Fundamental dishonesty and substantial injustice: elephant tests?

Mandatory dismissal of the entirety of a personal injury claim in which the successful claimant has been found to be “fundamentally dishonest” was introduced by section 57 of the Criminal Justice and Courts Act 2015. That provision also provided that the blunt effect of the dismissal could be avoided if it would cause “substantial injustice”, a qualification that was examined in a recent employers’ liability claim.

At the time it was introduced there were concerns in some quarters that defendants would raise the ‘FD’ argument at s57(1) of the Act indiscriminately. Some may think that those fears have been realised while others may reject them. But even if experiences of the section in practice are disputed, that should not detract from agreement on its basis in principle: that those who tell lies going to the heart of otherwise honest claims should lose all rights to recover.

The harshness of the complete dismissal under subsection (1) may be avoided only if the judge is “satisfied that the claimant would suffer substantial injustice if the claim were dismissed.” This aspect – at subsection (2) – was examined briefly in the recent case of Smith v Haringey, an EL claim resulting from an assault by a patient on a care worker.

At trial in February 2021, the core of the claim – damages for minor soft tissue injuries and other modest losses attributable to the assault – was valued by Master Cook at just over £2,500 (after applying an agreed liability discount of 25%). However, by that time the claimant’s case had mutated into one based on severe chronic pain and depression, with claimed future loss of earnings to retirement in the mid-2030s taking the schedule to well over £600,000. 

In addition, several other developments common to these sorts of cases had happened by then, for example: (i) the defendant had raised various inconsistencies in the claimant’s medical history and presentation to experts, (ii) the defendant had obtained persuasive surveillance footage, (iii) the defendant had obtained medical evidence stating that the claimant’s “account of her symptoms and disability cannot be relied upon [and] the account of her psychological symptoms cannot be relied upon either” and (iv) the claimant was by then acting in person having, as the Master put it, “parted company with her solicitor in January 2020.”

Based on these elements and on the evidence given at trial, the claimant was found to be fundamentally dishonest. She had been “inconsistent and knowingly misleading in her accounts to the experts and to the court … demonstrated a willingness to manipulate the facts to suit her arguments … done so deliberately in order to bolster [the loss of earnings claim, all of which meant that] there is simply no room to suggest that unconscious exaggeration may be at work.”

The features in the two paragraphs immediately above will be all too familiar with practitioners in this field. What is new in this case, however, is the Master’s brief attempt to give some guidance on “substantial injustice”. He said that the words must mean “more than the fact that the claimant will lose her damages” and added that fundamentally dishonest claimants will not “suffer substantial injustice by a result that Parliament clearly intended when enacting this legislation.”

Given that his second phrase doesn’t really add anything to the first – other than by way of paraphrase – the detail of “substantial injustice” still remains beyond our grasp for now.

Perhaps the reality is that both aspects of section 57 of the 2015 Act, the concept of “fundamental dishonesty” itself and the idea of “substantial injustice”, simply fall within Stuart-Smith LJ’s description back in 1998 of a very different statutory provision before him as being “an application of the well-known elephant test. It is difficult to describe, but you know it when you see it.”

Alistair Kinley, Director of Policy and Government Affairs at BLM

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