QOCS: further judgment says no protection for defendant as to costs of a counterclaim
Waring v McDonnell
Brighton County Court
25 September 2018
David Brown and Steven Dawson consider the decision in Waring v McDonnell (2018) as another county court decision on the effect of QOCS on counterclaims following swiftly on the heels of the earlier county court judgment in Ketchion v McEwan (2018).
In a further decision concerning the application of Qualified One Way Costs Shifting (QOCS) to defendants bringing personal injury counterclaims, Her Honour Judge Venn, sitting in the Brighton County Court has held that protection does not extend to shield an unsuccessful defendant from a liability for the claimant's costs, saying:
"He only has the protection of the QOCS regime in respect of his claim for damages for personal injury and does not benefit from it in the claimant’s claim for damages for personal injury".
In our earlier post concerning the Ketchion case, we reported upon the decision of HHJ Freedman who, in refusing the claimant permission to appeal, found that an unsuccessful counterclaiming defendant should have QOCS protection, both in respect of the counterclaim brought to recover personal injury damages, but also in connection with the defence of the successful claimant's (non-personal injury) claim.
HHJ Freedman in Ketchion had concluded: "the proper interpretation of CPR 44.13 is that the reference to proceedings is to both the claim and the counterclaim; and that since it is expressly stated that a Claimant includes a person who brings a counterclaim/additional claim, it follows that the Defendant/Part 20 Claimant has the protection of QOCS. For the reasons advanced by Mr Lyons, I reject the submission that to interpret the provisions in this way will encourage spurious or hopeless claims for damages for personal Injuries".
We expressed the view that the decision, whilst considered by HHJ Freedman to be a "logical" application of CPR Part 44.13 to counterclaims, ran contrary to the clear legislative purpose of the QOCS regime and was unlikely to find favour if tested at a higher judicial level.
It is therefore of interest that a further decision has now emerged from the Brighton County Court (a first-instance decision from another circuit judge, and once again not binding) in which the court refused to follow the earlier decision in Ketchion and expressly disagreed with the conclusions reached by HHJ Freedman.
Two road cyclists were involved in a head-on collision as a result of which each brought a claim for personal injury damages, the first to sue as claimant, and the other in the same action as a counterclaim. Judgment was entered for the claimant and the defendant's counter-claim was dismissed. The defendant attempted to rely on QOCS to avoid a liability not only for the costs of bringing his unsuccessful claim, but for the costs incurred by the successful claimant.
The application of QOCS in the "proceedings"
The defendant predictably sought to rely upon the same line of argument accepted by HHJ Freedman in Ketchion: a wide interpretation ought to be given to the word "proceedings" when determining the limits of QOCS protection. Accordingly, because proceedings in the present claim included a counterclaim seeking damages for personal injury the defendant should have the benefit of QOCS protection in respect of his unsuccessful counterclaim and his unsuccessful defence of the claimant’s claim.
The claimant accepted that the defendant should have the benefit of QOCS protection against adverse costs arising out of his unsuccessful counter claim; but argued that the rules simply did not extend to providing the defendant with protection in that capacity against the costs incurred by the successful claimant, which should be paid in the usual way.
Appeal decisions in Wagenaar v Weekend Travel Ltd (2014) and Cartwright v Venduct Engineering Ltd (2018) HHJ Venn drew out the purpose of the QOCS scheme. In particular, she highlighted the leading judgment of Vos LJ in Wagenaar (the same passages appearing in our earlier commentary upon the Ketchion decision).
Echoing the remarks made by Vos LJ at paragraph 37 of the Court of Appeal's Judgment, HHJ Venn found:
"The underlying purpose of the QOCS regime is, as set out above, to protect those who suffer injuries from the risk of adverse costs orders obtained by insured, self-insured or well-funded defendants. The purpose is not to protect those who are liable to pay damages to an injured party from the risk of adverse costs orders made against them in their capacity as defendant or paying party".
Turning to HHJ Freedman's interpretation of the term, "proceedings", HHJ Venn expressly disagreed with the conclusions reached by him, saying:
"HHJ Freedman went on to hold that the proper interpretation of CPR 44.13 is that the reference to proceedings is to both the claim and the counterclaim; and that since it is expressly stated that a Claimant includes a person who brings a counterclaim/additional claim, it follows that the Defendant/Part 20 Claimant has the protection of QOCS . I do not agree with that conclusion. The word “proceedings” in CPR 44.13 means the claim or the counterclaim; it does not mean the entire action, including the claim, the counterclaim and all the parties. HHJ Freedman’s analysis is not consistent with the decision in Wagenaar."
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