I am currently involved in a situation where the Claimant was proceeding against two Defendants but circumstances have changed which meant proceeding against the Second Defendant was no longer justified.
The Second Defendant is now seeking their costs of the claim. That’s the usual position as per CPR 38.6(1). There is a slight hiccup in that plan, the Claimant has the benefit of QOCS and the claim was issued before 6th April 2023 (so the Second Defendant cannot benefit from the Claimant receiving damages paid for by the First Defendant).
The Second Defendant has said they will accept proposals for their settlement of their costs or they will make an application within 7 days. The offer was put to both the Claimant and the First Defendant. It is the Claimant’s position that the Second Defendant cannot recover its costs from the Claimant because they would need to set aside the notice of discontinuance and then set aside QOCS.
Background
The Claimant was a passenger in a car and her claim was transferred to another firm just before limitation due to the potential conflict of interests. This was because the First Defendant (the third party driver) was claiming the Second Defendant (the driver of the Claimant’s vehicle) caused or contributed to the accident.
Due to a slight snafu, the Claimant’s claim form was issued twelve days late and the matter is due to be heard at a preliminary hearing on 4th August (it has taken months to get there). There has been judicial indication that the Defendants ought not to proceed to take issue with limitation, but nevertheless that is where the Claimant’s claim is.
In the time that the Claimant’s claim has been stagnant, the Second Defendant had proceeded to trial and succeeded against the First Defendant in full with no contributory negligence. But for the limitation issue, the Claimant and the Second Defendant’s claims would have been amalgamated.
The Claimant put the parties on noticed that she had to issue against both Defendants given the allegations made by the First Defendant. The situation had changed and now the Claimant would discontinue against the Second Defendant.
As above, the Second Defendant (represented by the Second Defendant’s insurer’s legal team) are threatening an application for costs.
Qualified One-Way Cost Shifting
Generally speaking, one cannot set aside QOCS unless the claim is struck out (in accordance with r3.4(2) of CPR) or there is a finding of fundamental dishonesty. They say Part 36 ‘trumps’ QOCS but that is a misconception, as there are damages/costs that any cost order can be enforced against.
It is the usual position that if a Claimant discontinues the claim, the right to costs under CPR 38.6(1) still exists, but because of QOCS no assessment or enforcement can take place without leave of the Court.
So in the above case, how can the Second Defendant get its costs? I say it is very unlikely it would be able to. Enter the case that the picture and title of this article draw reference from.
Excalibur & Keswick Ground Limited v McDonald
The case of Excalibur & Keswick Groundworks Ltd v McDonald [2023] EWCA Civ 18 is reconcilable because in this case, the Claimant discontinued at the start of trial and the Defendant wanted to set aside the notice of discontinuance and have the claim struck out.
In the first instance the trial Judge raised inconsistencies with the pleaded case, medical records and witness statement. After considering his position, the claimant discontinued. The Defendant applied to set aside the notice of discontinuance and asked for the claim to be struck out on the basis that he had obstructed the just disposal of the proceedings and should lose his QOCS protection.
The trial judge struck out the claim, saying that the Claimant dropping the claim at the last minute increased costs and took up court time, this was sufficient to make out that the conduct had obstructed the just disposal of the proceedings and disallowed costs protection.
A Circuit Judge allowed the appeal, finding that the conduct did not amount to an obstruction of just disposal of the proceedings and relied on Arrow Nominees Inc & Anor v Blackledge & Ors [2000] EWCA Civ 200 to determine that there was a high bar for a strike out. The conduct did not render a fair trial impossible or corrupted the trial process so that a just result could not be achieved. The inconsistencies could have caused his creditability to be questioned and undermined his claim but did not demonstrate a determination to prevent a fair trial.
The Court of Appeal endorsed the Circuit Judge’s decision to allow the Claimant’s appeal.
51. It follows, and I so find, that the claimant’s conduct did not meet the test of being likely to obstruct the just disposal of the proceedings. It is regrettable that consideration of his differing accounts had not taken place at an earlier stage but the defendant was in possession both of the claimant’s witness statement and the Statement of Case and could have applied for summary judgment. Of course, had summary judgment been obtained pursuant to CPR 24 , the claimant would be entitled to QOCS protection.
53. What the defendant has sought to do in this appeal is to remove the substantive right of the claimant to the protection provided by the broad-based and mechanical provisions of the QOCS scheme. For the reasons given, and subject to the views of Peter Jackson LJ and William Davis LJ, it has failed to do so and the appeal is dismissed.
Could the Second Defendant get a strike out?
It would be difficult, as above, to justify the setting aside of the Notice of Discontinuance if it did not lead to a strike out.
The Second Defendant would need to be able to demonstrate that the claim had no reasonable grounds for bringing the claim, was an abuse of process or the Claimant had failed to comply with an Orders, rules or practice directions.
The upcoming hearing was to determine whether or not the Court ought to exercise its discretion to disapply the effects of s11 Limitation Act 1980 in accordance with s33 Limitation Act 1980.
Like with many, the Second Defendant may be under the misapprehension that if the Claimant fails to convince the Court to disapply to the effects of s11 Limitation Act 1980 then the claim is struck out.
The limitation defence is just that, a defence. If the Defence upholds then the claim can be dismissed or, more likely, a summary judgment for the Defendant. There are various examples where summary Judgment is entered into and not a strike out:-
- Murithi v AVH Legal LLP (t/a Tandem Law) [2023] EWHC 1245 (KB) – Summary Judgment for the Defendants.
- Samrai v Kalia [2022] EWHC 1424 (QB) – strike out too draconian
The Second Defendant ought to treat this like any other claim where they are the single Defendant and the Claimant has discontinued. The high bar they need to make means it is not economically proportionate to try to pursue the Claimant (especially when the Claimant still has QOCS protection and any application would be subject to standard/indemnity costs as per Parsa v DS Smith & Another [2019] Costs L.R. 331).
What are the other options for the Second Defendant?
The Second Defendant could pursue the First Defendant. However they have not issued a contribution/Part 20 claim against them. The Second Defendant would most certainly be at risk of a costs Order if the First Defendant defended such an application. Further the Second Defendant, unless it gets the Notice of Discontinuance set aside, is no longer a party to the proceedings.
Allocation has not even taken place yet. The costs incurred are a result over squabbling over a 12 day delay and if I were acting for the Second Defendant (other than recommending a Part 20 claim against the First Defendant from the start of proceedings, meaning they would still be a party to the claim) I would recommend they bear the cost and run.
To follow the analogy of Excalibur, the Second Defendant may look pretty silly when they try to pull the sword from the stone and it doesn’t even wiggle.
Information
AJH Advocacy Limited, a Limited Company which is regulated by the Bar Standards Boards (entity number 190758), ceases trading on the 12th January 2026.
From the 12th January 2026 and onwards, Alec Hancock will practice as a Barrister at Magdalen Chambers in Exeter. For instructions on matters on or after 12th January 2026, please contact Magdalen Chambers via clerks@magdalenchambers.co.uk or by telephone on 01392 285 200.