Aviva and Keoghs set new ground in fundamental dishonesty appeal
News And Events02/12/2016
What happens when a claimant is not the root of the dishonesty, but the claim is nonetheless dishonest?
In the case of Menary v Darnton, on appeal by Aviva on behalf of the defendant, HHJ Hughes provided a welcome judgment which gave a more detailed clarification on fundamental dishonesty and also extended its reach to include enablers behind the claim. Whilst acknowledging the judgment in Gosling v Screwfix, which to date had been the only appeal arising on the definition of fundamental dishonesty, this important ruling provides a fresh perspective on its meaning.
The case arose from an alleged incident on 24th June 2014 where Mr Menary, driving his Vauxhall Astra, stopped to allow a car to emerge from a side road. Menary claimed that the defendant, riding behind his Astra on a motorcycle, failed to stop and collided with him. He claimed for ‘whiplash’ and damage to his car, relying on a medical report prepared by a GP.
The defendant denied there was any collision at all, stating that this was a near miss incident whilst also accepting that his motorcycle fell to the ground. By the time of the trial the defence had been amended to allege fraud.
Having dismissed the claim the judge at first instance nonetheless concluded that there was no fundamental dishonesty for the purposes of dis-applying QOCS pursuant to CPR 46.16. However the defendant sought and obtained permission to appeal that part of the order. Subsequently the claimant was given permission to file a cross appeal out of time whereby he sought to reverse the finding that there had been no impact. Interestingly however, he did not seek to set aside the dismissal of his claim.
At the appeal, HHJ Hughes’ judgment provided several key points of interest:
- He found that “the use of the word dishonesty necessarily imports well-understood concepts of deceit and falsity; the advancing of a claim without honest and genuine belief in its truth.” Echoing Gosling, he then concluded that fundamental dishonesty may be taken as “some deceit which goes to the root of the claim”.
- Importantly, the judge then went a step further than Gosling and held that “the purpose of the phrase is to distinguish any dishonesty from exaggerations which accompany PI claims from time to time. They may be dishonest but not fundamentally so”. In practice however, it will be difficult for a claimant to accept a finding of dishonesty but then suggest that the dishonesty was not fundamental, where their claim is for damages for pain and suffering following a road traffic collision.
- In the original case, the learned judge found that, because relevant medical documents recorded the claimant making reference to a previous RTA and previous back pain, they ‘saved’ him from a finding of dishonesty. At appeal HHJ Hughes disagreed, finding that “the documents produced were indirectly manufactured by the claimant in pursuit of a claim which had no basis in fact or reality. He did not invent an additional head of damage in an otherwise legitimate claim. It was dishonest in inception and pursued with the intention to take money from the defendant’s insurers”.
The Impact - Claim or Claimant?
It is widely accepted that it was a conscious decision to use the word “claim” rather than “claimant” in respect of fundamental dishonesty when drafting CPR 44.16. Where a claim has to be found to be fundamentally dishonest, a defendant does not have to establish fundamental dishonesty on the part of the claimant. However, as HHJ Hughes recognised in his judgment, the claimant will very often be at the root of the dishonesty. In a claims world driven by accident management companies, where claims are a commodity to be turned into profit, it may well be, as HHJ Hughes recognised, that “a credulous claimant might be used by lawyers to advance a dishonest claim”.
Importantly, a precedent has now been set. Whether the claim or the claimant (or both!) is fundamentally dishonest, the outcome should be the same - a finding of fundamental dishonesty and costs awarded for the insurer.
Damian Ward, Fraud Partner at Keoghs, was delighted with the result of the appeal, saying:
“This is a significant judgment which now allows us to say that dishonest claims must result in a finding of fundamental dishonesty and therefore the dis-application of QOCS, allowing costs to be enforced. If in rare circumstances that dishonesty does not taint the claimant, the enabler is then in the firing line to pay those costs.
It must also not be forgotten that this is a great result for our client, Aviva, and counsel, Georgina Crawford, from Farrar’s Building Chambers.”