Procedure for applications to disapply QOCS due to fundamental dishonesty a matter for Court’s discretion

HHJ Gosnell, sitting in Rouse v Aviva Insurance Ltd (unreported), 15 January 2016, (Bradford County Court), has clarified that the procedure to be adopted when dealing with applications under CPR Rule 44.16 (to disapply QOCS on the basis of fundamental dishonesty) is a matter for the court’s discretion.

The Claimant brought his claim for personal injury following an alleged car accident. The Defendant insurer had been suspicious of the accident circumstances, and carried out a thorough investighation. Shortly before the trial, the Claimant discontinued his claim.

The Defendant sought a finding of fundamental dishonesty under CPR 44.16, disapplying QOCS and allowing the Defendant to recover its costs.

The district judge initially held that the Claimant was not required to explain the discontinuance, nor was the court required to draw any adverse conclusion his lack of explanation; any allegation of specific fundamental dishonesty had to be decided in light of the papers, that the costs of a trial would be entirely disproportionate.

The Defendant appealed.

On appeal the judge considered that the Court had a wide discretion to order that an application under CPR Rule 44.16 could be determined by either:

• paper determination;
• limited enquiry; or
• a full trial of the facts.

Further, the judge acknowledged that a claimant could not be forced to give an explanation for any decision to discontinue, in cases where a prima facie case of dishonesty it is proper that a claimant be afforded the opportunity to explain why a claim was commenced but subsequently discontinued. If a claimant fails to give evidence or to explain the discontinuance, a defendant could be justified in inviting the Court to draw an adverse inference.

A Court’s procedural approach is likely to heavily depend at what point in proceedings a claimant discontinues; a full hearing is more likely to be deemed proportionate if the proceedings had reached a stage where the parties were all but ready for trial, and evidence had been exchanged.

In contrast, if a claim had been discontinued just after service of a defence, this may be a persuasive factor against incurring substantial additional costs of taking the matter to a full hearing.

Whilst this is only a County Court decision, it provides some guidance to insurers as to the procedural approach that the Courts will take towards applications to disapply QOCS on the grounds of fundamental dishonesty. This remains a developing area of law, and further guidance from higher Courts is awaited.

The current impression, however, is that judges will reserve a great deal of discretion when determining the appropriate procedural approach to such applications. Each case will be dealt with individually, and the approach taken is likely to depend upon the procedural stage that the claim has reached, and the level of additional work required to take the matter to a full formal hearing.

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