Case Alert - [2018] EWHC 51 (QB)
The defendant appealed against a finding that the claimant was entitled to damages for personal injuries, on the basis that the claimant had been dishonest. In Fairclough Homes v Summer, the Supreme Court held that, although the court had jurisdiction to strike out a statement of case under CPR 3.4(2) for abuse of process, it should do so only "in very exceptional circumstances". After that decision, Parliament brought in section 57 of the Criminal Justice and Courts Act 2015, which provides that a claim for personal injury damages must be dismissed if it is found that the claimant is entitled to damages but the court is satisfied, on the balance of probabilities, that "the claimant has been fundamentally dishonest". However, the claim will not be dismissed if the claimant would suffer "substantial injustice".
Knowles J has now held that a claimant should be found to be "fundamentally dishonest" if it is proven that he/she acted dishonestly 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". By "substantially affected" he meant "going to the root" of the claim, and by potentially affecting the defendant in the context of the case "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".
On the facts of the case, the judge allowed the appeal and dismissed the claim for damages. He noted that "substantial injustice" to the claimant must mean more than the mere fact the claimant will otherwise lose damages to which he was genuinely entitled: "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".
Fundamental Dishonesty - LOCOG v Sinfield
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