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Defendant's tactical counterclaim dismissed

16 June 2021
This case reinforces the original aims of the Jackson reforms and the principle that Defendants should avoid any vexatious or tactical attempts in bringing counterclaims.

Background

This case concerned an accident at a roundabout, liability was in dispute with both parties blaming each other for the accident. The claimant was the first to issue proceedings and the defendant denied liability, bringing a Part 20 claim for damages against the claimant and the claimant's insurers.

At trial, judgment was given in full to the claimant and the counterclaim was dismissed. The claimant's costs were summarily assessed by the Court in the sum of £7,650.

The defendant accepted that an order for costs should be made but argued that it should not be enforced as the defendant enjoyed the benefit of QOCS as it had brought a counterclaim.

Authorities 

HHJ Gargan reserved judgement and noted that there were conflicting authorities. In Ketchion v McEwan (28/06/18), HHJ Freedman determined that a counterclaiming defendant should have QOCS protection in relation to the claimant's costs. In contrast, HHJ Venn in Waring v McDonnell (6/11/18) held that an unsuccessful defendant only has the benefit of the QOCS regime in respect of his own claim for damages for personal injury and did not benefit when defending the claimant's claim for damages for personal injury.

In reaching their decisions, HHJ Freedman interpreted that "proceedings" should be given a wide interpretation to include the whole action in terms of costs protection, whereas HHJ Venn took an opposing view, preferring that QOCS would apply to the defendant's counterclaim and not to the original claim for damages in which the defendant remained the "unsuccessful defendant" rather than the "unsuccessful claimant".

Decision

HHJ Gargan preferred the principles established in Waring and held that the counterclaiming defendant did not enjoy QOCS protection in respect of the claimant's claim for personal injury.

A number of points were made in the judgment:

  • There is no definition of "proceedings" in law or as a term of art.
  • For the purposes of QOCS (Part 44.13 CPR), proceedings would encompass a claim against multiple defendants but would not include for example, a Part 20 claim for an indemnity arising out of the facts which give rise to the action.
  • The purpose of the Jackson reforms was to reduce disproportionate costs by abolishing recoverability of additional liabilities between the parties. This was to be achieved by successful defendants waiving their entitlement to costs subject to the caveats in Parts 44.15 and 44.16, such as abuse of process or fundamental dishonesty.
  • Applying QOCS to the whole action may encourage defendants to raise weak or tenuous claims which would give rise to considerable satellite litigation as successful claimants sought to recover their costs.

Consequences

The principles discussed are still to be determined by the higher courts, however we believe that should a case on this issue reach the Court of Appeal, the court is likely to favour the interpretation in this case in order to ensure that the aims of the Jackson reforms are fulfilled and to discourage any satellite litigation.

Accordingly, defendants should avoid any vexatious or tactical attempts in bringing counterclaims. 

However, in accidents involving multiple vehicles or where the claimant is a passenger, counterclaims or Part 20 claims for personal injury with realistic prospects of success may still be a useful mechanism for reducing claims for damages and costs. If a counterclaim/Part 20 claim for personal injury fails then costs of that counterclaim will enjoy QOCS protection, albeit, there will be no QOCS protection for the claimant's claim.

Contact Rob Bennett for more information.

Further Reading

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