Two words have taken on great significance for lawyers and their clients, over the last few years – ‘fundamental’ and ‘dishonesty’. They are relevant to Personal Injury claims which can be struck out in full under s57 of the Criminal Justice and Courts Act 2015, where there has been fundamental dishonesty. In such a case the court must dismiss the primary claim unless the claimant would suffer substantial injustice as a result. So the default position is that the claim is dismissed. If a claimant is found to have exaggerated symptoms then the whole claim is at risk. The purpose of this provision is to deter fraudulent or exaggerated claims.
The words are also relevant in relation to costs, and this is main focus of this post. In 2013 the government imposed dramatic changes in the way personal injury claims are conducted. These changes reduced the levels of legal costs that can be claimed against insurers in successful cases. At the same time, we had the introduction of QOCS – qualified one way costs shifting. In simple terms this meant that a successful defendant cannot enforce an order for legal costs against a claimant. There are exceptions to this rule, one of which relates to ‘fundamental dishonesty’. A successful defendant can ask the court for permission to enforce an order for costs where a claim is found to be ‘fundamentally dishonest.’ That sounds quite reasonable on the face of it.
But there is a problem. Many of us have been concerned about what happens if a claimant takes their case to trial and loses. There is nothing unusual about that. It happens every day in one court or another. So you have two drivers whose cars collide. One driver gives one version the other a different version. The judge has to decide which one is preferred. This is the whole point of litigation. If it is clear cut either way you don’t end up at trial.
But does this mean that the loser is fundamentally dishonest and therefore at risk of shelling out thousands of pounds in costs? When does poor memory become dishonesty? What takes dishonesty into the realms of fundamentalism? Is there a liberal dishonesty?
One of my colleagues was recently faced with exactly this issue. The argument was about whether the defendant’s car had stopped short of our client’s vehicle. The other side were arguing that if their evidence prevailed then our client must be fundamentally dishonest and thus liable for the costs. In fact, our client won, but it was a genuine concern.
This has recently been considered by the County Court in the case of Nesham v Sunrich Clothing; reported in Legal Futures. There had been a car accident and the judge preferred the Defendant’s evidence. The Defendant's lawyers asked for costs saying that the claimant must have been fundamentally dishonest because his version of events was rejected –
HHJ Freeman summarised the dilemma –
The claimant - “gave me his version of events. I have preferred not to accept that version, but it does not necessarily follow that he was fundamentally dishonest”
He went on - “And it is the experience of everybody who litigates in this field that drivers involved in an accident will give different and contrary versions of accidents to the extent of not just which lane they were in, but where they came from, the route they had taken and so forth… which may not constitute dishonesty, far less fundamental dishonesty.”
The judge criticised the defendants for using the threat of fundamental dishonesty as a tool to pressurise claimants to abandon claims. The judges analysis must be right. Otherwise any unsuccessful claimant is at risk of bankruptcy just because the court prefers the others side’s evidence. This would defeat the whole point of QOCS which is to enable ordinary people to pursue claims without worrying about costs. This is only a county court decision so is not binding on any other courts.
I hope the higher courts give us some clarification on this as soon as possible. The introduction of QOCS has seen a few problems but if we get this issue wrong, wipe out any benefits altogether.