Ho v Adelekun

Factual and Procedural Background

The Appellant sustained injuries in a road-traffic collision on 26 June 2012 and sued the Respondent for damages. Liability was disputed, the claim exited the pre-action protocol, and formal proceedings commenced on 7 January 2015. In April 2017 the Respondent made a Part 36 offer of £30,000 plus “costs to be assessed if not agreed.” The offer was accepted and embodied in a Tomlin order.

A dispute then arose over the basis of costs assessment. The Respondent argued for fixed recoverable costs under CPR Pt 45; the Appellant contended for standard-basis assessment. A Deputy District Judge accepted the Respondent’s position; a Circuit Judge reversed that decision; the Court of Appeal reinstated the Deputy District Judge’s ruling and awarded the Respondent her costs of that “assessment dispute”, totalling about £48,600.

Because settlement occurred without a court order for damages, the Qualified One-Way Costs Shifting (QOCS) regime applied and—following Cartwright v Venduct Engineering Ltd—there was “no headroom” of damages against which the Respondent could enforce her costs order. The Respondent therefore asked the Court of Appeal to set off her £48,600 costs against the £16,700 fixed costs she owed the Appellant. The Court of Appeal, considering itself bound by Howe v Motor Insurers Bureau, held that such set-off was permissible and ordered it. The Appellant obtained permission to appeal to the Supreme Court on the single issue of whether that set-off is compatible with QOCS.

Legal Issues Presented

1. Whether, under CPR r 44.14 (the QOCS rule), a defendant may set off costs it has been awarded against costs it owes to a claimant, where no court order for damages exists.
2. Specifically, whether set-off constitutes “enforcement” within the meaning of CPR r 44.14, thereby triggering the monetary cap that limits enforcement to the amount of damages and interest ordered in favour of the claimant.

Arguments of the Parties

Appellant’s Arguments

• QOCS forms a self-contained code governing what defendants can do with costs orders; silence in r 44.14 about costs-versus-costs set-off indicates it is barred.
• Allowing set-off would undermine access to justice by depriving claimants’ solicitors of the fund needed to satisfy Conditional Fee Agreements, contrary to the policy aim of QOCS.
• Set-off is a species of “enforcement”; therefore it is prohibited beyond the statutory cap unless an express QOCS exception applies.

Respondent’s Arguments

• The jurisdiction to order set-off (CPR r 44.12; s 51 Senior Courts Act 1981) is longstanding and can be displaced only by clear words, which QOCS lacks.
• Historical case law, particularly under the Legal Aid regime, treated costs-versus-costs set-off as routine and not as “enforcement.”
• Only the net costs liability (after set-off) should be tested against the QOCS cap; otherwise claimants would have no incentive to avoid unmeritorious interlocutory applications.

Table of Precedents Cited

Court's Reasoning and Analysis

The Supreme Court (per Judge Briggs and Judge Rose) treated the question as “pure construction” of CPR r 44.14, setting policy considerations aside for the Civil Procedure Rule Committee.

• Mechanical nature of QOCS: Rule 44.14 imposes a cap; it does not create a general discretion. “Without permission” refers only to specified exceptions in rr 44.15–44.16.
• Two monetary comparators: The rule requires comparing (A) the aggregate of all costs orders in favour of the defendant with (B) the aggregate of any orders for damages and interest in favour of the claimant. Costs orders in favour of the claimant are not part of this calculation.
• Set-off equals enforcement: The defendant necessarily “enforces” a costs order when it appropriates the claimant’s damages by set-off; by analogy, setting off costs against costs is likewise enforcement because it yields a measurable monetary benefit.
• Interpretation of “enforced” in context: Sub-rule 44.14(3) prevents the unenforced part of a costs order from appearing as an unsatisfied judgment, evidencing a broad conception of enforcement that embraces set-off.
• Rule 44.12 not excluded, but limited: The general set-off power survives; however, any use of it counts toward the cap. Where, as here, there is no damages order (headroom = 0), any enforcement—including set-off—is prohibited.
• Rejection of “netting” approach: The wording “aggregate amount in money terms” requires gross, not net, costs in favour of the defendant to be compared with damages and interest.
• Implications for existing authority: Because set-off is enforcement, the Court of Appeal’s reasoning in Howe was incorrect and is overruled.

Holding and Implications

HELD: The appeal is allowed. Set-off of the Respondent’s costs against the Appellant’s costs constitutes “enforcement” within CPR r 44.14; because no court order awarded damages to the Appellant, the monetary cap is zero and the Respondent cannot set off her £48,600 costs against the £16,700 costs owed to the Appellant.

Direct consequence: the Respondent must pay the Appellant £16,700 fixed recoverable costs (in addition to the agreed damages and interest) and can recover nothing on her own costs order. Broader implications: the decision resolves conflicting Court of Appeal authority, clarifies that costs-versus-costs set-off is constrained by QOCS, and signals that any policy adjustments now rest with the Civil Procedure Rule Committee.