Spotlight on Qualified One Way Costs Shifting

Fri, 05 Jul 2019

Gareth Compton, a costs lawyer expert at No5 Barristers’ Chambers, examines the provisions of the CPR with regard to Qualified One Way Costs Shifting and its potential effect of CPR 44.14.

Effect of qualified one-way costs shifting

44.14

(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

The effect of the rule is simple enough: costs orders in respect of, for example, interim applications made in favour of a defendant, can be enforced without permission of the court, at the conclusion of the proceedings, from any damages and interest awarded to the claimant.

So far, so straightforward. What is the position though in circumstances where a single or collection of interlocutory costs orders amount to the likely total value of the claimant’s claim or even more than the value of the claim?

Admittedly, such a scenario is unlikely. In most low value claims, fixed costs will apply, and any interim costs orders are accordingly very modest.

However, the scenario is far from impossible. Some low value claims may be outside the fixed costs regime because they are otherwise legally complex, for example, or because their trial time estimate takes them outside the Fast Track. It is also the case that the provisions of CPR 44.15(c) allow for interim costs orders, even in cases to which the fixed costs regime applies, to be enforced to their full extent in some circumstances in which conduct is an issue.

So, what can a defendant do if he/she has the benefit of interim costs orders which would extinguish or almost extinguish a claimant’s claim?  Would that expose the claimant to an argument that his claim is an abuse of process, pursuant to CPR 3.4(2)(b)?

In fact, as the notes in the White Book, in respect of the abuse of process rule, makes clear, the scenario I have sketched out is precisely one which might give rise to a successful application to strike out the claimant’s claim as an abuse. 

The notes specifically refer to those cases where “the benefit attainable by the claimant in the action is of such limited value that the ‘game is not worth the candle’ and the costs of the litigation will be out of all proportion to the benefit to be achieved; see Jameel v Dow Jones and Co [2005] EWCA Civ 75.”

Jameel was a libel action in which the publication of the alleged libel had been very limited. Giving judgment, Lord Phillips of Worth Travers M.R. expressed the position thus,

“[54]An abuse of process is of concern not merely to the parties but to the court.  It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties chose to play upon it.  The court is concerned to ensure that judicial and court proceedings are appropriately and proportionately used in accordance with the requirements of justice. […]

[69] If the claimant succeeds in this action and is awarded a small amount of damages, it can perhaps be said that he will have achieved vindication for the damage done to his reputation in this country, but both the damage and the vindication will be minimal.  The cost of the exercise will have been out of all proportion to what has been achieved.  The game will not merely have been worth the candle, it will not have been worth the wick. […]

[70] It would be an abuse of process to continue to commit the resources of the English court including substantial Judge and possibly jury time, to an action where so little is now seen to be at stake.”

It is not axiomatic that a very low value claim is necessarily an abuse of process. An individual or company is perfectly entitled to sue for payment of a £50 debt, for example. Rather, the point is this: the procedure for obtaining the damages must be proportionate to the amount in issue.  A tradesman suing for his £50 has access to a streamlined and cheap legal process for so doing.  It would be much harder to say that a claimant was entitled to pursue a de minimis claim by means of a fully fought trial. 

So far as I can see, the argument I have outlined in this article has yet to be put to the test in court, although it is an argument mooted in one of my own cases shortly before the claimant’s claim was stuck out in any event for other reasons.  It is surely only a matter of time though before the point is litigated.     

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