Ho v Adelekun [2021] UKSC 43 (06 October 2021)
Citation:Ho v Adelekun [2021] UKSC 43 (06 October 2021).
Subjects invoked: 12. 'Procedure'.26. 'Road traffic accident'.
Rule of thumb:What is one-way costs shifting in personal injury? How does it work in practice?This case invoked the subject of procedure, particularly in personal injury actions. This case invoked 2 principles – ‘one way costs shifting’ and ‘non-set off’. The Court firstly held that the principle of ‘one-way costs shifting’ means that a person who sustains a personal injury cannot be billed more in legal expenses than the value of their damages, so you cannot sustain a personal injury wrongfully caused by the negligence of the other party and walk out of the Court owing a debt to the other party in legal fees.Secondly, the Court further held that under the ‘non-set off’ principle, if one party negligently causes another party damages then these damages must be paid, and the expenses owed from the action cannot be deducted from the damages bill. Expenses owed must be pursued via debt collection processes in the ordinary manner in the first place without set-off being done initially.
Background facts:
This case invoked the subject of procedure, particularly in personal injury actions.
The material facts of this case were Ho caused injuries to Adelekun in a road traffic accident. Ho admitted liability and made an offer of £30k in damages to Adelekun, and Adelekun accepted this offer. However, they then had a lengthy debate on what ‘scale’ the expenses of the action should be calculated on, with Ho arguing for ‘fast track’ expenses, and Adelekun arguing for ordinary expenses. Adelekun and Ho therefore calculated very different figures for the legal expenses bill. After a lot of Court debates and appeals Adelekun eventually lost the expenses debate. This meant Adelekun actually ended up owing Ho a legal bill of more than £50k in expenses, which effectively meant that Adelekun’s full damages were wiped out and she possibly owed Ho £20k instead. This led to 2 points of law being raised. 1) Should Adelekun have to pay the full legal expenses of £50k to Ho? 2) Does Ho not have to pay Adelekun any damages at all because these are wiped out by the expenses Adelekun owes?
Judgment:
The Court held that due to the ‘one-way’ costs shifting principle the most legal expenses Adelekun could have to pay Ho were £30k. Due to this principle, someone cannot sustain an injury due to someone else’s negligence, and then end up owing money to the other person due to Court costs. If someone is injured due to the negligence of someone else, the worst that will happen to them is that they walk away from Court with nothing, but they will not walk away from Court in debt with £20k legal expenses. This does mean that people who have sustained personal injuries may end up essentially having a free bet arguing some points of law over it.
In terms of the second point the Court affirmed that the non-set off principle applied. The Court stated therefore that Ho had to pay the £30k to Adelekun. After this Ho could then send Adelekun the £30k expenses bill. It may eventually be that they could be set off against each other, but this could not be done in the first place. Adelekun had to get sent her cheque for £30,000, and then expenses would be taken further from there. In short, for both of these points, the Court affirmed that the personal injury procedural rules do fall more in favour of people who have sustained injuries due to the negligence of someone else, and could lead to some ‘anomalous results’ in some exceptional circumstances, but these nonetheless are how the rules must be interpreted, and they still provide the best compromise that those involved in the process have been able to come up with.
Ratio-decidendi:
Ratio-Decidendi at 15 & 38-45, Lord Briggs ‘15… Ms Ho accepts that she must pay the damages and interest to Ms Adelekun. But she contends that… they should be set off and absorbed by the £48,600 costs that Ms Adelekun owes her… 38. … We will call them A and B. If A is less than or equal to B, the defendant can enforce his costs orders without limit. If A is more than B, then the defendant can only enforce his costs orders up to the monetary limit of B. The effect of this cap, as we have called it, is to require the defendant to keep a running account in money terms of all costs recoveries which it makes against the claimant, and to cease enforcement when limit B is reached. 39. The question …:does the defendant have to bring into account the benefit in money terms of the set-off of a costs order in his favour; … For example, assume that the claimant is ordered an award of £20,000 in damages and interest, but that the defendant has costs orders for an aggregate amount of £30,000. If the defendant has not yet paid the damages, it can set off its damages liability against the claimant’s costs liability, but only up to £20,000…. 43. …. we do not consider that the well-established jurisdiction to direct set-off of costs against costs under rule 44.12 is displaced by the QOCS scheme, provided that there is an order for damages or interest and that the headroom provided by that order has not been exhausted by other means of enforcement…. 44. We recognise that this conclusion may lead to results that at first blush look counterintuitive and unfair. Why should a defendant which has a substantial costs order in his favour have to pay out costs to a claimant under an order made against him when the two costs orders would net off against each other, leaving both sides to meet their own solicitor’s costs themselves? … we hold that it is the result that follows from the true construction of the wording used in Part 44. Any apparent unfairness in an individual case such as this dispute between Ms Ho and Ms Adelekun is part and parcel of the overall QOCS scheme devised to protect claimants against liability for costs and to lift from defendants’ insurers the burden of paying success fees and ATE premiums in the many cases in which a claimant succeeds in her claim without incurring any cost liability towards the defendant. 45. We also recognise that this construction of rule 44.14 may lead to results that appear anomalous…. No one has claimed that the QOCS scheme is perfect. It is, however, the best solution so far that the opposing sides in the ongoing debate between claimant solicitors and defendant insurers have been able to devise’.
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.