Bulletproof justice?

The Criminal Justice and Courts Act 2015 came into force on 13 April 2015, heralding an important change for
those seeking to bring a claim for personal injury – the power of which all claimants and those representing them must be acutely aware.

Within the Act, disguised among provisions relating to criminal justice and judicial review, is a key shift for those issuing court proceedings for compensation for personal injury post-13 April.

Section 57 of the Act states that where the primary claim is for personal injury compensation, the court must dismiss the entire claim if, on application by the defendant, the court finds that the claimant has been ‘fundamentally dishonest’ – a term itself open to much interpretation.

While the issue must be raised by a defendant
in an application to the court, and cannot be raised by the court itself, this offers little comfort to claimants. The only caveat to this provision
is that the court may choose not to dismiss the
entire claim if it is satisfied that there would be substantial injustice to the claimant.

It is certainly anticipated by the government that the dismissal of an entire claim will become ‘the norm’ rather than the exception, as envisaged by the Supreme Court in Summers v Fairclough Homes Limited [2012] UKSC 26 [65]. We can therefore expect a fairly hard line from the judiciary, as we have already seen with the
case law on the current hot topic of relief
from sanctions.

Claimants and those representing them must therefore be acutely aware of the power of section 57, and its potentially catastrophic consequences for a claim.

Defining fundamental dishonesty

If we examine the dictionary definition of ‘fundamental’, it states that the word means ‘forming a necessary base or core; of central importance’. However, what constitutes ‘fundamental dishonesty’ or ‘substantial injustice’ is a matter of interpretation.

In looking for guidance of some kind, there has been some judicial comment on the phrase ‘fundamental dishonesty’ which will no doubt assist practitioners and judges alike when dealing with the new provision.

In 2014, His Honour Judge Moloney QC, sitting as a circuit judge in the case of Gosling v Hailo and Screwfix Direct (unreported, Cambridge County Court, 29 April 2014), was required to consider whether Mr Gosling had been ‘fundamentally dishonest’ after the second defendant made an application for an exception to qualified one-way costs shifting (QOCS).

In the substantive case, which was settled out of court, the claimant recovered a significantly lower sum than originally claimed, following service of surveillance evidence which was quite clearly at odds with the picture he had painted to the medical experts in the case.

Although the claimant had in fact discontinued his case against the second defendant, they were unable to recover their costs from the claimant over and above the award of compensation he received (which were a mere £5,000) unless they could show that QOCS should not apply. Part 44.16 of the Civil Procedure Rules states: ‘Orders for costs made against the claimant may be enforced to the full extent or such orders with the permission of the Court where the claimant is found on the balance of probabilities to be fundamentally dishonest.’

HHJ Moloney QC also referred to guidance issued by Lord Justice Jackson in his paper dated 31 October 2011, which contained guidance on the implementation of the new rules. Within this Jackson LJ states in section 4:‘I agree that if the claimant’s claim is fraudulent or is struck out as an abuse of process, the claimant should forfeit costs protection. However, I do not believe that either litigants or the court will be assisted by a practice direction which gives guidance on borderline cases. Any such guidance is likely to generate increased satellite litigation…’

HHJ Moloney’s view was that the question of fundamental dishonesty requires a ‘determination of whether the claimant is“‘deserving”… of the protection extended, for reasons of social policy by the QOCS rules’, or, more plainly, ‘what the rules are doing is distinguishing between two levels of dishonesty; dishonesty in relation to the claim which is not fundamental, so as to expose such a claimant to costs liability, and dishonesty which is fundamental, so as to give rise to costs liability’.

The judgment continues: ‘If…the dishonesty [goes] to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim, a claim which depended as to a substantial or important part of itself upon dishonesty.’ One can see, therefore, that this question is easily transferable to the section 57 provisions.

HHJ Moloney QC then went on to consider the value of the claim sought, compared to the value of the claim after the surveillance had been disclosed – noting that the fundamental dishonesty in this case affected approximately 50 per cent of the total claim in damages. When you compare this to the Supreme Court decision in Fairclough, it is clear to see the threshold is lowering.

In Gosling, HHJ Moloney felt that an oral hearing was not required. However, it is clear from the judge’s comments that this was only because the evidence was so overwhelming, seen from his description of the defendant’s case as ‘bullet-proof’.

The issue of proportionality is also going to be important when making or defending an application for strike out under section 57. There is no requirement for the court to hear oral evidence from the claimant before making its decision. The claimant always has the argument that they have the right to a fair hearing; however, in all but the highest value cases the cost of oral representations is likely to be a powerful incentive to deal with the applications on paper.

It is therefore conceivable that under section 57, when faced with compelling evidence of dishonesty, a claimant could have their entire case struck out without an oral hearing on the premise that it is not proportionate to hold the same. Is this not a substantial injustice?

No doubt in time we will see judicial decisions that will hopefully assist those in practice with the interpretation. However, until then ‘fundamental dishonesty’ is something of an unknown.

Double punishment

Fundamentally, section 57 is not a replacement
for the criminal offence of contempt; it is simply another tool in the belt of the justice system in
its endeavour to eradicate fraudulent personal injury claimants amid a so-called ‘claims epidemic’. In theory, a claimant could have their case struck
out under section 57 and also be pursued for a contempt of court. The truth of whether there is even a ‘compensation culture’ in this country is
questionable.

In a further attempt to reduce this ‘claims epidemic’ the Act also introduces new prohibitions in relation to the offer of inducements to encourage people to make personal injury claims. In recent years claims management companies have been prevented from offering inducements, and now, under section 58, this is extended to regulated persons (i.e. solicitors, barristers, etc).

The prohibition covers monetary incentives,
such as cash advances, and non-monetary incentives. I have in the past seen adverts offering
a free iPad to communicate with your lawyer, and
so the eradication of such incentives is clearly
not necessarily a bad thing. I suspect that those individuals who would be dishonest will still not be deterred by a lack of advertising, yet this ban could go some way to improving public perception.

Seeking a balance

Establishing a balance in judgement will be crucial in minimising adverse impact from the Criminal Justice and Courts Act. A personal injury claimant needs to feel that they can trust their representative, but at the same time the representative will need to ensure that their clients understand the risks of ‘over-egging the pudding’, so to speak.

It will be more important than ever to ensure claimants fully understand their schedule of loss
and the calculations, no matter how complex, as well as ensuring they understand the consequences of any incorrect information.

Practitioner advice

For practitioners, it will be essential to ensure
that clients are informed of the consequences of being found to have been fundamentally dishonest and, more importantly, that they understand the meaning of fundamental dishonesty. These issues must be approached sensitively and different clients will require different approaches.

Before the client is asked to sign a statement
of truth the risks must be reiterated and I for one
will be preparing standard advice in this respect.

It is dangerous to assume or stereotype as to which of our clients might be at greatest risk of being dishonest, but it is also important to remember that those clients who will are, in my experience, in the minority. The vast majority of our clients are honest and, if anything, tend to downplay their problems and the extent to which their injuries have affected them, both on a personal level and financially.

Access to justice

My own view is that, by definition, it will always be the case that dismissal of an entire claim will lead
to substantial injustice for the claimant, unless the entire claim is based on a fraud, such as a phantom passenger claim.

Can it be fair that someone who brings a claim for personal injury when they were not even involved in the alleged accident has the same outcome as an individual who was genuinely injured by someone else’s negligence, but who was dishonest about, say, their loss of earnings?

The existing common law already empowers
the court to dismiss cases in their entirety and the Supreme Court in Fairclough made it clear that this was a power only to be used in exceptional circumstances.

In that case, the Supreme Court refused to strike out Mr Fairclough’s claim, even though he only recovered around 10 per cent of his original pleaded claim, because he had a genuine right of action. There are, however, instances of lower courts taking on board the Supreme Court’s comments, and entire cases have been struck out (for example, Homes for Haringay v Fari and Fari [2013] EWHC 757 (QB) 20).

The new rule created by section 57 fetters all judicial discretion, and in my view unfairly targets personal injury claimants. It is not the civil courts’ concern to punish. Yes, I accept the court must protect its integrity and be seen to do justice to
all parties, but if a claim is genuine, and there are genuine sections of the claim that are proven on the balance of probability, the claimant should receive damages for those items of loss because the court has been able to assess the claim and do justice to both parties. A claimant ought not to recover compensation for any part of the claim which has not been made out, and the criminal justice system should be utilised to ensure that more fraudulent court users are given proper criminal sanctions, rather than refusing to award any compensation.

Ultimately, it may be the welfare system and government purse that will suffer at the hands of this new section 57, as if the responsible defendant isn’t going to pay compensation which could be utilised to pay for care and other services, then
who is? The answer is that it is you and I, fellow tax payers, who will pay – and so perhaps that is the substantial injustice. SJ

Louisa Chambers is a solicitor and chartered legal executive in the catastrophic injury team at Spencers Solicitors