High Court provides first authority on meaning of ‘fundamental dishonesty’

A personal injury claimant’s dishonest actions must “substantially affect” the presentation of his case if the court is to make a finding of ‘fundamental dishonesty’, the High Court has ruled in the first ruling on the meaning of the phrase.

It came in the context of section 57 of the Criminal Justice and Courts Act 2015 but should apply to qualified one-way costs shifting too.

In London Organising Committee for the Olympic and Paralympic Games (in Liquidation) v Sinfield [2018] EWHC 51 (QB), the dishonesty related to part of the damages sought – specifically over help with gardening, amounting to 42% of the special damages claim – but the whole case was dismissed as a result.

Mr Justice Julian Knowles said: “A claimant should be found to be fundamentally dishonest within the meaning of section 57(1)(b) if the defendant proves on a balance of probabilities that the claimant has acted dishonestly in relation to the primary claim and/or a related claim… and that he has thus substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the defendant in a significant way, judged in the context of the particular facts and circumstances of the litigation.

“By using the formulation ‘substantially affects’, I am intending to convey the same idea as the expressions ‘going to the root’ or ‘going to the heart’ of the claim.”

Here the judge held that the claimant had knowingly made dishonest misrepresentations in his schedule of loss which could have resulted in the defendant’s insurer paying out far more than it could properly, on honest evidence, have been ordered to pay.

The fact that the greater part of the claim may have been genuine was “neither here nor there” where the court finds fundamental dishonesty, he added.

He went on to say that where an application is made under section 57 and the judge determines that the claimant has been fundamentally dishonest, the entire claim must be dismissed, including any genuine element of the claim, unless the claimant could show he would suffer substantial injustice if his claim was dismissed.

There was no evidence here to support a finding of substantial injustice.

Roger Jones, the Kennedys partner who acted for defendant insurer Aviva, said: “After various lower court rulings on ‘fundamental dishonesty’, it was important to have a binding decision…

“Mr Justice Julian Knowles has provided clear guidance on how the test works in relation to section 57, and it will also apply to CPR 44.16, where a finding removes a claimant’s costs protection under qualified one-way costs shifting (QOCS).

“Both are helpful for defendants, but section 57 carries the real bite, since the entire claim will be dismissed unless the claimant proves substantial injustice, with the claimant paying the defendant’s costs less the amount the he would otherwise have received in genuine damages.”

 

 Picture credit: Lilla Frerichs (Creative Commons)

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Costs News
Published date
24 Jan 2018

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