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"Yes, I know I lost, but I still don't want to pay you…”

We are delighted to have a Guest Blog from Aidan Jones of BIKELINE (a trading name of Alyson France & Co. Solicitors), on their recent successful case of Waring –v- McDonnell (2018), in which  the court considered counterclaims and QOCS protection.  

Waring –v- McDonnell (2018) A losing Defendant with an unsuccessful counterclaim does not have QOCS protection against the successful Claimant’s costs of the main claim. We were instructed by a cyclist involved in a head-on collision on a country road with another cyclist in June 2016 in which both riders were injured.  We issued proceedings and the opponent defended and counterclaimed for his injuries and losses. At trial, our client succeeded 100% against his opponent and the counterclaim was dismissed. When costs were raised, Defence Counsel pulled a rabbit out of the hat: the unreported decision of HHJ Freedman in the case of Ketchion –v- McKeown as authority that as the Defendant/Part 20 Counterclaimant was unsuccessful in his claim, then he should be entitled to the protection afforded by Qualified One-way Costs Shifting pursuant to CPR Part 44.13; not only in relation to the counterclaim, but also to avoid paying any costs at all, on the basis that the main claim and counterclaim formed part of the same ‘proceedings’ and therefore could not be distinguished from each other. This led to the trial Judge (HHJ Venn) ordering an adjourned hearing of a preliminary issue to address this point. At the recommendation of Mr Owen Jones our Consultant costs draftsman, specialist costs Counsel, Mr Kevin Latham was instructed. Mr Latham’s detailed submissions to the Court included the observation that there was nothing in the CPR which affords the Defendant the benefit of QOCS protection in his capacity as Defendant to the Claimant’s claim and that (per the Jackson Report) the purpose of introducing QOCS was to reduce costs and was a concession for the abolition of recoverable ATE premiums. What is considered in this case (which is notable by its absence in HHJ Freedmans’ deliberations in Ketchion) is the authority of Medway Oil and Storage Company Limited [1929] AC 88 which decided that the costs of a claim are to be assessed as if the claim stood by itself, the costs of the counterclaim comprising only those costs attributable to the increase in costs, caused by the counterclaim. HHJ Venn decided that to apply the Defendant’s analysis based upon Ketchion, would risk Defendant insurers in RTA claims encouraging counterclaims, because even if unsuccessful, this would lead to no liability for the costs of a successful claim.  Also the Part 36 regime would have no teeth as costs recovery would be limited to the amount of damages recovered in the counterclaim, if any.   Judge Venn remarked that had such radical changes been intended, these would have been spelt out and been the subject of debate at a policy making level. Judge Venn’s conclusion: the Defendant/Part 20 Counterclaimant only had the protection of QOCS in respect of his counterclaim for damages for personal injury and does not benefit from it in the Claimant’s claim. In hindsight, whilst this might appear to be the obvious conclusion, HHJ Freedman’s judgment in Ketchion presented a golden opportunity for the Defendant’s insurer to test the water.  Whilst there has been no appeal against the decision in our case, there is of course the risk that we have not heard the last word on this subject.  Our sincere thanks to Mr Latham for his hard work in this case. Aidan Jones (solicitor) Alyson France & Co.

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