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The amendment relates specifically to the provisions of QOCS (Qualified One-Way Costs Shifting), which was originally established to limit the liability of a claimant for the defendant’s costs in personal injury and related claims.
Simply put, QOCS applies to personal injury claims commenced after 6th April 2023. It provides that defendants can be ordered to pay the costs of a successful claimant but will not be able to recover their own costs if they successfully defend a claim, save for a small set of circumstances.
In February of this year, the QOCS provisions were eroded following a review of the Civil Procedure Rules. For claims issued after 6th April 2023, a defendant will be able to recover an award in their favour, against a costs award in favour of the claimant, up to the value of costs, damages and interest awarded to the successful claimant. This is a departure from the previous provisions where any potential set off was limited to the value of the claimants costs.
The decision has been welcomed by defendants. The previous rules were perceived to tip the balance completely in favour of the claimant, however, the new rules have been argued to shift the dial too far back in the other direction.
It does, however, create a precarious situation for claimants, who have enjoyed a level of protection from adverse costs thanks to the existing QOCS rules.
At Arc Legal, we are particularly concerned about the impact the changes will have on Part 36 offers. The current position is that if an offer is not beaten, the defendant can offset their costs up to the level of the claimant’s solicitors’ costs. The new provisions could leave claimants without some of their damages (if they are not insured), and lead to higher claims on policy where insurance is available. This is because the defendant can now enforce any award to include damages as well as their costs.
As the risk to a claimant has been increased with Part 36 offers having more bite, it’s more important than ever for claimants to have a Legal Expenses Insurance (LEI) policy. Our policies will protect an insured from any exposure arising from the application of the rule changes, following a successful claim.
Without LEI, a policyholder will be liable for not only their legal representation, but any costs to be awarded to the defendant. We would urge our broker partners to engage with policyholders to explain these changes to customers and well as highlight the importance of LEI when they’re selling the product, to ensure customers know why it’s such a valuable product.
Andrew Kenyon, Head of Specialist Claims, Arc Legal Group
If you require any further information in relation to this update, or details of our products and services, please contact your Partnerships Manager or email [email protected].