QOCS not available to claimants who fail to beat part 36 offers

There will be no means test or minimum contribution for personal injury claimants to be protected by qualified one-way costs shifting (QOCS), justice minister Jonathan Djanogly said this morning.

However, claimants who fail to beat part 36 offers to settle by defendants will lose the protection of QOCS, although they will not have to pay more in costs than they would have received in damages from the court.

In an attempt to level the playing field, Djanogly said defendants who failed to beat part 36 offers would face additional sanctions of paying a further ten per cent of damages or ten per cent of costs in non-damages cases.

Djanogly said there were two further situations in which claimants would lose the protection of QOCS – if the claim was found to be fraudulent on the balance of probabilities and if the claim was struck out because it disclosed no reasonable cause of action or where it is an abuse of process.

On the positive side, QOCS protection would not be lost where cases were discontinued and for all appeals.

Neil Williams, member of the Consumer Justice Alliance, said: “The size of the costs penalty claimants will have to pay if they fail to beat part 36 offers will be limited to the size of the damages awarded by the court.

“They will not have to pay costs above that amount. They may come away with nothing, but they will be no worse off than when they started the claim.”

However, Williams said the prospect of losing their QOCS would mean greater pressure on claimants to accept part 36 offers.

“It could force them to settle at an under-value. If their claim is for £6,000 and the defendant’s offer is £4,000, they may prefer to accept this than risk losing everything.”

Generally, Williams welcomed the announcement that no means tests would be applied to QOCS and there would be no minimum contributions.

He said it made up “to a limited extent only” for the restrictions on CFAs the LASPO Act would bring in next spring.

Williams called on the government to consult over plans to raise the small claims limit for personal injury claims from £1,000 to £5,000.

In his statement on QOCS, Djanogly said a further restriction on the rule was being “considered” by the government.

QOCS would not apply to “elements of a claim for personal injury that are pursued for the benefit of a third party (such as a property damage insurer or a credit hire provider) in respect of goods, services or indemnity provided by a third-party to the claimant as a consequence of the accident”.

He added: “The new rule on proportionality has been agreed by the Civil Procedure Rule Committee (CPRC), and the test is intended to control the costs of activity that is clearly disproportionate to the value, complexity and importance of the claim. The senior judiciary are considering revisions to the Costs Practice Direction to give effect to the new rule.

“Changes to the Civil Procedure Rules will be considered by the CPRC in the autumn, in order for the necessary changes to come into effect for April 2013.

“The Ministry of Justice will continue to engage with key stakeholders throughout the implementation stage and will also work closely with the senior judiciary on other aspects of Lord Justice Jackson’s reforms, which are due to come into effect at the same time.”