An abuse of QOCS

Qualified one-way costs shifting (QOCS) has provided protection for claimants fighting David versus Goliath battles against well-heeled defendants. However, any claimants who intend to bend the rules to gain tactical advantage should think again.

As is well known, QOCS was introduced on 1 April 2013 for personal injury claims. The effect of QOCS is that defendants will generally be ordered to pay the costs of successful claimants but, subject to certain exceptions, will not recover their own costs if the claim is successfully defended.

As with any new regime, there remain areas of uncertainty. Both claimants and defendants are now exploring the limits of the QOCS rules, leaving district judges to deal with varied and novel attempts by parties to deploy the provisions to their advantage.

One such attempt was Brian Kite v The Phoenix Pub Group. The claimant issued proceedings for injuries suffered from a fall in the car park of a pub that was, when proceedings were issued, owned by the defendant company. The defendant’s position was that a different company owned the pub at the time of the accident, so they were not responsible for any injuries suffered. The claimant served proceedings at the pub’s address, and, after receiving no reply, entered default judgment.

Default judgment

The claimant then made an application to set aside default judgment, pursuant to Civil Procedure Rule (CPR) 13.2 and an application to strike out the claim under CPR 3.4, as there were no reasonable grounds for bringing the claim. At the hearing of the applications, the judge set aside default judgment under CPR 13.2 as service was defective.

Further, the hearing of the strike out application was adjourned to allow the claimant time to prepare for it. Finally, the judge made an order that the claimant should pay the defendant’s costs of the hearing. 

The claimant’s solicitors then wrote to the defendant’s solicitors and reminded them that, as the case was a QOCS case, the costs order awarded could not be enforced. The defendant’s solicitors replied, arguing that as the case would clearly be struck out at the adjourned hearing, CPR 44.15 was engaged. CPR 44.15 provides that the effects of QOCS are disapplied if a case is struck out, as the claimant has disclosed no reasonable grounds for bringing the proceedings.

The defendant argued, as a result, that they could enforce their costs order and would be able to enforce any further costs orders.

The claimant’s response to this was to serve notice of discontinuance on the defendant. The intended effect was to prevent the defendant bringing the case within the CPR 44.15 exception to QOCS as the case would not have been struck out. The effect of such a tactic would, in their view, be that the claimant would retain the benefit of QOCS and, consequently, all costs orders made against them would be unenforceable.

Opportunistic behaviour

The defendant applied to the court for an order, setting aside the claimant’s notice of discontinuance. This application was considered at the adjourned strike out hearing. The defendant argued the courts should not tolerate or condone the claimant’s opportunistic behaviour, which, in their submission, amounted to an abuse of the QOCS provisions.

The district judge decided he had the discretion to set aside the notice of discontinuance in accordance with the courts’ general case management powers, and was guided in the exercise of his discretion by the overriding objective. The judge noted it would not be in the interests of justice to allow the claimant to benefit from their opportunistic conduct. Claimants could not be encouraged to pursue poor claims, suffer costs orders, and then avoid them by discontinuing once it became clear that the case would be struck out.

Consequently, the notice of discontinuance was set aside. The judge proceeded to consider the strike out application, and duly struck out the claimant’s case. The defendant was awarded costs, both of the application to set aside the notice of discontinuance and of the strike out application.

As a result of the strike out, and pursuant to the exception at CPR 44.15, QOCS was disapplied and the defendant was entitled to enforce both of the costs orders, as well as the favourable costs order from the previous hearing.

Although as a judgment of the county court the case does not provide binding authority, it is an indicator of the attitude that will be taken by district judges. Claimant solicitors should note that claimants will likely not retain the protection of QOCS if claims that have no merit are discontinued. More broadly, it can be expected that judges will take a dim view of attempts to abuse the QOCS regime for tactical advantage, and will not hesitate to utilise their case management powers to restrict such behaviour. SJ

Theo Barclay is a barrister practising from Hailsham Chambers @Hailsham_Chamb