Excalibur & Keswick Groundworks Ltd v Michael McDonald

The Court of Appeal considered the proper approach to setting aside a Notice of Discontinuance under CPR 38.4, the circumstances in which a claim may be struck out under CPR 3.4(2)(b) as conduct "likely to obstruct the just disposal of the proceedings", and the operation of the exceptions to Qualified One-Way Costs Shifting (QOCS) in CPR 44.15(c).

The court held that the power to set aside a Notice of Discontinuance is a broad discretion to be exercised in accordance with the overriding objective but that powerful or cogent reasons (for example abuse of process or egregious conduct) are required to deprive a claimant of the right to discontinue. Mere late discontinuance to preserve QOCS is not, of itself, a ground to set aside the notice.

On strike-out under CPR 3.4(2)(b) the court emphasised the high threshold: conduct must be of such a nature and degree that it corrupts the trial process or puts the fairness of the trial in jeopardy. An inconsistent or unreliable account that undermines credibility and the viability of a personal injury claim may warrant summary judgment but does not ordinarily meet the very high standard for strike-out or for removing QOCS protection under CPR 44.15(c).

Background and parties: The claimant alleged personal injury from a fall from a ladder while working as a groundworker. Proceedings were issued against two defendants. The claimant’s pleaded case stated that the ladder had been tied to scaffolding; his witness statement later suggested the ladder may not have been tied, and medical records contained inconsistent entries. The trial was listed for a remote hearing. On the morning of trial, following judicial intervention about the inconsistencies, the claimant discontinued by serving Notices of Discontinuance.

Procedural posture: After discontinuance the defendants applied to set aside the Notices of Discontinuance (CPR 38.4) and to strike out the claim on the basis that the claimant’s conduct was "likely to obstruct the just disposal of the proceedings", with the consequence that QOCS protection should not apply (CPR 44.15(c)). The District Judge treated the notices as if they would be set aside and disapplied QOCS. The claimant successfully appealed to HHJ Freedman in the County Court, who allowed the appeal. The defendants then appealed to the Court of Appeal.

Issues framed:

• When may a court properly set aside a Notice of Discontinuance under CPR 38.4?
• What is the correct interpretation of "likely to obstruct the just disposal of the proceedings" in CPR 3.4(2)(b) and for the purposes of CPR 44.15(c)?
• Whether the court may employ case management powers purposively to deprive a claimant of QOCS protection where discontinuance occurs late.

Court’s reasoning and decision: The Court of Appeal reiterated that CPR 38.4 confers a wide discretion to set aside a Notice of Discontinuance but that, because a claimant may discontinue as of right except in limited cases, there must be powerful and cogent reasons (for example abuse of process or egregious conduct) to set a notice aside. The court rejected the argument that CPR 38.4 should be applied differently in personal injury/QOCS cases. On strike-out, the court adopted the established high threshold: strike-out under CPR 3.4(2)(b) requires conduct so serious that it would be an affront to the court to allow the claimant to continue, typically where the fairness of trial is put in jeopardy. The Court of Appeal concluded the claimant’s materially inconsistent accounts undermined credibility and may have made the case unsustainable, but did not amount to the exceptional misconduct required for strike-out or to remove QOCS protection under CPR 44.15(c). The Court observed that where summary judgment is available it remains an appropriate remedy, but it is different in character from strike-out for abusive conduct.

Relief sought and disposition: The defendants sought to set aside the Notices of Discontinuance and to have QOCS disapplied by striking out the claim for conduct likely to obstruct the just disposal of the proceedings. The Court of Appeal dismissed the defendants’ appeal, upholding the County Court judge’s approach that the Notices of Discontinuance should not be set aside on the facts and that the threshold for strike-out and disapplication of QOCS had not been met.

The appeal is dismissed. The Court of Appeal held that (i) the court has a broad discretion to set aside a Notice of Discontinuance under CPR 38.4 but powerful and cogent reasons (for example abuse of process or egregious conduct) are required to deprive a claimant of the right to discontinue; (ii) strike-out under CPR 3.4(2)(b) requires conduct of a high degree that corrupts the trial process or jeopardises a fair trial; and (iii) CPR 44.15(c) does not add a new test but applies the same high concept to the consequences for QOCS once a claim has been struck out. The claimant’s inconsistent accounts did not meet that high threshold and therefore QOCS protection remained.

Appeal to the Court of Appeal (Civil Division) from the County Court at Newcastle upon Tyne (HHJ Freedman, judgment 29 November 2021). The District Judge below had set aside QOCS protection; HHJ Freedman allowed the claimant's appeal. The defendant appealed to the Court of Appeal, which dismissed the appeal: [2023] EWCA Civ 18.