SETTING ASIDE DISCONTINUANCE AND DISAPPLYING QOCS: A HIGH COURT DECISION

June 15, 2017 · by · in Applications, Costs, QOCS

In Shaw -v- Medtronic [2017] EWHC 1397 (QB) Mr Justice Lavender considered issues relating to the setting aside of notices of discontinuance and disapplying QOCS. He declined to set aside a notice of discontinuance or give permission to enforce costs in a case that had the protection of qualified one-way costs shifting.

THE CASE

In an earlier judgment the judge had set aside permission to the claimant to serve the First and Third Defendant out of the jurisdiction. The claim against the fourth defendant was struck out. The claimant subsequently discontinued the claim against the fifth defendant.

  • The claimant applied for permission to amend the particulars of claim against the remaining defendant, the second defendant.
  • The First, Third and Fifth defendants applied for an order that they could enforce the costs orders made in their favour, notwithstanding the rules relating to qualified one-way costs shifting.

The second defendant applied to strike the action out. The judge refused permission to amend against the second defendant.

KEY POINTS

  • The judge refused to set aside a notice of discontinuance served by the claimant on one of the defendants in the action.
  • The discontinuance in this case did not amount to an abuse of process.
  • The judge refused to disapply the qocs protection.
  • There were elements of the claim which were outside the ambit of qocs protection however they were not pleaded or were de minimis and would not have added to the costs of the action.

THE JUDGMENT ON COSTS AND QOCS

    1. I turn now to costs. It is not disputed that the First, Third and Fourth Defendants should have their costs of this action, subject to the agreement that there is to be no order as to the costs of the Claimant’s disclosure application. As a result of the discontinuance, the Fifth Defendant is also entitled to its costs.
    2. Mr Riley-Smith proposes to submit that I should order that those costs be assessed on the indemnity basis. I will deal with that issue after I have given judgment. In relation to costs, however, there is an issue as to the extent to which the Defendants can enforce any costs orders made against the Claimant. That is because of section 2 of CPR Part 44, i.e. the provisions concerning qualified one-way costs shifting. CPR 44.13(1) provides that:
“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.”
    1. It is not disputed that the present action falls within this section. I set out the terms of the Claim Form in paragraph 10 of the First Judgment. The Claimant’s claims for damages, including aggravated, exemplary and restitutionary damages, were all claims which arose out of death or personal injury and which survived for the benefit of the late Mr Ewan’s estate.
    2. The general rule is that set out in CPR 44.14(1):
“Subject to rules 44.15 and 44.16 orders for costs made against the 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.”
    1. Since there have been no orders for damages and interest made in the Claimant’s favour, this rule, if it applies, means that no costs order may be enforced at all against the Claimant.
    2. There are a number of exceptions to the general rule. First, Mr Berkley told me on instructions that the exception in CPR 44.1.7 does not apply. The first relevant exception is that provided for by CPR Rule 44.15.1(a):
“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; …”
  1. That is the case in respect of the claim against the Fourth Defendant, as I held in paragraphs 16 to 20 of the First Judgment. In the light of this judgment, it is now also the case in relation to the Second Defendant.
    1. In relation to the First and Third Defendants, I have held that the Claimant has disclosed no reasonable grounds for bringing the proceedings (see paragraphs 21 to 36 of the First Judgment). If the Claim Form had been served on them within the jurisdiction, I would have struck it out, but, because it was served on them outside the jurisdiction, the appropriate relief was to set aside service. As for the Fifth Defendant, Medtronic Plc, what I said in paragraphs 16 to 20 of the First Judgment applies mutatis mutandis to the Fifth Defendant, which is the ultimate parent of the Medtronic Group, but which was not even incorporated until 12 January 2014. I have not struck out the proceedings against the Fifth Defendant, because the Claimant has discontinued them. The Civil Procedure Rule Committee may care to reconsider the scope of CPR 44.15.1(a), but as presently drafted it does not apply to the First, Third and Fifth Defendants.
    2. The Fifth Defendant seeks an order setting aside the notice of discontinuance, so that I can then hear and allow the Fifth Defendant’s application issued on 16 October 2016 for an order striking out the proceedings. The effect of this would be to bring the Fifth Defendant within the scope of the exception in CPR 44.15.1(a) to the general rule concerning qualified one-way costs shifting.
    3. I am not persuaded that it would be appropriate to do this. Prima facie, the Claimant had a right to discontinue under CPR Rule 38.2. It was a proper use of that power, and to be encouraged, for the Claimant to recognise, in the light of the First Judgment, that her claim against the Fifth Defendant was not sustainable and to discontinue that claim.
    4. The court has power under CPR Rule 38.4 to set aside a notice of discontinuance. That paragraph does not identify the circumstances in which the power should be exercised. The only guidance on that point in paragraph 38.4.1 of the White Book is to be found in two cases which are cited for the proposition that a court may set aside a notice of discontinuance as an abuse of the process of the court, but there was no abuse of process in the present case.
    5. Mr Riley-Smith also drew my attention to the judgment of May LJ in Gillam v Browning [1998] 2 ALL ER 68 and to what Diplock J had to say about the meaning of abuse of process in Hunter v Chief Constable of the West Midlands Police [1982] AC 529. He also referred to the case of High Commissioner for Pakistan and the United Kingdom v National Westminster Bank Plc [2015] EWHC 55 Ch, in which Henderson J stated that, while abuse was a persuasive factor in favour of setting aside a notice of discontinuance, the reason for discontinuance was the key question. In that case, he found that the Claimant had sought to achieve a tactical advantage.
    6. Looking at the facts of this case, the Fifth Defendant served an acknowledgement of service on 11 October 2016. On 17 October 2016, the Fifth Defendant’s solicitors wrote to the Claimant’s solicitors pointing out the weaknesses in the Claimant’s case against the Fifth Defendant. That prompted a response on 19 October 2016 from the Claimant’s solicitors to the effect that the Claimant did not intend to discontinue the claim at that stage against the Fifth Defendant. That in turn led to the application to strike out being made on 25 October 2016. I gave the First Judgment on 20 January 2017 and the notice of discontinuance was served in March 2017.
    7. Mr Riley-Smith submits that I can infer from those circumstances that the Claimant’s intent in serving notice of discontinuance was to avoid the exception to the qualified one-way costs shifting regime. He submits that it is difficult to draw any other conclusion. However, it is striking that the Claimant has decided to discontinue against the Fifth Defendant, but is still, notwithstanding the First Judgment, seeking to maintain her claims against the First, Third and Fourth Defendants by way of an application to the Court of Appeal for permission to appeal.
    8. In those circumstances, the possibility that the Claimant has simply recognised, in the light of the First Judgment, that the claim against the Fifth Defendant will not stand remains a real one. That is perhaps a realisation which should have occurred to the Claimant earlier, but it does not, in those circumstances, strike me that this is a case of abuse of process or anything sufficient to justify setting aside the notice of discontinuance.
    9. The First, Third and Fifth Defendants seek an order under CPR Rule 44.16.2(b). That sub-rule provides as follows:
“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.”
  1. This sub-rule applies if the Claim Form and Particulars of Claim include a claim which falls outside the scope of CPR 44.12.1. There were only two candidates for such a claim. The first is the claim for misrepresentation and deceit. This is referred to in the Claim Form, but not pleaded in the Particulars of Claim, as I noted in paragraph 12.2(d) of the First Judgment. I therefore ignore it. The second is the free-standing claim in unjust enrichment, but, as I said in paragraphs 32 to 35 of the First Judgment, it was unclear whether the Particulars of Claim did include a free-standing claim in unjust enrichment. Moreover, the Claimant did not obtain permission to serve the Claim Form out of the jurisdiction insofar as it contained a free-standing claim in unjust enrichment. Consequently, there was no such claim against the First and Third Defendants and CPR 44.16.1(b) does not apply to them.
  2. Assuming that there is a pleaded free-standing claim in unjust enrichment against the Fifth Defendant, it overlaps entirely with the claim for restitutionary damages. The additional costs incurred in dealing with the free-standing claim are minimal and it would not be just to make an order under section 44.16.1(b) on that account. I would have reached the same conclusion in relation to the First and Third Defendants if I had found that CPR 44.16.1(b) applied to them.
  3. Mr Riley-Smith invited me, in effect, to use the discretion which CPR 44.16.1(b) gives to remedy the perceived defects in CPR 44.15.1(a) to which I have referred. I do not consider that this would be an appropriate use of that discretion. Accordingly, I dismiss the application made by the First, Third and Fifth Defendants.
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