QOCS, CPR 44.16, AND FUNDAMENTAL DISHONESTY (CPR r44.16)

pi_kate_mckinlay Kate McKinlay

Gosling v Screwfix and Anr – (unreported, Cambridge County Court, 29th March 2014)

Beware rule 44.16 in cases where fraud/dishonesty/ exaggeration is alleged.
In this case Mr Gosling lost his claim for personal injury. Although his claim was issued pre-April April 2013, there being nothing in the rules to prevent him doing so, Mr Gosling the Claimant sought to avoid the traditional costs order by invoking the provisions of CPR r.44 Part II r 44.14.

THE RULES
R44.14, from 1st April 2013, for social policy reasons, provides a losing Claimant with a shield behind which to ‘hide’ and thus avoid paying the winning party’s costs:-
r44.14 states:-
(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.

Whilst QOCS has now been in force for over a year, HHJ Moloney’s decision is believed to be the first case where the exceptions set out in r44.16 have been applied.
r44.16 states:-
(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.

SIGNIFICANCE
The case is significant because it raises important issues as to what ‘fundamental dishonesty’ constitutes for the purposes of r44.16.
FACTS
HHJ Moloney, sitting in Cambridge County Court, heard a claim for personal injuries in which the Defendant argued in respect of both liability and quantum that the Claimant was dishonest. HHJ Moloney did not accept that the claim was dishonest in its entirety and accepted the Claimant’s account on the circumstances of the accident. He was however persuaded in part by covert surveillance evidence, that the Claimant had significantly and deliberately exaggerated the extent of his ongoing symptoms, that this was dishonest conduct and that the effects of its discovery was to reduce the value of the claim by half, and made findings in these terms.

FINDINGS
The judge considered that in making a finding on fundamental dishonesty for the purposes of QOCS, the question he had to ask himself was whether, in broad terms, the Claimant was deserving of the costs protection extends to him, for reasons of social policy, by the new QOCS regime. He held that the term ought to be given a purposive and contextual meaning and that there was a distinction to be drawn between dishonesty that was ‘incidental’ or ‘collateral’ to the claim and dishonesty which went to the ‘whole, or a substantial part of the claim’. The latter could be regarded as fundamental dishonesty whereas the former would be unlikely to be so. In this instance the Claimant’s dishonesty was integral to the value of the claim and significantly affected its value such that it was “on any view” sufficient to be categorised as fundamentally dishonest. The judge went on to find that on, the balance of probabilities Mr Gosling’s conduct was fundamentally dishonest, such that r44.16 applied and the Claimant was not afforded the protection that he would otherwise have had from QOCS. Mr Gosling was ordered to pay the Defendant’s costs on the indemnity basis.

LESSONS TO BE LEARNT
The key lesson from this case is that, it appears that the courts will be willing to make a fundamental dishonesty finding even where only part of the claim is found to be dishonest. Notwithstanding that this Claimant was successful on liability; he was still subject to an adverse costs for the whole claim order due to dishonesty in respect of part of the claim. Advisors will therefore need to be alive to this risk and, where there are any concerns whatsoever about deliberate exaggeration, embellishment or more, firstly advise their clients in clear terms that they could be at risk of an adverse costs order and secondly take out appropriate insurance.

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One comment

  1. […] colleague Kate McKinlay also considers QUOCs and fundamental dishonesty in the Zenith Personal Injury […]

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