Alpha Insurance A/S v Roche & Anor

Under CPR 44PD 12.4(c), the court has an unfettered discretion to direct determination of an allegation of fundamental dishonesty after a claimant has discontinued. The discretion must be exercised in accordance with the overriding objective, by weighing all relevant circumstances. Exceptional circumstances are not required, and there is no presumption either for or against directing a determination. Relevant considerations may include the strength of the evidence, the stage and circumstances of discontinuance, costs incurred, use of court resources, the public interest in exposing false claims, and any prejudice to the claimant. A first-instance decision attracts a wide margin of appreciation, but an appeal court may exercise the discretion afresh where the wrong legal test was applied.

The defendant insurer appealed against HHJ Gregory’s refusal to direct determination of allegations that the claimants’ personal injury claims were fundamentally dishonest. The claim arose from a minor road traffic accident. The insurer admitted negligence but alleged that the second claimant had not been present in the vehicle and that the first claimant’s claim was tainted by dishonesty.

The claimants filed a notice of discontinuance on the day before trial. The insurer sought a direction under CPR 44PD 12.4(c), so that the allegation could be determined and any resulting costs could be enforced outside the QOCS regime. The central issue was the correct approach to that discretionary power.

1. Appeal allowed. The judge below had applied the wrong test by seeking a particular exceptional quality in the case. CPR 44PD 12.4(c) contains no requirement for exceptional circumstances. That requirement appears expressly in paragraph 12.4(b), which concerns settled proceedings.
2. The discretion under CPR 44PD 12.4(c) is unfettered, subject to the overriding objective in CPR 1.1. The court must weigh all relevant circumstances. There is no presumption that determination should ordinarily be directed, and no presumption that it should ordinarily be refused. Such directions should be neither routine nor exceptional.
3. The court should recognise both the need to use further court resources in a discontinued claim and the public interest in identifying false claims and requiring dishonest claimants to meet the costs of litigation. Each case is fact-sensitive. First-instance judges must be given a wide margin of appreciation, and an appeal court should not interfere merely because it might have reached a different conclusion.
4. Because the judge below had applied the wrong legal test, the appellate court exercised the discretion afresh. The allegation was supported by evidence capable of acceptance and raised a genuine triable issue, although the insurer’s case was not particularly strong. The claim had been discontinued on the day before trial, after the insurer had incurred the costs of preparing for trial and its witnesses had attended court. No explanation for the late discontinuance had been provided.
5. The claimant’s minority and the possibility of distress were relevant but insufficient to outweigh the other factors. On balance, it was reasonable to give the insurer the opportunity to test the evidence and litigate the fundamental dishonesty issue. The court directed that those issues be determined and invited the parties to agree an appropriate order.

• High Court (Queen’s Bench Division): The appeal from HHJ Gregory’s decision of 14 February 2018 was allowed. The High Court directed determination of the fundamental dishonesty issues.