QOCS: Setting Off Costs Against Costs

FAULKNER V SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY

The court exercised its discretion against allowing a defendant to set off ‘costs against costs’ in a case where it unsuccessfully applied to resurrect a discontinued claim with a view to striking it out and thus removing the protection of QOCS by virtue of CPR 44.15.


“On the face of it, this might appear to amount to no more than an arbitrary procedural act of wanton posthumous desecration followed by a prompt and unceremonious reinterment. However, there was method in the madness of this procedural manoeuvre.”


  • In short, the claimant enjoyed the protection of QOCS against the enforcement by the defendant of any costs orders against him.
  • The service of a notice of discontinuance does not, of itself, remove such protection.
  • Under CPR 44.15, however, the protection of the QOCS regime is stripped away where proceedings have been struck out on one or more of the grounds therein identified.
  • Accordingly, the defendant hoped to reanimate the claim solely for the purpose of striking it out in such a way that it could proceed thereafter to enforce an order for costs against the claimant.

Having been ordered to pay the claimant’s costs of the failed application the defendant sought to set those costs off against an earlier costs order made in its favour. The court however exercised its discretion against the defendant, thus preserving the claimant’s protection under QOCS for the whole of the defendant’s costs.


“I would not … conclude that the discretion to set off costs against costs is to be exercised against the defendant in every case in which it unsuccessfully applies to set aside notice of discontinuance of a claim falling within the QOCS regime.”

However…

“In this case … it became readily apparent that the application to set aside the notice of discontinuance was very weak. Indeed, the bid to strike out the resurrected claim under CPR 44.15 was doomed to failure. If the defendant had ever considered that such a strike out application had realistic prospects of success then it could and should have made it whilst the claim was still proceeding and weeks before the notice of discontinuance had been served. It was entirely inconsistent for the defendant to proceed towards the hearing of a preliminary issue in a case in which, as they were later to argue, the claimant’s case was so weak that it could have been struck out without the need for any such issue to be heard. One can understand the tactical reasons behind the defendant’s application but it was deeply flawed. There were, indeed, grounds upon which the claimant’s evidence was vulnerable. Doubtless, the defendant was fairly confident that the preliminary issue would be determined in its favour. Nevertheless, the strength of its case was never such as to justify a strike out application falling within one of the narrowly defined circumstances set out in CPR 44.15 and that is why one was never made until after the claim had already been discontinued.”

FAULKNER V SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY [2020] EWHC 296 (QB)