QOCS AND DISHONESTY: YOU CAN TRY TO CHECK OUT ANY TIME YOU LIKE BUT YOU CAN’T ALWAYS LEAVE

Thanks to Sintons LLP there is now a copy available online of the judgment of HH Judge Gosnell in Rouse -v- Aviva Insurance Limited (15th January 2016). This is another case that relates to discontinuance by the claimant in a QOCS case.

“…the service of a notice of discontinuance is not the end of the matter for a claimant. If a defendant thinks they can satisfy a court on balance of probability the claim is fundamentally dishonest, they can ask the court to direct that an issue arising out of that allegation be determined

KEY POINTS

  • It was a matter for the court, in each case, to determine the appropriate procedure for determining an allegation of fundamental dishonesty in cases where the claimant discontinued a claim.
  • It would not necessarily be disproportional for the court to order that a hearing take place where witness evidence would be heard.

THE CASE

The claimant brought an action for damages claiming he had been injured when a bird cage fell from a car and struck the car in which he was travelling.  The defendant had evidence that the cage stayed in place. The claim was discontinued 2 – 3 days before trial.  The defendant made an application for a finding of fundamental dishonesty and this was listed before the District Judge.

THE DECISION OF THE DISTRICT JUDGE

The District Judge found that any application by a defendant in these circumstances must be one that was heard on the papers and based on the papers available at the time.

THE DECISION OF THE CIRCUIT JUDGE

HH Judge Gosnell found that the rules allowed a defendant to determine the issue.

“… it is clear from the Practice Direction at 12.4 that the service of a notice of discontinuance is not the end of the matter for a claimant. If a defendant thinks they can satisfy a court on balance of probability the claim is fundamentally dishonest, they can ask the court to direct that an issue arising out of that allegation be determined”

HOW DOES THE COURT DETERMINE THE ISSUE?

The judge held that the real issue was how the courts were to determine allegations of fundamental dishonesty:-

“If I reach the conclusion that there may have to be a hearing at which parties can give evidence, I think it must be right that where the claimant does not give evidence or does not proffer any reason for the decision to discontinue, then the defendant can invite the court to draw an adverse inference. I think Mr Morwood is right that no-one can compel a claimant to give  evidence in these circumstances and similarly no-one can compel him to explain why he discontinued. However, obviously, for the court to find that notwithstanding the somewhat unusual circumstances and his late discontinuance, he is not dishonest. I think that an explanation for the discontinuance would be very helpful to the court in making that conclusion.”

IS THE COST OF AN ENQUIRY  ON THE ISSUE OF FUNDAMENTAL DISHONESTY ALWAYS DISPROPORTIONAL?

“I pause there to ask myself rhetorically is it difficult to imagine circumstances in which it would be proportionate to require the parties to incur the expense of a trial? Take this  case, for example. The defendant says that it has incurred costs of £11,293.36 which, leaving aside the fact that that might well be reduced on a summary assessment, it is a substantial sum of money. What would be the costs of having a somewhat limited enquiry as to whether this was a fundamentally dishonest claim? The answer is it would be, probably, roughly the same in this case as the costs in a fast track trial because of the fact that, perhaps in this case, it would be helpful to the claimant for him to give  evidence and his driver and it may be helpful for the defendant’s witnesses to give evidence although I am not convinced in this case that would be necessary. I have got to say that if the Rules say that the defendant can seek a direction that the claimant is fundamentally dishonest – and there is going to be some sort of fair procedure for that to happen – it would not necessarily be disproportionate for, perhaps, £2,000 to be spent at a three hour hearing to determine whether there was fundamental dishonesty when the sum of £11,293.36 is at stake. Therefore, my conclusion is that there may be  circumstances where it is proportionate to have such an enquiry.”

The judgment goes on to state:

“…I think it is right that I should look at, specifically, the points which most concerned the Judge which were that this would be in the face of the thrust of most of the changes to the CPR which are trying to avoid disproportionate costs, I accept that the concern about disproportionate costs is something that a Judge taking this decision is going to have to wrestle with on each occasion. Any Judge is going to be reluctant to encourage satellite litigation and disproportionate costs. Judges are quite familiar with having to do this when dealing with cases of misconduct under CPR 44.11 or dealing with issues such as applications against non-parties and wasted costs orders. It is a position that courts are very familiar with. There is an understandable reluctance to have additional costs incurred unless they are absolutely necessary. The reason I think they are necessary in this case and  actually would be necessary in other similar cases is, strangely, not because it is fair to the defendants it is actually because it is only fair to the claimant”

IT IS AN ISSUE FOR THE COURT’S DISCRETION

The judge concluded that the question was one of discretion in each case.

“Therefore, my decision in this and other cases is that it is a matter for the court’s discretion as to how this procedure should be adopted. In my view, where the Rules do  not say what the procedure should be but direct that issues have to be determined, it is  within the court’s general discretion how to do that. If it could only be done on paper I would have expected the Rules to say so. Therefore, for the reasons that I indicate, in general terms, the court has the option how to adopt this procedure whether in writing, whether with a limited inquiry or whether with a full trial. In the particular facts of this case it seems to me that either a full trial or a limited inquiry at least giving the claimant and his witness the opportunity to give evidence is the right and fair way to move  forward”

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