MIB CLAIM IS SUBJECT TO QOCS: COURT OF APPEAL OVERTURN HOWE

“For the purposes of CPR Part 44.13, which describes the claims eligible for Qualified One-Way Costs Shifting (“QOCS”), what is a claim for damages for personal injury? As Stewart J said it is a simple question but does not yield a simple answer.” Is how Mr Justice Lewison described the issue in the judgment today in Howe -v- MIB [2017]  EWCA Civ 932.  The Court of Appeal overturned the earlier decision and stated that the claimant did have the protection of QOCS.

THE CASE

The claimant had been injured by a wheel which came off an unidentified lorry in France. He brought an action against the MIB under regulation 13(1) of The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Board) Regulations (SI2003/37).  The Claimant was unsuccessful and the issue arose as to whether he was entitled to QOCS protection.  In an earlier judgment, considered here, Mr Justice Stewart held that he did not have the protection of QOCS.

ON APPEAL: THIS WAS A QOCS CASE

The Court of Appeal held that this was a QOCS case.  This was not an action for “debt” and could properly be construed as being akin to an action for damages for personal injury.

1. 1. The judge acknowledged that the rationale for QOCS applied to Mr Howe’s claim but nevertheless held that it was outside the scope of CPR Part 44.13. He reasoned that the claim was a claim to compensation recoverable by statute (rather than in tort at common law); and that the MIB had not been guilty of any breach of duty. The conclusion that the compensation that Mr Howe claimed was not “damages” was underlined by regulation 16 which described the compensation as a “civil debt”. He was not persuaded to reach any different conclusion by reference to principles of EU law.

   2. Applying orthodox domestic common law principles of interpretation, 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 a 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.

   3. Sometimes the distinction between the two is elusive, or even counter-intuitive. For example a claim under a contract of guarantee or indemnity is usually regarded as a claim for damages, even if the principal obligation guaranteed is an obligation to pay a debt. 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. There are other kinds of claim for money, for example claims for equitable compensation, which are neither.

   4. However, the application of common law taxonomy to claims created by EU law may be misleading. It must not be forgotten that a claim created by EU law applies across the various legal systems of the EU which will have their own taxonomy of claims. Lord Mance made a similar point in Moreno at [41].

   5. To revert to the Directive, what it requires is the ability to claim “compensation” from the compensation body. Article 1.1 of the Fourth Directive describes it as “compensation in respect of any loss or injury resulting from accidents”. Article 1.4 of the Second Directive describes it (so far as relevant) as “compensation …for … personal injuries.” In view of the requirement in regulation 13 that the MIB must compensate the injured party “in accordance with Article 1 of the second motor insurance directive” I do not consider that there is any difficulty in characterising Mr Howe’s claim as a claim for compensation “for personal injuries”.

   6. Can the reference in CPR Part 44.13 to “damages for personal injuries” be interpreted, conformably with the Marleasing principle, to include a claim for compensation under regulation 13? The rationale underlying QOCS is, in my judgment, a domestic version of the principle of effectiveness. 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.

   7. The change required is to disapply the common law taxonomy of legal claims to a claim to compensation under regulation 13 and to treat the word “damages” in Part 44.13 as including compensation under that regulation. That is, no doubt, a departure from the “the strict and literal application of the words”. However, I do not consider that it “goes against the grain” of the CPR. As Mr Williams QC, for Mr Howe, pointed out the glossary of terms in Appendix E to the CPR itself describes “damages” as a “sum of money awarded by the court as compensation to the claimant”. Nor does this interpretation run counter to the underlying thrust of either the CPR or QOCS. As the judge himself said, Mr Howe is within the rationale which inspired QOCS. This interpretation is also supported by Lord Mance’s statement in Moreno at [31] that the compensation to which the injured party is entitled is “the same compensation as that to which the victim is entitled as against the driver responsible.”

   8. One factor which influenced the judge in his conclusion that QOCS did not apply was the terms of regulation 16. Where a duty or obligation is created by statute, it is for Parliament to decide what are the consequences of breach of that duty or failure to perform that obligation. In some cases it does so expressly, by providing that a breach of statutory duty is actionable. In other cases, the legislation is silent, in which case the courts must work out by reference to a number of different indicators, whether Parliament intended that a breach of statutory obligation should be actionable and, if so, by whom. However, as a general rule where Parliament has decided that a breach of duty is actionable in one particular manner it is not open to the courts to devise a different form of remedy. A venerable and often cited statement to this effect is found in the judgment of Lord Tenterden CJ in Doe d Murray v Bridges (1831) 1 B & Ad 847:

“And where an Act creates an obligation, and enforces the performance in a specified manner, we take it to be a general rule that performance cannot be enforced in any other manner.”

1. 1. In our case regulation 16 provides “any sum due and owing” under the Regulations is recoverable as a civil debt. Does Mr Howe claim a sum that is “due and owing” under the Regulations? In my judgment he does not. One of the characteristics of a debt is that its amount is ascertained at the time when proceedings are begun. It is only when the amount of a debt has been ascertained that it can be said to be “due and owing”. I do not consider that by regulation 16 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. It would also apply where one compensating body is subrogated to a claim against another compensating body after it has paid out an ascertained sum to an injured claimant. I do not, therefore, consider that regulation 16 undermines the interpretation of CPR Part 44.13 that I prefer.

   2. Accordingly, I would allow the appeal. The consequence is that the QOCS regime applies. Under the QOCS regime CPR Part 44.16 (2) provides:

“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.”

1. It follows from the way in which this rule is framed that the first instance judge must both (a) exercise a discretion and (b) conduct an evaluation of what is just on the facts of any particular case. The MIB asked the judge for permission to enforce a costs order against Mr Howe in so far as the costs related to his unsuccessful claim for a declaration that the MIB was liable to compensate him under the Untraced Drivers’ Agreement. That was the claim that was introduced by amendment shortly before trial. The judge said that if he were wrong about the application of QOCS (as I think he was) he would not have exercised his discretion in favour of MIB.

2. Mr Palmer argued that to allow the MIB to enforce its costs order in relation to the claim for a declaration would be a more just outcome than that which the judge would have favoured. However, I do not consider that he identified any error of principle that the judge made. What the argument amounted to was no more than an invitation to this court to consider the matter afresh. But that is no ground for impugning the exercise of a judicial discretion. I would reject the MIB’s argument under this head.

3. Accordingly, I would simply allow the appeal. A number of other questions were canvassed very shortly at the hearing, but they were all dependent on the outcome of the appeal. We said at the hearing that the time for dealing with those arguments (preferably on the papers) would be once the result of the appeal was known.