QOCS: A Work in Progress - Jayne Doore, Shakespeares Solicitors
04/05/15. Jayne Doore, a senior Member of Shakespeares Solicitors Insurance Team considers the implications of QOCS so far.
Qualified One way Costs Shifting – commonly referred to as QOCS - first appeared as part of the Jackson reforms in April 2013. It applies to all personal injury claims and claims under the Fatal Accident Act 1976 and Law Reform (Miscellaneous Provisions) Act 1934. It’s operation may be extended further.
It does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement (
It forms part of CPR 44.13-16 and the effect, in particular, of rules 44.15 and 44.16 is to effectively rob a successful Defendant the opportunity of obtaining a full costs Order (in the otherwise normal way) against his/her unsuccessful Opponent. This is because enforcement of any costs order is limited to the aggregate amount in money terms awarded in respect of damages and interest.
There are however some exemptions to this rule. In essence, where the claim has been struck out or where the claim has been found to be fundamentally dishonest.
Firstly therefore, without requiring permission of the Court, under 44.15 a full costs order can be made where a Claimant is found to have:
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Disclosed no reasonable grounds for bringing the proceedings;
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The proceedings are an abuse of the process;
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The conduct of the Claimant, or a person acting on their behalf, is likely to obstruct the just disposal of the proceedings;
Secondly CPR 44.16 (1) states that with permission from the Court;
“(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”
The key points from this are “full extent” and “fundamental dishonesty”. Full extent means a Defendant can pursue a normal, unrestricted Costs Order.
How Judges would interpret “fundamentally dishonesty” has been widely debated given the rather unfortunate absence of a definition, let alone guidance, in the Rules.
Many have already commented it is unlikely to carry the same burden as fraud on the premise that surely that word would otherwise have been selected.
Guidance has come thanks to the case of Gosling v (1) Hailo (2) Screwfix Direct – 2014 – CC – Cambridge. Of particular interest was the finding that fundamental dishonesty did not have to relate to the entire case but only to part of it – in this particular case, it related to quantum and to the issue of exaggeration.
The Claimant, Gosling, brought a claim after injuring himself falling from a ladder made by D1 and supplied by D2. He claimed to be in constant pain, that he was reliant upon crutches and needing assistance with everyday activities. The pleaded claim was in the region of £80,000. D1 disclosed surveillance evidence which purportedly demonstrated a far higher level of function than the Claimant claimed. Following disclosure of the surveillance, the claim settled against D1 for £5000 plus costs. The claim against D2 was discontinued.
Ordinarily D2 would have been entitled to seek a full Costs order but under the new rules QOCS prevented that. Undeterred, D2 applied to the Court under CPR 44.15-16. The grounds were two-fold; either that the Notice of Discontinuance be set aside and the claim against D2 struck out or for a finding that the claim was “fundamentally dishonest”.
DJ Maloney, in interpreting the rules, considered that “fundamental dishonesty” had to be interpreted “purposively and contextually in the light of the context”. In other words, did the Claimant deserve QOCS protection. He stated:
“Thus a Claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps to some minor, self contained head of damage. If on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to be that it would be a fundamentally dishonest claim: a claim which depended to a substantial or import part of itself upon dishonesty”.
Dishonesty, he concluded, in relation to such a substantial part of the claim (in this case around half of the value) was in fact “fundamental”.
This case had not reached Trial. It settled, like a vast number of cases do, following disclosure of effective surveillance evidence. Therefore, the fact that the CPR44 Practice Direction states that “normally” the issue of fundamental dishonesty is to be determined at Trial should not deter a Defendant pursuing costs. The Practice Direction goes onto state that in cases which have already been settled, in only “exceptional circumstances” will the Court Order that the issue of fundamental dishonesty be determined within those proceedings. It also says that a Notice of Discontinuance which has not been set aside will not prevent the determination as to whether a claim is fundamentally dishonest.
The evidence against the Claimant in Gosling is likely to have been rather potent and in many cases it is far less black and white. Such was the Judge’s certainty on his finding of fundamental dishonesty in Gosling he did not consider it necessary to cross examine the Claimant. Helpfully, however, the Judge emphasised that in cases which fell short of such clear evidence, it was necessary to consider whether it was just and proportionate to pursue enquiry by calling oral evidence from a Claimant.
The message for me is both sides beware. Each case necessarily turns on it’s own facts and the impact of surveillance evidence should never be underestimated.
A final point. Although the damages awarded were £5000 there was an additional indemnity to the CRU for the sum of £18,000. Had the Claimant been awarded QOCS protection, would that have meant that costs would have been measured against £5000 damages or £23,000? This question remains unanswered.
Commenting, Atif Razzaq, Partner and Head of Costs at Shakespeares said:
“This is the first case where a court has dealt with the meaning of fundamental dishonesty and we have now have an idea of how the Court will apply the QOCS provisions. However, the question of how dishonest a claim is before it can be classified as fundamentally dishonest is still arguable, for example, if a claim is 30% dishonest, is the whole claim fundamentally dishonest? This any many other grey areas will need to be addressed in further cases”.
Jayne Doore
Shakespeares Solicitors
Image cc flickr.com/photos/theenmoy/5472993906
