Palmer v Mantas and Liverpool Victoria Insurance – A reminder of the hurdles to be jumped by a defendant seeking to prove a claimant is fundamentally dishonest

This article was co-authored by Elle Bonam, Trainee Solicitor, Manchester.

The claimant received an award for damages in excess of £1.6 million for a minor traumatic brain injury (mTBI) and a somatic symptom disorder suffered after a high speed accident.

The claimant’s vehicle was hit from the rear by the defendant’s insured driver, who was later convicted of driving under the influence of alcohol. Liability was admitted by the defendant, so the trial related to causation and quantum only. My fellow partner, Mark Walsh, and Legal Director, Ben Appleton, have previously looked at this judgment from the perspective of the challenges of the mTBI defence but here we look at it from the perspective of allegations of fundamental dishonesty.

Defendant’s case as to fundamental dishonesty

The defendant’s case was that the claimant had acted dishonestly in order to maximise the level of compensation she recovered following the accident. They supported the allegation with over 700 pages of social media posts, showing the claimant taking part in activities and going on various holidays. Statements from the defendant’s pain management expert were offered in support, with the expert stating that the claimant was clearly exaggerating.

There were two key issues raised by the defendant to allege fundamental dishonesty.

Firstly, the claimant had “islands of memory” post-accident. She recalled many small details of the accident, including that her airbags did not deploy and the other driver had smelt strongly of alcohol. However, she did not recall events after this.

The second issue related to how the claimant presented. One expert noted that she appeared truthful on examination, but after review of the medical records, this expert’s opinion changed. The key issue was whether the alleged exaggeration was conscious or unconscious.

Law on fundamental dishonesty

The law on whether a claim can be struck out by reason of fundamental dishonesty has evolved since its introduction in Section 57 of the Criminal Justice and Courts Act 2015.

This provision means that even if a claimant is found to be entitled to damages in respect of their primary claim, if they have been fundamentally dishonest in a related claim, the court must dismiss this claim unless it is satisfied that the claimant would suffer “substantial injustice”.

The burden of proof lies with the party alleging the fundamental dishonesty which, in most cases, is the defendant.

Judge’s findings in relation to fundamental dishonesty

The judge found that the claimant not volunteering further information about the progression of her symptoms, in the context of not being asked specifically, was “not indicative of a deceitful and consciously withholding character on her part”. The defence had attempted to assert that the claimant had withheld evidence from the medical experts, in particular evidence relating to her travel and active lifestyle following the accident.

The judge found that this did not amount to fundamental dishonesty, as the claimant had directly answered the questions asked by the experts, and had done so truthfully. The claimant therefore could not be held to be dishonest when she did not voluntarily offer information which was not asked of her.

Takeaways from the case in relation to fundamental dishonesty

In reality, the judge’s findings have not clarified or changed the law on fundamental dishonesty, or the evidence needed to prove it.

As with all cases with fundamental dishonesty concerns, much will hinge on the facts of the individual case and how credible the judge finds the claimant to be. Here, the judge found that the claimant’s somatic symptom disorder caused her to unconsciously exaggerate. Potential psychological overlay should always be considered in determining whether there is likely to be a finding of dishonesty, whether that overlay be accident-related or not.

However, the following points are important to note:

Firstly, it is important to commit the claimant to a version of events early on, either through Part 18 Questions or through thorough questioning by experts. However, this will always need to be balanced with not giving away your cross-examination strategy.
Secondly, it is important to note that there are explanations for poor memory, in particular when a claimant has suffered a brain injury. The court may well allow the claimant the benefit of the doubt for misremembering dates where they are not significant and where the claimant has documented memory problems. The claimant may also be forgiven by the court for not realising that some of the symptoms were related to the accident, particularly where those symptoms are related to memory.
Thirdly, it is important to distinguish between conscious and unconscious exaggeration. The experts for both parties agreed that there was potentially some exaggeration by the claimant. Most of the experts believed that this exaggeration was unconscious. Unconscious exaggeration will not amount to fundamental dishonesty, whereas conscious exaggeration will likely result in a finding of fundamental dishonesty. Ruth de Asha, Senior Associate, delivered a webinar on the difference between conscious and unconscious exaggeration.
Finally, it is important to remember that the claimant’s credibility remains key, especially since the judgment in Armstrong v First York [2005]. Here lies the key risk for a defendant alleging fundamental dishonesty.

Summary

Making an allegation of fundamental dishonesty places the burden of proof of that allegation on the party making it and invariably that involves proving that the other party has made dishonest representations in relation to the claim. As the strike out of a claim is a draconian sanction, judges will be careful to make that finding.

However they regularly do make such findings and this judgment should not deter insurers from running these arguments. It does, however, serve as a reminder that presenting cogent evidence of dishonesty is necessary, including tying the claimant to a version of events. Otherwise the benefit of the doubt is likely to be given to the claimant, given the burden of proof on the defendant alleging dishonesty.

Fundamentally honest blog