Fundamental dishonesty and the risk of telling little white lies
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Before the advent of qualified one-way costs shifting (QOCS) in April 2013, the rules on costs recovery were relatively straightforward. Costs typically followed the event; meaning that a claimant who had taken a defendant to trial and lost was liable to pay the defendant’s costs.
However, as part of the Jackson reforms, the rules were changed so that, barring a few notable exceptions, a losing claimant was no longer liable to pay a successful defendant’s costs following trial. Whilst a defendant can still secure an order for costs against a successful claimant, the difficulty for the defendant is that the order cannot be enforced without permission from the court.
This article examines one of those notable exceptions, where the defendant invites the court to make a finding of ‘fundamental dishonesty’.
The key provision is Rule 44.16 of the CPR which provides that orders for costs can be enforced against the unsuccessful claimant where the claim is found on the balance of probabilities to be ‘fundamentally dishonest’.
The legislative armoury was further bolstered by s.57 of the Criminal Justice and Courts Act 2015, which states that in cases of fundamental dishonesty, the court must dismiss the claim unless it is satisfied that the claimant would suffer ‘substantial injustice’ if the claim were dismissed.
Unfortunately little further statutory guidance of what fundamental dishonesty means was given, though in the widely reported case of Gosling -v- Hailo & Screwfix (Cambridge County Court, 29 April 2014), HHJ Maloney QC found that whilst the claimant had suffered a genuine injury, he had considerably exaggerated the extent of his ongoing symptoms such that he was falsely claiming half the value of his claim. Although making a finding that the claimant did suffer as a consequence of the accident, the claim taken as a whole was ‘fundamentally dishonest’, and the claimant was ordered to pay the defendant’s costs on an indemnity basis. The judge held that fundamental dishonesty had to be interpreted ‘purposively and contextually in the light of the context’. This meant that the claimant should not be exposed to costs liability on the basis of dishonesty as to some minor head of damage, rather the dishonesty had to go ‘the root of either the whole of his claim or a substantial part of his claim…’.
This logic was followed in James -v- Diamanttek [2016], where a claim for noise induced hearing loss was dismissed; the deputy district judge finding that ‘the claimant has not been telling the truth’ about his use of hearing protection. However in relation to the question of fundamental dishonesty, the judge found that whilst the claimant had not been telling the truth, his dishonesty did not equate to him being a ‘dishonest person’. The defendant appealed the decision and citing Gosling, HHJ Gregory agreed that the test in Rule 44.16 had been met. In short, the use of hearing protection was ‘fundamental’ to the case and as the trial judge had found he had lied about this issue, the test was satisfied and QOCS protection was removed.
More recently, in the case Meadows -v- La Tasca [2016] EW Misc B28 (CC), the court was presented with evidence relating to the claimant’s slipping accident at a restaurant that was found to be ‘riddled with inconsistencies’. The district judge in that case also found that the claimant and her witness had an ‘inability to accurately recall the basic details in relation to the claim’. The district judge found the claim to be fundamentally dishonest. However, it was held on appeal that although there were a number of inconsistences (which prevented the court from finding that the claimant had discharged the burden of proof); the cumulative effect was not so great that a finding of fundamental dishonesty could be found.
The majority of cases relating to fundamental dishonesty are first instance only and indeed naturally turn on their own merits. It will be interesting to see how the higher courts in due course interpret what is and isn’t ‘fundamentally dishonest’.
It is, however, interesting to see already developing from the case law that not only does there have to be actual dishonesty (something other than confusion or mistake), but that dishonesty must go directly to the heart of the claim for personal injury.
