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Failure to establish fundamental dishonesty shows pitfalls to be avoided

26 March 2020

Smith v Ashwell Maintenance Limited
Leicester County Court
21 January 2019

The decision by HHJ Hampton in the Leicester County Court in Spencer Smith v Ashwell Maintenance Limited on 23 January 2019 just over a year after the LOCOG v Sinfield (2018) decision has raised more questions and debate on the concept of fundamental dishonesty in relation to applications made under section 57 of the Criminal Justice and Courts Act 2015.

Legal background

The defendant raised arguments seeking dismissal of the claim on the basis of the claimant's dishonesty based on both the authority of Summers v Fairclough Homes ('Summers') (2012) which was a decision of the UK Supreme Court, and also under  s.57 of the Criminal Justice and Courts Act 2015 ('section 57').

In Summers, the issue of whether an entire claim could be struck out as an abuse of process was considered. In that case, the claimant claimed damages of over £800,000 having suffered a fracture to his ankle in an accident on a building site. He maintained that he was dependant on crutches and was incapable of working but surveillance (not only by the defendant but also the DWP) revealed that he was mobile and working in a burger van. He was ultimately awarded just over £88,000.

It was held by the Supreme Court that the court has the power to strike out a claim as an abuse of process at any stage of proceedings including after the end of a trial even when there has been a determination that the claimant is entitled to damages in principle. It was held that to deliberately make a false claim and to adduce false evidence could constitute an abuse of process but the power to strike out should be exercised only when it was just and proportionate to do so and only in highly exceptional circumstances. What constituted being 'exceptional' was not specifically spelt out but the Supreme Court took a sympathetic view and decided that the facts of Summers did not satisfy that test.

Following that case parliament intervened and section 57 was enacted, applying to injury claims issued on or after 13 April 2015. It provides that in claims for damages in respect of a personal injury ('the primary claim'), if the court finds that the claimant is entitled to damages in respect of the claim, the defendant can nevertheless seek the dismissal of the claim under this section. If on that application the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a later claim, the court must dismiss the claim, unless it is satisfied that the claimant would suffer substantial injustice (which is not defined). The section goes on to provide that the court must note the notional amount of the 'genuine' damages that would have been awarded and then when assessing costs, that sum will be deducted from the defendant's costs.

Both Summers and section 57 were considered in the Smith case. The exact reasons for this are not clear although it should be noted that Mr Smith was injured on 14 July 2013 which was after the date of the Summers judgment but before section 57 came into law. It is not clear from the judgment as to the date on which his proceedings were issued (which would have been needed to have been on or after 13 April 2015 for section 57 to apply) nor whether the defendant was also seeking to strike out the claimant's claim as an abuse of process.

Factual background

On 14 July 2013 the claimant, a qualified commercial heating engineer, when working in gas installations in the course of his employment, slipped and fell approximately 4 feet into a hole. His foot struck a pipe at the bottom and he injured his ankle. While there was an allegation of contributory negligence which was ultimately withdrawn during the trial, the main argument revolved around the gravity of the injury and the resultant disability of the claimant who alleged even to the date of trial that he was severely debilitated and was unable to work and required ongoing care from his family.

The defendant argued that the claimant's injury was time-limited and that his presentation to the medical experts and his approach to the claim overall was so exaggerated as to amount to fundamental dishonesty. The court was invited to dismiss the claim in accordance with Summers and/or pursuant to section 57.

The defendant relied on extensive covert surveillance (from 18 occasions) as well as the claimant's appearance in a Channel 4 programme 'Selling Houses with Amanda Lamb' in March and April 2014 (known as the "Reef footage") where the claimant was seen undertaking a whole range of DIY activities and negotiating stairs without any difficulty; whereas he had advised his own orthopaedic expert that he was unable to kneel or squat and that he was struggling with stairs.

There were a number of other contradictions too. His bank statements showed financial transactions suggesting that he had received payments for what appeared to be work that he was conducting for reward. There was evidence of purchasing plumbing supplies. The defendant also accessed the Gas Safe Register which records the names of the businesses and operatives (including the claimant's) who are competent to undertake the installation and repairs of gas installations and certified to provide gas safety certificates. The defendant contacted a number of people who were apparently the claimant's customers some of whom attended the trial. The claimant had also been filmed carrying large planks of wood onto a work site.

The claimant in his evidence asserted that he was on pain medication at the time of the Reef footage, and that it was his son who had a plumbing business, but the son was not a qualified gas fitter, and that due to financial difficulties which his son had experienced, he was helping him by processing financial transactions via his bank account. The claimant said he had also assisted his son by giving him advice.

In response to the footage showing him transporting materials, the claimant stated that he was accompanied by his son and was merely driving for him as his son also did not have a driving licence. He also explained that he had transported some light planks of wood at a site when he knew that there was a skip there and that this was his own personal material. He was seen wearing workman's clothing and he claimed that was explained by the fact that he would wear those in any event.

The reference in his medical records to the fact that the GP's 45 minute delay in seeing him had "cost him a job" was simply his frustration at the delay and that he was referring to one of his son's jobs. He had claimed that he had only undertaken one long haul holiday since the accident in Florida with difficulty, but it was later established in the evidence that he had also been to the Dominican Republic and the USA and there was also evidence of other short stays and holidays in Portugal.

Consideration of the evidence

The judge found that there were some "troubling" and "significant contradictions" in the claimant's case. However, the judge found the claimant's explanations for running his son's business via his own bank account and being on hand to advise were plausible and that account was backed up by his son. There was no actual evidence showing him physically working.

Importantly, the judgment criticises the hostility exhibited towards the claimant by the defence team and in particular by their orthopaedic expert. The judge was of the view that "from the earliest intimation of a claim, the defendant had shown a determination to avoid fully compensating him". Significantly perhaps, a witness summary obtained from a 'customer' who said that the claimant himself fitted a boiler, was completely contradicted at trial when that customer was invited to give evidence by the claimant. The witness said at trial that he had had nothing to do with this witness summary and had advised the defendant team of that fact. The judge concluded that there was "an element of bad faith on the part of the defendant in seeking to introduce this witness summary in this way".

The judge highlighted a quote from a 2002 article in the report of one of the pain consultant experts that "outright faking of pain for financial gain is rare, but exaggeration is not, especially if the patient is involved in litigation. It is often difficult to determine whether this represents an attempt to convince or deceive the clinician."

The judge did not find that there had been an outright faking of pain but believed that there had been "an element of exaggeration" brought about by an attempt to convince rather than to deceive. The surveillance evidence could only be a 'snapshot'. His conduct did not amount to the sort of conduct that would justify dismissal of his claim in accordance with the principles outlined in Summers. In that case, contrary to his own account, the claimant was seen playing football and the claimant had even engaged in work for reward – yet even so, his case had not been dismissed. In the index case the judge's finding was that the claimant had not engaged in work for reward.

Furthermore, the judge was not satisfied that the grounds had been established for striking out the claim pursuant to section 57. The case of LOCOG v Sinfield (2018) was considered by way of comparison and it was noted that in that case, the claimant had fabricated receipts to support an unjustified claim for gardening services. However in the index case, the claimant had not been shown to have fabricated evidence.

The judge went on to say that given that the claimant had suffered personal injury and accepting the evidence of the claimant's expert evidence on that, as well as taking into account what she referred to as the defendant's vigorous attempts to avoid responsibility for an accident, the claimant would suffer substantial injustice if his claim were dismissed.

The claimant was awarded just over £360,000 in damages.

Comment

It should be noted that this is a county court decision (and so not a binding authority) but that in terms of any appeal that the judge made certain findings of fact regarding the claimant.

Undoubtedly there is very clear criticism in the judgment of the manner in which the defendant conducted its case and this played a large part in the judge's thinking and ultimate finding. There are salutary lessons to be learnt here in how to deal with a claimant who appears to be grossly exaggerating his/her claim by doing so in a non-partisan way that is likely to be seen as such at trial.

However, there are some valid questions to be asked about the presentation of the claimant's claim. In LOCOG v Sinfield (see our update) the dishonesty of the claimant was evident in the 'presentation' of his claim but the judge in the index case appeared to distinguish the two cases on a factual basis seeming to contrast the faking of a receipt (in fact it was an invoice) in Sinfield from the faking of injury in Smith.

Of greater concern to insurers however will be the following extract from the judgment in this case:

"Faking pain, as described by the learned authors referred to above [referring to the medical journal article], would almost undoubtedly amount to fundamental dishonesty. Exaggeration, with mixed motives of attempting to convince or deceive, is not".

The conclusion to draw from this statement from the judge is that unless the reason to exaggerate is entirely motivated by an intention to deceive then it cannot be fundamentally dishonest. This appears to run contrary to the very raison d'être of section 57 and in our opinion is a mistaken view of the law.

Furthermore, we note the judge's remark that the claimant had suffered personal injury and that (combined with the attitude of the defendant) meant that a substantial injustice would be suffered if there had been a finding of fundamental dishonesty. This in itself also appears to be mistaken and it contradicts the judgment of Mr Justice Knowles in the High Court decision of LOCOG v Sinfield (also followed in another High Court case of Razumas v Ministry of Justice (2018)(see our update)) to the effect that substantial injustice cannot amount to a mere loss of other genuine damages and therefore should amount to something more than the loss of the claim itself.

Another issue for consideration is the fact that there was no reference in this case to the UK Supreme Court's decision in Ivey v Genting Casinos (2017) when the court re-defined the legal definition of dishonesty for those accused in criminal cases so that it is in line with allegations of dishonesty in civil cases. The test is an objective one: was the person in question dishonest by the standards of an ordinary, reasonable individual (having the same knowledge as the accused)? Had this question been asked or considered by the judge, would there have been the same finding?

It would appear from Smith that courts will continue to grapple with the concepts of exaggeration of claims and fundamental dishonesty. This decision highlights the fact that the presentation of one's case (both by the claimant and the defendant) can be critical to gaining or losing judicial sympathy and therefore to the final outcome.

Contact

For further information about this article or about the operation of fundamental dishonesty in QOCS or Section 57, please contact Stratos Gatzourison 0161 604 1841, or by email at stratos.gatzouris@dwf.law

Further Reading

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