Interim payment application defeated by allegation of fundamental dishonesty in catastrophic injury claim

The interesting judgment of Master Fontaine (sitting in retirement) in the case of Mehmood v Mayor [2024] EWHC 1057 (KB) has added to the recent jurisprudence concerning allegations of fundamental dishonesty in serious injury cases.

Background

The claimant was 46 years old and had suffered a significant brain injury in a road traffic collision on 10 January 2019. Prior to the accident he ran and worked in a restaurant and takeaway. Primary liability was admitted and the case proceeded on the issues of contributory negligence and quantum. The defendant filed an amended defence disputing the assertion of lack of capacity as well as pleading fundamental dishonesty under Section 57 of the CJCA 2015. It was the defendant’s case that, if the plea of fundamental dishonesty was made out, the catastrophic injury claim could be defeated in its entirety.

The application before Master Fontaine was to approve a previous voluntary interim payment of £10,000 and to make a further interim payment of £75,000.

The court was required to consider the application pursuant to the provisions of CPR 25.7 and the well-established principles set out in Cobham Hire Services v Eeles [2019] EWCA Civ 204.  In a high value case, the claimant can normally be confident of succeeding on an application where insurance is in place, primary liability is established and if the case proceeds to trial there would be an order for a substantial amount of money. The court would ordinarily approach the application under the first limb of Cobham i.e. to aggregate the likely award for pain and suffering, past losses and accommodation, and award a proportion of such a sum (which can be a high amount). The exercise is carried out on a conservative basis.

General damages for pain and suffering alone were said to exceed £200,000 and therefore there would normally have been no difficulty for Master Fontaine in approving the previous interim payment and ordering the additional £75,000 sought. However here the defendant argued that the court could not be confident that the claimant would recover a substantial sum of money because, if he was found to have been fundamentally dishonest, there may have been no money awarded at all. They relied upon CPR 25.7(4) that states, “The court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.”

The application

Mr Hunjan KC on behalf of the claimant submitted that there was a good explanation for the surveillance footage disclosed by the defendant that showed the claimant working at the restaurant. He argued that the footage showed the claimant carrying out mundane tasks such as taking orders and payment from customers whereas prior to the accident he was in charge of administration of the business.

All of the Part 35 experts had reviewed the surveillance evidence and Master Fontaine summarised their comments relevant to the defendant’s allegations of dishonesty. 

There was disagreement between the neuropsychologists (Dr Ford for the claimant and Professor Powell for the defendant). Professor Powell said that the surveillance evidence was “grossly inconsistent” with presentation at interview. In relation to neuropsychiatric evidence the claimant relied upon Dr Lohawala and the defendant Dr Isaac.  Dr Isaac expressed concerns regarding the honesty of the claimant and considered that he had made a good recovery and was able to return to work. In relation to neurological evidence the claimant relied upon Dr Cockerell and the defendant Dr Heaney.  Dr Heaney similarly expressed concerns regarding honesty and concluded that a good recovery had been made.

Mr Hunjan KC made submissions in relation to the absence of a witness statement by the defendant in response to the application.  However, Master Fontaine said that the defendant had adduced such evidence which was fully dealt with in the amended defence and documents served for the purpose of the application.

Judgment

Master Fontaine dismissed the application for interim payment and approval of the previous voluntary interim payment on the basis that the Section 57 defence of fundamental dishonesty remained a live issue for trial and could not be properly adjudicated upon at an interlocutory stage.  He found that he could not confidently be satisfied that if the matter proceeded to trial the claimant would obtain judgment for a substantial amount of money.

Practice points

1. The judgment provides an interesting illustration of the impact an allegation of fundamental dishonesty can have in high value litigation, even where there is no doubt that the claimant has suffered life changing injuries.
2. It is likely that the court will be reluctant to make an award for an interim payment where it is satisfied there is sufficient evidence for there to be a prospect of a finding of fundamental dishonesty at trial. Given that the court must take a conservative approach when assessing such applications there is likely to be a reasonably high bar for the claimant wishing to persuade the court that it should not have regard to a Section 57 FD defence.
3. By definition such applications will be fact specific. A mere assertion of fundamental dishonesty without evidence to establish why it is likely to be a live issue at trial will be insufficient. In Mehmood the defendant had adduced a significant amount of evidence consisting of the surveillance and medical expert opinions in brain injury disciplines plus orthopaedic experts. Those experts spoke with one voice on the question of dishonesty.  In those circumstances it was unsurprising that Master Fontaine felt compelled to find the issue could not be adjudicated upon at an interlocutory stage.
4. There are tactical issues at stake for a defendant in deciding whether to resist an interim payment application when there are concerns about the honesty of the claimant as to whether they are willing to adduce evidence in an effort to defend the interim payment application. The defendant must decide whether the privilege attaching to the surveillance documentation should be waived to adduce such evidence before the court.  There is also a likely need to rely upon additional supporting evidence from experts that demonstrate the prospects of a reasonable Section 57 fundamental dishonesty defence. There will be questions whether serving such evidence early will have an adverse effect on the remainder of the case.
5. The courts are unlikely to be sympathetic to ‘tactical’ defences to interim payments by defendants who raise the prospect of a fundamental dishonesty defence but are not willing or able to back this up with supporting evidence. This is especially so in high-value cases where there is an apparent need for funds to pay for rehabilitation.