Qualified one way cost shifting – same name different jurisdictions – what are the key differences North & South of the border?

Qualified One-way Cost Shifting, commonly abbreviated to “QOCS”, plays a pivotal role in personal injury litigation. It limits when a defender can recover expenses from an unsuccessful claimant.

Insurers and anyone handling claims should be aware of the key differences in the QOCS rules between Scotland and those in England & Wales. Despite the shared acronym, the outcomes can be quite different in each jurisdiction.

What Types of Claims Are Covered?

QOCS applies to personal injury claims across both jurisdictions.

It also applies to claims stemming from the death of an injured person, though in England & Wales, this is specifically for claims brought under the Fatal Accidents Act 1976 or the Law Reform (Miscellaneous Provisions) Act 1934 s1(1).

What Does QOCS Do?

In Scotland, QOCS means that a court cannot order the pursuer to pay another party’s costs unless one of the exemptions applies (see below).

In contrast, QOCS does not stop the court from making an order on costs in England & Wales. Instead, the value to which the defendant can enforce the court order is capped. That cap is equal to the total damages, costs and interest in favour of the claimant. So, the defendant cannot recover more than the claimant has been awarded.

When Can QOCS Be Disapplied in Scotland (“The Exemptions”)?

In Scotland, the defender must apply to the court to have QOCS disapplied based on a set list of grounds:

• A fraudulent representation by the pursuer, which must be supported by a factual finding by the court (for more information see our comments on one leading case from the Sheriff Appeal Court)
• The pursuer’s conduct was manifestly (obviously) unreasonable or an abuse of process (we have provided a deeper dive into this in another blog)
• Where the court valued the pursuer’s claim lower than the value of the defender’s Tender (the equivalent to a Part 36 Offer)
• The pursuer unreasonably delayed before accepting a Tender (please our insights on a recent case where this ground was successfully argued)
• The defender is granted summary decree
• The pursuer abandoned the claim

However, even if one of these grounds can be established, the court retains the discretion of whether QOCS should be disapplied. Instead, the court may choose to reduce the pursuer’s expenses, award no expenses to either party, or simply refuse to disapply QOCS.

Additionally, if QOCS is disapplied due to a Tender, the defender’s costs are still capped at 75% of the value of the Tender.

You can find our discussion of the Scottish caselaw here.

When Can QOCS Be Disapplied in England & Wales?

In England & Wales, QOCS can be disapplied automatically without the court’s permission. This occurs where the claim is struck out for one of these reasons:

• The claimant did not have reasonable grounds to sue
• The claimant’s conduct amounts to an abuse of process or is likely to obstruct the just disposal of proceedings

In other circumstances, the court’s permission is required to disapply QOCS. This means that the court must still be persuaded that it is fair to disapply QOCS even if persuaded that one of these exemptions applies:

• The claimant has been fundamentally dishonest
• Where an aspect of the claim does not relate to personal injuries
• Claim is brought for the benefit of another person, such as for insurers and a credit-hire provider

The last ground means that the court may order an insurer or credit-hire provider to pay the defender’s costs if the claimant is suing on their behalf.

There is no exception for a Part 36 offer, so any costs a defender can recover because of a Part 36 offer will still be capped, unless one of the grounds listed above applies.

Key Takeaways

• In Scotland, the court always has a discretion to refuse to disapply QOCS, even if an exception applies.
• A Tender is an exception to QOCS in Scotland, but a Part 36 offer is not in England & Wales.
• Where a claim is brought for the benefit of an insurer or credit-hire provider, QOCS can be disapplied in England & Wales, but this is not a QOCS exception in Scotland.
• Even pre-litigation conduct can impact the court’s decision on costs.

Our insurance team is well experienced in this area and has argued numerous cases involving the disapplication of QOCS, including our team’s solicitor-advocate, Michael Wilson, who has appeared at several hearings on this issue.

For more information, please get in touch to request a recording of our webinar on how to manage and mitigate costs in personal injury claims. If you would like to discuss anything raised in this blog, please contact Carly Forrest or your usual Brodies contact.