A tangled web: ‘substantial injustice’ in fundamental dishonesty claims

‘Oh, what a tangled web we weave, when first we practice to deceive’ – Sir Walter Scott.

Case law in relation to ‘fundamentally dishonest’ (FD) claims continues to develop. In this case the court considered the issue of ‘substantial injustice’ (SI). SI may provide a lifeline for claimants found to be FD, allowing recovery of damages notwithstanding the finding.

The law

Section 57 of the Criminal Justice and Courts Act 2015 sets out:

‘Personal injury claims: cases of fundamental dishonesty

(1) This section applies where, in proceedings on a claim for damages in respect of personal injury (“the primary claim”) -

(a) the Court finds that the Claimant is entitled to damages in

respect of the claim, but

(b) on an application by the Defendant for the dismissal of the claim

under this section, the Court is satisfied on the balance of

probabilities that the Claimant has been fundamentally

dishonest in relation to the primary claim or a related claim.

(2) The Court must dismiss the primary claim, unless it is satisfied that the Claimant would suffer substantial injustice if the claim were dismissed.

(3) The duty under subsection (2) includes the dismissal of any element of the primary claim in respect of which the Claimant has not been dishonest.

(4) The Court’s order dismissing the claim must record the amount of damages that the Court would have awarded to the Claimant in respect of the primary claim but for the dismissal of the claim.

(5) When assessing costs in the proceedings, a Court which dismisses a claim under this section must deduct the amount recorded in accordance with subsection (4) from the amount which it would otherwise order the Claimant to pay in respect of costs incurred by the Defendant.’

The normal effect is that the whole of a claimant’s claim is dismissed if the claimant has been found to be FD in relation to any aspect of it. However, if SI (under Section 57(2)) were to be found then the dismissal of the claim would not occur.

Why substantial injustice was an issue in this case

In many cases, especially those of modest value, there is little that can be said in relation to SI, once a FD finding has been made. It is usually clear that there is no SI.

However, in this case, partial liability was admitted (2/3 in the claimant’s favour) and damages assessed (based on genuine injuries and consequences) at £596,704, even after liability apportionment.

Accordingly, was there SI when the claimant faced losing her genuine claim with an assessed value at almost £600,000?

Background

The claimant was visiting Aberavon Pier in July 2018 when she fell onto rocks and sand, four to five metres below. Some railings had, at some point, been present on the pier. The claimant had been drinking prior to the incident.

Judgment had been entered and the issues for the court were: whether the claimant had been FD; quantum; and, if FD, whether there would be SI to the claimant.

The evidence

The evidence included:

• work performance reviews of the claimant’s employment for Admiral Insurance, both before and after the accident;
• medico-legal medical reports;
• treating medical records;
• witness evidence from the claimant and her mother, and other ancillary witnesses;
• Department for Work and Pensions applications;
• a life insurance application;
• video surveillance evidence; and
• social media evidence.

The judgment was largely based on the consideration of what the claimant told the medico-legal experts and what was contained in her witness evidence, compared to the evidence from the other sources.

The facts and the dishonesty

It is difficult to sum up the facts of this case briefly; the judgment sets these out in over 80 pages.

The judge found that the claimant did sustain skull fractures and a moderately severe traumatic brain injury, with substantial frontal and temporal lobe damage. However, recovery was noted to be very good, intellect and cognition remained intact. There was some fatigue, irritability, anxiety, disinhibition, emotional dysregulation and reduction in short-term memory. There was no substantial loss of memory function, the ability to multi-task or spatial awareness. The NHS care received was high quality. The claimant returned to work in a demanding, challenging and fast-moving job, working 6.5 hours per day, five days per week, within three to four months. Fatigue reduced the number of hours she could work. The claimant maintained social activities including foreign holidays, visiting restaurants and spa weekends, though she had less energy than before.

There was a mild left-sided weakness, which resolved within a year. There was mild, left-sided high-frequency hearing loss and milder loss to the right ear. There was short-term tinnitus and dizziness.

The claimant sustained a fractured left ankle, which healed well within eight months and fully within twelve months.

There was a fractured pelvis, with pain for no more than three months.

There was depression, which was in part due to the accident, as well as other non-accident injuries and for work-related reasons, which ought to have resolved.

Depression returned (which led to the claimant requiring a litigation friend), only once surveillance evidence was delivered and social media disclosure made. This downturn was due to the claimant’s dishonesty and the realisation that her claim may be dismissed for FD.

Notwithstanding the above effects on the claimant, it was what the judge described as a ‘gross exaggeration and fabrication’ of the effects that led to the FD finding.

This exaggeration/fabrication consisted of the true duration and/or extent inter alia of:

• her left-sided hearing loss;
• her disability when walking;
• her noise intolerance;
• her dizziness and balance issues;
• her fatigue;
• her lack of spatial awareness;
• her ankle pain and range of movement;
• her left-sided hand grip and alleged weakness;
• her cognitive disability;
• her memory and cognitive functioning;
• her light intolerance;
• her back of head pain;
• her ability to shower alone;
• her foreign travel;
• her ability to socialise and her consumption of alcohol;
• her ability to drive long distances;
• her need for help with activities of daily living; and
• her headaches.

In conclusion, the judge found that:

“Overall, I find that the Claimant has presented her function and disabilities to clinicians, medico-legal experts and the Court dishonestly. The effects of this dishonesty on the claim have been substantial and fundamental.”

Factors – substantial injustice

The court found that the following factors should be considered when considering SI:

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 the 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 the 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?; and
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?

The factors as applied to this case

The judge found, as follows:

The claimant sought £2.5 million and recovered just under £600,000. The dishonest parts of the claim inflated the damages sought by over £1 million.

The scope of the claimant’s untruths was wide, relating to her asserted pain, her activities of daily living, her social life, her physical disabilities and her mental disabilities. The level of dishonesty was high.

The claimant’s dishonesty had a very substantial effect on the trial, its preparation and on the evidence relating to the claims for case management, care, therapies, loss of earnings and the figure for the pain, suffering and loss of amenity. It led to many more experts’ reports.

The claimant was moderately severely brain-injured, but has made a very good physical and cognitive recovery. Depriving the claimant of damages would not transfer much, if any, cost of care to the NHS, social services and the taxpayer generally.

The defendant’s tort was at the lower end of the culpability scale. The pier had stood in the state it was in for years with no previous accidents.

The judge estimated that the genuine damages to be received by the claimant would be reduced (or potentially eradicated) by adverse costs orders and the standard terms of her own conditional fee agreement.

The claimant is capable of work, physically and mentally, from the perspective of the injuries caused by the defendant. Evidence of the claimant’s suicidal ideation was taken into account. The claimant’s current unstable state of mental health was caused by her own dishonesty. The judge was unclear whether the dismissal of the claim would lead to the claimant being unable to repay her mortgage.

The judge found that the interim payments should not be repaid because that would probably mean that the claimant would lose her home.

The claimant maintained before trial, in open court and in her last witness statement, that she had never lied during the claim. It was taken into account that there was excellent recovery which the claimant made from the injuries with high-quality NHS treatment both at hospital and for years afterwards.

On balance, the judge did not find that there would be SI to dismiss the claim.

While acknowledging that it appeared that this was a large sum of money to deprive a genuinely injured person of, by drafting and passing Section 57, parliament had sought to stamp out dishonesty, which is fundamental in personal injury claims, and the claimant had breached this law.

The judge further noted that the claimant had been wholly unrepentant when she gave evidence and had sought, in parallel, to defraud the Department of Work and Pensions and Legal & General insurance about her disabilities.

Conclusion

This is helpful and the first reported guidance as to the consideration of SI in FD cases. It does appear that few cases will be able to successfully navigate a path through the eight factors set out by Ritchie J.

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