Mr Brian Kite v The Phoenix Pub Group

Introduction

There are many areas of the QOCS regime where the approach of the courts remains uncertain in the absence of detailed guidance in the CPR. One such area arose in a recent case involving an adjourned strike out hearing and the service of a late-in-the-day notice of discontinuance.

The Facts

The Claimant brought a claim for injuries sustained on November 2014 when he fell into an uncovered man hole in the car park of a pub, The Suffolk Punch. The Defendant is a company that operates a number of pubs in the South West of England. The Defendant’s case was that, although The Suffolk Punch had once been operated by it, by the time of the accident it was owned and operated by a different company, Enlighters Ltd. Unfortunately for the Claimant Enlighters Ltd had since dissolved.

The case first came before the Court on the Defendant’s applications both to set aside default judgment and to strike out the claim. Default judgment had been entered because, following the service of proceedings at The Suffolk Punch, there had been no response to the claim form. Default judgment was set aside with the Judge finding that service had been invalid. It then fell to the Judge to consider the Defendant’s application to strike out.

In support of the strike out application the Defendant had provided Companies House records which illustrated that it had no connection with Enlighters Ltd, the official copy entry for The Suffolk Punch showing that the Defendant was not the freeholder, and the lease for The Suffolk Punch which indicated Enlighters Ltd as the leaseholder. On the Defendant’s application to strike out counsel for the Claimant submitted that an adjournment of the strike out hearing was necessary to allow the Claimant to carry out further investigations and produce evidence (the application having been made only one week prior to the hearing itself). The Defendant resisted the application to adjourn but this was granted by the Judge, on the basis that there was no prejudice to the Defendant in allowing the Claimant more time. The Judge ordered that the Claimant pay the Defendant’s costs of that hearing.

No evidence was produced by the Claimant following the hearing. In the run up to the adjourned hearing the Claimant’s solicitors contacted the Defendant’s solicitors to inform them that this case was a QOCS case and that accordingly they would not be able to recover their costs. In response the Defendant’s solicitors reminded the Claimant of the exception which applied where a case was struck out (see CPR 44.15 below).

44.15 Exceptions to qualified one-way costs shifting where permission not required

(1) 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;

(b) the proceedings are an abuse of the court’s process; or

(c) the conduct of-

(i) the claimant; or

(ii) a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct, is likely to obstruct the just disposal of the proceedings.

Two days before the adjourned strike out hearing the Claimant then served a notice of discontinuance on the Defendant; the effect of which would be to deprive the Defendant of an enforceable costs order, since at that stage there was no order for damages in favour of the Claimant (see CPR 44.14 below).

44.14 Effect of qualified one-way costs shifting

(1) Subject to rules 44.15 and 44.16, orders for costs made against a 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.

(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

(3) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.

The Defendant made an application to set aside that notice of discontinuance pursuant to CPR 38.4, in order that the strike out application could proceed at the hearing.

The Decision

At the adjourned strike out hearing the Defendant’s application to set aside the notice of discontinuance was heard first. The Defendant’s case was that serving a notice at such a late stage, following a previously adjourned hearing (that had only been adjourned for the Claimant to obtain further evidence), was conduct which the Court should neither indulge nor encourage. It was submitted on behalf of the Defendant that to allow such tactical manoeuvring would produce a manifestly unjust result for the Defendant, who would not be able to enforce either the costs occasioned by the last hearing or the costs to which they were entitled following the service of a notice of discontinuance. The Claimant resisted the application on the basis that they were properly entitled to serve a notice of discontinuance, notwithstanding the consequences that that would have for the Defendant under the QOCS regime.

The Judge found that he had an unfettered discretion to set aside a notice of discontinuance, and was guided in exercising his discretion by the overriding objective. He was of the view that the important part of the overriding objective for the purposes of such an application was the need to deal with cases fairly, and that the conduct of the Claimant in requesting the adjournment and then only serving a notice at this late stage was unfair. Accordingly he held that it was appropriate to set the notice aside in order to ensure that the case was dealt with fairly and that the parties were on equal footing. He found that there was no prejudice to the Claimant in so doing as they would have an opportunity to answer the strike out application.

The strike out application was then permitted to proceed; the Claimant put forward no further evidence or submissions in response and so the case was struck out. The Defendant was awarded its costs of both the application to set aside the notice of discontinuance and the application to strike out the claim.

As a result of the notice being set aside and the claim having been struck out the Defendant will be entitled to enforce the costs orders made, notwithstanding QOCS.

Rebecca Jones, instructed by Thompson Allen LLP, appeared on behalf of the Defendant.