The Power To Set Off Costs Against Costs In A QOCS Case

Ho v Adelekun

In November last year the Court of Appeal decided that fixed costs continued to apply in a case which started under the RTA Protocol and was settled by way of the acceptance of a Part 36 Offer which referred to CPR 36.13 and offered to pay “costs to be subject to detailed assessment if not agreed”.

As a consequence of that decision the Appellant (original defendant) was awarded her costs of the appeal.

The question to be determined now was whether the court had jurisdiction to set off those costs against the costs owed to the Respondent (original claimant) in the substantive claim.

Although persuaded by the submissions of the Respondent that it had no jurisdiction to set off costs in a case to which QOCS applied the court found itself bound by its own previous decision in Howe v Motor Insurers’ Bureau.

“were there no authority on the issue, I would be inclined to accept Mr Mallalieu’s submission that, where QOCS applies, the Court has no jurisdiction to order costs liabilities to be set off against each other. I would find convincing Mr Mallalieu’s contention that Section II of CPR Part 44 represents a self-contained code and that, accordingly, a defendant can recover costs he has been awarded only by set-off against damages and interest under CPR 44.14 or, where appropriate, by invoking CPR 44.15 or CPR 44.16.”.

“However, this Court decided otherwise in Howe v Motor Insurers’ Bureau. The judgments in that case were unreserved. Further, it seems unlikely that the Court had the benefit of anything like as much argument as we did and, unsurprisingly, it would not appear to have known of the judgment which Judge Dight had given less than three months earlier in Darini v Markerstudy Group. Even so, as Mr Mallalieu accepted, we are bound by the decision in Howe unless it was given per incuriam.”

Lord Justice Newey had clear reservations about the justness of his decision and concluded his judgment with an invitation to the Civil Procedure Rules Committee to consider whether costs set-off should be possible in a QOCS case.

HO V ADELEKUN [2020] EWCA CIV 517