Fundamental Dishonesty; Inconsistencies and Lack of Disclosure by the Claimant’s Solicitor is not Sufficient to Conclude that a Claimant is Fundamentally Dishonest
The matter of Michael v I E & D Hurford Ltd (t/a Rainbow) [2021] EWHC 2318 (QB) concerned a road traffic collision claim. The Claimant worked as an uber driver and was hit in the rear by the Defendant as he was moving off from a set of traffic lights. The Claimant claimed damages for credit hire, personal injury and physiotherapy treatment. Judgement in the sum of £3,624.18 was entered for the Claimant following trial on 14 September 2020. There were a number of inconsistencies between the Claimant’s statements of case and the Claimant’s oral evidence however the trial judge did not consider that the Claimant was fundamentally dishonest. The Defendant submitted an application to appeal this decision.
Grounds for Appeal
The Defendants submitted an application for appeal. It was alleged that the recorder who had initially heard the trial was wrong to find that there was no fundamental dishonesty. Five points were submitted in support of this:
1. The fact that the Claimant had exaggerated his claim for physiotherapy and served a fabricated and/or fraudulent physiotherapy report
2. The consequences of CPR 22 of signing statements of case which were known to be inaccurate or untrue and the fact that the Court had found these to be inaccurate, at least in part
3. The consequence of the inaccurate disclosure statements on 23 August 2019 and 2 September 2020, which contained the fabricated physiotherapy documents
4. The failure of the Claimant to give disclosure of credit card statements
5. The Claimant’s failure to disclose that he had a second job which was relevant to the credit hire claim and the assertion of impecuniosity
The Powers of the Appellate Court
Mrs Justice Stacey noted that the jurisdiction of the High Court in an appeal from the County Court is limited to "a review of the decision of the lower court" under CPR 52.21(1) and that an appeal will be allowed where the decision was either wrong or unjust because of a serious procedural or other irregularity. She also noted that 52.21(4) provides that the Appeal Court "may draw any inference of fact which it considers justified on the evidence". As there was no allegation of any procedural or other irregularity, this appeal was limited to the inference of fact.
Mrs Justice Stacey noted that appeal courts have been repeatedly warned not to interfere with findings of fact by the trial judge unless compelled to do so. Various reasons have been provided in case law, the most recent being McGraddie v McGraddie [2013] UKSC 58 [2013] 1 WLR 2477. Essentially, as an appeal should not be a full re-trial of the whole case, any appeal judge is unlikely to have regard to the entirety of the facts and evidence that was available to the trial judge. Even reference to documents or transcripts cannot replicate the atmosphere of the Court room. Therefore, where a finding of facts is concerned, the Court will require a particularly compelling case to overturn the findings of the trial judge.
In Molodi v Cambridge Vibration Maintenance Service, Aviva Insurance Limited [2018] EWHC 1288 (QB) and Richards and Anor v Morris [2018] EWHC 1289 (QB), Martin Spender J stated that “where the trial judge has heard the evidence and has not concluded that the claimant was dishonest, I direct myself that it would require a very clear case indeed for an appellate court effectively to overturn the trial judge's conclusion in that respect and find that the claimant was dishonest despite not having seen the witnesses give evidence."
Section 57(1)(b) of the Criminal Justice Act 2015
This section requires that, on application of the Defendant, where a Court finds that the Claimant has been fundamentally dishonest, the Court must dismiss the claim unless the Claimant would suffer substantial injustice as a result. Under section 57, this dismissal would also include any element of the primary claim in which the Claimant had not been dishonest.
Mrs Justice Stacey then considered the definitions of “dishonesty” and “fundamental dishonesty”. She concluded that the test for dishonesty was objective and therefore, if by ordinary standards an individual’s mental state can be characterised as dishonest, it was irrelevant whether the individual considered that he or she was being dishonest. She concluded that fundamental dishonestly meant dishonesty that went to the root of the claim.
Analysis of the facts and Findings
Mrs Justice Stacey considered the various facts that the trial judge had found to be inconsistent with the statement.
She noted that, during cross-examination of the Claimant, he willingly offered information that was inconsistent with his statements of case. The Claimant confirmed that he only attended one session of physiotherapy despite his solicitors having claimed for 8 sessions at £100 per hour. The Claimant also confirmed that he drove his damaged vehicle to the mechanic and thereafter stored the vehicle at his home address, despite his solicitor having claimed for storage costs. Furthermore, when questioned about his second job at ASDA, the Claimant seemed just as perplexed as the Defendants that this had not been disclosed.
Therefore there was no indication that he had deliberately hidden information from his solicitor or from the Court. It was also clearly apparent that the Claimant was unfamiliar with his witness statement and, in some respects, it was beyond his understanding. Despite the Defendants’ reference to the statement of truth signed by the Claimant with regards to his witness statement and the disclosure statement, the Claimant was not asked to waive legal privilege.
Mrs Justice Stacey found that the trial judge was entitled to conclude that, if there had been dishonesty, it was not on the part of the Claimant. Consequently, the Defendants’ appeal was dismissed.
Commentary
This is good news for Claimants. Where a Claimant is found to be fundamentally dishonest in a personal injury claim, the Claimant will lose any protection under Qualified One Way Costs Shifting. Also, most ATE policies include a clause that provides that a finding of fundamental dishonesty will void the policy entirely. Therefore, in the event that a Claimant is found to be fundamentally dishonest, the Claimant will be solely responsible for the entirety of his opponent’s costs. This case demonstrates that the dishonesty on behalf of the Claimant must be clear, it is not enough to simply demonstrate that there have been inconsistencies in the claim or that there is evidence that a Claimant’s solicitor has chosen to withhold. This is of course important; as the consequences of a finding of fundamental dishonesty are so severe, a blameless Claimant should not be held responsible.
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