Legal costs and the unsuccessful personal injury claimant
Qualified One-Way Costs Shifting (QOCS).

The Court of Appeal in Howe v MIB [2017] (Judgment delivered 6 July 2017) has clarified the applicability of QOCS to claims brought against the Motor Insurers’ Bureau (MIB) under the untreated drivers agreement.

QOCS – “Qualified One-Way Costs Shifting”
The availability of legal aid for individuals wishing to pursue a claim for compensation for personal injuries sustained in an accident has now largely been replaced by Conditional Fee Agreements and After the Event (ATE) legal expense insurance. Legal aid is only available in very limited circumstances. In 2013 the cost of ATE insurance ceased to be recoverable as a result of changes to the Court Rules. Once ATE premiums ceased to be recoverable it was necessary to protect claimants from the risk of adverse costs orders obtained by insured or self-insured parties with deep pockets. It was proposed that all claimants in personal injury cases should be given a broadly similar degree of protection against adverse costs orders as that enjoyed by legally aided claimants. Qualified one-way costs shifting or “QOCS” was introduced to overcome the deterrent effect on bringing claims for personal injury of the risk of paying a defendant’s costs if the claim failed.

QOCS only applies to personal injury cases and the general rule is that court orders for costs made against a claimant may be enforced but only to the extent that the amount in money terms of the costs orders does not exceed the amount in money terms of any compensation award made in favour of the claimant. (There are exceptions to the rule for example where a claimant’s case is struck out without merit or where the claim is fundamentally dishonest.

The Court of Appeal has clarified the use of QOCS in road traffic cases against the Motor Insurers Bureau (MIB) where person at fault cannot be traced. In Howe v MIB ([2017] EWCA Civ 932) Mr Howe was seriously injured whilst he was driving a lorry on the A16 in France when a wheel detached from a lorry in front of him. Through no fault of his own Mr Howe collided with the wheel and the resulting accident left him severely injured. Neither the other vehicle nor its driver has been traced. After a long delay Mr Howe brought a claim against the Motor Insurers’ Bureau, but the claim was dismissed on the grounds that it was statute barred.

The defendants (MIB) sought to recover their costs. Mr Howe’s lawyers argued that the claim came within the QOCS provisions and that as he had not recovered any compensation he should not have to pay the defendant’s costs.

The defendants arguments sought to rely on the the definition of the nature of the claim against the MIB. The MIB Regulations state that any sum due and owing pursuant to the Regulations shall be recoverable as a “civil debt”. The MIB argued that a claim for a “civil debt” is different from a claim for “damages” in a personal injury claim. QOCS does not apply to “civil debts” and as the MIB’s obligation arises as a civil debt they argued that QOCS did not apply. The Court of Appeal did not agree. Mr Howe’s claim would have had to have been assessed as a claim for damages for personal injuries and any payment to be made by the MIB if Mr Howe had succeeded in his claim would not have arisen in the nature of a civil debt.

The Court of Appeal held that the QOCS regime applies to the MIB’s untraced driver’s agreement scheme and Mr Howe could rely on it.