Kerry Underwood

SECTION 57 AND FUNDAMENTAL DISHONESTY: A HARD LINE TAKEN: THREE RECENT CASES

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The whole issue of Section 57 is dealt with at length in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available here for £15 including P&P

There have been three recent and important High Court decisions in relation to how the fundamental dishonesty test under section 57 of the Criminal Justice and Courts Act 2015 should be applied.

That section requires a court to dismiss an otherwise valid personal injury claim if the claimant has been fundamentally dishonest in relation to the claim unless the claimant would suffer substantial injustice if the claim was dismissed.

It only applies to cases issued on or after 13 April 2015 and covers counterclaims as well.

The full text of section 57 and the Explanatory Notes are set out at the end of this piece.

 

In Ivey v Genting Casinos Limited (trading as Crockfords Club) [2017] 3 WLR 1212

 

the Supreme Court restated the common law test for dishonesty, holding that while dishonesty is a subjective state of mind, the standard by which the law determines whether that state of mind is dishonest is an objective one, and that if by ordinary standards a defendant’s mental state is dishonest, it is irrelevant that the defendant judges by a different standard.

 

In Razumas v Ministry of Justice [2018] EWHC 215 (QB)

 

the Queen’s Bench Division of the High Court dismissed a personal injury claim under section 57 of the Criminal Justice and Courts Act 2015.

The claimant brought a clinical negligence claim against the Ministry of Justice concerning treatment whilst he was a prisoner, maintaining that there had been a failure to diagnose a tumour leading to his leg being amputated.

The claimant lied about seeking treatment, which raised the issue of whether the claim should be dismissed under the fundamental dishonesty provisions of section 57.

However, there is an exception if the claimant would suffer “substantial injustice” if the claim was dismissed.

The claimant submitted that his dishonesty fell short of being fundamental, as the lies were barely significant in the context of the case and also that he would suffer substantial injustice because of the gross disproportion between the lies and the effect of depriving him of the award of damages.

The High Court held that fundamental dishonesty was made out as the admitted dishonesty was part of the potential success of the claim and had substantially affected presentation of his case.

The High Court also held that something more than the loss of damages was required before there could be substantial injustice, as the whole point of section 57 was to remove damages and any other result would “cut across what [section 57] is trying to achieve.”

The court here referred to

 

Howlett v Davies and Ageas Insurance Ltd [2017] EWCA Civ 1696

 

where the Court of Appeal approved the following passage of the County Court judgment in

 

Gosling v Hailo 29 April 2014

 

“44. It appears to me that this phrase in the rules has to be interpreted purposively and contextually in the light of the context. This is, of course, the determination of whether the claimant is ‘deserving’, as Jackson LJ put it, of the protection (from the costs liability that would otherwise fall on him) extended, for reasons of social policy, by the QOCS rules. It appears to me that when one looks at the matter in that way, one sees that what the rules are doing is distinguishing between two levels of dishonesty: dishonesty in relation to the claim which is not fundamental so as to expose such a claimant to costs liability, and dishonesty which is fundamental, so as to give rise to costs liability.

  1. The corollary term to ‘fundamental’ would be a word with some such meaning as ‘incidental’ or ‘collateral’. Thus, a claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps as to some minor, self-contained head of damage. If, on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim: a claim which depended as to a substantial or important part of itself upon dishonesty.”

 

The court here also considered

 

London Organising Committee of the Olympic and Paralympic Games v Haydn Sinfield [2018] EWHC 51 (QB)

 

in which Mr Sinfield suffered an injury for which the Organising Committee was liable but where he dishonestly claimed gardening expenses, supported by fake invoices.

 

There the court dismissed the whole of the claim, relying on section 57 and said

 

“62. In my judgment, a claimant should be found to be fundamentally dishonest within the meaning of s 57(1)(b) if the defendant proves on a balance of probabilities that the claimant has acted dishonestly in relation to the primary claim and/or a related claim (as defined in s 57(8) ), and that he has thus substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the defendant in a significant way, judged in the context of the particular facts and circumstances of the litigation. Dishonesty is to be judged according to the test set out by the Supreme Court in Ivey v Genting Casinos Limited (t/a Crockfords Club) , supra.

  1. By using the formulation ‘substantially affects’ I am intending to convey the same idea as the expressions ‘going to the root’ or ‘going to the heart’ of the claim. By potentially affecting the defendant’s liability in a significant way ‘in the context of the particular facts and circumstances of the litigation’ I mean (for example) that a dishonest claim for special damages of £9000 in a claim worth £10 000 in its entirety should be judged to significantly affect the defendant’s interests, notwithstanding that the defendant may be a multi-billion pound insurer to whom £9000 is a trivial sum.”

 

Here the court concluded:

 

  1. “I gratefully adopt the test set out by Julian Knowles J and ask myself first: Did Mr Razumas act dishonestly in relation to the primary claim and/or a related claim? To this the answer must be yes. He has one main claim, and the dishonesty went to one route to succeed on it in full. Has he thus substantially affected the presentation of his case, either in respect of liability or quantum, in a way which potentially adversely affected the defendant in a significant way? Again the answer must be yes. The argument which he advanced went to an entire factual section and pleaded occasion which would have entitled relief on the main claim. Thus the first part, fundamental dishonesty is made out.
  2. I do not consider that there could be any way out for Mr Razumasvia the argument on substantial injustice. It cannot in my judgement be right to say that substantial injustice would result in disallowing the claim where a claimant has advanced dishonestly a claim which if established would result in full compensation. That would be to cut across what the section is trying to achieve.
  3. In the Sinfield case Julian Knowles J had no difficulty in dismissing this argument in the context of a dishonesty which went only to part of the quantum claimed. At [89] he stated that it was plain from section 57(3):

“….something more is required than the mere loss of damages to which the claimant is entitled to establish substantial injustice. Parliament has provided that the default position is that a fundamentally dishonest claimant should lose his damages in their entirety, even though ex hypothesi, by s 57(1), he is properly entitled to some damages. It would render superfluous s 57(3) if the mere loss of genuine damages could constitute substantial injustice.”

  1. This, it seems to me, must be right. Something more is required. That something more is not made out here and so, if there were a claim it would fail at this stage.”

 

In London Organising Committee of the Olympic and Paralympic Games (In Liquidation) v Sinfield [2018] EWHC 51 (QB)

 

the Queen’s Bench Division of the High Court overturned the County Court’s award of damages and dismissed the claimant’s personal injury claim due to fundamental dishonesty under section 57 of the Criminal Justice and Courts Act 2015 in exaggerating the costs of gardening following his injury.

The claimant was injured whilst working as a volunteer at the 2012 Olympic Games and the defendant admitted liability.

The High Court said that the fact that the greater part of the claim was genuine is “neither here nor there.”

If something has “substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the defendant in a significant way” then it amounts to fundamental dishonesty requiring the whole claim to be dismissed.

The claimant falsely claimed that he had spent thousands of pounds employing a gardener to manage his two acre garden after the accident.

The trial judge had said that he needed “evidence of weight” before finding dishonesty and held that the proper inference was that the claimant was “muddled, confused and careless” about the gardening claim, but that that did not contaminate the entire claim.

Here the High Court overturned that finding.

The gardening claim represented about 28% of the overall damages claim, but the false element was around 11% of the claim.

The trial judge had found that the claimant was not fundamentally dishonest within the meaning of section 57, but if he was wrong about that “it would be substantially unjust for the entire claim to be dismissed when the dishonesty relates to a peripheral part of the claim and the remainder of the claim was honest and genuine.”

 

Here the High Court said

 

“65.Given the infinite variety of circumstances which might arise, I prefer not to try and be prescriptive as to what sort of facts might satisfy the test of substantial injustice. However, it seems to me plain that substantial injustice must mean more than the mere fact that the claimant will lose his damages for those heads of claim that are not tainted with dishonesty. That must be so because of s 57(3). Parliament plainly intended that sub-section to be punitive and to operate as a deterrent. It was enacted so that claimants who are tempted to dishonestly exaggerate their claims know that if they do, and they are discovered, the default position is that they will lose their entire damages. It seems to me that it would effectively neuter the effect of s 57(3) if dishonest claimants were able to retain their ‘honest’ damages by pleading substantial injustice on the basis of the loss of those damages per se. What will generally be required is some substantial injustice arising as a consequence of the loss of those damages.”

Section 57 Criminal Justice and Courts Act 2015

“57 Personal injury claims: cases of fundamental dishonesty

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

 

  • the court finds that the claimant is entitled to damages in respect of the claim, but

 

  • 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.

(6) If a claim is dismissed under this section, subsection (7) applies to—

  • any subsequent criminal proceedings against the claimant in respect of the fundamental dishonesty mentioned in subsection (1)(b), and
  • any subsequent proceedings for contempt of court against the claimant in respect of that dishonesty.

(7) If the court in those proceedings finds the claimant guilty of an offence or of contempt of court, it must have regard to the dismissal of the primary claim under this section when sentencing the claimant or otherwise disposing of the proceedings.

(8) In this section—

  • “claim” includes a counter-claim and, accordingly, “claimant” includes a counter-claimant and “defendant” includes a defendant to a counter-claim;

 

  • “personal injury” includes any disease and any other impairment of a person’s physical or mental condition;

 

  • “related claim” means a claim for damages in respect of personal injury which is made—

 

(a)

in connection with the same incident or series of incidents in connection with which the primary claim is made, and

 

(b)

by a person other than the person who made the primary claim.

 

(9) This section does not apply to proceedings started by the issue of a claim form before the day on which this section comes into force.”

 

Section 57: Personal injury claims: cases of fundamental dishonesty

 

Section 57 provides that in any personal injury claim where the court finds that the claimant is entitled to damages, but on an application by the defendant for dismissal is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to either the claim itself (the primary claim) or a related claim, it must dismiss the primary claim entirely unless it is satisfied that the claimant would suffer substantial injustice as a result. A related claim is defined in subsection (8)as one which is made by another person in connection with the same incident or series of incidents in connection with which the primary claim is made. Subsection (3)makes clear that the requirement to dismiss the claim includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.

 

Subsection (4) requires the court to record in the order for dismissal the amount of damages that it would otherwise have awarded. This will be relevant in the event of an appeal and in determining what the claimant should pay the defendant in costs. It will also be relevant for the purposes of any criminal proceedings or proceedings for contempt of court which may be brought against the claimant in relation to the same behaviour.

 

Subsection (5) provides that when assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in the order under subsection (4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant. For example, if the amount of damages which the court records that it would have awarded but for the dismissal of the claim were £50,000, and the amount that the court would otherwise order the claimant to pay in respect of the defendant’s costs was £100,000, the claimant could not be ordered to pay the defendant more than £50,000 in total.

 

Subsections (6) and (7) deal with the relationship between an order dismissing the claim and any subsequent proceedings against the claimant for contempt of court or criminal prosecution, and provide for the court hearing the latter proceedings to have regard to the order dismissing the claim when sentencing the claimant or otherwise disposing of the proceedings. It is intended that this will enable the court to ensure that any punishment imposed in those proceedings is proportionate.

 

In addition to defining a related claim, subsection (8) defines “personal injury” for the purposes of the section as including any disease and any other impairment of a person’s physical or mental condition, and provides for the definition of “claim” and related terms to cover counter-claims.

 

Subsection (9) provides that the section does not apply to proceedings started by the issue of a claim form before the date on which the section comes into force.”

 

SECTION 57 FUNDAMENTAL DISHONESTY APPEAL

 

In Wright v Satellite Information Services Ltd [2018] EWHC 812 (QB)

 

the Queen’s Bench Division of the High Court was hearing an appeal against the decision of a Circuit Judge awarding the claimant in a personal injury action damages of £119,165.02.

The defendant appealed on the basis that the claim should have been dismissed under section 57 of the Criminal Justice and Courts Act 2015 on the basis that the claimant had been fundamentally dishonest.

 

The defendant did not dispute any of the findings of fact made by the trial judge but stated that:

 

the Learned Judge, having found that the Claimant’s claim for the cost of care was not established, was wrong as a matter of law not to find that he had therefore been dishonest in his presentation of this element of the claim and that such dishonesty was ‘fundamental’ to the integrity of the claim within the meaning of section 57 of the Criminal Justice and Courts Act 2015.”

 

Here liability had been admitted but quantum remained in issue and fell to be determined by the court.

It was the defendant’s case that covert video surveillance demonstrated that the claimant was far less disabled than he claimed and that he had deliberately and dishonestly exaggerated his claim.

The judge held that the claimant was not guilty of dishonesty, still less dishonesty of a fundamental nature.

The judge went on to say that had he found that the claimant had been fundamentally dishonest, then he would have held under section 57(2) that the claimant would not have suffered substantial injustice if the claim was dismissed.

That conclusion was not challenged by the claimant and therefore the only issue on the appeal was whether the judge was wrong to find, on the balance of probabilities, that the claimant had not been fundamentally dishonest.

Here claim for future care had been pleaded in excess of £73,000.00, but the trial judge allowed just £2,100.00 to cover the provision of some care following future surgery.

The trial judge, whose reasoning the High Court upheld, found that the claimant’s evidence was not untruthful, but rather  that a proper interpretation of the evidence did not support the assessment of the care expert.

The High Court held that this was essentially a challenge to the trial judge’s findings of fact.

Here the High Court then gave some useful guidance on a court’s task in dealing with an application under section 57.

 

38. The first stage for the court when considering an application under section 57 is to decide whether, on a balance of probabilities, the defendant has established that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim. The judge was not satisfied that this was the case. On the facts and the evidence presented to him, it cannot be said that this was not a decision open to him. The issue of dishonesty is akin to a jury question. In the case of a civil trial before a judge alone, it is a matter for the trial judge who has seen and heard all the evidence unless some material flaw in approach or his analysis can be identified.”

 

Comment

The guilty party in this case was clearly the expert, as recognised by the court.

Nevertheless, lawyers must be increasingly wary of simply putting forward expert evidence without any real analysis of the truth of that evidence.

This has been a long standing problem, but the introduction of section 57 makes it a much more serious issue.

Clearly here the High Court was right not to interfere with the findings of fact of the trial judge, but one may consider that the claimant was a little fortunate at first instance.

 

The whole issue of Section 57 is dealt with at length in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available here for £15 including P&P

 

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Written by kerryunderwood

April 18, 2018 at 8:27 am

Posted in Uncategorized

2 Responses

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  1. Reblogged this on | truthaholics and commented:
    Here the High Court then gave some useful guidance on a court’s task in dealing with an application under section 57.

    “38. The first stage for the court when considering an application under section 57 is to decide whether, on a balance of probabilities, the defendant has established that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim. The judge was not satisfied that this was the case. On the facts and the evidence presented to him, it cannot be said that this was not a decision open to him. The issue of dishonesty is akin to a jury question. In the case of a civil trial before a judge alone, it is a matter for the trial judge who has seen and heard all the evidence unless some material flaw in approach or his analysis can be identified.”

    truthaholics

    April 19, 2018 at 12:21 am


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