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Claimant’s material change of evidence on central issue in case deemed conduct likely to interfere with just disposal of proceedings, leading to strike out and enforceable costs under CPR44.15

The introduction of QOCS was supposed to be a cost neutral exercise, benefiting the Defendant insurer who no longer had to pay an uplift for running a case to trial or the cost of an ATE insurance policy, with the quid pro quo being that the successful Defendant would not be able to enforce a costs order against the Claimant whose claim failed.

Those benefits being almost instantly (and conveniently) forgotten, Defendants turned to complain about the cases where they won, but could not enforce their costs. There are, of course, cases where a Claimant is awarded damages at trial, but less than the sum offered by way of CPR36 offer, such that the post-offer costs can be set off against damages, although it would be a rare case where there was sufficient awarded in damages to cover the costs of the trial.

Moreover, the Supreme Court’s decision in Ho v Adelekun [2021] UKSC 43 makes it clear that there should be no set off as between any costs owed by the Defendant to the Claimant and those which the Claimant might incur to the Defendant. That decision (described by one commentator as ‘astonishing’) falls outside the current article.

That leaves two scenarios where a successful Defendant can enforce a costs order against an unsuccessful Claimant and, more importantly, go beyond the mere sums of money which might be at stake and ordered in the Claimant’s favour. Those provisions are set out in CPR44.15 and CPR44.16.

CPR44.16 will be well known to regular readers. After all, this is a Fraud newsletter. The rule, of course, provides that if the case is found (and only on the balance of probabilities) to be fundamentally dishonest, the Court can (and will normally) order that the fraudulent Claimant should not only lose any damages to which he would be entitled but for his fraud, but that the Defendant should be entitled to enforce its costs of the action against him.

CPR44.15, however, is slightly less common in day to day personal injury practice. Part of that is because of the industrial nature of the work: a specialist firm is unlikely to run unmeritorious or misconceived claims. It is worth recalling what the rule actually says.

44.15 Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;

(b) the proceedings are an abuse of the court’s process; or

(c) the conduct of –

(i) the claimant; or

(ii) a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct,

is likely to obstruct the just disposal of the proceedings.

Clearly, (a) and (b) serve to dissuade wholly unmeritorious (but not dishonest) claims from being brought but the third limb is more wide-ranging.

The analysis is simple:

  1. There must be conduct which is likely to obstruct the just disposal of the proceedings;
  2. That conduct must be sufficiently heinous to warrant the action being struck out;
  3. If that strike out is ordered by the Court, the costs are then enforceable against the Claimant as of right, without any discretion from the Court (as one sees in CPR44.16). The logic, on the face of it is that for the Court to strike out the claim, the conduct must have been heinous in any event, so the enforcement sanction would fall to be engaged.

In the normal course of events, A recent case in the Birmingham County Courtm Rakowski v Chemflex Limited, HHJ Ingram (18 & 19 May, 18 June and 20 July 2021) saw an interesting and potentially novel crossover between the jurisdictions of CPR44.15 and CPR44.16.

The Claimant, a Polish national with limited English (who gave evidence through an interpreter so skilled that he could provide simultaneous translation), was employed as a casual labourer to undertake one day’s work at the Defendant’s bathroom showroom. Sometime after lunch, he sustained catastrophic injuries to his left (non-dominant) hand leading to the complete loss of all four fingers. The circumstances of the accident and the injury were in issue and the matter fell to be tried on the preliminary issue of liability.

The Claimant’s case was that he had been given a hammer and told to partially demolish a concrete panel fence between the rear of the premises and an overgrown embankment leading down to the local canal. There was an issue about the type of hammer provided. The original Particulars of Claim suggested that it was a lump hammer, whilst the witness statement (and a formal amendment to both the Particulars of Claim and the Reply, with translation, shortly before trial) suggested that it was, in fact, a standard domestic hammer with a wooden handle and a small head. In the witness box, the Claimant suggested that the hammer in question was, in fact, somewhere between the two, but repeated that he had been given it by the Defendant.

His evidence was that he had hit the (already cracked) second panel from the ground with the hammer provided, that the panel had dropped out unexpectedly, his hand had followed through, and the third through sixth panels had shuttered down, trapping his hand. It was therefore said, on his behalf, that that he had been instructed to undertake an unsafe job in an unsafe manner with inadequate training and equipment, and that whilst there was some contributory negligence on his part, primary liability rested with the Defendant.

There was no issue that the Claimant was found with his hand trapped in the fence, but the Defendant denied any need to repair the fence, or giving him any instructions to that effect, or supplying him with a hammer. Whilst no search for the hammer was undertaken immediately after the accident, it could not be seen on a contemporaneous video. Searches several years post-accident showed the scene apparently unchanged, but no sign of any hammer. The only three people working in the business (save for the Claimant) were the owner and his wife (Mr and Mrs Omer), and their manager (Mr Fareed), all of whom came to court to deny giving any instructions about the fence to the Claimant.

It was agreed between the parties that if the instruction had come from the Defendant, its servants or agents, primary liability would attach, whilst if it did not, the claim would fail. The identity of the person giving the instruction (if any) was thus central to the case.

The Claimant’s witness statement stated that the person instructing him to undertake work on the fence was the owner of the Defendant company, Mr Omer, with whom he had spoken some 12 months post-accident to ensure that the accident was properly reported.

In the witness box, before confirming his statement, and without prior warning of the impending change in evidence, the Claimant averred that the instructions had actually come from a man wearing blue overalls, who wasn’t Mr Omer (who had already left the premises to price up a job), or Mrs Omer (who was clearly not a man), or Mr Fareed (who did not wear overalls, preferring a suit in his role as a salesman). The Claimant maintained that this man must have been employed by the Defendant: Who else would have been there to give him the instruction and/or the hammer?

The evidence was concluded over 1½ days on 18 and 19 May 2021 and the matter was adjourned to 18 June 2021 for oral submissions.

The Defendant’s submissions on primary liability were threefold: (a) that the Claimant had not, in any event, come up to proof because of the various inconsistencies in his evidence, not least the reference to the man in blue overalls who had not been referenced at any stage until he entered the witness box; (b) that the reference to the man in the blue overalls was not simply a mistake, but a deliberate, and fundamental, piece of dishonesty to maintain the claim once it was apparent that Mr Omer and Mr Fareed were there to be cross-examined and to deny any involvement in the Claimant’s alleged instruction; and (c) that the change in the Claimant’s case, arising in the circumstances in which it did, was not merely fundamentally dishonest, but also an abuse of process, such that his claim fell to be struck out on the basis that the conduct of the Claimant was likely to obstruct the just disposal of the proceedings.

That last point had been raised between the parties at the conclusion of the Claimant’s evidence, but the limited time available meant that the decision was taken to hold back the point until the conclusion of the evidence, rather than cause additional problems as to whether the Defendant would be put to its election by making such a submission at the conclusion of the Claimant’s evidence. It was important, because it was open to the judge to conclude that the memory was genuine, but mistaken, rather than a deliberate piece of dishonesty.

Having reserved judgment, HHJ Ingram delivered an oral judgment on 20 July 2021, concluding that the man in the blue overalls was, in fact, a dishonest invention by the Claimant when faced with the Defendant’s witnesses, rendering the claim fundamentally dishonest.

More importantly, she also concluded that the very specific circumstances in which the new evidence came to light, when the Defendant could not conceivably respond save to deny in the face of the Court that any such man existed, was conduct which served to obstruct the just disposal of the proceedings. The Claimant had already taken the opportunity to amend his pleadings shortly before trial. In the circumstances, it was not simply a matter of dismissing the claim as fundamentally dishonest and then considering the enforceability of costs under CPR44.16, but rather, it was appropriate to strike out the claim as an abuse of process, triggering enforceability under CPR44.15.

This was an important conclusion for two reasons: firstly because the Court was not, of course, bound to conclude that the claim was fundamentally dishonest, and secondly because CPR44.15 is an automatic trigger. As it transpired, because of the parallel finding of fundamental dishonesty, the issue did not arise.

The Order (wording agreed by the parties) made it clear what even if the matter had not been struck out, the claim would have been dismissed as having been fundamentally dishonest, which would have led to the same result on costs, and that the Claimant had not actually come up to proof in any event.

The Claimant being a man of straw, an order was made for a payment of £10,000 on account and the remainder of the Defendant’s costs be stayed generally with liberty to apply.

Comment: This is a particularly unusual set of circumstances and a particularly unusual but pleasing result for the Defendant and its insurers, representing, as it does, another method by which to defend an unmeritorious claim. There is certainly scope for the application to be made earlier, and more specifically at the end of the Claimant’s evidence. There may also be circumstances where the claim is not, in itself, fundamentally dishonest, but the conduct is similarly seismic in its effect. Whether the Court will entertain a similar application in those circumstances remains to be seen. It is important to note that formal amendment of the Claimant’s pleadings (which were still nevertheless silent as to the man in blue overalls) occurred as late as the pre-trial review.

David Boyle was instructed by Sarah Ezzat of Weightmans on behalf of Ageas Insurance.

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