The Supreme Court this morning handed down judgment in Adelekun v Ho on the key question of whether Defendants can set costs off against costs in a QOCS case. The Court unanimously held for the Claimant that such set offs were limited by QOCS and that the general discretion in CPR 44.12 to allow such set offs was overridden by the specific provisions of CPR 44.14, thereby overturning the contrary Court of Appeal decision in Howe v MIB (no.2) [2017] EWCA Civ 932.
A Defendant’s ability to set off its costs in a QOCS case is therefore limited to a set off against a maximum of the ‘aggregate amount in money terms of any order for damages and interest made in favour of the Claimant’, which operates as a cap on the maximum set off allowed. That cap cannot be extended by adding the costs awarded to the Claimant to that amount.
In light of the Court of Appeal’s decision in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654, which was not disturbed by the Supreme Court, it is likely that in the vast majority of cases there will be no such order for damages and no set off at all will be possible. Even if a set off is possible, it cannot exceed the amount provided for in CPR 44.14, that is to say the amount of damages and interest awarded in an order.
Roger Mallalieu KC acted for the successful Appellant, with Benjamin Williams KC intervening by written submissions for APIL. Nicholas Bacon KC, with Andrew Roy, acted for the Respondent.
