QOCS to apply to all PI claims

The “qualified one-way costs shifting” (QOCS) regime will apply to all personal injury claimants—regardless of their financial circumstances—the Ministry of Justice (MoJ) has confirmed.

In a written statement to Parliament this week, MoJ minister Jonathan Djanogly confirmed there would be no financial means testing.

Under QOCS, claimants who lose their personal injury case no longer have to pay their opponent’s costs. It is being introduced by Pt 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and is due to come into effect in April.

Djanogly says QOCS protection will be lost if the claim is found to be fraudulent on the balance of probabilities; the claimant has failed to beat a defendant’s “Pt 36” offer to settle; or the case has been struck out because there is no reasonable cause of action, or it is an abuse of the court’s process.

The principles set out in Pt 36 of the Civil Procedure Rules will override QOCS, but only up to the level of damages recovered by the claimant.

Djanogly says the MoJ is considering the possibility of disallowing QOCS protection for any parts of a claim pursued for the benefit of a third party in respect of goods, services or indemnity provided to the claimant by that third party as a consequence of the accident. The third party might typically be a credit hire provider or property damage insurer.

He says an additional sanction will need to be paid where judgment for the claimant is more advantageous than a defendant’s Pt 36 offer. This will be calculated as 10% of damages or 10% of costs, with a maximum sanction of £75,000. The sanction will be tapered where claims are valued at more than £500,000.

Professor Dominic Regan of City Law School says: “The statement fundamentally shifts from the original plan and is the better for it. The abandonment of tests of wealth and unreasonableness will avoid much potential satellite litigation.”

NLJ consultant editor David Greene, a partner at Edwin Coe, says: “The relationship between QOCS and Pt 36 has been a troubling one.

“The application of it adds to the uncertainty of the system and its qualifications for all parties but it is good to secure some certainty of the way forward. The problem with the proposals, however, is that they can bring about some odd results in which it is as good to lose as win. This really needs looking at.”