The government has answered some of the fundamental questions about how its new system for transferring the costs burden in personal injury cases will work.
Under qualified one-way costs shifting, claimants are intended to be protected from defendants' costs in most circumstances, even when they lose. The new rule is designed to abolish the need for claimants to take out after-the-event insurance premiums, which in the new QOCS era will no longer be recoverable from defendants when they win.
In a commissioning note the to the Civil Justice Council, which it has asked to carry out some further work on QOCS, the Ministry of Justice has revealed its decisions on several key elements of the new QOCS rules, which must be implemented by next April according to the government's timetable.
In particular, the government has answered the question of what happens to QOCS protection when a claimant rejects an offer made under part 36 of the Civil Procedure Rules. In what will be seen as a blow for claimants, the MoJ has said that: 'If a claimant fails to beat a defendant's part 36 offer, the part 36 principles will apply, but only up to the level of damages recovered.'
Claimant lawyers had argued that allowing part 36 to 'trump' QOCS in this way would produce too much uncertainty for claimants over whether they may become liable for the other side's costs, prompting a need to take out ATE insurance, and potentially undermining one of the main objectives of the QOCS regime.
The government also revealed its plans in relation to cases that are dropped by claimants. It said QOCS protection will be allowed in cases 'that are discontinued during proceedings and for appeal proceedings brought by defendants'. It is seeking advice from the CJC on whether QOCS should apply to claimant appeals.
The MoJ confirmed that claimants will not need to pass any financial test in order to benefit from QOCS, but it is seeking advice from the CJC on whether losing claimants should have to make a minimum payment.
The government has asked the CJC to look further into what behaviour by claimants should cause the loss of QOCS protection. As expected, it has said that QOCS will not apply to fraudulent claims, and it will not apply to claims that are struck out. The MoJ wants further advice on how to ensure that claims involving 'dishonesty' do not get QOCS protection.
It said it is 'particularly keen to discourage dishonest claims, in particular where the claim is exaggerated, either in terms of the injury sustained, or in the circumstances in which the injury is sustained.'