Excalibur & Keswick Groundworks Ltd v Michael McDonald

A claimant’s right to discontinue cannot ordinarily be displaced merely to remove qualified one-way costs shifting protection. Although the court has a broad discretion under Rule 38.4 of the Civil Procedure Rules 1998, powerful reasons are required to set aside a notice of discontinuance. Abuse of process or similarly egregious conduct must be shown.

Strike-out for conduct likely to obstruct the just disposal of proceedings requires misconduct of a nature and degree that corrupts the trial process and puts the fairness of the trial in jeopardy. Inconsistency between a pleading and a witness statement, even if it undermines the claim, does not without more meet that threshold. Rule 44.15(c) creates no independent strike-out power. It only governs enforcement of costs after a claim has been struck out.

The claimant brought a personal injury claim arising from an alleged fall from a ladder at work. On the morning of trial, the District Judge identified inconsistencies between his pleaded case, witness statement and medical records. The claimant then discontinued. The defendants successfully applied to set aside the notices of discontinuance and strike out the claim, thereby removing qualified one-way costs shifting protection.

HHJ Freedman allowed the claimant’s first appeal. He held that the claimant’s inconsistent account did not obstruct the just disposal of the proceedings and that there were no powerful reasons to set aside the notices.

The employer appealed to the Court of Appeal. The principal issues concerned the discretion under Rule 38.4 of the Civil Procedure Rules 1998, the meaning of conduct “likely to obstruct the just disposal of the proceedings”, and whether the relevant rules could be used purposively to remove costs protection.

1. Appeal dismissed. The claimant’s notices of discontinuance remained effective, and his qualified one-way costs shifting protection was not removed.

2. Rule 38.4 of the Civil Procedure Rules 1998 gives the court a broad discretion to set aside a notice of discontinuance. The discretion must further the overriding objective. However, a claimant ordinarily has a right to discontinue, subject to the limited exceptions in Rule 38.2. Powerful reasons are therefore required before that right is displaced. Evidence of abuse of process or similarly egregious conduct is required where the application would deprive the claimant of the right to discontinue.

   The rule does not operate differently merely because the claim is a personal injury claim governed by qualified one-way costs shifting. Such an approach would undermine the purpose of that regime. A claimant’s recognition of weaknesses in the claim, followed by discontinuance, did not provide the necessary powerful reasons. The defendant’s wish to obtain a strike-out and enforce its costs was insufficient.

3. Rule 3.4(2)(b) imposes a high threshold. The relevant question is whether the litigant’s conduct is of such a nature and degree as to corrupt the trial process and put the fairness of the trial in jeopardy. It is unnecessary to establish that a fair trial has become literally impossible. Nonetheless, the misconduct must be serious enough to justify depriving the litigant of the right to pursue the claim.

   The discrepancy between the claimant’s pleading and witness statement was material and could undermine his credibility and the viability of his claim. It did not demonstrate a determination to prevent a fair trial. An unreliable or inconsistent account, without more, was not conduct likely to obstruct the just disposal of the proceedings. The defendant could instead have sought summary judgment, which would not have removed the claimant’s costs protection.

4. Rule 44.15(c) becomes engaged only after proceedings have been struck out. It creates no independent power or principle of strike-out and adds nothing to the interpretation of the identical wording in Rule 3.4(2)(b). The qualified one-way costs shifting scheme is broad and essentially mechanical; its express exceptions cannot be expanded through a general appeal to the overriding objective.

• Court of Appeal (Civil Division): The employer’s appeal was dismissed. The notices of discontinuance remained effective and qualified one-way costs shifting protection continued: [2023] EWCA Civ 18.
• County Court at Newcastle upon Tyne, HHJ Freedman: On 29 November 2021, the claimant’s appeal was allowed. The judge held that the claimant’s conduct did not obstruct the just disposal of the proceedings and that the notices should not have been set aside.
• County Court, District Judge: The notices of discontinuance were treated as set aside, the claim was struck out and the claimant was deprived of qualified one-way costs shifting protection.