Fundamental dishonesty is one of my favourite things and it always intrigued me that there was concern that the lack of a rigid definition is a negative thing.
However, fraud is a covert behaviour that continues to test the weaknesses in the claims and legal process. Rigid definitions and a lack of flexibility to address and challenge poor behaviour would, in my view, be a negative.
The law now enables defendants to challenge dishonest behaviour in claims where there is misrepresentation, exaggeration and non-disclosure across liability, causation and quantum.
Furthermore, by not providing overly structured definitions of what is fundamentally dishonest the courts can flex in order to fit the evidence before them and (most importantly) no poor behaviours are legitimised.
A brief history of fundamental dishonesty
Sinfield v LOGOC
The claimant fabricated gardening invoices which amounted to 42% of the special damages claim. The High Court found that this deception was sufficient to make a finding that the claimant had been fundamentally dishonest and deprive him of his damages claim entirely. Mr Justice Julian Knowles further affirmed that should a claimant provide false evidence, which substantially affects the presentation of the claim in respect of liability or quantum, then a fundamentally dishonest outcome can be expected.
Introduced the power to see a strike out of an entire claim if it could be established that the Claimant had been fundamentally dishonest pursuant to s.57 of the Criminal Justice and Courts Act.
Gosling v Screwfix Direct
HHJ Maloney found that the exaggeration of symptoms which impacted on quantum could be fundamentally dishonest on the basis that it went to the root of the claim. The exaggeration in Gosling was held to in excess of 50%.
Introduction of Qualified One Way Costs Shifting which prevents the recovery of costs by a successful defendant, unless a specific exemption was triggered. One exemption is in cases where there is a finding that the claim was fundamentally dishonest (CPR 44.16).
Summers v Fairclough
Court confirmed that a claim can be struck out, as an abuse of the court process, where it is found to be fundamentally dishonest.
Current application of fundamental dishonesty
The principles and decisions relating to fundamental dishonesty demonstrate how it can be applied to all/any of the three limbs of a claim:
- Liability: accident circumstances
- Causation: injury, other loss and circumstances
- Quantum: injury and other losses
The consistent assessment is whether that dishonest element can be shown to go to the root of the claim.
- L had a genuine and entirely constitutional back injury but fabricated an accident work to try and attribute liability onto her employer. L was found to fundamentally dishonest.
- M1 lied about sustaining a head injury when she allegedly banged her head in toilet cubicle at the defendant’s premises. On demonstrating how implausible the entire story was, including the mechanics of the alleged accident, M was found to be fundamentally dishonest.
- M2 provided a false account of being ill whilst on holiday. Following investigation of social media posts which demonstrated he had an enjoyable holiday, he was found to be fundamentally dishonest.
- C provided a false account of her inability to work post-accident. Her claim was found to be fundamentally dishonest when documents demonstrated a sustained and varied post-accident employment record.
- FP, S and M alleged to be passengers in a rented vehicle. The incident was suspected to be staged. The claims discontinued early but the judge found the claims to be fundamentally dishonest given the minimal damage to the vehicle and the significant inconsistencies in the evidence. The court also drew adverse inference from the timing of the discontinuance.
- A alleged that she was sat in a vehicle struck by the defendant. Her presence in the vehicle was disputed. In light of the inconsistencies in the claimant’s evidence, and the police report which was notable by the absence of any reference relating to the claimants being present at the scene, the judge had little hesitation in finding the claim to be fundamentally dishonest at trial.
Dispelling some myths
Whilst the courts and insurers become more comfortable with the concept of fundamental dishonesty and fraud generally, there remains a number of myths relating to how it all works and when it can be applied in claims.
- Trial: an application for a finding of fundamental dishonesty does not have to be determined at a trial. It may be, but not as a matter of course. We have had the issue determined at interim applications and directions.
- Pleadings: you do not necessarily have to plead that a claim or claimant is dishonest or that a specific finding will be sought in the claim. It will depend on the specific facts of the case and the strategy for the claim.
- Timeframes: applications upon discontinuance ought to be pursued promptly but they do not have to be made within 28 days. Always remember that if there is strong evidence of fundamental dishonesty you do not need to wait to the conclusion of the case and issue an interim application.
- Concessions: conceding breach of duty does not preclude a finding of fundamental dishonesty.
- Children: managing dishonesty relating to claims for minors can be uncomfortable. However, bear in mind that such claims are presented by a litigation friend, who can be found to be dishonest in how they have presented the claim on behalf of the minor (the Fagan principal).
- Evidence: additional new evidence in support of your application can be presented. The defendant is entitled to investigate and this does not end when the case is perceived to be progressed beyond a certain procedural point or concluded.
Fundamental dishonesty - keeping it loose
The available case law supports a broad interpretation of fundamental dishonesty from what it is, through to how and when it is applied in litigation. We continue to explore for our clients how we can use fundamental dishonesty to challenge, and avoid validating, poor claims behaviour. At all times we continue to look at the intent behind the conduct.