Ho v Adelekun

Where qualified one-way costs shifting (QOCS) applies, the Court of Appeal is bound by an earlier decision that it has jurisdiction to set off mutual costs liabilities under CPR 44.12. The court may therefore set off costs awarded to a defendant against costs awarded to a successful claimant, even though the claimant’s protection under QOCS is engaged. Once jurisdiction is established, the discretion should ordinarily be exercised according to the circumstances of the case, including whether the claimant has misconducted herself and whether the defendant would otherwise suffer an unfair costs shortfall. A costs set-off does not create a net liability to the defendant and is therefore not, on the assumed application of the binding authority, inconsistent with QOCS. Departure from a previous Court of Appeal decision under the per incuriam exception requires a rare and exceptional case, not merely fuller argument suggesting that the earlier case might have been decided differently.

The claimant accepted a £30,000 settlement offer made by the defendant in a personal injury claim arising from a road traffic accident. The settlement was recorded in a Tomlin order. The Court of Appeal had previously held that the fixed costs regime applied and allowed the defendant’s earlier appeal.

The remaining issues were whether the defendant could set off costs awarded to her against the claimant’s liability for costs of the claim, and whether the claimant should pay the defendant’s costs of an earlier hearing before Deputy District Judge Harvey. The County Court had made no order as to those costs. The central questions were the interaction between CPR 44.12 and the QOCS provisions in CPR 44.13–44.17, and whether the earlier Court of Appeal decision in Howe v Motor Insurers’ Bureau could be avoided as having been given per incuriam.

1. Jurisdiction. The court held that it was bound by Howe v Motor Insurers’ Bureau, in which the Court of Appeal had decided that CPR 44.12 gives jurisdiction to order a set-off of mutual costs liabilities in a QOCS case. Howe had not been shown to have been decided per incuriam. The fact that fuller argument might have led to a different conclusion was insufficient, because the exception requires a rare and exceptional case involving, in general, ignorance of a binding statute, rule or authority, or a comparable manifest error.
2. Interaction with QOCS. Proceeding on the basis that set-off was legally available, the court exercised its discretion to order it. Arguments that set-off was inconsistent with the underlying policy of QOCS went principally to jurisdiction, which had already been determined by Howe. There was no specific feature making set-off unjust, and the defendant had incurred substantial costs while remaining subject to a significant shortfall even after set-off. The order did not require the claimant to make a net payment to the defendant.
3. Costs of the earlier hearing. The Deputy District Judge had identified the general rule that costs follow the event and had not erred in principle. However, he had attached excessive significance to the appellant’s signature of the Tomlin order. The parties had approached the issue on the basis that the claimant accepted the defendant’s offer and that the offer, rather than the order’s wording, was decisive. The defendant was therefore entitled to the costs of the application before the Deputy District Judge.
4. Additional observations. Males LJ considered that “enforced” in CPR 44.14 could properly be understood as including set-off against damages and interest, and that the QOCS rules formed a self-contained code. Nevertheless, Howe was binding. He also explained that QOCS protects a claimant from a net liability to the defendant, not from liability to the claimant’s own solicitors. The Rules Committee might usefully reconsider whether costs set-off should be available in QOCS cases.

• Court of Appeal (Civil Division): The court had previously allowed the defendant’s appeal concerning the applicability of the fixed costs regime in [2019] EWCA Civ 1988 . In the present costs judgment, it ordered set-off of the parties’ costs liabilities and ordered the claimant to pay the defendant’s costs of the hearing before Deputy District Judge Harvey.
• County Court at Central London: His Honour Judge Wulwik had reversed a decision of Deputy District Judge Harvey. Deputy District Judge Harvey had applied the fixed costs regime but made no order as to costs.