In the absence of an authoritative statutory definition, a fair amount of judicial ink has been spent attempting to unpack the practical meaning of the term ‘fundamental dishonesty’. It was introduced by CPR 44.16(4) as an exception to the qualified one-way costs shifting (QOCS) provisions in CPR 44.14 and has since been employed in the Criminal Justice and Courts Act 2015. The Court of Appeal in Howlett v Davies  EWCA Civ 1696 (on which see Russell James’ 2017 article) endorsed the approach of HHJ Moloney QC in the unreported case of Gosling v Hailo (29 April 2014) on the meaning of the term in the QOCS context. An important element of that guidance is an explicit distinction between dishonesty relating to issues that are ‘fundamental’ and those that are merely ‘incidental’ to the claim.
Relatively few findings of fundamental dishonesty have been made at all and, although a general taxonomy is helpful, discussion of this vexed expression against different factual and legal backgrounds renders its meaning clearer and application simpler. In this context, the recent case of LOCOG v Sinfield  EWHC 51, which is the first reported case on the concept in relation to section 57 of the 2015 Act is a helpful addition to the emerging definition. Section 57 provides in part:
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.…
The case concerned a volunteer at the 2012 Olympic Games who injured his arm and wrist; the Defendants admitted liability. Following a trial on quantum, LOCOG served an amended defence which alleged fundamental dishonesty.
The Claimant claimed that the injury prevented him from tending to his two-acre garden which he said he and his wife had used to look after alone but for which they now required a gardener. The amount claimed in this respect was ~£14,000 which represented ~42% of total damages. It emerged that the Claimant had employed a gardener before the accident (who had taken on no more work since the accident) and that additional invoices, purportedly from the gardener, were in fact drawn up by the Claimant himself (his ex post facto excuse was that this was ‘self-billing’).
At first instance, the judge rejected the section 57 application, finding that the Claimant had been “muddled, confused and careless” in making the inflated claim and, in relation to the creation of false invoices, had been “dishonest”. Crucially, however, he had not been fundamentally dishonest so as to affect the entirety of the claim.
Allowing LOCOG’s appeal, Knowles J took Howlett and QOCS caselaw as his starting point for his discussion on fundamental dishonesty. This discussion is useful for three reasons:
- it provides a practical example of fundamental dishonesty;
- it clarifies the narrow difference between the two uses of the term; and
- it outlines the proper approach to be taken to an application under section 57.
Firstly, it was found clear that this was an example of ‘dishonest’ behaviour. Dishonesty is not a particularly controversial concept and imports the well-understood concepts of falsity, deceit and deception. In Ivey v Genting Casinos  3 WLR 1212 the criminal standard of dishonesty was modified to be more objective, the civil test now being for the court to consider, as a matter of fact: what the Claimant’s words meant and whether the Claimant could have genuinely believed that meaning.
The court also noted that even in the context of a claim for gardening assistance ~42% of the damages was sufficiently ‘fundamental’. What fundamental actually means however still remains something of a mystery. The judgment brings together existing signposts on fundamentality: the Howlett approach was applied and the judge considered the proportion of the damages affected was more than incidental; the definition of ‘fundamental’ breach of contract discussed by Lord Upjohn in Suisse Atlantique  1 AC 361 is also drawn on (breaches that go “to the root” of the contract). However, the judgment does not go much further than canvassing these authorities and applying them to the present facts in actually clarifying the concept of fundamentality for the purposes of personal injury litigation.
Secondly, the decision compares the usage of the term fundamental dishonesty in relation to QOCS and section 57. At paragraph 60:
60 …the drafter of s 57 sought to draw several distinctions from CPR r 44.16: it is the claimant who the court must find dishonest, rather than the claim. Further, rather than permitting the defendant to recover all of his costs, the court is required to assess the claimant’s ‘genuine’ damages and deduct that figure from the defendant’s costs. As to the first point, however, it will be rare for a claim to be fundamentally dishonest without the claimant also being fundamentally dishonest, although that might be a theoretical possibility, at least.
On the basis of that dictum, it appears that practitioners should not be reluctant to draw on QOCS caselaw when considering the term in the section 57 context and vice versa. Whether there could be a case where a Claimant is fundamentally dishonest but that dishonesty does not infect his claim remains to be seen.
Finally, at paragraph 64, the judge neatly summarises the correct approach:
64 Where an application is made by a defendant for the dismissal of a claim under s 57 the court should:
a. Firstly, consider whether the claimant is entitled to damages in respect of the claim. If he concludes that the claimant is not so entitled, that is the end of the matter, although the judge may have to go on to consider whether to disapply QOCS pursuant to CPR r 44.16
b.If the judge concludes that the claimant is entitled to damages, the judge must determine whether the defendant has proved to the civil standard that the claimant has been fundamentally dishonest in relation to the primary claim and/or a related claim in the sense that I have explained.
c.If the judge is so satisfied then the judge must dismiss the claim including, by virtue of s 57(3), any element of the primary claim in respect of which the claimant has not been dishonest unless, in accordance with s 57(2), the judge is satisfied that the claimant would suffer substantial injustice if the claim were dismissed.
In addition to this, Knowles J addressed a finding that the judge below had made: that it would be substantially unjust for the entire claim to be dismissed when the dishonesty related only to a peripheral part of the claim. In paragraph 65 he dismisses this, noting that it was Parliament’s intention that section 57(3) “…be punitive and…operate as a deterrent” and that a ruling which effectively allowed fundamentally dishonest claimants to keep the “honest” portion of their damages “would effectively neuter” the effect of that subsection.
Overall, the first case to discuss fundamental dishonesty in the section 57 context sensibly draws on and contributes to the emerging judicial understanding of the term. It provides guidance on the approach to be adopted which, with further application, will help bring much-needed clarity to this important area.
20.02.18 – Charles Shwenn