Howe v Motor Insurers' Bureau

On 22 March 2016 I handed down judgment in this case after a four day trial earlier that month. The judgment is reported at [2016] EWHC 640 (QB). The claim failed and the Claimant was ordered to pay 85% of the Defendant’s costs of the claim.

The outstanding issue is as to whether the Claimant has the benefit of Qualified One-way Costs Shifting (QOCS). This has been argued by counsel who did not appear on the trial, namely Mr Benjamin Williams QC for the Claimant and Mr Howard Palmer QC for MIB.

There had been correspondence between the parties in which MIB questioned whether the Claimant had entered into a pre-commencement funding arrangement. If that had been the case, then he would not have had the benefit of the QOCS protection. However, MIB now accepts, in the light of the comprehensive assurances from the Claimant’s solicitors that he entered into no such pre-commencement funding arrangement, that this exemption from QOCS protection does not arise.

The central point for my determination concerns the opening wording of CPR Rule 44.13(1) which sets out the scope of QOCS. The Rule states:

“44.13

(1)

This Section applies to proceedings which include a claim for damages –

(a)

for personal injuries;

……..”

The question for me is whether the proceedings included a claim for damages for personal injuries. In order to decide this I have to look at the substance of the claim brought.

The skeletal background to this case is:

MIB argues that a claim for compensation under the 2003 Regulations is not a claim for damages for personal injuries. MIB submits that this is self evident, but is in any event made clear by Regulation 16 of the 2003 Regulations which states:

“16 Civil Liability

Any sum due and owing pursuant to these Regulations shall be recoverable as a civil debt.”

In Wagenaar v Weekend Travel Limited [2015] 1 WLR 1968; [2014] EWCA Civ. 105 the Claimant claimed damages for personal injury against the Defendant who joined the Third Party Defendant claiming indemnity/contribution. The judge dismissed the Claimant’s claim and the Defendant’s Part 20 claim. He ordered the Claimant to pay the Defendant’s costs and the Defendant to pay the Third Party costs but, pursuant to QOCS, that neither order was to be enforced. The Court of Appeal allowed the Third Party’s appeal on the basis that the QOCS provisions in CPR 44.13 to 44.17 did not apply to protect the Defendant from paying the Third Party’s costs. At paragraph 36 Vos LJ said this:

“36.

I should start by referring briefly to the Jackson Report, pursuant to which QOCS was introduced. I shall not repeat here the careful discussion in Chapters 9 and 19 of the Jackson Report. Suffice it to say that the rationale for QOCS that Jackson LJ expressed in those sections came through loud and clear. It was that QOCS was a way of protecting those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded defendants. It was, Jackson LJ thought, far preferable to the previous regime of recoverable success fees under CFAs and recoverable ATE premiums. There is nothing in the Jackson Report that supports the idea that QOCS might apply to the costs of disputes between those liable to the injured parties as to how those personal injury damages should be funded amongst themselves.”

The Court of Appeal in the context of the case before it, considered the proper meaning of the word “proceedings” in Rule 44.13. Vos LJ said:

“38.

…The whole thrust of CPR Rules 44.13 to 44.16 is that they concern claimants who are themselves making a claim for damages for personal injuries, whether in the claim itself or in a counterclaim or by an additional claim (as defined in CPR r20.2(2)). …”

From the 2003 Regulations and relying on Wagenaar, MIB submits:

I start with Jacobs v MIB [2011] 1 All ER 844; [2010] EWCA Civ. 1208. A substantial part of the reasoning of this judgment is under challenge in the case of Moreno due to be heard by the Supreme Court this summer. However, it seems that the passages I am about to cite are not controversial:

“16.

Regulation 13 gives a person resident in this country who has been injured in a road traffic accident abroad involving a vehicle which is normally based abroad a right to obtain compensation from the compensation body if it has proved impossible to identify the vehicle or an insurance undertaking which insures it. …

…

THE SCHEME OF THE DIRECTIVE

21.

The scheme of the compensation arrangements established by the Fourth Directive appears clearly from Arts 6 and 7, to which I have already referred. In essence, the compensation bodies are intended to provide a safety net which will be called upon only in rare cases where the tortfeasor is unidentified or uninsured or where for some reason the insurer fails to respond to a claim within the prescribed time. Even then, however, the compensation bodies do not ultimately bear the burden of the claim, because the body that has paid compensation to an injured party has the right to obtain reimbursement from the corresponding body in the state where the insurer is established… or has a claim against one of the guarantee funds: see Arts 6(2) and 7. The scheme appears to proceed on the assumption that the existence of the driver's liability and the determination of the amount of compensation payable to the injured party will be governed by the same principles at all stages of the process, but the Directive does not go so far as to provide that such questions are to be determined by reference to the law of the country in which the accident occurred.”

I repeat what I believe to be the central citation from paragraph 36 of Wagenaar:

“…the rationale for QOCS…was that QOCS was a way of protecting those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded defendants.”

In paragraph 5.8 of chapter 19 of the Jackson Report the author stated:

“5.8

In personal injuries litigation it must be accepted that Claimants require protection against adverse costs orders. Otherwise injured persons may be deterred from bringing claims for compensation.”

Against this background what is the proper interpretation in rule 44.13(1) of “A claim for damages…for personal injuries”? This simple question does not yield a simple answer.

The rationale for QOCS can be said to extend to a Claimant in Mr Howe’s position. He comes fairly and squarely within the citations which I have set out above in paragraph 11, subject to whether, in relation to the Jackson Report citation this is “personal injuries litigation”. He is a person who has suffered personal injuries and, absent QOCS, he faces enforcement of the adverse costs order obtained by the MIB which is a well funded Defendant. If his claim does not have QOCS protection, then injured persons in situations similar to his may be deterred from bringing claims for compensation.

In paragraph 27 of the judgment in the main action I set out a quotation from Lord Mance in the case Bloomsbury International Limited v Sea Fish Industry Authority [2001] 1 WLR 1564; [2011] UKSC 25. He said:

“[10] In matters of statutory construction, the statutory purpose and the general scheme by which it is to be put into effect are of central importance. They represent the context in which individual words are to be understood. In this area as in the area of contractual construction, “the notion of words having a natural meaning” is not always very helpful…and certainly not as a starting point, before identifying the legislative purpose and scheme.”

Therefore in interpreting the words of Rule 44.13(1) I must bear in mind the purpose of the QOCS scheme. That said there may well be some cases (possibly a solicitor’s negligence claim secondary upon a personal injuries claim) which do not come within the words of Rule 44.13 and where there is no QOCS protection. The real question is whether this is such a case.

The substance of the claim is based on MIB’s liability to compensate the Claimant under Regulation 13 of the 2003 Regulations. As I found, on the way the case was argued before me and pleaded, this is a claim under statute (judgment paragraph 82). In those circumstances section 9 of the Limitation Act applies, since it applies to “an action to recover any sum recoverable by virtue of any enactment.”

MIB rely upon the fact that the claim is not based upon any breach of duty by it. This was expressly stated by counsel for the Claimant in the original trial when he said “This has never been a claim for breach of statutory duty. There is no breach ever been alleged against MIB.” Mr Williams QC responds that Rule 44.13 does not expressly require a breach of duty. So far as the word “damages” is concerned he took me to the definition of “damages” in the Glossary to the Civil Procedure Rules. This states that the meaning of damages is “a sum of money awarded by the Court as compensation to the Claimant.” However I note that in bold and at the very beginning of the Glossary are the following words:

“Scope

This glossary is a guide to the meaning of certain legal expressions as used in these rules, but it does not give the expression any meaning of the rules which they do not otherwise have in the law.”

I was not addressed in any detail about the meaning of damages, nor was I taken to any authority on something which has caused problems in previous cases. I have however reminded myself of certain passages in McGregor on Damages 19^th Edition which makes it clear that damages are simply an award in money for a civil wrong and that, to retain the requirement of a wrong is entirely necessary, this being the essential feature of damages; actions claiming money under statute, where the claim is made independently of a wrong, are not actions for damages. (Paragraphs 1-001, 1-004, 1-007).

This difficulty for the Claimant is underlined by Regulation 16 which Mr Williams strove to overcome. He suggested that Regulation 16 was directed to where sums had been agreed but not paid; also that it did not follow that the claim was not within Rule 44.13 because the debt in question is what should be paid as damages for personal injury. He said that it was difficult to apply principles of civil debt to circumstances where there may be dispute as to liability/quantum of loss. He impressed upon me again the principles of construction in the Bloomsbury case and, if necessary, the Marleasing case [1990] ECR I–4135. Nevertheless, despite those submissions, Regulation 16 is in my judgment entirely consistent with a proper analysis of the situation, namely that a Regulation 13 claim is not a claim for damages for personal injury. It is Regulation 16 which enables recourse to the Court and the cause of action is for a civil debt, which civil debt is the sum recoverable by statute independently of any breach of duty or other wrong by the MIB.

In Nemeti v Sabre Insurance Co Limited [2013] EWCA Civ. 1555 the Appellants had brought an action against the Respondent insurer directly seeking damages pursuant to Regulation 3 of the European Communities (Rights Against Insurers) Regulations 2002. It was then realised that the Regulations did not apply as the negligent driver was not the “insured tortfeasor” and the accident did not take place in the UK. The Appellants then sought to add the estate of the deceased driver as a party. The issue for the Court of Appeal was whether section 35 of the Limitation Act 1980 applied. In paragraph 4 Hallett LJ said that Regulation 3 provides a right of action against motor vehicle insurers where “an entitled party” (generally a resident of a Member State of the European Union) “has a cause of action against an insured in tort…and that cause of action arises out of an accident.” A party can sue either the insured tortfeasor or the insurer who is directly liable "to the entitled party to the extent that he is liable to the insured person". In paragraphs 41 and 42 the Court of Appeal said that the original cause of action derived from statute. Apart from the essential ingredients of the negligence of the driver, there were additional and vital elements in the claim to the effect that an accident occurred in the UK and the tortfeasor was insured by the Defendant. The claim for relief would have referred to the Regulation and presumably sought payment from the Defendant 'to the extent that (the Defendant) was liable to pay the insured tortfeasor’. Paragraph 42 concludes with these words:

“The original claim was not, therefore, a claim for damages for personal injury against the Respondents…It was not a claim in negligence. It was effectively a claim for an indemnity under statute (as the Claim Form made clear) limited to the Respondents' liability to their insured.”

Neither side submitted that I was bound by what the Court of Appeal said in Nemeti. Mr Williams QC submitted the Court of Appeal in stating that the original claim under Regulation 3 of the 2002 Regulations was not “A claim for damages for personal injury against the Respondents”, were referring to something which was unnecessary for the decision. He submitted that section 35 of the Limitation Act 1980 does not require construction of the words “damages for personal injury”, and that it is not known whether there was full argument on this point. He said the Court of Appeal were not considering the QOCS regime. Nevertheless, whilst I do not have to consider whether Regulation 3 of the 2002 Regulations is within the QOCS regime, the analysis by the Court of Appeal in the context of the claim before them is, to say the least, consistent with my approach to this case.

In the case of Norman v Ali and Aziz [2000] Lloyds Rep IR 395 the Court of Appeal decided that a claim based on the principle in Monk v Warbey came within the provisions of section 11 of the Limitation Act 1980. The material wording of section 11 is “Whether damages claimed by the Claimant for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to the Claimant or any other person.” At page 401 Otton LJ said:

“…On a proper reading of section 11 the language used does not expressly or by implication import causation. The words “consist of or include damages in respect personal injuries” are much wider and it is not necessary that the breach of duty physically caused the personal injury. Accordingly, I must, with reluctance, dissent from the learned judge and hold that a Monk v Warbey claim is not “in the same category as the inability of the victim of a negligence solicitor or insurance broker to obtain a judgment”. The owner has not created “a situation in which the injured party cannot obtain damages”.”

Earlier (at page 400) the learned judge had distinguished the insurance broker’s negligence case of Ackbar v C F Green & Co Limited saying:

“The breach of contractual duty by the brokers to their client, occurred prior to the accident. Consequently the injuries sustained in the accident were “only a measure of damages now claimed”. In a Monk v Warbey case the breach of duty by the owner towards the person injured arises only when the person is in fact injured, viz in the accident itself.”

The Claimant submits that the present case is much closer to the Monk v Warbey claim based on the above citations from Otton LJ and because, in short, the Ackbar type case is where the Claimant has been deprived of a primary right. The Claimant further relies on what was said in Norman about the case of Bennett v Greenland Houchen: “the Court of Appeal, allowing the appeal, held that an action fell to be regarded as including a claim for personal injury if, viewed in a commonsense way, the action was about personal injury suffered by the Claimant.” However, I do not regard the Norman case to be of assistance in this context. A Monk v Warbey claim is a claim for damages for personal injuries, there being a breach of statutory duty on the part of the owner. This breach of duty arises in the accident itself, even though section 11 Limitation Act does not require causation.

Finally, Mr Williams relied on European law. His argument was based on Evans v Secretary of State for the Environment, Transport and the Regions [2005] All ER (EC) 763 (ECJ). He cited paragraph 27, that the intention of the Community Legislature in the Second Directive:

“Was to entitle victims of damage or injury caused by unidentified or insufficiently insured vehicles to obtain protection equivalent to, and as effective as, that available to persons injured by identified and insured vehicles.”

In paragraph 45 the Court referred to the requirement of the domestic legal system of each Member State to ensure that the rules were no less favourable than those governing similar domestic action (equivalence) and do not render virtually impossible or excessively difficult the exercise of rights conferred by Community law (effectiveness). In Evans at paragraphs 74 – 78 the Court rejected the claim that there was insufficient reimbursement of costs incurred by victims of untraced drivers. It said that this was a procedural matter (paragraph 75), but the Court continued:

“76.

As pointed out in para.[45] of this judgment, in the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from Community law, in conformity with the principles of equivalence and effectiveness.

77.

It is incumbent on the national court to verify whether, under the procedural arrangements adopted in the United Kingdom, those principles are complied with. In particular, it should assess whether, in view of the less advantageous position in which victims find themselves vis-à-vis the MIB and the conditions under which such victims are able to submit their comments on matters that may be used against them, it appears reasonable, or indeed necessary, for them to be given legal assistance.

In Byrne v MIB [2009] Q.B. 66 the Court of Appeal said at paragraph 21 that it is for national courts to determine whether the MIB arrangements satisfied the principles of effectiveness and equivalence. The appropriate comparison for the purposes of the principle of equivalence is the system of remedies available for insured drivers. The fact that the MIB procedure, looked at as a whole, met the requirements of effectiveness and equivalence was not a sufficient answer to specific complaints in respect of costs. Costs are a procedural matter for which a Member State is responsible, but are subject to the principles of effectiveness and equivalence.

Mr Palmer QC submitted that the effect of the Jacobs case was that a Regulation 13 Claimant injured by an uninsured or untraced motorist was in a better position than a Claimant who was claiming against an insured motorist. He said that this was because the insured motorist, under Rome II, could recover damages only by reference to the assessment of such damages in the country of accident whereas, under Jacobs, the Claimant had a choice of that country or the UK. It does not appear in the judgment in Jacobs that this point was explored or ruled upon by the Court of Appeal. It may well be something which is in issue before the Supreme Court in Moreno. Nevertheless, the point does not assist in the determination of the point before me.

Mr Palmer QC also submitted that the principles did not apply in relation to a protection against unsuccessful claims. This point arose only in reply and, on the basis of the argument before me, I do not rely on this.

The short answer to the point is that what I have to decide is ultimately a matter of construction of Rule 44.13, having regard to the principles set out by Lord Mance in Bloomsbury. The construction is clear in my judgment. Mr Howe’s claim against the MIB is not one for damages for personal injuries. Reference to the principles in the Marleasing case [1990] ECRI-4135 cannot change that construction. Nor can reference to Evans or Byrne. Whether the non applicability of the QOCS regime offends the principles of equivalence and effectiveness is not for me to determine. This requires a wide ranging and careful analysis. In this regard I note, in particular from Evans, that the ECJ, whilst recognising the differences between the MIB procedure and a court procedure, acknowledged advantages in the MIB procedure in holding that the procedural arrangements adopted in the United Kingdom are sufficient to provide the protection to which unidentified or uninsured vehicle victims are entitled under the Second Directive (paragraphs 44 – 58). Given the procedural differences between a Regulation 13 claim and a standard claim for damages against an insured driver, I am not prepared to say, without more, that the lack of applicability of the QOCS regime does (or probably does) offend against the principles. This is, in any event, an unusual case. It is worth stating that though this is a claim under Regulation 13, claims before a court in respect of the Untraced Drivers’ Agreement are thought to be extremely rare. That Agreement contains its own internal procedure.

The effect of my ruling is that the Claimant does not have protection under the QOCS regime. Were I wrong about this MIB sought permission to enforce costs pursuant to this specific provision in Rule 44.16(2)(b) which states:

“(2)

Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –

(a)

…

(b)

a claim is made for the benefit of the claimant other than a claim to which this Section applies.”

MIB’s argument is as follows:

I reject these MIB submissions because:

For the above reasons, QOCS does not apply to this claim and orders for costs made against the Claimant may be enforced in the usual way.