Courts given stronger powers to strike out 'fundamentally dishonest' claims, says expert

Out-Law Analysis | 17 Jun 2015 | 2:43 pm | 2 min. read

FOCUS: Courts in England and Wales now have the power to strike out personal injury claims in their entirety if the person making the claim has been fundamentally dishonest, even if parts of the claim were genuine.

Section 57 of the Criminal Justice and Courts Act, which came into force on 13 April 2015, is the UK government's latest attempt to address the growing 'compensation culture', the number and extent of fraudulent personal injury claims and the cost of these claims to insurers and the companies and individuals that they insure.

The courts have always had discretion to strike out part of a claim or punish the person bringing that claim by way of a legal costs order if that person was being dishonest or committing fraud. The new provisions both strengthen that power and enshrine it into law.

Background

The UK government has brought in a number of acts of parliament intended to discourage unscrupulous people from 'chancing their arm' and bringing a fraudulent or exaggerated claim. To date, these measures have included the following:

  • fixed legal fees;
  • banning solicitors from paying for claims from claims management companies;
  • banning solicitors from offering inducements to claimants;
  • introducing an independent medical panel to provide reports relating to road traffic accidents;
  • putting the onus on personal injury solicitors to filter out fraudulent claims.

These measures were seen as a means to discourage fraudulent claims from being pursued in the first place. However, they did not deal with the fraudulent claimant who was intent on pursuing the claim regardless, or the claimant who had a genuine injury but who was exaggerating the extent of the injury suffered and the losses caused by that injury.

'Fundamental dishonesty'

Section 57 of the Criminal Justice and Courts Act refers specifically to personal injury claims and fundamental dishonesty. It gives the court the power to strike out the whole claim, including any parts of it that were found to be genuine, if the court agrees that the individual claiming has been "fundamentally dishonest".

The provision is clearly aimed at discouraging those who may well have a genuine claim, but who have 'milked' the situation: for example, someone who has suffered an injury but overstated the symptoms; or someone who has claimed for the cost of gardening while living in a flat.

However, if this is to be effective, judges will need to send out a strong message that they will not be afraid to take such measures. Without enforcement, the changes will be of little value.

A finding of fundamental dishonesty can only be made where liability is not in dispute, as the court has to find that the claimant is entitled to damages. It will certainly be useful with larger claims, as liability will have generally already been decided. An individual or company defending a claim that suspects fundamental dishonesty will be required to make an application to the court.

The courts have already ruled on fundamental dishonesty for the purposes of the new qualified one-way costs shifting (QOCS) regime. Last year, a judge in the Cambridge County Court required the claimant, a Mr Gosling, to pay the legal costs of Screwfix Direct, a company that had supplied him with a ladder that he had fallen from to his injury. Gosling was found to have significantly exaggerated his symptoms, which was enough for a finding of fundamental dishonesty to succeed.

The future

Until now, it has been tactically difficult for companies and individuals defending personal injury claims to put pressure on a claimant they suspect of being dishonest or exaggerating. In most cases, the only option would have been to make a Part 36 offer to settle which would lead to the claimant recovering damages and costs.

It will be interesting to see the outcome of any fundamental dishonesty applications in the coming months, including the courts' approach to not only defining fundamental dishonesty but also the threshold of the evidence required for the court to make such a finding. If judges are brave, as the judge was in the case of Gosling v Screwfix, then this will be an effective tool and send out a strong message to those tempted to make fraudulent claims or exaggerate genuine ones.

Ian Evans is a personal injury expert at Pinsent Masons, the law firm behind Out-Law.com.