Kerry Underwood


with 2 comments

These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here or from me here

Fundamental dishonesty and section 57

In Molodi v Cambridge Vibration Maintenance Service (1) and Aviva Insurance Limited (2) [2018] EWHC 1288 (QB)

the High Court allowed the defendant’s appeal and held that the claim be dismissed on the ground that the claimant had been fundamentally dishonest within the meaning of Section 57 of the Criminal Justice and Courts Act 2015.

This was a road traffic accident and there was no doubt that the defendant was responsible for the accident – see paragraph 4 of the appeal judgment.

However, the claimant lied about various matters, including stating that he had only one previous claim, whereas he had had between five and seven previous claims, the duration of his symptoms, the cost of repairs to his vehicle, the need for physiotherapy sessions and the length of time off work.

The trial judge, in finding for the claimant, appears to have been influenced by the poor quality of legal staff involved in such cases:


“I have hardly seen a Claim Notification Form in the last number of years where the detail of the accident as I found it on the evidence, often on objective evidence, is properly recorded in the Claim Notification Form. The process itself is often, because of its nature, littered with inaccuracy, partly because the forms are filled out by relatively lowly junior people in the office who are not qualified, partly because they do not take sufficient care over setting out the details and sometimes as they type it up they make mistakes. I see it in almost every case. The fact that there is no mention made of the right hand does not of itself concern me. The other injuries are broadly referred to.”



The fact that fraud had not been pleaded did not prevent the court from making a finding of fundamental dishonesty – see


Kearsley v Klarfeld [2005] EWCA Civ 1510:


“There is no substantive obligation on the Defendant to plead fraud so long as his reasons for resisting the claim are clearly stated in accordance with CPR 16.5.”


The High Court also quoted from the Court of Appeal’s decision in


Howlett v Davies[2017] EWCA Civ 1696


31. Statements of case are, of course, crucial to the identification of the issues between the parties and what falls to be decided by the court. However, the mere fact that the opposing party has not alleged dishonesty in its pleadings will not necessarily bar a judge from finding a witness to have been lying: in fact, judges must regularly characterise witnesses to have been deliberately untruthful even where there has been no plea of fraud. On top of that, its seems to me that where an insurer in a case such as the present one, following the guidance given in Kearsley v Klarfeld, has denied a claim without putting forward a substantive case of fraud but setting out ‘the facts from which they would be inviting the judge to draw the inference that the plaintiff had not in fact suffered the injuries he asserted’, it must be open to the trial judge, assuming that the relevant points had been adequately explored during the oral evidence, to state in his judgment not just that the claimant has not proved his case but that, having regard to matters pleaded in the defence, he has concluded (say) that the alleged accident did not happen or that the claimant was not present. The key question in such a case would be whether the claimant has been given adequate warning of, and a proper opportunity to deal with, the possibility of such a conclusion and the matters leading the judge to it rather than whether the insurer had positively alleged fraud in its defence.”


Here the High Court was clearly influenced by “the problem that fraudulent or exaggerated whiplash claims have presented for the insurance industry and the courts.”(paragraph 44).

The High Court set out detailed guidance as to what courts should expect to see in genuine whiplash claims:


44. Before considering the particular issues in this case, it is also pertinent to recognise the problem that fraudulent or exaggerated whiplash claims have presented for the insurance industry and the courts. This was recognised in March 2018 when the Ministry of Justice published a Civil Liability Bill which aims to tackle insurance fraud in the UK through tougher measures on fraudulent whiplash claims, proposing new, fixed caps on claims and banning the practise of seeking or offering to settle whiplash claims without medical evidence. The problem of fraudulent and exaggerated whiplash claims is well recognised and should, in my judgment, cause judges in the County Court to approach such claims with a degree of caution, if not suspicion. Of course, where a vehicle is shunted from the rear at a sufficient speed to cause the heads of those in the motorcar to move forwards and backwards in such a way as to be liable to cause “whiplash” injury, then genuine claimants should recover for genuine injuries sustained. The court would normally expect such claimants to have sought medical assistance from their GP or by attending A & E, to have returned in the event of non-recovery, to have sought appropriate treatment in the form of physiotherapy (without the prompting or intervention of solicitors) and to have given relatively consistent accounts of their injuries, the progression of symptoms and the timescale of recovery when questioned about it for the purposes of litigation, whether to their own solicitors or to an examining medical expert or for the purposes of witness statements. Of course, I recognise that claimants will sometimes make errors or forget relevant matters and that 100% consistency and recall cannot reasonably be expected. However, the courts are entitled to expect a measure of consistency and certainly, in any case where a claimant can be demonstrated to have been untruthful or where a claimant’s account has been so hopelessly inconsistent or contradictory or demonstrably untrue that their evidence cannot be promoted as having been reliable, the court should be reluctant to accept that the claim is genuine or, at least, deserving of an award of damages.”



In overturning the trial judge’s finding, the High Court said that the judge had “adopted a much too benevolent approach to evidence from a claimant which could be demonstrated to be inconsistent, unreliable and, on occasions, simply untruthful.”


The High Court also stressed the importance of the accuracy of the medical report in whiplash cases:


46. The medical evidence is at the heart of claims for whiplash injuries. Given the proliferation of claims that are either dishonest or exaggerated, for a medical report to be reliable, it is essential that the history given to the medical expert is as accurate as possible. This includes the history in relation to previous accidents as this goes to fundamental questions of causation: whether, if there are ongoing symptoms, those are attributable to the index accident or to previous accidents or to some idiopathic condition of the claimant. Furthermore, the knowledge that a claimant has been involved in many previous accidents might cause a medical expert to look rather more closely at what is being alleged on the incident occasion to see whether the claimant is being consistent and whether his reported injuries are in accordance with the reported circumstances of the accident. Once, as here, the Claimant could be shown to have been dishonest in respect of a fundamental matter and then to have maintained that dishonesty through his witness statement and into his evidence before the Court, it is difficult to see how the Learned Judge could have accepted any other part of the Claimant’s evidence or the medical report itself – and, without these, there was nothing left.”


The High Court upheld the defendant’s submission that the claimant had been fundamentally dishonest and that the claim should therefore be dismissed.

It went further and said that the trial judge should have dismissed the claim on the basis that the claimant had failed to prove his case that any injury occurred, even though the defendant admitted primary liability for the accident.


QOCS, fundamental dishonesty and discontinuance

In Alpha Insurance A/S v Roche and Roche [2018] EWHC 1342 (QB)

the Queen’s Bench Division of the High Court held that the Circuit Judge should have allowed the defendant’s allegation of fundamental dishonesty to be heard in circumstances where the claimants had discontinued the day before trial.

The starting point on discontinuance in a QOCS case is no different from a claimant losing the case –  there is a costs order in the defendant’s favour in the usual way, but generally it cannot be enforced unless certain circumstances set out in CPR 44.13 to CPR 44.17, dealing with QOCS, applies.

The Practice Direction accompanying CPR 44  provides at 12.4 that:

“(c) where the claimant has served a notice of discontinuance, the court may direct that issues arising out of an allegation that the claim was fundamentally dishonest be determined notwithstanding that the notice has not been set aside pursuant to rule 38.4;”

The Circuit Judge refused the defendant’s application on the ground that a further hearing would involve “a disproportionate use of limited and precious court resources, given the amount of time and court resources that have already been devoted to the pursuit of this case”.

The Circuit Judge went on to find that “there is nothing…which suggests that there is any particular exceptional quality about this particular case that should cause me to give further directions and to set aside further court time to allow this particular isolated issue of dishonesty to be ventilated.”

The High Court found that that constituted an error of law as there is no requirement in the Practice Direction of exceptionality.

The High Court pointed out that if a case is settled, rather than discontinued, then the Practice Direction does specifically require that there be exceptional circumstances before there is a hearing in relation to alleged fundamental dishonesty.

The Circuit Judge appears to have exercised his discretion on the failure to understand the law, and consequently had erred in law, allowing the High Court to set the decision aside.

On discontinuance the court has an unfettered discretion which requires it to weigh all relevant considerations in accordance with the overriding objective and there is no presumption either way, that is that the court will generally direct determination of the issue of fundamental dishonesty, nor that it will generally not make such a direction.


The High Court had this to say:


“18. The provision has been introduced expressly to allow issues of fundamental dishonesty to be determined after discontinuance. Inevitably, this involves the allocation of further court resources to a case in which the claim is no longer being pursued. It will not be uncommon for such cases to involve relatively modest costs. However, in considering proportionality, it does need to be recognised that there is a public interest in identifying false claims and in claimants who pursue such claims being required to meet the costs of the litigation.”


Two factors which weighed heavily in the balance for the High Court were the very late stage at which the claim was discontinued and the complete absence of any explanation from the claimants, in a case where the defendant had admitted negligence but had alleged that the second claimant’s claim was fraudulent.

Thus this would have brought Section 57 of the Criminal Justice and Courts Act 2015 into play had the matter gone to a contested hearing.

As the case was discontinued, that ceased to be an issue, as the claimants lost the case in any event, and the issue here was fundamental dishonesty for the purpose of depriving the claimants of the protection of QOCS.

The High Court said:

However, where liability is not disputed save for the allegation of fundamental dishonesty and where the matter is close to trial, I believe some explanation can reasonably be expected.”


These issues are dealt with in my book Qualified One-Way Costs Shifting, Section 57 Set-off available from Amazon here or from me here







Written by kerryunderwood

June 8, 2018 at 8:30 am

Posted in Uncategorized

2 Responses

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  1. Hello Kerry
    I read this post but what if the lawyers had lied and defrauded the client on the assumption that the home insurance had told them to play his injury’s down and to get him to settle for a much lesser cost ie price fixing personal injury claims

    John b fairhurst

    June 8, 2018 at 9:43 am

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