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Orman v Cihangir & Octagon Insurance

Articles | Fri 15th May, 2015

Judgment was given by Her Honour Judge Baucher sitting at the County Court at Central London on 15th May 2015. It considered the relatively new provisions in respect of qualified one-way costs shifting (“QOCS”) and fundamental dishonesty.

The matter related to a road traffic accident. The Claimant had discontinued his claim on the day of trial. Qualified one-way costs shifting applied. On the day of discontinuance, the Defendant’s costs were assessed and ordered to be paid by the Claimant (with such order not to be enforced without the permission of the court: Rule 44.14).

The Second Defendant sought its costs under the exception in Rule 44.16(1): costs “may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest”. It argued that the issue of fundamental dishonesty ought to be determined by the court at a hearing at which the Claimant could be cross-examined (the “determination hearing”) under paragraph 12.4(c) of Practice Direction 44.

The court rejected the suggestion that a determination hearing could not be held where Rule 44.16(1) was not already engaged (an argument based upon the first line of paragraph 12.4). It did, however, accept that a determination hearing must be ordered after an application under the Practice Direction and such a hearing would not automatically be listed after discontinuance just because the Defendant had made an allegation of fundamental dishonesty.

The Claimant argued that such a hearing would be disproportionate in terms of time and cost. Further, he noted that the starting point in the CPR is that there is no determination hearing unless it is directed, and there was nothing in the instant case which warranted a listing. The Claimant said he had discontinued because of procedural problems (including the failure to obtain permission to rely on certain evidence), not because of any underlying dishonesty.

The Second Defendant argued that the Claimant had avoided the risk of a liability for costs by discontinuing and without a hearing the Second Defendant would be deprived of an opportunity to recover its costs. It further argued that a hearing would involve only cross-examination of the Claimant and therefore it would not have a lengthy time estimate.

The court had regard to its duties to deal with cases justly and at proportionate cost, to do justice between the parties and to ensure that its resources are used properly. It determined that a hearing should be directed, because of the value of the unenforceable order for costs (just under £27,000) and because, in the particular circumstances of this case, it would not involve a lengthy hearing. The matter was listed for a determination hearing, with the Claimant and the Defendant’s engineering expert directed to attend to give live evidence.

William Dean was instructed by Andrew Edwards of Nesbit Law Group L.L.P.

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