PLEADING AND ARGUING FUNDAMENTAL DISHONESTY: THE CLAIMANT KNEW WHAT WAS COMING (ON THIS OCCASION)

We have already looked at the factual findings in Pinkus v Direct Line [2018] EWHC 1671. Of equal interest is that part of the judgment where the judge considered the claimant’s argument that the defendant should not be allowed to argue fundamental dishonesty.  This judgment does not give a licence to defendants to make vague allegations late, however.  It was clear (not least from the claimant’s own skeleton argument at an an interlocutory hearing) that the claimant appreciated throughout that credibility and honesty were going to be key issues at the trial.

 

“Having heard the evidence and had an opportunity now to read the reports, statements and documents I am satisfied that the defence case alleging dishonesty was justifiably and properly put.”

THE CASE

The claimant was injured in a road traffic accident on the 21st August 2012. Liability was admitted. The claimant’s case was that he had suffered significant psychological consequences as a result.

THE CLAIMANT’S ARGUMENT THAT THE DEFENDANT COULD NOT RAISE THE ISSUE OF DISHONESTY

The claimant objected to the defendant being able to run arguments of dishonesty on the grounds that the issues were not particularised fully, and made late.   The judge rejected that argument, but held that the defendant could not raise any matter that would take the claimant by surprise (as it turned out there was only one objection from the claimant on this ground).

THE JUDGMENT

  1. A preliminary matter was raised as to whether or not the defendant should be entitled to rely upon their allegations of fundamental dishonesty where the claimant contends that their pleading of the issue was not only late but inadequate. The defence (dated 21.12.15 at 1.105) makes no admissions as to any injuries and indicated the defendant would seek their own medical evidence. It denied that the claimant suffered any diffuse brain injury. Rotational/contre coup forces and/or that the claimant knocked his head are denied, He is put to strict proof of the alleged loss and damage. By the updated counter-schedule dated 11.1.18 (only signed with a statement of truth on the first day of trial) the defendant pleads fundamental dishonesty and sets out some details of the arguments, putting the claimant’s credibility, honesty and reliability in issue.
  2. This pleading (see 1.24) gives details and particulars, but, as the claimant points out, also refers to matters “to be explored in cross-examination” and contains the phrase in one respect “for example”. The claimant says this indicated that there would be other matters which the defendant may rely upon which have not been detailed and therefore the pleading is defective. Further the pleading refers to matters which may arise in cross examination which were not detailed and again the claimant says this is inadequate.
  3. The claimant referred me to the speech of Lord Millett in the case of Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC, stating that “It is well established that fraud or dishonesty…must be distinctly proved; that it must be sufficiently particularised… The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him… this involves knowing not only that he is alleged to have acted dishonestly but also the primary facts which will be relied on at trial to justify the inference…this is only partly a matter of pleading. It is also a matter of substance”.
  4. The defendant referred me to the case of Howlett v Davies [2017] EWCA Civ 1696 where the Court of Appeal (see para. 25 et seq.) considered whether a trial judge can find fundamental dishonesty sufficient to displace QOCS without fraud having been alleged in terms in the defence. Newey, LJ. felt that the Three Rivers decision (amongst others) was of limited assistance, in particular because it related to what a claimant rather than a defendant must plead and prove. In brief, other previous decisions were distinguished because in those cases, the thrust of the allegations of dishonesty were not put at all or were a finding of the trial judge without input from the advocates. At para. 31 Newey, LJ said “…the mere fact that the opposing party has not alleged dishonesty in his pleadings will not necessarily bar a judge from finding a witness to have been lying: in fact, judges must regularly characterise witnesses as having been deliberately untruthful even where there has been no plea of fraud …[and] following the guidance given in Kearsley v Klarfield [where a claim is denied] without putting forward a substantive case of fraud, but setting out “the facts from which they would be inviting the … inference that the plaintiff had not in fact suffered the injuries he asserted” it must be open to the … judge, assuming the …points have been adequately explored during the oral evidence, to state….he has concluded (say) that the alleged accident did not happen or that the claimant was not there”.
  5. He went on (para. 32) to say that an insurer could invoke CPR 44.16(1) regardless of whether or not there was any reference to fundamental dishonesty in its pleadings. In Howlett counsel for the defendant accepted that he had not used words such as “fraud” or “dishonest” in cross-examination but had said things like “that is not true”, so that the claimants knew what they were facing and that that was sufficient for the District Judge to have been free to make the finding of fundamental dishonesty.
  6. From the outset (as set out in the defence) the defendant in this case has denied that the accident occurred as the claimant says and put causation and quantum in issue. In light of the defendant’ss stance and, in particular, for example their use of surveillance it has been apparent throughout that the claimant’s credibility was in issue. The stark contrast between the way that he and the defendant value the claim has been known to the claimant throughout. His symptoms have been difficult for any of the experts to explain and the defendant have identified him as either consciously or unconsciously exaggerating. I note that the skeleton argument prepared on behalf of the claimant for the hearing in front of Master Eastman on 19.1.18 set out “The credibility, honesty and reliability of the claimant are in issue”. The issue of fundamental dishonesty is not therefore new although it has not been specifically particularised in the pleadings, until the updated counter-schedule.
  7. An allegation of fundamental dishonesty is a serious one with significant consequences. There are costs consequences which can be swingeing. A claimant found to have been fundamentally dishonest runs the risk of contempt proceedings and losing his or her liberty. Following the introduction of s.57 Criminal Justice and Courts Act 2015 even where there is a valid claim, a finding of fundamental dishonesty can cause a claimant to lose the claim in its entirety. In the same way, of course, that there are these significant consequences for a claimant, there are significant benefits to a defendant who can establish such dishonesty.
  8. At the beginning of the trial the claimant applied for a ruling that the defendant should not be allowed to run their case on conscious exaggeration, malingering and fundamental dishonesty. I gave an extemporary ruling allowing the defendant to run these arguments. I expand the ruling now to say that I find that in the circumstances of this case the principles set out by Newey LJ in Howlett apply in preference to the principle enunciated in Three Rivers. At the beginning of the trial the claimant had known “what he was facing” for some time. He knew he had been subject to surveillance. He knew there were issues in relation to the medical evidence which made conscious exaggeration at least a possibility (including lack of a definitive diagnosis, the unusual pattern of symptoms he was reporting, the failed effort tests, and the dispute about how the accident occurred.) By the time of the trial he knew the detail of the matters in the updated counter schedule and the specific allegations of conscious and gross exaggeration. He had had an opportunity to respond even at that stage, seeking to admit further statements in rebuttal of defence witnesses, including from his son and by seeking to put in evidence of previous convictions, casting doubt on the credibility of one of the defendant’s witnesses. The matters to be put to him in cross-examination would not, in my view, have come as any surprise to him.
  9. Moreover, since as in any case and as set out in Howlett, it must be open to me, having heard all the evidence, to conclude that the claimant is lying or exaggerating in respect of some of his claim, the case ought to be put squarely to him to allow him to respond. This must include issues raised in the course of the trial which go to credibility even where they have not been specifically pleaded.
  10. However, as I said when I gave my ruling, I would not allow any issue to be raised of which the claimant would not have any sufficient notice and which he might have been able to deal with by way of additional evidence or which the experts would have been able to address, but had not and could not in the course of the hearing. Thus, I made it clear that I would not allow any specific points to be taken or arguments to be run which caused prejudice to the claimant because they came too late and in respect of which he had had no notice and could not deal with them or any such point where the experts would need to consider matters further and/or prepare supplementary opinion/reports/letters which could not fairly be done in the course of the trial.
  11. In the event I think there was only one intervention by Mr Grant objecting to a question in cross-examination. As sometimes happens in a hearing of this kind, in fact, the claimant’s experts were able to deal, for example, with the issue of capacity overnight and the defendant’s experts were able to give their views about the claimant’s experts diagnosis of PTSD with dissociative symptoms even though that was raised for the first time in opening/oral evidence. In other words, the trial followed a common pattern where there are several experts and a great deal of oral evidence, namely matters arose and were dealt with without the need for any adjournment. I am satisfied that the defendant’s case was fairly and properly put and the claimant and his lay and expert witnesses had full and proper opportunity to respond.
  12. As I have said, in any event, it would be open to me to find that the claimant is consciously exaggerating or fabricating his symptoms or malingering and, if appropriate to make a finding on those/other grounds that he has been fundamentally dishonest. I am not convinced that there is any material difference between “conscious exaggeration”, “fabrication” and “malingering”. I am of the opinion that each involves an allegation of pretending to have an illness or disability or pretending to have greater symptoms of illness or disability to achieve a gain. I say this because at para. 64 of his closing submissions, counsel for the claimant has set out a note taken of my extemporary ruling on this issue which is preceded by the suggestion that I may have prohibited defence counsel from putting conscious exaggeration to the claimant. My ruling did not do so. Having heard the evidence and had an opportunity now to read the reports, statements and documents I am satisfied that the defence case alleging dishonesty was justifiably and properly put.