Ho (Respondent) v Adelekun (Appellant) Michaelmas Term  UKSC 43
The Appellant was injured in a road traffic accident and brought a claim for damages against the Respondent. That action was ultimately settled for the sum of £30,000 plus reasonable legal costs by way of a Tomlin Order. A dispute then arose as to whether those costs of the Appellant were fixed recoverable costs or not. That dispute was ultimately resolved in favour of the paying party/Respondent in the Court of Appeal with the Respondent awarded the costs of that dispute. The Respondent was unable to enforce that costs award due to the provisions of Qualified One Way Costs Shifting (QOCS), specifically that the damages were not awarded by Order of the Court. The Respondent therefore sought to offset their costs as against their own liability for fixed recoverable costs to the Appellant arising from the substantive personal injury litigation. The Court of Appeal considered itself constrained by an earlier decision of that Court in Howe v MIB and thus allowed offset. The Appellant brought an Appeal of that decision to the Supreme Court.
The decision concerns the operation of QOCS and specifically whether offset of costs awards in both parties favour (as provided for in Civil Procedure Rule 44.12) is permissible and the extent to which, if at all, that mechanism is curbed by QOCS.
The Court declined to examine in any detail the various policy considerations deployed by both parties, instead directing such matters to the attention of Civil Procedure Rules Committee. It was stated that QOCS does not fetter the Court from making Costs Orders but merely “the use which defendants can make of costs orders in their favour”. It was found the QOCs regime is essentially “mechanical rather than discretionary”. The Court concluded QOCS “is intended to be a complete code about what a defendant in a PI case can do with costs orders obtained against the claimant”. The Court further found that the defendant can recover costs awarded by any means available including an offset with claimant costs, but only up to the monetary amount of damages and interest awarded to the claimant by Court Order.
Essentially then setoff between two costs awards is still permitted, however, setoff is a form of enforcement and as such is subject to operation of QOCS. In principle therefore a defendant cost award can be recovered from either or both claimant damages and costs. However, the amount of defendant costs award capable of enforcement cannot exceed the damages and interest awarded to the claimant by Order of the Court. It is no longer possible for a defendant costs award to extinguish claimant damages and then look to any claimant costs award by way of offset to recoup any balance remaining.
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