UK: Scotland: Fundamental Dishonesty Considered

Last Updated: 19 April 2018
Article by Andrew Constable

Most Read Contributor in UK, November 2018

Grant Grubb v John Finlay [2018] CSIH 29



The Court of Session has refused an appeal which sought to dismiss a substantially exaggerated claim on the basis that it was fundamentally dishonest.

Background

The Pursuer sued the Defender for £500,000 following an accident which occurred in a petrol filling station in Dundee in 2011. The Defender reversed his Peugeot into the front of the Pursuer's stationary car. The Defender admitted liability, and therefore, the only issue was that of quantum of damages.

The Pursuer averred that he had sustained a whiplash injury to his cervical spine, resulting in an impingement of the C7/C8 nerve roots.

We were instructed to act on behalf of the Defender by his insurance company. We advanced arguments that the Pursuer had been fundamentally dishonest, as he had made several contentions which were not truthful. In the absence of formal Scottish legislation on this issue, and with reference to English procedure and legislation on fundamental dishonesty, we sought that the action should have been dismissed as an abuse of process.

The Lord Ordinary accepted that there was discretion to dismiss an action if a "fair trial is impossible, or if there is a fundamental dishonesty on the part of the pursuer, or if there is an abuse of process," but declined to use it. The Lord Ordinary awarded the Pursuer around £7,500 in damages.

On our further motion following an additional hearing, expenses in favour of the Defender were awarded on a 2/3 basis, commenting on the Pursuer's conduct.

We appealed the decision to award damages, arguing that the whole case should have been dismissed, based on the principle of fundamental dishonesty. The Pursuer cross-appealed the decision to award expenses in favour of the Defender.

The Court of Session

The Court of Session was asked to rule on two issues:

  1. The power of the court to dismiss an action, summarily at the stage of a proof, when the Pursuer is found to have acted dishonestly;
  2. Whether a Pursuer, who has been awarded damages, should, in the absence of a tender, be the subject of a contra award of expenses because of his dishonest conduct

As to the first issue, it was found that whilst the Court had an inherent power to summarily dismiss an action, it was in very rare circumstances where it would do so whilst one party is producing evidence in supporting of the claim.

The Pursuer's response to the appeal admitted that "any fraud was purely technical," and that the Court could not dismiss the claim as fundamentally dishonest because he had suffered injury. The dispute arose over the exaggeration of such injury.

The Court agreed, holding that "the pursuer did not make a fundamentally dishonest claim. He made a good, if exaggerated, claim."

The exaggeration was considered "in the context of the Lord Ordinary's finding that the pursuer had continuing symptoms, albeit that they cannot, in the Lord Ordinary's view and preferring one body of medical evidence over another, be causally linked to the accident."

The appeal was dismissed.

In respect of the second issue, the Court held there was no basis to impugn the Lord Ordinary's decision to make the Pursuer the subject of a contra award of expenses. The Court held that the Lord Ordinary was entitled to consider the conduct of the parties and that the Pursuer's "lack of candour" had resulted in an extended proof.

The cross-appeal was dismissed.

What can we learn?

  • This decision exemplifies the problem defenders continue to face in Scotland with fraudulent claims. The Lord Ordinary confirmed that fundamental dishonesty on the part of the pursuer can result in the summary dismissal of a claim, yet the Court of Session did not define what actions constitute such fundamental dishonesty.
  • The Pursuer initially claimed approximately £500,000, reducing his claim down to £183,000, and was awarded around 4% of the reduced sum, yet was not considered to be fundamentally dishonest.
  • The decision not to dismiss the claim stands firmly at odds with the decision to award expenses in favour of the defender, particularly in light of the pursuer's "lack of candour".
  • This case had striking similarities with the English claim of Summers v Fairclough Homes. This claim became the direct precursor to the primary legislation introducing section 57 of the Criminal and Justice Courts Act (CJCA) in England and Wales. We are of the view that the facts of this claim mirror the exact circumstances in which we would expect a Court in England and Wales would apply Section 57.
  • There is some encouragement for defenders, as Sheriff Principal Taylor recognised the need to protect defenders within the Civil Litigation Funding Bill and the requirement in Section 8 will remove QOCS protection when a fraudulent representation has been made. However, the difference between a finding of fundamental dishonesty under the qualified one-way costs shifting (QOCS) regime and under section 57 would have been particularly important here.
  • Broadly speaking, the removal of QOCs protection can be summarised as the pursuer unsuccessfully bringing a fraudulent claim – usually entirely fraudulent – and losing QOCS protection as a consequence. The Court of Session was of the view that the Pursuer had suffered a genuine injury in this instance. Section 57 fundamental dishonesty is different; it addresses those pursuers who dishonestly exaggerate a genuine claim, causing that claim, including genuine heads of loss, to be dismissed. This mirrors the circumstances of this claim.
  • There have now been a number of very robust decisions in England and Wales using this legislation, which have been reported on by our colleagues.
  • Similar provisions to those in Section 57 did not make their way into the Civil Litigation Bill. In the absence of such legislation, it is clear that an authoritative judgment is required on what constitutes fundamental dishonesty, notwithstanding our view that the Scottish Government to consider the implementation of legislation similar to that of Section 57.
  • It is increasingly untenable to allow the dismissal of actions for breaches of minor procedural rules, yet permit actions to proceed to conclusion of proof when it becomes apparent there is a clear intent of defrauding a defender, and abusing the Court process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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