In a controversial decision at High Court level, the judge decided that in any case, whether personal injury or not (so could be a debt or commercial litigation claim) if a counterclaim is one for personal injury, qualified costs shifting applies and therefore unless an exception applies, even if the Claimant wins, they may recover NO COSTS!
This decision may be appealed but reinforces the need to make a part 36 offer or mediate in any cases involving a personal injury claim!
Ketchion v McEwan, Newcastle upon Tyne CC, HHJ Freedman, 28 June 2018
1. This recent costs case, if correctly decided, has dramatic and far reaching implications for personal injury litigation.
2. The claimant brought a claim against the defendant for financial losses arising out of a road traffic accident. He did not bring a claim for damages for personal injuries. The defendant denied liability and brought a Part 20 counterclaim for personal injuries.
3.The matter came before DDJ Thorn as a fast track trial. He decided that the accident was entirely the defendant’s fault. He accordingly entered judgment on the claim and dismissed the counterclaim.
4. The claimant was therefore in principle entitled to an order for his costs. However, the DDJ ruled that the Qualified One Way Costs Shifting (“QOCS”) regime applied in respect of those costs. This precludes enforcement of costs save in limited circumstances, none of which applied here.
6. The result was therefore that, despite succeeding in full, the claimant could recover no costs.
7. The claimant, aggrieved, sought permission to appeal. This came before HHJ Freedman as a rolled up hearing of both permission and the full appeal in the event that permission was granted. The judge heard full argument from both sides.
8. The claimant’s arguments were rejected. The judge placed heavy reliance on the wording of CPR 44.13, which provides:
(1) This section applies to proceedings which include a claim for damages – (a) for personal injuries; .. .. (2) In this section ‘claimant’ means a person bringing a claim to which this Section applies… and includes a person making a counterclaim or an additional claim. (the judge’s emphasis).
It should be noted that the claimant did not dispute that QOCS applied to counterclaims. He argued rather that the claim and the counterclaim were separate proceedings, with the result that QOCS applied only to protect the defendant of any adverse costs liability in respect of pursuing his counterclaim and not to protect him from the costs of defending the claimant’s claim.
The judge however ruled that a restrictive interpretation of the term “proceedings” which meant that it did not apply to the whole of the action was precluded by authority.
In the judge’s view this provided a decisive answer to the claimant’s arguments. He held at  that it would “be patently absurd and illogical if the word proceedings is deemed to cover all of the claims brought against six separate defendants, but not a claim and Part 20 claim”. Whilst acknowledging the potential injustice of this result, he held that this was an inevitable result of the wording of the rules. He agreed with the defendant that, if had been intended that a Part 20 claimant’s QOCS protection were to be limited in such ways, the rules would have expressly said so.
The judge came to this conclusion “without hesitation”. Not only did he dismiss the appeal; he refused permission on the basis that the appeal stood no real prospect of success.
The consequences of this judgment, if correct, are surprising if not alarming. Any counterclaim for personal injury would (unless an exception to QOCS could be invoked) preclude costs recovery even if the claim is wholly successful. Thus, for example, a claimant who successfully established a claim for catastrophic injuries could would not recover a penny of costs if the defendant happens to have even weak a counterclaim for minor whiplash.
Such a scenario is far from uncommon. In many if not most serious road traffic accidents the defendant will also have suffered some injury, be it physical or psychiatric.
All such a defendant would need to obtain QOCS protection is an arguable case that the claimant was also negligent. Any material degree of contributory negligence would suffice, even if the defendant has no defence to the lion’s share of liability for the claimant’s claim.
This would also apply to non personal injury claims where there is a personal injury counterclaim!
So, really there is more of an incentive to settle a personal injury claim as even if you win, you may not recover your costs.