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06 February 2023

Discontinuing Claimant still has QOCs protection

Discontinuing Claimant still has QOCs protection

Written by Peter Causton 

A recent case has clarified the law on Qualified One Way costs shifting and found that a
Claimant who discontinued at the last minute was still entitled to QOCs protection, as
dishonesty was not alleged. This will give some comfort to claimants who sometimes
foundthat they cannot discontinue a personal injury claim without being penalised by being
ordered to pay thousands of pounds to the Defendant insurers.
This was the Court of Appeal decision in Excalibur & Keswick Groundworks Ltd v
McDonald [2023] EWCA Civ 18 (17 January 2023). In this case the claimant was
employed by the first defendant ("the defendant") as a groundworker. The second
defendant was the main contractor who had engaged the defendant to provide a new
drainage system to the wall of the house. It was the claimant's case that he was
climbing up a ladder during the course of his employment when it slipped beneath
him causing him to fall and suffer injury.
The trial was listed for a remote hearing. On the morning of the trial the District
Judge raised issues as to the ownership of the ladder, and the inconsistency in the
claimant's account as between his pleaded case, his witness statement and the
entries in the medical records. The District Judge asked the claimant's counsel if the
claimant wished to consider his position. The matter was adjourned for 30 minutes
and the claimant made the decision to discontinue. As a result, Notices of
Discontinuance were served on both defendants that morning. Following service,
counsel for the defendants applied to set aside the Notices of Discontinuance (CPR
38.4) and to strike out the claim on the grounds that the claimant's conduct had
obstructed "the just disposal of the proceedings", and as a result he was not entitled
to the protection of qualified one-way costs shifting ("QOCS").
The judge held that QOCs protection should not apply. “She noted that the claimant
had dropped his claim at the "eleventh hour and fifty ninth minute … the inevitable
outcome of which would be to increase Costs and take up additional Court time and
resources by virtue of additional listings and hearing, using time of both Court staff
and the judiciary, in addition to the incurring of today's costs and use of court
resources." The District Judge stated that: "I do not consider that his conduct in that
context can be otherwise than to obstruct the just disposal of the proceedings. The
matter has been drawn out and I am satisfied costs have incurred needlessly. I am
entirely satisfied that had his case been pleaded in accordance with the facts known
only to the Claimant, as clarified this morning by Counsel on his behalf, the inevitable
consequences would have included, from a significantly earlier time, the prospects of
either being struck out on application for summary judgment or, indeed, of the court's
own motion."
At [10] the District Judge concluded that the claimant, having at first put forward a
conflicting account and at a very late stage clarified the position, should not be
protected from QOCS exemption. She was satisfied that it was: "… progressive of
the overriding objective, including but not limited to dealing with matters
proportionately having regard to the amounts involved, and use of court resources,

…. that it is just and convenient that the court exercise its discretion to set aside the
notice of discontinuance with the consequence of disallowing the Claimant protection
from costs that would otherwise avail …."
The Claimant appealed and the judge on appeal found as follows:
At [61] the Judge observed that the court has a wide and unfettered discretion to set
aside a Notice of Discontinuance but "…since a Claimant can discontinue as of right
(subject to the exceptions laid down in CPR 38.2(2)) and the permission of the Court
is not required, there would, as it seems to me, need to be powerful and cogent
reasons why a notice of discontinuance should be set aside. Even in the absence of
any authority, for my part, I would conclude that the mere fact that, if the Notice of
Discontinuance was not set aside, a Claimant would be entitled to QOCS protection,
without more, would not justify setting aside a Notice of Discontinuance."
The Judge considered the authorities of Shaw v Medtronic & Others  [2017] EWHC
1397 and Mabb v English [2018] 1 Costs LR 1, decisions respectively of Lavender J
and May J. The Judge at [32] recognised that in Shaw the principal reason for
serving the Notice of Discontinuance was to maintain QOCS protection but noted
that Lavender J did not consider that to be a legitimate basis for setting aside the
Notice of Discontinuance. He stated that Lavender J concluded that "…absent abuse
of process or something similar, such as egregious conduct, a Court would not be
justified in setting aside a Notice of Discontinuance." The Judge agreed with the
reasoning of Lavender J and further stated at [65] that "… if serving a Notice of
Discontinuance is perfectly legitimate in these circumstances and within the Rules,
then there can be no proper basis for setting aside the Notice of Discontinuance
unless, as Lavender J observes, there was an abuse of process or something akin to
that." He also agreed with the observations of May J to the effect that there was no
inherent unfairness in a claimant taking advantage of the result that the Rules permit
and that there would need to be some extreme form of conduct on the part of a
claimant before a Notice of Discontinuance should be set aside.
At [72] the Judge identified what he described as the "correct approach" which
should have been taken by the District Judge namely:
"…consider first whether, in its discretion, the Court should set aside the Notices of
Discontinuance. With the benefit of the authorities, the District Judge would, I
venture to think, have concluded that the mere fact that the Appellant was seeking to
retain QOCS protection was not a reason to set aside the Notices of Discontinuance.
Further, she would have been persuaded that there was nothing about the conduct
of the Appellant which was so out of the ordinary as to warrant the unusual, if not
exceptional, course of setting aside the Notices of Discontinuance. Had she reached
that conclusion, then there would have been no legitimate basis for her to go on to
consider the exceptions to QOCS."
The Judge made the further observations at [73]:
"If, however, contrary to the above, the District Judge had decided that the Notices of
Discontinuance ought to be set aside, she then ought to have considered the basis
for the application for the claim to be dismissed. She could legitimately have entered

Judgment on the grounds that the Claimant had no real prospect of succeeding on
the claim. If summary Judgment had been entered in favour of the Defendants, then
the exceptions to QOCS could not have been invoked. What she was not entitled to
do, for the reasons set out above, was to strike out the Statement of Case on the
basis that the Statement of Case was likely to obstruct the just disposal of the
proceedings. I should make it clear that, in my view, the Statement of Case was no
more likely to obstruct the just disposal of the proceedings as [sic] the conduct of the
Appellant himself."
The Court of Appeal Decision
The Court of Appeal found that the QOCs regime is essentially a mechanical
process:
“The rationale behind the introduction of QOCS is that it provides a broad scheme of
protection for claimants preventing enforcement of costs orders made against them
in failed personal injury claims. A common outcome of the QOCS scheme is that a
defendant who succeeds will not recover its costs from a losing claimant despite a
costs order in its favour. The scope of the scheme is broad. All personal injury
claimants qualify, their means are irrelevant. As was stated in Adelekun (para 33) the
QOCs regime is essentially mechanical rather than discretionary so that the phrase
in CPR 44.14(1) "without the permission of the court" did not preserve a general
discretionary power to permit a defendant's costs enforcement beyond that expressly
provided for by the permission process in CPR 44.16. That process was
necessitated only by the need for the court to see whether the qualifying facts
existed, such as fundamental dishonesty.”
In relation to notices to discontinue, the Court of Appeal found that the right to
discontinue should only be set aside where there was an abuse or egregious
conduct by the Claimant:
”Given the breadth of the discretion accorded to the court to set aside a Notice of
Discontinuance, coupled with the fact that a claimant can discontinue as of right
subject to limited exceptions, in my view the Judge was right to state that there need
to be powerful reasons why a Notice of Discontinuance should be set aside. Further,
I agree with the reasoning of Lavender J in Shaw and May J in Mabb that evidence
of abuse of the court's process or egregious conduct of a similar nature is required
on an application which has the effect of depriving a claimant of his right to
discontinue.
I do not accept the defendant's contention that a court is required to approach CPR
38.4 differently in a personal injury claim to which QOCS applies. If that were so, it
would in my view defeat the purpose of the QOCS regime which is an attempt to
correct the financial imbalance as between claimants and defendants in personal
injury claims.
It is of note that the defendant has not alleged that the claimant was or might be
fundamentally dishonest. The defendant's purpose in seeking to set aside the Notice
of Discontinuance was in order to facilitate an application to strike out the claim and
thereafter seek an order for costs in favour of the defendant.”

The mere decision to discontinue based upon an analysis and evaluation the legal
case was not sufficient to amount to an abuse. The Court of Appeal said:
“What the claimant did, following an intervention by the District Judge (para 7
above), and in all likelihood having received legal advice, was to recognise
inconsistencies as between his witness statement and the pleaded case, weigh up
his prospect of success and having done so, made the decision to discontinue. It is a
course of conduct taken by many litigants and in my judgment does not begin to
provide the powerful reasons upon which a Notice of Discontinuance could or should
be set aside.”
The Court of Appeal then went on to consider whether the claim should have been
struck out so as to remove QOCs protection and found that it should not:
The Court of Appeal said:
“I accept the contention made on behalf of the claimant that the wording of CPR
3.4(2)(b) creates a high bar for a strike-out with its focus on abuse of process or a
Statement of Case which is "otherwise likely to obstruct the just disposal of the
proceedings". In addressing the issue of whether the claimant was guilty of conduct
which is likely to obstruct the just disposal of the proceedings the Judge, relying
upon the authority of Arrow Nominees, at [56] posed the relevant questions as
follows: "whether the appellant's conduct in this case rendered the just of fair trial
impossible or whether his conduct corrupted the trial process so that a just result
could not be achieved". At [59] he stated that what the Rules envisage is conduct
"which jeopardises the fairness of the trial process".
I accept the contention made on behalf of the defendant that the approach of the
court to this issue, as identified by the Court of Appeal in Arrow Nominees, was not
whether the litigant's conduct rendered a just or fair trial impossible. Reflecting the
approach of the court in Arrow Nominees, in particular as stated at [54], I would
formulate the question thus: is the litigant's conduct of such a nature and degree as
to corrupt the trial process so as to put the fairness of the trial in jeopardy? In my
judgment, the claimant's conduct did not begin to meet the degree of seriousness
which is envisaged in this formulation.
What this claimant did was to give a different account in his witness statement from
that which was contained in the Statement of Case. It was a material inconsistency
and one which had the potential to undermine not only his credibility but also the
viability of his claim. What it did not do was to demonstrate a determination by the
claimant to pursue proceedings with the object of preventing a fair trial. If this
claimant's conduct is to be regarded as obstructing the just disposal of the
proceedings, the same could be said of the conduct of many litigants who present
claims for personal injuries.
It follows, and I so find, that the claimant's conduct did not meet the test of being
likely to obstruct the just disposal of the proceedings. It is regrettable that
consideration of his differing accounts had not taken place at an earlier stage but the
defendant was in possession both of the claimant's witness statement and the
Statement of Case and could have applied for summary judgment. Of course, had

summary judgment been obtained pursuant to CPR 24, the claimant would
be entitled to QOCS protection.”
The Defendant’s appeal was therefore dismissed. This decision is a major victory for
Claimants and access to justice. The Court of Appeal has reinforced a Claimant’s
right to bring a claim for personal injury with costs protection. The Court has
redressed the balance and emphasised that a Claimant should be able to
discontinue a claim without losing costs protection. What remains unclear is whether
the Court would adopt the same approach if fundamental dishonesty is actually
raised in the Defence.

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