Kraszewski v UK Insurance Ltd (Hastings 31/12/18)
Since the introduction of One-Way Qualified Cost Shifting (QOCS), Defendants have had limited opportunity to recover the costs incurred in resisting unmeritorious claims. Fundamental Dishonesty, under CPR 44.16, has understandably attracted significant focus from Courts and Insurers given the novelty of the legal concept and the public policy desire to identify and deter dishonest claims.
The recent case of Kraszewski v UK Insurance Ltd (Hastings 31/12/18) is a timely reminder that other tools are available to Defendants for cost recovery.
The original claim arose from an alleged road traffic accident in which the Claimant pleaded that she had suffered neck and right shoulder injuries. The Defendant driver reported that no contact was made, and liability was denied. The claim progressed through disclosure and witness exchange and a large number of inconsistencies were identified between the medical report, medical records and witness evidence.
The week prior to trial the Claimant attempted to discontinue but the Defendant applied for the QOCS shield to be dropped and for Defendant’s costs to be enforceable.
The Defendant driver was an elderly gentleman in poor health. As a consequence, he was unable to attend the trial and the matter proceeded in his absence. This rendered the ‘no contact’ argument untenable and undermined the Defendant’s prospects of proving fundamental dishonesty. There remained, however, significant issues with regard to the validity of the injury claimed and as such the Defendant elected to maintain their stance.
Under cross examination the Claimant’s evidence was poor but the Court felt that it fell short of the necessary threshold required for a finding of fundamental dishonesty. Despite reaching this decision the Court described the approach taken by the Claimant and her solicitors as careless and reckless. He was particularly influenced in this conclusion by the late discontinuance, the failure to identify and correct clear errors in the evidence and a failure to disclose documentation in breach of CPR 31 (disclosure).
The Judge accepted an oral application that the conduct of the Claimant and/or her representatives was sufficiently poor that it impeded the just disposal of the proceedings. As a result, an order was issued that the costs of defending the claim were enforceable against the Claimant. The Judge did not expressly consider the need to set the discontinuance aside under CPR 44.15 but indicated that he would exercise his full discretion to ensure that costs were recoverable, given the conduct he had observed.
The conduct of a party has long been a determinative factor in recovery of costs and in post QOCS cases this is no different. The above judgment shows that an alternative route to cost recovery under CPR 44.15 should be considered especially in cases where fundamental dishonesty arguments are weak, but the parties conduct remains poor. It is also worth highlighting that ATE insurers are more likely to withdraw cover in cases of dishonesty and actual financial recovery may be more successful under CPR 44.15 than CPR 44.16.