Excalibur & Keswick Groundworks Ltd v McDonald: Court of Appeal rules, that qualified one-way costs shifting protection is still in place for last-minute discontinuance.
On 17 January 2023, the Court of Appeal (COA) handed down judgment in Excalibur & Keswick Groundworks Ltd v McDonald (Excalibur v McDonald) clarifying the approach to be taken by Judges when considering applications to set aside Notices of Discontinuance, strike out personal injury claims and disapply a claimant’s qualified one-way costs shifting (QOCS) protection.
QOCS was introduced in 2013 as part of the Jackson Reforms on Costs and applies to claimants in personal injury claims. It limits a losing claimant’s liability to pay costs, however, it does not prevent a costs order from being made in a defendant’s favour.
QOCS effectively puts a monetary cap on the amount of defendant’s costs which can be enforced by limiting it to the amount of any court order for damages and interest made in favour of the claimant.
In limited exceptions, a costs order, without the monetary cap, can be enforced against a claimant. For example, if the claimant’s conduct was likely to obstruct the just disposal of proceedings, or if the claim was found to be fundamentally dishonest.
Excalibur v McDonald: The Case
The Claimant, working as a groundworker in Newcastle upon Tyne, brought a claim for personal injury against the Defendant following an accident at work.
However, on the morning of the trial, the District Judge raised issues as to the ownership of the ladder and highlighted material inconsistencies in the Claimant’s pleaded case, his witness statement and his medical records. After the District Judge ordered a brief adjournment, the Claimant made the decision to discontinue his claim and Notices of Discontinuance were served that morning.
The Defendant subsequently applied the same day to the Trial Judge to set aside the Notices of Discontinuance and to strike out the claim on the grounds the Claimant had obstructed ‘the just disposal of proceedings, and as a result, was not entitled to QOCS protection.
The District Judge, who was also the trial judge, allowed the application. The Court found in the Defendant’s favour and concluded the Claimant should not be protected from the QOCS exemption.
The Claimant’s Appeal
The Claimant subsequently and successfully appealed the District Judge’s decision to Circuit Judge, HHJ Freedman.
HHJ Freedman set out what he described as “the correct approach” which should have been taken by the District Judge.
The District Judge should have first considered whether the Court should use its discretion to set aside the Notices of Discontinuance. HHJ Freedman explained:
“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.”
HHJ Freedman then set out the alternate position should the District Judge have found the Notices of Discontinuance ought to be set aside, confirming they should have then considered the basis for the application to be dismissed. HHJ Freedman explained to the District Judge
“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.”
Using the approach set out above, HHJ Freedman held the District Judge’s decision was wrong and therefore the Claimant’s appeal should be allowed.
The Defendant’s Appeal to the COA
The COA rejected the Defendant’s appeal and found the Claimant should be entitled to QOCS protection. The COA held:
- The course of conduct taken by the Claimant did “not meet the test of being likely to obstruct the just disposal of the proceedings”.
- Defendant’s appeal sought “to remove the substantive right of the claimant to the protection provided by the broad-based and mechanical provisions of the QOCS scheme”.
Sophie Hughes, Trainee Solicitor: QOCS was introduced in an attempt to correct the financial imbalance between claimants, often a lay person with no legal insurance, and defendants, often entities with the benefit of insurance or large resources. Excalibur v McDonald is an important case on QOCS and confirms the courts will not easily allow applications to set aside Notices of Discontinuance, strike out personal injury claims or disapply QOCS under the Civil Procedure Rules exception to allow enforcement of adverse costs orders. Excalibur v McDonald confirms the scope of the scheme to protect claimants is broad, and costs orders will only be enforced against them in very limited and exceptional circumstances. On a separate note, it will be interesting to see if the QOCS regime expands beyond personal injury in the future.