument that the QOCS rules were ultra vires. The court stated that relevant legislation was to be read subject to the powers of the rules committee and that the rule making authority has every right to control the exercise of its discretion in relation to costs. Thus, the defendant's appeal was dismissed.

However, the third party was successful in its appeal. The court agreed that the QOCS provisions were intended to protect injured parties from facing adverse costs consequences. The QOCS provisions were not applicable under a Part 20 claim in relation to apportionment of damages.

Practical implications

The Court of Appeal has stated that the QOCS provisions apply to personal injury cases and not to any additional claims which do not involve personal injury.

Therefore, defendants will need to consider whether it would be economical to bring a Part 20 claim as this could leave them exposed to additional costs. Indeed in the Wagenaar case, the defendant would have actually been better off if both claims had succeeded!

About the Author

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Paul Eccles

Head of Commercial Insurance

03700 86 8741

Paul is head of the insurance team at Shoosmiths which sits within the litigation and disputes practice. He specialises in all aspects of insurance-based litigation. He has a particular interest in policy cover disputes between insurers/insured, including breach of warranty, misrepresentation/mistake, non-disclosure and fraudulent claims acting for both the insured and insurers.

He has a broad depth of experience in most classes of insurance business to include commercial risk, professional indemnity, employers' and public liability personal injury claims and product liability for some major household brands.

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