Application of QOCS – Significant New Decision confirms application against Compensatory Bodies

Application of QOCS – Significant New Decision confirms application against Compensatory Bodies

The issue of when and where Qualified One-Way Costs Shifting (QOCS) ought to apply, and tensions in the rules in respect thereof, especially where claims are brought against a compensatory body rather than a more traditional, personal defendant who has wronged the Claimant, has been a matter of some debate since the introduction of QOCS.

It had long been thought and, indeed, argued that a claimant not pursuing an individual, but rather a body, was not entitled to such protection as it did not strictly fit into the definition prescribed by CPR 44.13.

However, most recently, the Court of Appeal has had an opportunity to clarify the position and hunt down some useful guidance in this regard.

In the matter of Howe v Motor Insurers Bureau [2017] EWCA Civ 932 the claimant was driving a lorry on the A16 in France, when a wheel detached from a lorry in front of him and, through no fault of his own, the Claimant collided with the same leaving him severely injured. Neither the offending vehicle nor the driver could be traced and after delays, the Claimant brought a claim against the Motor Insurers Bureau which was dismissed at first instance on the ground that it was statute barred.

An appeal against that decision was made, however the appeal was struck out on the ground that it was bound to fail pursuant to Moreno v MIB [2016] UKSC 52 and as such, therefore, it was subsequently accepted that his claim against the Defendant and accordingly concluded, leaving only issues in relation to costs of that claim and of the unsuccessful appeal to be resolved.

Those issues came back before Stewart J who had originally dismissed the claim as being statute barred, on this occasion found that the claim was not a claim for damages for personal injury for the purposes of CPR 44.13 which would have given rise to Mr Howe receiving QOCS protection, but gave permission to appeal.

Following detailed analysis of the Rules, European Regulations & Directives, together with case law across a very detailed judgment, Lewison LJ concluded that

“…in order to fall within the scope of CPR Part 44.13 a claim must be both a claim for “damages” and also one in which the damages claimed are “for personal injuries.” At common law there is a clear distinction between a claim that sounds in debt and the claim that sounds in damages. A debt is a definite sum of money payable by one person to another usually in return for the performance of a specified obligation by the payee or on the occurrence of some specified event or condition. A claimant who claims payment of a debt need not prove anything beyond the occurrence of the event or condition on the occurrence of which the debt became due. He need prove no loss; and the rules about remoteness of damage and mitigation of loss are irrelevant. Damages, on the other hand, consist of a sum fixed by law in consequence of an antecedent breach of obligation or duty.

“Sometimes the distinction between the two is elusive, or even counterintuitive.…A claim against insurers for indemnity under an insurance policy, even where the policy is a valued policy, is classified as a claim sounding in damages. That has been the position for some 200 years.”

and raised query as to whether the reference in CPR 44.13 to “damages for personal injuries” could be interpreted to include a claim for compensation under regulation 13 of the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, concluding that

“…Those who have (or may have) valid claims for damages for personal injury should not be deterred from pursuing them by the risk of having to pay the Defendant’s costs, except in the circumstances laid down by Section II of Part 44. If Mr Howe’s claim under regulation 13 is covered by QOCS he will be in an equivalent position to an injured person who sues an insured driver.”

Lewison LJ did give consideration to the rationale adopted by Stewart J in his original judgment, noting the influence which he felt the judge had had regard to in reaching his conclusions at first instance that QOCS did not apply, that the influence being in relation to regulation 16 of the aforementioned regulations, however found that that regulation did not apply as the same referred to “any sum due and owing” Mr Howe’s claim did not constitute a sum that was “due and owing” as the same would only be created by a debt, namely an amount ascertained at the time when proceedings were begun.

“It is only when the amount of the debt has been ascertained that it can be said to be “due and owing”. I do not consider that by regulation 16 a parliament can be taken to have altered one fundamental characteristic of a debt by a side wind. In my judgment regulation 16 would apply to Mr Howe’s claim once the amount of his compensation had been assessed…I do not, therefore, consider that regulation 16 undermines the interpretation of CPR part 44.13 that I prefer.”

Accordingly, the appeal was allowed.

This judgment is the first clear guidance provided by the Court of Appeal in relation to the application of QOCS against parties other than the person or body responsible for any injury or breach, and potentially paves the way for QOCS protection to be applied outside the ambit of road traffic claims, to other such compensatory bodies, such as insurers or tour operators, a number of whose claims have been stayed pending the outcome of this appeal.