“FUNDAMENTAL DISHONESTY” AND STRIKING OUT IN PERSONAL INJURY CASES: TEN KEY PROCEDURAL POINTS

The rule as to “fundamental” dishonesty has attracted a lot of attraction (and a lot of heated debate). However there has been very little examination of the details of the Act and the consequent procedural implications.  There are 10 key points which every personal injury litigator must be aware of.

THE TEN KEY POINTS

1. The section cannot apply to cases where liability is disputed. The court has to find that “the claimant is entitled to damages” before it can make an order under the Act

It is a statutory requirement that before an order can be made “the court finds that the claimant is entitled to damages” ((57(1)(a)).This could pose a dilemma for defendants in some cases.  A defendant cannot make an application in a case where liability is in issue unless it is is prepared to concede that the claimant is entitled to damages. It may have to admit liability before making an application so that the court can consider making an order under the Act. This could make an application a high risk strategy in cases where liability is in issue.

2. The test is on the balance of probabilities

There is only one test of “balance of probabilities”, however the case law indicates that more cogent evidence is needed in relation to allegations of dishonesty. “Clear and convincing evidence” is needed, (see this useful discussion by Drukker solicitors on the standard of proof).

3, The court “must”dismiss the claim – however there is a potential escape clause

Section 57(2) states that court “must” dismiss the primary claim.  However there is a caveat “unless it is satisfied that the claimant would suffer substantial injustice if the claim was dismissed”.  There is no definition of “substantial injustice”. It is probable that this may deal with those cases where there is a major claim for damages and ongoing loss and the claimant is found to be dishonest on a relatively minor issue.

4. The court must dismiss the whole claim not just the the part on which the claimant has been found to be dishonest

Section 57(3) is phrased in a strange way. It means that the entire claim is struck out not just the element of the claim upon which dishonesty has been found.

“(3)The duty under subsection (2) includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.”

5. The dishonesty can be in relation to a “related claim” but the related claim has to be a personal injury action

The term “related claim” has a clear definition in 57(8).

  • It has to be a claim for “personal injury”
  • It has to be in connection with the same incident or series of incidents.
  • It has to be someone other than the claimant (“by a person other than the person who made the primary claim”).

So a related action in relation to property damage or car hire alone will not suffice. Such an action cannot be a “related claim”.

It is not clear whether proceedings have to be issued in relation to a “related claim”. s57.(8) states a claim includes a counterclaim but there is no further definition.

6. When striking out the claim the court has to assess the damages it would have paid

Even though the court dismisses the claim Regulation 57(4) means it has to record the damages it would have paid.  This means, in substantial cases, there may have to be a fairly detailed assessment of damages.

7. The damages that would have been awarded are then set off against any costs that the claimant is ordered to pay to the defendant

This is why the court has to assess the damages it would have paid. The sum that would have been awarded in damages is set off against any costs that the claimant is ordered to pay to the defendant.

It is not clear what happens when the potential damages exceeds the sum payable.  However a claimant in these circumstances should not expect the balance. It is a right of set off.

8. The loss of the damages claim is taken into account in any subsequent criminal or contempt proceedings

s.57(6) & (7) mean that the fact that the claimant has lost the damages claim is taken into account both in any crimimanl proceedings and and any proceedings for contempt of court in relation to the same action.

9. Fundamental dishonesty applies to a counterclaim

Section 57(8) makes it clear that the section applies to a counterclaim.

10. Fundamental dishonesty does not apply to actions issued before the Act came into force

That is the 13th April 2015.

THE SECTION AND THE GUIDELINES

SECTION 57 OF THE CRIMINAL JUSTICE AND COURTS ACT 2015

“57 Personal injury claims: cases of fundamental dishonesty

(1)This section applies where, in proceedings on a claim for damages in respect of personal injury (“the primary claim”)—

(a)the court finds that the claimant is entitled to damages in respect of the claim, but

(b)on an application by the defendant for the dismissal of the claim under this section, the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim.

(2)The court must dismiss the primary claim, unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed.

(3)The duty under subsection (2) includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.

(4)The court’s order dismissing the claim must record the amount of damages that the court would have awarded to the claimant in respect of the primary claim but for the dismissal of the claim.

(5)When assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in accordance with subsection (4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant.

(6)If a claim is dismissed under this section, subsection (7) applies to—

(a)any subsequent criminal proceedings against the claimant in respect of the fundamental dishonesty mentioned in subsection (1)(b), and

(b)any subsequent proceedings for contempt of court against the claimant in respect of that dishonesty.

(7)If the court in those proceedings finds the claimant guilty of an offence or of contempt of court, it must have regard to the dismissal of the primary claim under this section when sentencing the claimant or otherwise disposing of the proceedings.

(8)In this section—

  • “claim” includes a counter-claim and, accordingly, “claimant” includes a counter-claimant and “defendant” includes a defendant to a counter-claim;

  • “personal injury” includes any disease and any other impairment of a person’s physical or mental condition;

  • “related claim” means a claim for damages in respect of personal injury which is made—

    (a)

    in connection with the same incident or series of incidents in connection with which the primary claim is made, and

    (b)

    by a person other than the person who made the primary claim.

(9)This section does not apply to proceedings started by the issue of a claim form before the day on which this section comes into force.”

THE EXPLANATORY NOTES

There are explanatory notes to the section

Section 57: Personal injury claims: cases of fundamental dishonesty

502.Section 57 provides that in any personal injury claim where the court finds that the claimant is entitled to damages, but on an application by the defendant for dismissal is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to either the claim itself (the primary claim) or a related claim, it must dismiss the primary claim entirely unless it is satisfied that the claimant would suffer substantial injustice as a result. A related claim is defined in subsection (8)as one which is made by another person in connection with the same incident or series of incidents in connection with which the primary claim is made. Subsection (3)makes clear that the requirement to dismiss the claim includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.

503.Subsection (4) requires the court to record in the order for dismissal the amount of damages that it would otherwise have awarded. This will be relevant in the event of an appeal and in determining what the claimant should pay the defendant in costs. It will also be relevant for the purposes of any criminal proceedings or proceedings for contempt of court which may be brought against the claimant in relation to the same behaviour.

504.Subsection (5) provides that when assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in the order under subsection (4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant. For example, if the amount of damages which the court records that it would have awarded but for the dismissal of the claim were £50,000, and the amount that the court would otherwise order the claimant to pay in respect of the defendant’s costs was £100,000, the claimant could not be ordered to pay the defendant more than £50,000 in total.

505.Subsections (6) and (7) deal with the relationship between an order dismissing the claim and any subsequent proceedings against the claimant for contempt of court or criminal prosecution, and provide for the court hearing the latter proceedings to have regard to the order dismissing the claim when sentencing the claimant or otherwise disposing of the proceedings. It is intended that this will enable the court to ensure that any punishment imposed in those proceedings is proportionate.

506.In addition to defining a related claim, subsection (8) defines “personal injury” for the purposes of the section as including any disease and any other impairment of a person’s physical or mental condition, and provides for the definition of “claim” and related terms to cover counter-claims.

507.Subsection (9) provides that the section does not apply to proceedings started by the issue of a claim form before the date on which the section comes into force.”

4 comments

  1. Reblogged this on Zenith PI.

  2. Do you think that the defendant can cover all bases by a submission of fundamental dishonesty in any event thus triggering section 57 if the claimant is entitled to damages and triggering QOCS disqualification if no entitlement to damages?

  3. baser akoodie · · Reply

    Thanks gordon.the article on fundamental dishonesty has been most helpful.

  4. I suppose so. But there may be little point in practical terms. There are a number of alternatives:-

    1. The claimant loses because he or she is telling lies. In which case s.57 does not come into it because the court has to find that the claimant is entitled to damages for the section applies.

    2. The claimant wins some damages but is found to have been “fundamentally dishonest”. The defendant has to make an application. In this scenario the damages are set off against any liability to pay the defendant’s costs. (There is no bar to the claimant recovering some costs against the defendant, this is going to be an interesting area…).

    The section requires that there be “an application by the defendant for dismissal of the claim”. It may well be that s.57 applications are made (as a matter of course) in all cases where the defendant is doubting the claimant’s credibility. In some cases these may well be heard as part of the trial – in cases where there is not enough evidence to satisfy a court on an interlocutory application.

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