Shaw v Medtronic & Others  EWHC 1397(QB)
A case which shows the difficulty in overcoming QOCS when a claim is discontinued
QOCS has been in place now for four years, however it remains one of the most misunderstood principles in modern legal costs.
CPR 44.13(1) provides the scope of QOCS:
‘(1) This Section applies to proceedings which include a claim for damages –
(a) for personal injuries;
(b) under the Fatal Accidents Act 1976; or
(c) which arises out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934’
The general rule regarding the application of QOCS is found at CPR 44.14(1):
‘(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.’
Shaw v Medtronic & Others provides examples of when Orders for costs are limited to the damages in accordance with CPR 44.14(1) and when the Order for costs is not limited to damages recovered by the Claimant.
The Exception to QOCS under CPR 44.15
The Claim itself was pursued against five Defendants but all of the claims were unsuccessful (pending any Appeal). The Claims against the Second and Fourth Defendant were struck out as a result of the Claimant having no reasonable grounds for bringing the proceedings. In respect of these Defendants, we have an example of when costs can be recovered by the Defendant, in excess of the Claimant’s award for damages.
CPR 44.15 establishes that:
‘Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –
(a) the claimant has disclosed no reasonable grounds for bringing the proceedings’
So the Second and Fourth Defendants were in a position to enforce their order for costs without the permission of the Court, contrary to the general rule in CPR 44.14(1).
The First and Third Defendants are in a similar but slightly different position. Even though Justice Lavender makes it clear that the Claimant disclosed no grounds for bringing the proceedings against these Defendants, the claims against them were not struck out. As the claims were served on these Defendants outside of the jurisdiction, the appropriate procedure was for service to be set aside against these Defendants. With the claims against the First and Third Defendants not having been struck out, CPR 44.15 does not apply. It is interesting to note that Justice Lavender invites the Rules Committee to reconsider the scope of CPR 44.15 to encompass this situation, but nevertheless felt bound to follow the literal interpretation of the rule as written.
The claim against the Fifth Defendant is perhaps the most interesting. An Application had been made on the part of the First, Third and Fourth Defendants, which resulted in the setting aside of each claim. The Claims against the Second and Fifth Defendant were based on similar grounds. Seeing that the Court was likely to take a similar approach to the claim against the Fifth Defendant as it did against the First, Third and Fourth Defendants, the Claimant discontinued against the Fifth Claimant. By discontinuing (rather than having the claim struck out), the Claimant would retain QOCS protection.
The Fifth Defendant sought to set aside the discontinuance in accordance with CPR 38.4, in order that the claim could then be properly struck out and QOCS protection would be avoided. The Court however did not accept it was appropriate to do so. While the Court has power to set aside discontinuance, Justice Lavender explains this should only occur when there has been an abuse of process. When determining abuse of process, the reason for discontinuing the claim is key and the Court did not accept that the only reason for discontinuing against the Fifth Defendant was to gain a tactical advantage (retain QOCS protection), as such the discontinuance stood and as CPR 44.15(a) does not apply to a discontinued claim, QOCS protection remained as per the general rule.
Dealing with Elements of the Claims outside of QOCS Scope
With the First, Third and Fifth Defendants unable to recover costs in accordance with the general rule at 44.14(1), they sought to enforce their costs orders in accordance with CPR 44.16.2(b):
(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –
(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.
The Defendants relied on claims for misrepresentation, deceit and unjust enrichment, which had been pleaded within the Claim Form, in order to take the costs outside of the scope of QOCS. Justice Lavender however noted that these elements of the claim were not actually pleaded within the Particulars of Claim, as such these minor, unpursued elements did not provide justification for the Court going behind the general rule. Once again these Defendants were deemed to be subject to the general rule at 44.14(1) and could therefore not recover any costs.
QOCS protection is in place for a good reason, it replaces the protection previously provided by the recovery of additional liabilities. Without QOCS there would be severe barriers to access to justice, with the fear of cost consequence following a lost claim preventing entirely reasonable claims from being pursued.
As a result of QOCS importance, the Court seems resolved to find that QOCS protection applies even when this seems somewhat contrary to the spirt of the rules. Claimant solicitors should note the decision regarding the application of CPR 38.4. If it appears prospects of success have diminished, serious thought should be given to the discontinuance of the claim. If instead of discontinuing, the claim is struck out due to lack of grounds, QOCS protection will be lost and the Defendant will be able to enforce costs orders against the Claimant.