Counter-claims: ‘Waring’ over QOCS

19 Nov 2018

Following hot on the heels of the decision of Ketchion the issue of defendant's counterclaims benefiting from qualified one-way costs shifting (QOCS) protection has again come before the courts this month in Waring v McDonnell , a decision of her Honour Judge Venn in the Brighton County Court.

Background

The facts of the claim briefly were that the claimant and defendant were both cyclists travelling in opposite directions in Sussex when they collided head-on, both suffered personal injury and both pursued claims for damages, Mr McDonnell by way of his counterclaim. At trial Her Honour Judge Venn gave judgment for the claimant and dismissed the counterclaim. There was no finding that the counterclaim had no real prospect of success, it was not summarily judged or struck out. At the conclusion of the trial the defendant asserted that he was protected fully protected against the claimant’s costs by operation of QOCS.

Her Honour Judge Venn considered the relevant Civil Procedure Rules along with the recent decision of Ketchion v McEwan [2018] in which Deputy District Judge Thorne refused the claimant permission to enforce a costs order against the defendant on the basis that QOCS applied in respect of the counterclaim. In giving her judgment, Her Honour Judge Venn also considered the cases of Wagenaar v Weekend Travel Ltd [2014], Plevin v Paragon Personal Finance Ltd and another (No 2) [2017], Howe v Motor Insurers’ Bureau [2017] and Cartwright v Venduct Engineering Ltd [2018].

HHJ Venn discussed the debates in Wagenaar andCartwright over the construction of the word “proceedings” in the context of Civil Procedural Rules 44.13 and CPR 20.2(2). The relevant passages of 44.13, which is headed “Qualified one-way costs shifting: scope and interpretation” are set out below.

  1. This Section applies to proceedings which include a claim for damages - (a) for personal injuries…
     
  2. In this Section, ‘claimant’ means a person bringing a claim to which this Section applies or an estate on behalf of which such a claim is brought, and includes a person making a counterclaim or an additional claim.

HHJ Venn concluded "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” ".

This analysis is consistent with the judgment in Howe in which it was held the word “proceedings" can have a narrower meaning and which was supported by Lord Sumption in Plevin. HHJ Venn went on to state that the underlying purpose of the QOCS regime is to protect those who suffer injuries from the risk of adverse costs orders. 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.

The judge rejected the submission that the effect of the Cartwright decision is that the word “proceedings” must be construed more widely so as to grant a defendant QOCS protection. HHJ Venn made clear that Ketchion is not a binding decision upon her and rejected His Honour Judge Freedman's conclusions. She concluded in this case that Mr McDonnell was an unsuccessful defendant in the main claim brought by Mr Waring and an unsuccessful claimant in his own counterclaim for damages. Accordingly, he would only have the protection of QOCS in respect of the costs of his counterclaim for personal injury and not in relation to the costs of Mr Waring’s claim for damages.

What this means for you

While this is another first instance decision it nevertheless brings some clarity to the point. The reality is that defendants are not and should not be able tactically to ‘cloak’ themselves with QOCS protection merely by raising a counterclaim.

Although the interplay between QOCS and counterclaims is probably most likely to be encountered in road traffic claims, given than the likelihood of both parties being injured is far greater than in EL or PL settings, Waring is a well-reasoned judgment on the general point and one which should tidy up what was in danger of becoming a satellite area of dispute. While the matter still needs to appear before the Court of Appeal to provide binding authority, the useful guidance in this case should serve to quell any unrest around defendants seeking QOCS protection intended to protect claimants.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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