The rule committee needs to draft a tight definition of qualified one-way costs-shifting (QOCS), rather than grant wide judicial discretion as originally envisaged by Lord Justice Jackson, the Civil Justice Council (CJC) has recommended.
In its newly published advice to the Ministry of Justice (MoJ) on QOCS – which informed the government’s announcement on the issue last week – the CJC said it is “striking” how far the policy on QOCS has moved since Jackson LJ’s final report in December 2009.
He proposed that the basic test for QOCS should broadly follow the well-established formulation used to define costs protection for legally-aided clients. This would means that costs awarded against a claimant “shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including the financial resources of all the parties to the proceedings and their conduct in connection with the dispute to which the proceedings relate”.
Now, however, there is no financial test for QOCS, while the circumstances in which conduct issues should lead to loss of cost protection have been carefully and precisely defined, always with a view to minimising uncertainty and the risk of challenge, the CJC observed.
“The view of the working group [that produced the report] is that the original overall test of reasonableness proposed in the final report is no longer the best vehicle to deliver the final detailed policy on QOCS. It would be strange indeed if the rules stated that the test was what was reasonable, and then defined exactly what was or was not to be treated as reasonable.
“In our view, it would be preferable for the rules to specify directly when a claimant may be liable for costs. Any other approach risks opening the door to a further and unspecified discretion to award costs, the extent of which would inevitably be the subject of satellite litigation.”
Further, it said the two-stage approach as originally envisaged by Sir Rupert – namely special QOCS rules to determine first whether any award of costs should be made against the claimant and secondly to determine how much it is reasonable for the claimant to pay – may not be necessary.
“Instead in the rare circumstances where QOCS protection is lost under the above tests, it is lost entirely and existing costs principles can apply to determine quantification of those costs.”
It is clear that the announcement last week was heavily influenced by the CJC report, such as adopting its recommendation that claims should not lose QOCS protection merely because they have been struck out, but only where the claim discloses no reasonable cause of action or where it is otherwise an abuse of the court’s process.
It also warned against trying to remove QOCS protection from exaggerated claims where there is no proven dishonesty.
The MoJ said it is “considering further” the practicality of QOCS protection not applying to subrogated non-injury elements of a claim, which the CJC report discussed in detail without coming up with a clear solution.
It said: “The fundamental problem… is that drafting a principled test or rule which limits the scope of QOCS is not only a difficult and complex exercise but also that it in so doing there is a real risk of providers (not only of credit hire) immediately changing behaviours and business models in an attempt to bring matters back within the scope of protection.”
The full advice can be found here  (links to PDF).