QOCS -Traps for the Unwary

Hello and welcome to this webinar on qualified one way cost shifting. I've called it traps for the unwary. On I think We'll Will See is the weapon unfold. Why that title seems appropriate at the moment. My name's Niki Carter on Let's Let's get straight on with the presentation, have a look and see what we're going to be looking at. What I wanted to look at really was the effect off. The clocks will use that term. Everybody else does that qualify one way? Cost shifting provisions that inter Part 44 off the rules We look particularly, and I think we need to focus on the exceptions. So the circumstances in which the climate will lose potentially that protection that costs protection. I am particularly, of course, at fundamental dishonesty, which which gets the biggest press if you like what we think actually means. What other practical implications off that I think we also need to take a look at the effect off the qualified one way cough shifting regime on the part 36 provisions that cost provisions because there is, ah, connection of thinking. We've seen ah lot where we got new provisions come in How do they impact that? If you like Default costs rules in part 36 Use that term loosely. What will actually happen? We've had some interesting decisions. We've had, ah, lot off decisions in recent months and probably in the last year on one of the ones we really need to take a look at. The case called Howlett from the Court of Appeal the back end of 2017 on really what that explored waas the extent to which the defendant needs to set out their stall. If they're going to be pleading fundamental dishonesty, they're gonna be pleading fraud. Do they actually need to name and shame if you like the allegations that they're making? Or is it sufficient? If it's clear to the claim and that the claimants version of events is put at issue, is that enough for the Clark for the defendant to pull off? If you like an argument that the claimant should lose their clocks protection, what about the application of clocks in in various different arenas? Actually, one of those arenas that were well focusing on on it was flagged up by case of how on Motor Insurance Bureau is What about the application off qualified when we cost shifting, for example, in claims against the M I B. How does that work is? It's still a protection that the claimant is entitled to. Is it? Protection of the claiming gets? Certainly that the term fundamental dishonesty and we're obviously going to be looking at this in a number of context was coined in the rules 44 point 16th up. One where the quarks rules, if you like, provides the orders for costs against the claim and may be enforced to the full extent with permission of the court, where the claim is found on the balance of probabilities to bay fundamentally dishonest. And we know the term fundamental dishonesty is the same one used in section 57 off the Criminal Justice and Courts Act. The same one, of course, In that arena, the courts required to dismiss a claim where the claimant has been found entitled to damages for PR. But if either the primary claim or a related claim is advancing probabilities fundamentally dishonest, the whole claim is forfeited. So these are the two you know, tranches. If you like off off this new provisions on you know what we need, I think to do is examine the consequences off finding of this kind. Now, I've called the first slide that we're looking at consequences of a finding of fraud because I think that the context of our finding or the court coming to the conclusion that claim has actually bean fraudulent. I use the term deliberately not using the term fundamentally dishonest. At this moment, there are a number of consequences, only one of which eyes something. Our subject today look, walks. The loss of your qualified one were cost shifting if you're the claimant. But there are so many others. And I think claimants need to be aware if you like off the other consequences. Even if the defendant doesn't hit the target on persuade the court that fundamental dishonesty is what's been present then maybe other considerably onerous consequences for a claimant Where the court has decided the claimant is dishonest, fraudulent. The 1st 1 No, no. Stop press here because this is being in the rules for a long time. 44.2 and in particular second procedurals. I draw your attention to some five sub d which talks about conduct on a costs order, even if the climate successful, even if the Clements succeeded in that claim, conduct off the claimant, which, of course required to take into account remain a cost order includes whether a claimant has who has succeeded has exaggerated that claim. Let's not go into the wealth off satellite litigation there is about what that means. But the reality is that you know, if you've set your stall out a claim for the loss of earnings at £300,000 I've found yourself accepting £3000. Those going to bay argument from the defendant, leaving aside fundamental dishonesty about exaggeration, is that what that means is it of necessity, exaggeration? If you recover so much less and you may find a different costs order coming out at the end? Um, potentially we've seen it case called Son Cooper in 2015. Ah, claim for exemplary damages on in that particular case, we have an insurance company who decided they would bring proceedings against the claimant effectively in a P I action on the basis off hard dishonesty in bringing the claim, ah claim for exemplary damages again beyond the scope of this Webinar to explore quite what the claim for exemplary damages would mean. But in truth, we all know what it would mean it would mean are vastly inflated, some in terms of damages in this case for the insurers. So it's a hugely important issue committal for fraud. Let's let's go right to it. Really Access on com from 2017. Why? Why worry about contempt of court? Why bother about fundamental dishonesty? Let's go for a criminal conviction on a committal for fraud where the issue was a fraudulent P, I claim, um, controversial are listed. Its unpick ing a settlement r slash judgment we saw in the Zurich Insurance and Heywood case went all the way to the Supreme Court in 2016. Insurers who settle API, I claim, where they suspected fraud by the claimant were entitled to set aside that settlement when they later discovered effectively proof of fraud. The argument in that particular case was well, yes, they suspected fraud where they made in the offer. I think it's about £130,000 they pay. They suspected it, but they didn't know it until they got a tip off from some neighbors of his after the settlement. Were they influenced by those misrepresentations on behalf? The climate? Yes, that's all they have to show on the settlements unpicked on. Mr Heywood had to repay if he had it £130,000 off course, the subject of today's webinar on the next one on the slide losing clocks protection if the defendant can show that fundamental dishonesty is in place. We've talked about this already. To the other. Consequence, of course, is a whole claim being dismissed, including the non fraudulent pits under the Courts Act for fundamental dishonesty. And, of course, allegations of fraud not necessarily findings abroad will have procedural consequences. So it may be that the track allocation will be like interfered with. If there is an allegation of fraud, liven ready? It may well be. And we know from the case KEDO on the shore from 2016 with what the impact of that might be. Your coming out of the portal on you may have a claim. It's not worth multi track money, but the allegation is fraud. You may argue it's a claimant that you're justified in May allocated to the multi track with all the consequences that will have for avoiding fixed cost regime on exit so that, you know, these are not small consequences of these allegations. I just want to to tick off, if you like. From the list The Provisions in the Criminal Courts Criminal Justice Act Bill Act from 2015. I just want to tick off if you like. From the list. The provisions in the Criminal Justice and Courts Act 2015 when it deals with fundamental dishonesty and the dismissal or for the whole claim, there's the provisions on your slide in any P. I claim where the court finds the climate is entitled to damages. It's important this is a case. The claimants one effectively. This is not like walks where the issue is well. Has the climate lost on what happens about cost? This is where the times one but the court finds climate has been funded it fundamentally dishonest. The court must dismiss the entirety of the claim on We know the fallback if you like. The protection, let's say, is unless the court concious of the climate can show they would suffer fundamental. There's a substantial unless the claimant can show they would suffer substantial injustice. As a result. There's no question that this is a provision for a win. So we're talking a very different story to the clock situation, which is, of course, the story where the claimant is going to be losing on. That's important, I think, to be clear about we need to deal on our next slide. With corks exceptions, we know that the big exception that we're interested in we're talking about is fundamental dishonesty. I think the you know, it's so unclear from the provision in the rules, and it's pretty unclear to be honest in the Courts Act. What does this mean on? Of course, we're all struggling and were struggling as this first came in tow. Work out what North it men. Ah, pretty key case in early days off this provision was K School Gosling inhaler, which suggested that exaggeration or dishonesty in relation to Quantum was enough for a case to be termed fundamentally dishonest. I don't know how to summarize this best. Perhaps I'll just say crutches at a medical appointment, but not on the DVD defended. Got Holder was pretty much that the course in that case, eyes on a judge, Maloney said. The Kerala re term two fundamental would be a word with some meaning, such as incidental or collateral. So, in other words, it would have to be key. It would have to be key to a substantial part, the claim. And I think the belief grew up that perhaps we were talking percentages. Perhaps we're looking at whether a claimant have been dishonest to a certain percentage off the claim. Was it that Is that what mattered? Um, certainly. What we think we found is there perhaps, are two levels off dishonesty that which was not fundamental so that the claimant isn't exposed to cost liability on dishonesty, which is from the mental, so as to expose the claimant to, of course, liability. And I say I think the feeling wolf is that on a percentage basis, you know is the culpability of the actions of the claimant. Are they leading to a collateral matter of minor matter, or do they go to a significant part of the claim? So does fundamental main both in size and importance. Does it mean the effect of the dishonesty was fundamental to a substantial part of the claim? and that might mean in size and importance. Is that what's going on here? Is that what we're talking about? I think one of the things that for defendant from a defender point of view that we have to consider his wife. Perhaps insurers might be reluctant to plead forward toe put fundamental dishonesty into the mix. Is it necessary to make this allegation well, firstly, possibly because they lack direct knowledge of the relevant events. There are professional obligations knocking about counsel solicitors that mean that we need to be slow to allege. For orders professionals, there's a, you know, cases more likely to be allocated to the multi track we saw there earlier. If fraud is asserted on the trial judge, concluding that a fraud defense has not been proved might well be liable to find for the claimant without considering the issue. Really, considering whether or not there are issues off the claimants, you know, the defendant's reaching the high standard that's required of defendants when they're making this allegation. It ups the ante in a fairly major way to look at the pleadings rules. We could do that quite quickly. 16.5 requires the defendant to identifying the in his defence which of the allegations he denies. If it's denied what are his reasons for doing so? And he intends to put forward a different version of events state his own version that's in the rule. So we know that defendants are not necessarily required to set out their stall. We know it and we saw it in the next slide. The case of Howlett and Davis in 2017 the Court of Appeal case where the issue really waas the statements of case prepared by the defendants, hadn't identified the issue specifically or fundamental dishonesty. The court took the view that the mayor fact that the opposing party hadn't alleged dishonesty in their pleadings doesn't necessarily bar a judge from finding a witness to have been lying. What? That must be true. I think that that's always the judges prerogative. In fact, judges must regularly characterize witnesses as having been deliberately untruthful, even where there isn't a player fraud. And if we go back in time to the case of Cares Lynn Clark Field, which looked at pleadings of fraud, particularly in that case of L V. I actually allegations of low velocity impact. The court took the view that no on allegation or putting causation issue is not a pleading of fraud. What do we learn from Halle? The key question will be whether the claimant have been given adequate warning off on a proper opportunity to deal with the possibility off such a conclusion. My dishonesty on the matters leading the judge to it rather than whether the judge had off the insurer. Sorry, positive, positively alleged fraud in its defence s. So there's no need. It is the story from hell it for a defendant to set out their stall and specifically allege fundamental dishonesty, fraud and for the court to make a finding on those terms on perfectly possible for the claimant to lose that qualified one way cost shifting protection, even if this has never been put an issue in the statements of case. So it's quite clear that it isn't necessary for a defendant to make that allegation. There's no need for a defendant to set that stall out. Walk matters next slide, where a witness honesty is to be challenged always best that it's explicitly put to the witness. So I think we know when it comes Teoh advocacy. When it comes to cross examination, it's important that you know the witness is clear and have fair notice that their honesty is in issue. It may be that, you know, using words like lying on dishonest or not necessary the fact that a party is not alleged. Fort, in his pleading may not precluding from suggesting to a witness in cross examination that he's lying and look out for what's done in cross examination. What terms are used? It may be that even if they advocate doesn't go as far as using the words dishonesty that was lying then it's clear from the style of cross examination, the claimants honesty is being putting question. That's let's call it that. So we know that it's not necessary to alleged pleading it can come as a nasty surprise at the conclusion. Off matters. Let's take a look at some off the consequences If you like off on allegation or fundamental dishonesty on, I think one of the things you were having explored the fact that it isn't necessary for the defendant to come out and make this allegation in the statements of Case per se, one of the things I think that is important is that we recognize that if the allegation is made, if that Klayman's honesty, if you like, he's putting to issue. And if allegations of fraud, allegations of fundamental dishonesty all not proved against the kind who obtained judgment, the defendant is unsuccessful. If you like in making that allegation stick the claimant, of course, as a successful party in the circumstances is likely to obtain an order for costs just under the general discretion, Really, on the part. 44. I think further what we should think about is, you know, should that came to be vindicated at trial. Let's put it like that in rejecting allegations of dishonesty. Then, even if the climate is failing to be perhaps a part 36 offer made by the defendant, I think the argument would be from the claimers point of view that that's more advantageous on a broad analysis of the issues on when the courts, looking at part 36 17 where should the cost full? But this becomes a relevant issue. In other words, the fact that the claimant has succeeded, if you like, in defeating allegations of dishonesty on goes on to succeed. The argument would be that the claimant should still collect costs and shouldn't be paying the defendant's costs from the date the defenders, part 36 offer on the basis that the outcome for the climate is more advantageous. You know, the argument also runs. Of course, you make an allegation off dishonesty against the climate and your unsuccessful in that one of the arguments might be the claimants entitled to indemnity costs as a result of having to face that allegation, if you like s. So I think it's it's important, really toe look at whether or not an allegation of this kind may by defendant on early point will have also will have cost consequences. The argument runs for the claim. And if the claimant is successful in their claim now, we saw that the court is willing, Teoh the supply of very if you like the provision off Part 36 when it comes to cases. For example, that left the portal. We saw it in Broadhurst in town, the 2016 Court of Appeal cases where the court was willing. If you like to look out to the relationship between fixed costs within the portal on the costs under 36 17 off the PA 36 role on the basis that when claims that left the portal, the claimants had made Part 36 offers, which they then went on to trial to do better than what costs that they get their portal exits. Will, the court decided in Broadhurst in town, both fixed costs up to the latest date on the table six for having left the portal and then reap all the rewards under 36 17 sub four that they've bean title to for having been successful with their part 36 proposal. Double costs if you like one done on the basis of indemnity. So I think that argument is a live one. I think when it comes to examining if you like the extent off the corks protection, we need to be clear that Cox does not apply to proceedings and celery toe person injury claims. For example, claims under the Civil Liability Contribution Act 1978 even where such claims are brought US Part 20 claims within the person that the claimants person injury action on a good example of that we saw recently in the case off wagon are on weekend travel clocks Rules do not apply to proceedings between a defendant in a P I claim and 1/3 party, and it does raise questions. This I think, about whether it's prudent for a defendant to join third parties to an action where the claimant is benefiting from quarks protection. You know the argument big all to lose if you like. For the defendant, clocks protection may be lost where proceedings include a claim made for the financial benefit of a person other that in the claimant or dependent. We saw that when we look specifically at the role of 44 16 sub tuned three, for example, subjugated claims claims for credit higher. So it may be that in those particular cases, corks protection may be lost in circumstances where those on the natures off the claim I thought it would be helpful is if we had a look at some scenarios, really on had a look at what the relevant is off quirks on the relevance off Section 57 in various scenarios, but I think it can become a bit confusing to try and work out where Quach steps in on where cracked section 57 steps in. And I think for many, Kliment said, This is a confusing story. We're trying to explain to the Kleiman what the consequences might be in certain scenarios. It's important they get a really clear understanding of how those two provisions kind of work together if you like. Um, and scenario one, the whole claim is fabricated down. Probably as bad as it gets, isn't it? It's in everyone. The insurer is going to win a liability. The whole claim eyes fabricated. Then we'll no special rules really need to apply. Section 57 of these Criminal Courts of Justice Act doesn't supply because, of course, that only applies. It's kind is gonna win eso. It's not relevant in that circumstance. Qualified one way cost shifting. Okay, how does that apply? A starting point is that the losing claimant paste costs scenario one. This is the instance in which the claim is lost In this circumstance. Yes, corks is relevant. Don't deploy. This decision makes no difference whatsoever to the application of the qualified one way cost shifting regime. In this scenario, the insurers going to win the insurer will be successful on In those circumstances, it's quite clear that squawks is not going to be relevant. Let's take a look at second scenario. A genuine claim bought the amount of it has been dishonestly exaggerated. Now, in this particular scenario, are the climate's genuine on the claim is one of the claimant that claims been successful on Therefore clocks is just not relevant. Corks is only going to apply where the climate is unsuccessful. Does the claim our protection? Do they not? In this scenario, the claim is genuine on its one and therefore cooks is not relevant here. Isn't relevant for section 57 on the finding of fundamental dishonesty in that scenario, yes, it's a classic scenario for Section 57 2 applies in it the claims one or liability but has been dishonestly exaggerated. Potentially, the court to Science Section 57 may overturn Wipe out feel like the whole P I case. Andi certainly would only be relevant in appeal. My case. Potentially, if the court finds fundamental dishonesty, the claimant loses everything on the whole claim is is destroyed, if you like. By the finding fundamental dishonesty scenario. Three Dishonesty, which makes no difference to the claim so there's dishonesty, but it's no actually relevant. It's no actually going to make any difference to the claim itself. Quantified One way call shifting doesn't apply because in this particular case, the cases one cox only applies to cases that are lost or whether it's failure to be a part 36 offer so irrelevant if you like. In this particular scenario, quartz is not relevant. Section 57 The Supreme Court held that such exaggeration, which makes no difference to the claim, isn't fraudulent. Even though it's dishonest on the court. May say, Well, it's the lie that's dishonest, but the claim is no. This is a very fine test on. I think, you know, we need to be very clear when we say dishonesty, which makes no difference to the claim. Is that really true? Is it possible? But that can be such a thing. The test under Section 57 is whether the claimant is fundamentally dishonest, whether rather than the claim on it could be argued on to Section 57 that in this scenario the wind would be overturned. Section 57 is very specific. Is the claimant fundamentally dishonest, not the claim. It's the climate, and it's important that we examiner look at that. It may be on the case off. Rouse and I think of ever insurance looked. It fits in some detail in the county court breakfast in January 2016. Could there be circumstances in which it was proportionate for there to be a trial to determine the issue off fundamental dishonesty? In this particular case, Rouse claimed the P I arising out of an accident which allegedly occurred he was a passenger in a friend's vehicle. No question. The defendants took a bad view of the claim and gave it full investigation. Two or three days before trial Rows discontinued his claim. A defendant applied for finding a fundamental dishonesty opportunity pursuant to 44 16 so they could enforce their costs against the Kliman. The procedure to be adopted in conducting 44 16 applications where it's been discontinued, was examined in this case. Could that be determined in this case on the papers with limited inquiry or with a full trial on the case of Gosling, which we looked at earlier was considered in the instant case? What did the court decide? The fright and fair way to move forward will be to a full trial or a limited inquiry giving Mr Rouse and his witnesses the opportunity to give evidence on what was clear was where the climate didn't give evidence or didn't proffer any reason for the decision to discontinue. The defendant could invite the court to draw an adverse inference on we've seen from recent cases on you know, the ability, if you like off the court to draw adverse inferences where evidence not given by a witness on. So, you know, I think it's clear that even or in this particular case, even though discontinuance happened, it's still possible for the defendant to come along on, make the application on, have the application dealt with four fundamental dishonesty. One thing that we need to consider is cooks protection for appeals on one of the things that the race is itself is well, hang on a minute case of Parker, but at what cost protection is there for claimants under clocks? Does it apply our two first appeals, for example, in personal injury proceedings, the judge in this particular case, the access to justice, was the It was dependent, really, on the kindness having the benefit off course protection. Remember that claims lost their protection. Our prior Teoh lesbo that they used to have for bringing proceedings they've lost that now with big cocks isn't in place. They have nothing. Certainly the court took the view that the claimant needs to have that protection are on first appeals. You also noted, in this particular case of some protection, against on meritorious proceedings through the need to obtain permission to appeal. So there'd be a filter off some kind claims going really nearly appear with the fear of consequences on the question of whether they appear was part of the person injury proceedings. Because remember the clocks to kick in. It must be the judge considered there was no difference in the nature of a claimant. In a p. I claim that same Klayman once he became the appellant in a an appeal. So what we found out Parker butter was Cork's regime remains in place and ought to remain in place to ensure the climate's access to justice. One thing that we found out in a case called How on the M. I. B. From 2017 which went to the court of appeal is a clarification really off the application of qualified one way cost shifting and personal injury claims brought against compensatory bodies such as the Motor Insurers Bureau, such as potentially tour operators on the package. Holiday regulations on you Do those kinds benefit from squawks? Protection on the impact of this decision is pretty major, really. The judgment ensures that the wording contained within the rule for Cox applies to claims for damages to P I and should be broadly interpreted to encompass any P. I claim where compensation is sought by an injured claimant. Claims on the package tour eggs, direct claims against motor insurers as well as claims against the M I B. I'm now very clearly going to benefit from clocks protection. The deal being there's now a level playing field when it comes to actions for PR on cost protection became it's bringing those claims. Jackson reforms always intended to introduce damages of a protection rather full people bringing Pioline claims to get protection against adverse costs orders without the fear of racking up costs. Insurers and other large economic entities who are defending the claims it is important to note the cautionary notes on all good news in how, in a supplementary judgment of the court appeal, the court found that while Mr Harrell was awarded the costs of his appeal course applied, we found that, really, those costs were to be set off against the defendants. Unenforceable orders, which secured in the main action on subsequent appeal in the limitation proceedings the curve. The claimant effectively then had to bear his own costs of the appeal on still remained out pocket despite his successful appeal with Cox protections. So be wary off course orders along the journey for the defendant that may come into consideration when it comes to the appeal. Let's take a look at the case or Catalano on EPS League. Tiresias Di asked. Sorry, let's take a look at the case of Catalano in 2017 The Court of Appeal case. The issue here really waas The appellant employees appeal against the decision that the qualified one way cost shifting regime was no applicable to her claim for loss and damage suffered as a result of noise induced hearing loss during her employment with her employer. She began proceedings under a conditional fee agreement back in 2012 on the same date. After the event insurance was declined, expert evidence was obtained on it was common ground that a funding arrangement the purposes off Rule 48 2 wars, entered into on the first of April 2013. Of course, that caught the Kochs regime came into fools, and the claimant entered into a new CF A. In July of that year with the same solicitors argument, it replaced the prior arrangement. One day prior to trial, she served a notice of discontinuance the issue waas. Whether the district judge had been correct to find the Kochs regime was not applicable. Onda After discontinuance, she was liable for the employees costs of just over £20,000. In this argument, the court decided that in any case in which litigation services have been provided under a CF a maid before the first of April 2013 success fees could continue to be recovered. Its costs on qualified one way cost shifting would not supply. Even if the CF I was terminated on a second CF A was made, it was irrelevant that sisters remained the same after termination of first CF A. Because the second CF they had replaced the abandoned one. She was no operating under a pre commencement funding arrangement and did not have the benefit. Beatty cover. I'm should therefore have the benefit off squawks. Now that's a complicate, a complex situation. But I think it does make us focus. Really, all the circumstances in which quarks will apply on there will be lots of these cases where there are complex funding arrangements dating back to before are the first of April 2013. One case that I think we need to focus on before we have to finish is a case called out for Insurance and Roche. And it's important issues from this year 2018. The case. Let's call it off the missing passenger. You can probably work out arrest for yourself in this particular case, Mr Justice? Yep. From that circuit, judge should have set aside a notice of discontinuance to allow a claim of fundamental dishonesty to be hurt. She held that the notice of discontinuance should be set aside in order that the court could consider the issue of fundamental dishonesty alleged by the defendant. Pursuant to a part. 44 on went on to say this profession has been introduced expressly to allow issues fundamental dishonesty to be determined after discontinuance. Inevitably, this involves the allocation of coal resources to a case which is no longer being pursued, not uncommon for these cases to involve pretty modest costs. However, in considering proportionality, it needs to be recognized as a public interest in identifying false claims on in claimants who pursue claims being required to meet the cost of the litigation. This is an important decision, and it means that even if there's been a notice of discontinuance, the climate is no safe, not free. The defendant may well apply for the court to consider the issue of fundamental dishonesty on set aside that notice on. I think that's a really important thing for claimants to understand. It's not over if you like, until the defendant has potentially considered their options on making an application for fundamental dishonesty. What is over, however, is our weapon on eso hope it's been helpful on thank you very much for listening