Substantial injustice: an opportunity for dishonest claimants

In this blog we offer a view that the Judgment in Williams-Henry v Associated British Ports Holdings Ltd [2024] EWHC creates a platform for dishonest claimants to try to avoid seeing an entire claim dismissed.

In our prior blog [found here] we discussed the scenario where a claimant is found fundamentally dishonest and tries to prevent the dismissal of the claim by inviting the court to make a finding that the claimant would suffer substantial injustice if the claim were dismissed in its entirely.

We commented that without a definition of substantial injustice, it was harder for dishonest claimants to succeed with the argument.  We predicted that there will be further challenges, but the existing case law demonstrated that judges were reaching the same decisions.

The position has changed following the decision in Williams-Henry, now binding on County Courts.

In this case, the Claimant suffered serious injuries but saw her claim (valued at £3.5m) dismissed in its entirely on grounds of fundamental dishonesty.  The Claimant invited the Court to find that she would suffer substantial injustice if the honest parts of her claim (assessed at £600,000) were dismissed, alongside the dishonest parts.

The Judge set out the relevant factors to consider when faced with a substantial injustice application:

(1) The amount claimed when compared with the amount awarded. If the dishonest damages claimed were small or moderate compared to the size of the assessed genuine damages which were substantial or very substantial this will weigh more heavily in favour of an SI ruling.

(2) The scope and depth of that dishonesty found to have been deployed by the claimant. Widespread and gross dishonesty being more weighty against SI than moderate or minor dishonesty.

(3) The effect of the dishonesty on the construction of the claim by the claimant and the destruction/defence of the claim by the defendant. This would be measured by considering all matters including the costs consequences of the work done in relation to the dishonesty compared with the work done had there been no dishonesty.

(4) The scope and level of the claimant's assessed genuine disability caused by the defendant. If the claimant is very seriously brain injured or spinally injured, then depriving the claimant of damages would transfer the cost of care to the NHS, social services and the taxpayer generally and that would be more unjust than if the claimant had, for instance, a mild or moderate whiplash injury. The insurer of the defendant (if there is one) has taken a premium for the cover provided. Why should the taxpayer carry the cost?

(5) The nature and culpability of the defendant's tort. Brutal long term sexual abuse, intentional assault or drug fuelled, dangerous driving being more culpable than mere momentary inadvertence.

(6) The Court should consider what the Court would do in relation to costs if the claim is not dismissed. The Judge should ask: will the Court award most of the trial and/or pre-trial costs to the defendant in any event because fundamental dishonesty has been proven? Also, will the claimant have to pay some or all of his/her own lawyers' costs out of damages if the claim is not dismissed? These both aim towards answering the question: "what damages will be left for the claimant after costs awards, costs liabilities and adverse costs insurance premiums are satisfied?" If the genuine damages to be received by the claimant will be substantially reduced or eradicated by the adverse costs awards, then it is less likely that SI will be caused by the dismissal.

(7) Has the defendant made interim payments, how large are these and will the claimant be able to afford to pay them back?

(8) Finally, what effect will dismissing the claim have on the claimant's life. Will she lose her house? Will she have to live on benefits, being unable to work?

In applying his own test, the Judge decided that substantial injustice did not apply and the entire claim was dismissed. 

However, the Claimant was not required to repay substantial interim payments of £75,000 on the basis that it would:

‘be an injustice to the Claimant because she would then be homeless, jobless, depressed and suicidal.’

The Fundamentally Honest view

To some extent, the decision in Williams-Henry remains a positive for Compensators as it is consistent with the prior case law and with the overall intention of Parliament expressed in a quote that bears repeating:

The government simply do not believe that people who behave in a fundamentally dishonest grossly exaggerating their own claim or colluding should be allowed to benefit by getting compensation in spite of their deceit. Committee of the Whole House on the Bill for the Act in the House of Lords.

However and crucially, there are now a series of factors to apply and with that comes an opportunity for dishonest claimants to further push the boundaries.  

Before Williams-Henry, there was benefit for Compensators in not having a test to apply or a definition of substantial injustice.  That meant there was limited judicial discretion on the point, given the clear intention of Parliament before enacting Section 57 of the Criminal Justice and Courts Act 2015.

Judicial clarity on statute can bring certainty but with the number of factors and then the weight to be attributed to each, the decision is likely to have the opposite effect.  The introduction of the Claimant’s own financial circumstances in an interesting departure from the starting premise that fraudsters should not financially benefit from dishonesty.

There is now a complex set of factors for Judges to consider, with each factor raising questions that will be open to challenge, interpretation and probably further case law.  We expect that dishonest claimants will continue to push the boundaries and try to take advantage of the decision in Williams-Henry to avoid seeing their entire claim dismissed.    

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