Fundamental Dishonesty

There has been a flurry of recent Judicial decisions where claims have been struck out based on fundamental dishonesty.  Shaw v Wilde [2024] EWHC 1660 (KB) provides helpful clarification in this area.

Shaw -v- Wilde 

The Claimant, Mr Shaw, was injured in a motorcycle accident and brought a claim for damages in personal injury totalling £6.6M. Liability was admitted by the Defendant with arguments of contributory negligence rejected by Mr David Allan KC sitting as a Judge of the High Court, in February 2022. 

Issues of quantum and fundamental dishonesty fell to be determined by His Honour Judge Sephton KC (sitting as a High Court Judge), who held that Mr Shaw had a legitimate claim worth around £1.2M but as he had been fundamentally dishonest, he dismissed the entire claim concluding that ‘Mr Shaw has only himself to blame’ and ordered him to re-pay £150,000 of interim payments received. 

Fundamental Dishonesty

Section 57 of the Criminal Justice and Courts Act 2015 (“the Act”) gives the Court power to strike out the personal injury claim of a Claimant who would otherwise be entitled to damages if satisfied that, on the balance of probabilities, they have been fundamentally dishonest in relation to the primary claim or a related claim (1b). This applies unless the Court is satisfied that the Claimant would suffer substantial injustice (2). When assessing costs the Court then deducts the sum it would have awarded for damages (“but for” the dishonesty) from the amount which it would otherwise order the Claimant to pay in respect of the Defendant’s costs (5).

The burden is on the Defendant to establish dishonesty and the test was set out by the Supreme Court in Ivey -v- Genting Casinos Limited [2018] A.C. 391 at [74]. The Court considered: 

1. What the actual state of the individual’s belief or knowledge was; and 
    

2. If a dishonest state of mind is established, whether the conduct of the individual was dishonest in accordance with the (objective) standards of ordinary decent people. 

In weighing up the evidence in Shaw, His Honour Judge Sephton KC found that the Claimant had given accounts of his mobility and function which he knew were untrue and misleading and that he was not as severely affected as he made out [175]. He concluded that the ordinary person would not consider he was merely exaggerating, but instead his conduct was dishonest by the standard ordinary decent people [175].

Signing a Statement of Truth 

The Shaw Judgement reinforces the implications of signing a Statement of Truth [171]. Practice Direction 22 (para 2.1) of the Civil Procedure Rules sets out the standing wording for Statements of Truth which includes confirming that the writer believes the facts stated are “true” and that they understand, “that proceedings for contempt of court may be brought against anyone who makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth.”

Mr Shaw had signed several documents outlining his symptoms verified with a Statement of Truth. He said he had not realised he was advancing exorbitant claims because he had relied upon experts and his lawyers. However, the Judge rejected this and found that: “the form of the Statement of Truth has been altered so that a person who verifies a document appreciates the serious consequences of verifying without an honest belief in its truth…The Court is entitled to expect that a person who verifies a document understands it and has an honest belief that what he is verifying is true.”

The Court also rejected the notion that Mr Shaw had limited capacity to understand what he was signing because of his poor educational attainment, cannabis use or childhood neurodevelopmental disorders; noting that he, “was able to manage the huge volume of documentation confidently and without apparent difficultly…He appeared to have little difficulty in following questions, reading passages in the bundles and forming coherent answers.”

The Judge was also mindful that the Defendant had raised written concerns about the veracity of Mr Shaw’s evidence during the litigation, giving him the opportunity to clarify any parts of his claim that he did not understand but he “chose not to set the record straight” [174]. It was held that the case, “would probably have settled if Mr Shaw had been honest” [187] but instead the Court had to, “unpick Mr Shaw’s lies in order to arrive at the true facts”, unnecessarily prolonging the litigation and having a “very significant effect upon the costs of the case and the use of court resources” [176(4)]. 

Defining ‘substantial injustice’

Even if a Claimant is found to have been fundamentally dishonest, they may still be able to retain their damages, if they can show they would otherwise suffer substantial injustice. Section 57(3) of the Act makes clear that this must be more than the “mere fact that the claimant will lose his damages for those heads of claim that are not tainted with dishonesty”. The Court will look at the effect on the Claimant.

In Shaw, the Judge ultimately concluded that: “I am not persuaded that Mr Shaw would suffer substantial injustice if his case were dismissed. He told important lies about his condition. He gambled that his lies would not be found out or that the Court would excuse them, although he was aware of the risk that his claim might be dismissed if he were found out. Although the dismissal of his heavy claim will cause Mr Shaw significant financial hardship, I have concluded that it will not inflict substantial injustice.” (para 186). The Judge clearly appreciated the significant ramifications of his decision, but it was noted that Mr Shaw’s basic needs would be met by state provision in the same way as a victim with no solvent tortfeasor to pursue.

This case comes as a clear warning to Claimants and a welcomed approach for Defendants who are increasingly taking a robust stand against dishonest claims.

Key take home messages for Defendants 

• If there are concerns around dishonesty, investigate carefully, with a greater analysis of medical records and the accounts given in witness statements and to experts to look for inconsistencies.

• Particular attention should be paid to documents signed by a statement of truth. 

• The deployment of surveillance might be appropriate in some cases.

• Putting the Claimant on notice of concerns can work to the Defendant’s advantage tactically but would need careful consideration.  

For a copy of the judgement, please contact Lisa Hughes or Gill Stoll.