Qualified one-way costs shifting: What constitutes an exception to the rules and when will the Court apply its discretion in relation to the cost award?

Published 29 marzo 2018

Summary

Qualified one-way costs shifting (QOCS) applies to personal injury claims commenced after 1 April 2013. It provides that a bona fide, losing claimant will not have to bear the Defendant's costs, save for in a small set of circumstances.   

In this personal injury case the Claimant made concurrent claims in both contract and tort for pure financial loss which was found to fall within an exception to QOCS and the Court applied its discretion thereby allowing the Defendant to recover a proportion of its costs.

In this briefing we consider the impact of the ruling in Faiz Siddiqui v University of Oxford Chancellor, Masters & Scholars (2018) as to when the exception is triggered and how the discretion will be applied to the consequent costs award. We also look at when and how these principles can be applied to personal injury claims against residential care providers where Claimants look to recover privately funded care home fees as part of their claim. 

What was the case about ?

This was a high profile case in which a student, Mr Siddiqui, brought a personal injury claim against his university on the basis that they were in breach of duty in their teaching as part of a history course in 1999 - 2000. This was alleged to have caused the Claimant to miss out on a First class degree causing him to fail to be admitted to a US law school and thereby resulting in psychiatric injury. The Claimant also sought loss of earnings on the basis that he would ultimately have become an international commercial lawyer had he achieved a First.

Mr Siddiqui's claim was dismissed by the court for lack of merit and due to being time barred. The Defendant university was therefore entitled to a costs order in their favour but parties disputed the application of the QOCS rules. The Defendant's total costs were in the region of £300,000.

The relevant law

Qualified one-way costs shifting (QOCS) applies to personal injury claims commenced after 1 April 2013, subject to some exceptions.

Where a Claimant in a personal injury claim makes an additional claim in contract and tort for pure financial loss, it falls within the exception to QOCS under CPR r44.16(2)(b) and the Court has discretion regarding the costs order it can make

What did the Court decide?

The Claimant argued that QOCS should apply to the entirety of costs; his claim was a personal injury claim and so should have protection from paying any costs.

The Defendant, whilst agreeing that a personal injury claim should benefit from QOCS, argued that claims were also made in contract and tort (i.e. effectively on the basis of professional negligence) for pure financial loss as a result of the alleged negligence and as such that CPR r 44.16 (2)(b) should apply:

(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where - […]

(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.

The Court held that the Claimant had made a stand-alone claim for economic loss unrelated to psychiatric injury. Whilst there was evidential overlap between the claim for personal injury and the claim for financial loss, that this did not prevent the application of r 44.16 (2)(b). The Judge could not see good reason to depart from the earlier decision within Jeffreys v Commissioner of Police for the Metropolis (2017) i.e. that there was no requirement for the personal injury and non-personal injury aspects of the claim to be divisible.

The Defendant was awarded 25% of their costs to reflect the time spent on the pure financial loss aspects of the claim. Whilst the Judge viewed that a third of costs incurred may be more accurate, he was keen not to deprive the Claimant of any genuine QOCS protection he was entitled to for the personal injury element of his claim.

How can we use the principles moving forward?

Whilst most personal injury cases fall safely within QOCS protection, there are a growing number of claims which are pleaded in both personal injury and breach of contract/tort for pure financial loss. Of particular note, are the personal injury claims which arise from provision of residential care in a care home setting and where Claimants look to recover privately funded care home fees.

Where such a claim in contract is raised by the Claimant alongside a personal injury claim, this case should be referred to during settlement negotiations to remind the Claimant that they could be exposed to liability for a proportion of the Defendant's costs. It should also be carefully considered when addressing costs at the conclusion of a successfully defended matter. The fact that both a personal injury claim and a pure financial claim will have the same evidential basis does not preclude a Defendant from recovering at least some element of their costs.