This article focuses on what can happen in the situation where an otherwise genuine claimant is found by the court to have lied, or at least been economical with the truth, in relation to part of their claim. They may have created a false head of loss, not been entirely up front about their ability to undertake certain activities or falsified documents to support part of their claim; potentially, the list is endless.
Despite the array of sanctions already available to the court to deal with personal injury claimants found to have been less than honest, on 13th April 2015, Section 57 of the Criminal Justice and Courts Act 2015 (“the Act”) came into force, creating huge uncertainty.
The previous position
Before the Act came into force, a claimant who brought a genuine claim but which contained fraudulent elements (or was related to another claim which was fraudulent), would still be awarded damages for the genuine part of their claim but the court could then penalise them when it came to the awarding of legal costs.
Section 57
This position was changed substantially by the Act which gives the court the power to dismiss in its entirety a claim for damages where it is satisfied that, on the balance of probabilities, the claimant has been ‘fundamentally dishonest’ in relation to the claim, unless the claimant would otherwise suffer ‘substantial injustice’.
But what do ‘fundamentally dishonest’ and ‘substantial injustice’ actually mean in practice? Can it mean that a seriously injured claimant with genuine life-changing injuries who is found to have exaggerated even a modest part of their claim, faces having the whole of their claim dismissed – zero damages?
In fact, in a host of cases since the Act came into force where the meaning of ‘fundamental dishonesty’ was considered, much of the discussion was focused on the value of the dishonest element as a percentage of the genuine claim. There was clearly uncertainty as to whether Section 57 should be applied to dismiss a claim in its entirety if the genuine element was valued at more than the fraudulent element.
The Sinfield case – clarity at last?
In January 2018 the judgment was handed down in the case of London Organising Committee for the Olympic and Paralympic Games (in Liquidation) v Sinfield, where the dishonest part of the claim amounted to 28% of the overall claim.
In this case, the High Court sought to provide some clarity on the definition of ‘fundamental dishonesty’. In his judgment, the judge, Mr Justice Knowles said that a claimant should be found to be fundamentally dishonest if the defendant could prove ‘on a balance of probabilities’ that they had acted dishonestly in relation to the primary or a related claim.
The judge also considered the definition of ‘substantial injustice’ stating: “It seems to me plain that substantial injustice must mean more than the mere fact that the claimant will lose his damages for those heads of claim that are not tainted with dishonesty. It would render superfluous [Section 57] if the mere loss of genuine damages could constitute substantial injustice.”
Finding that the claimant had been ‘fundamentally dishonest’ and dismissing the whole of the claim, the judge commented “If the claimant has been fundamentally dishonest in the way I have indicated then the fact that the greater part of the claim might be honest is neither here nor there (subject to substantial injustice)”.
Seemingly putting pay to proportionality of damages arguments once and for all, the Sinfield case signifies a move towards a very rigid application of the fundamental dishonesty test. This was underlined in the subsequent case of Razumas v Ministry of Justice.
Razumas
In the Razumas case, where judgment was given very shortly after Sinfield, the claimant had lied (and subsequently admitted lying) about seeking medical treatment during a particular period, with the Defendant submitting that he had therefore sought to base one, but not all, of his allegations of negligence against the Defendant on a false assertion.
The claimant said that this dishonesty was not ‘fundamental’ to the case and that he would also suffer substantial injustice because of the ‘gross disproportion’ between the false assertion and the effect of depriving him of an award of damages.
Adopting the test set out by Mr Justice Knowles in Sinfield, the judge, Mrs Justice Cockerill, said: “I…ask myself first: Did Mr Razumas act dishonestly in relation to the primary claim and/or a related claim? To this the answer must be yes. He has one main claim, and the dishonesty went to one route to succeed on it in full. Has he thus substantially affected the presentation of his case, either in respect of liability or quantum, in a way which potentially adversely affected the defendant in a significant way? Again the answer must be yes. The argument which he advanced went to an entire factual section and pleaded occasion which would have entitled relief on the main claim. Thus the first part, fundamental dishonesty is made out.
“I do not consider that there could be any way out for Mr Razumas via the argument on substantial injustice. It cannot in my judgement be right to say that substantial injustice would result in disallowing the claim where a claimant has advanced dishonestly a claim which if established would result in full compensation. That would be to cut across what the section is trying to achieve.”
However…
On 11th April 2018, the judgment was handed down in the case of Edward Wright v Satellite Information Services Limted. This was an appeal heard by a High Court Judge, Mrs Justice Yip against a trial decision in the County Court.
In this case, upholding the decision of the trial judge, it was found that a claimant who gave a “misleading impression” of his injuries was not fundamentally dishonest.
No doubt assisted by the covert surveillance and other evidence, the trial judge had identified “real inconsistencies” in the claimant’s case, “including as to how far he was able to walk; to what extent he needed to use a walking stick and the level of pain that he suffered” and there were features in the way the claim was presented “giving rise to the suggestion that the claim was overstated”. These inconsistencies had particularly undermined the claimant’s claim for future care, which formed a significant proportion of his claim.
However, Mrs Justice Yip said that, in finding that the man “had not established his claim for future care”, the trial judge was “not bound to find that the claimant had acted dishonestly merely in presenting such a claim.” She said that the trial judge had not rejected this part of the claim because the claimant’s evidence was untruthful, but because “a proper interpretation of that evidence did not support the assessment of the care expert”. She continued, “I do not consider that the judge was wrong in not treating the failure to establish the care claim as amounting to a finding of dishonesty.
“I would go further. I would have been surprised if the judge had found that the rejection of the bulk of the future care claim in itself when set in context did support a finding of dishonesty, still less fundamental dishonesty.”
She concluded, “It is plain [that the trial judge] had concerns about some of the inconsistencies and he gave them particular attention before reaching the findings that he did.
“He was entitled to find that, although at times the claimant gave a misleading impression by focusing on his symptoms when they were at their worst, he had not deliberately attempted to overstate his case.”
So where does that leave claimants?
In spite of the decision in the Edward Wright case, it must now be accepted that the courts are generally adopting a rigid interpretation of the fundamental dishonesty test. Clearly, if a claimant is blatantly dishonest and fabricates evidence or is deliberately economical with the truth, they can (and indeed should) expect short shrift from the court and the Section 57 axe is highly likely to fall.
However, what the Edward Wright decision does underline is that it is crucial for claimants to be entirely clear as to how their limitations affect them on a daily basis. Symptoms, and therefore their effect on daily activities, can be variable and a claimant’s case must present a complete picture; a good day, a bad day, an average day.
In that respect, Mrs Justice Yip issued a stark warning to the lawyers. As a result of the inconsistencies, the claimant’s schedule in that case was excessive and therefore did not, she said, serve its purpose. “It is very important that lawyers draft the schedule in such a way that the facts to which the client is attesting are clear. Failing to do so is failing in their duty both to the client and to the court.”
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