Defendant who brings unsuccessful counterclaim does not have QOCS protection in respect of the costs of the Claimant’s successful claim

Kings Chambers’ Specialist Costs Counsel, Kevin Latham, has secured an enforceable order for a claimant’s costs despite the defendant/counterclaimant contending that he had the benefit of Qualified One-Way Costs Shifting (“QOCS”) protection in respect of the whole of the proceedings arising out of a collision between two cyclists. The decision of Her Honour Judge Venn in Waring v McDonnell expressly disagrees with the earlier judgment of His Honour Judge Freedman in Ketchion v McEwan (28/6/18) dealing with precisely the same issue and raises an important point of principle and practice.

In Waring, the claimant brought a claim against the defendant in respect of personal injury and consequential loss following a head on collision between himself and fellow cyclist, the defendant. The defendant filed a defence and counterclaim in which he denied liability and brought his own personal injury claim. The matter proceeded to trial whereupon judgment was entered for the claimant with the counterclaim being dismissed.

Relying upon the judgment of HHJ Freedman in Ketchion, the defendant contended that he had the benefit of QOCS protection pursuant to CPR r.44.13 as he was a claimant in the proceedings.

In a reserved judgment handed down on 6 November 2018, HHJ Venn concluded that the claimant should be entitled to enforce an order for costs in respect of his successful claim. Drawing on the Court of Appeal’s recent decisions in Wagenaar v Weekend Travel Ltd (T/A Ski Weekend) & Serradj [2014] EWCA Civ 1105 and Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654, the Judge determined that the word “proceedings” in CPR r.44.13 should be interpreted in a manner consistent with the underlying purpose of the QOCS regime. Having concluded that the defendant’s counterclaim was an ‘additional claim’ in its own right pursuant to CPR r.20.2(2), she concluded that: –

“The defendant is not, in the claim in which he is the defendant, protected by the QOCS regime; in his capacity as defendant, he is not making a claim for damages for personal injury. In the context of CPR 44.13 and its application to this claim, the word “proceedings” is synonymous with “a claim”.

In particular, the Judge noted the unjust consequences if the defendant was to benefit from QOCS protection in respect of the costs of the entire court proceedings, namely: –

1. Insurers of defendants to claims for personal injury arising out of road traffic collisions would be incentivised to encourage counterclaims for damages for personal injury;
2. Claimants making claims for damages for personal injury arising out of road traffic collisions would be significantly worse off than any other claimants making a claim for damages for personal injury in which counterclaims were less likely to arise;
3. Access to justice would be reduced as it would be surprising if any solicitor continued to act once a counterclaim was intimated given that they would be unlikely to ever recover any costs (unless the client was privately paying);
4. The Part 36 regime would have no teeth (save for any additional amount);
5. Liability insurers would not only avoid having to pay ATE premiums and success fees under CFAs, they would, in many cases, avoid having to pay any costs to a successful claimant at all.

For all of those reasons, HHJ Venn concluded that the defendant did not enjoy QOCS protection in respect of his unsuccessful defence of the claimant’s claim, but that he did enjoy QOCS protection in respect of his unsuccessful counterclaim, costs being identified as a cost of the claim or the counterclaim by reference to the long-standing principles set out in Medway Oil and Storage Company Limited v Continental Contractors Limited & Others [1929] A.C. 88.

Whilst the defendant did not apply for permission to appeal in Waring, this is an important decision on the applicability of the QOCS regime which seems destined to be determined at a higher, authoritative level in the near future, given the existence of two entirely contradictory non-binding decisions.

Please click here to read the decision made by HHJ Venn in Waring v McDonnell in full.  

Kevin Latham was instructed by Aidan Jones of Alyson France & Co Solicitors.