A notable and well-known exception to Qualified One-Way Costs Shifting (QOCS) is that a Claimant whose claim is found to be “fundamentally dishonest” loses the protection of the QOCS rules.
This exception can be found in CPR 44.16. However the concept of fundamental dishonesty remains undefined and in the absence of any Court of Appeal authority on the definition, we remain reliant to a large extent upon first instance decisions in the county court for guidance on procedure and application of the relevant rule.
Nevertheless, the recent appeal case of Wayne Rouse v Aviva Insurance Limited (2016) (decision of HHJ Gosnell) gave some useful consideration to the issue of fundamental dishonesty and discontinuance. HHJ Gosnell overturned the first instance decision of the late District Judge Edwards, drawing the following conclusions:
a) Following discontinuance of the claim by the Claimant at any stage of the proceedings, it is a matter for the court’s discretion as to how to proceed with an application by the Defendant for a finding of fundamental dishonesty – “the court has the option how to adopt this procedure whether in writing, whether with a limited enquiry or whether with a full trial” [para 10].
b) HHJ Gosnell noted that the circumstances where it is proportionate to have a full enquiry are likely to depend upon the stage at which Notice of Discontinuance is served and the likely costs incurred up until that point. (In the index case, HHJ considered a three hour hearing at a cost of £2,000 would likely be proportionate when the sum of £11,293.36 worth of costs was at stake and the proceedings had been discontinued 2/3 days before trial).
c) If the Claimant is given an opportunity to give evidence or provide a reason for the decision to discontinue and he/she does not utilise that opportunity; the Defendant can invite the court to draw an adverse inference from this.
Closely related to the fundamental dishonesty exception is the exception set out at CPR 44.15, which provides that if a claim is struck out, the Claimant will lose their QOCS protection. One ground for such a strike out detailed in rule 44.15(1)(c)(i) is if the conduct of the Claimant is likely to obstruct the just disposal of the proceedings. This rule was considered as an alternative to the fundamental dishonesty exception in the first instance decision of Asim Brahilika v Allianz Insurance PLC (2015) (decision of DJ Dodsworth).
On the trial date, Claimant Counsel attended, however the Claimant was on holiday. An application to adjourn was dismissed, and the claim was struck out accordingly. DJ Dodsworth held that it would be wrong to make a finding of fundamental dishonesty against a Claimant whose evidence had not been tested by way of cross-examination.
As DJ had already made the decision not to adjourn the case, the relevant QOCS provision became r44.15(1)(c)(i). The judge found that the Claimant’s failure to attend the trial was conduct of the Claimant likely to obstruct the just disposal of the proceedings. Judge Dodsworth considered the just disposal of proceedings included allowing the Defendant the opportunity to test the Claimant’s evidence and to see if it was possible to establish a case on fundamental dishonesty. The Claimant’s failure to attend had deprived the Defendant of this opportunity. The Claimant was no longer entitled to the QOCS protection and the Defendant’s costs were summarily assessed at £3,500.
- If the Claimant’s discontinues the case, at any stage it is open to the Defendant to apply for a finding of fundamental dishonesty. It is a matter for the court how this is dealt with. If the Claimant does not take the opportunity afforded to them to provide an explanation for discontinuance, an adverse inference may be drawn.
- If the Claimant does not attend trial, the Claimant’s representative can apply for an adjournment. Should this fail, the claim will be struck out. The Claimant’s non-attendance may then form a ground for removing the Claimant’s QOCS protection under CPR 44.15. Both judgments referenced in this post are available in full on Lawtel.