FUNDAMENTAL DISHONESTY – THE “SUBSTANTIAL INJUSTICE” ARGUMENT: THREE KEY CASES

Section 57 of the Criminal Justice and Courts Act 2015 introduced the concept of “fundamental dishonesty” and provides penalties when a claimant is found to be fundamentally dishonest. Section 57 (2) provides an exception if the court finds that the claimant would suffer “substantial injustice if the claim were dismissed.” There are relatively few decisions on this issue. To my knowledge there have been no cases where a claimant has successfully used the “substantial injustice” route to avoid the penalties.

 

THE CASE LAW TO DATE

SINFIELD

In London Organising Committee of the Olympic And Paralympic Games (LOCOG) v Sinfield [2018] EWHC 51 (QB). Mr Justice Juliam Knowles considered s.57(3)

“Given the infinite variety of circumstances which might arise, I prefer not to try and be prescriptive as to what sort of facts might satisfy the test of substantial injustice. However, it seems to me plain that substantial injustice must mean more than the mere fact that the claimant will lose his damages for those heads of claim that are not tainted with dishonesty. That must be so because of s 57(3). Parliament plainly intended that sub-section to be punitive and to operate as a deterrent. It was enacted so that claimants who are tempted to dishonestly exaggerate their claims know that if they do, and they are discovered, the default position is that they will lose their entire damages. It seems to me that it would effectively neuter the effect of s 57(3) if dishonest claimants were able to retain their ‘honest’ damages by pleading substantial injustice on the basis of the loss of those damages per se. What will generally be required is some substantial injustice arising as a consequence of the loss of those damages.”

PATEL -v- ARRIVA MIDLANDS

Similarly an argument based on substantial injustice was dismissed in Patel v Arriva Midlands Ltd & Anor [2019] EWHC 1216 (QB). The defendant’s application under s.57 was allowed at an interlocutory hearing without there being an assessment of damages.

  1. The Claimant submits that the court cannot assess substantial injustice without a full quantification of the claim as otherwise it cannot understand the extent of the claim that it is dismissing. I have already set out that I am satisfied that the ‘dishonest part’ of the claim is the bulk of the pleaded claim by value.
  2. The Claimant further submits that the court cannot deal with substantial injustice without hearing witness evidence, but is not clear to me that the Claimant has raised any real argument that dismissal of the claim would cause substantial injustice to the Claimant, beyond losing his entitlement to damages for the lesser, ‘honest’ part of his claim. Mr Hunjan submits orally and in his skeleton argument that Chirag Patel has had to give up his career to look after his father, but I am satisfied this detriment to the son (if detriment there is) cannot in law amount to substantial injustice to the Claimant in the dismissal of the claim.
  3. I have mentioned the Claimant’s submission that he will require substantial care for the rest of his life, and if the claim is dismissed it will cause substantial injustice as the family do not have the funds to provide for commercial care. However is difficult to understand on what basis that submission is made, given that the only diagnosis is of a conversion disorder which I have found is not tenable. To the extent that the submission is founded on a need for care arising from another diagnosis or potential diagnosis, this is both unpleaded and unevidenced, and so cannot raise issues of substantial injustice arising from dismissal of the pleaded claim, in my judgment.
  4. Finally, the Claimant submits that a court cannot without substantial injustice dismiss the claim of the Claimant, a protected party, because of the dishonest conduct of his litigation friend. In my judgment that submission cannot succeed in the circumstances of this case as I have found them to be. Firstly, I have found that the Claimant himself has been fundamentally dishonest in relation to his claim. He has done so by his presentation alone, as well as by not correcting the false impression of the Claimant’s disabilities given by his litigation friend to the doctors or his solicitors at any time during the course of these proceedings. Secondly, I have found that the Claimant must be presumed to have capacity in this case.
  5. For those reasons I dismiss the entirety of the claim.

RAZUMAS

Razumas v Ministry of Justice [2018] EWHC 215 (QB)

Mrs Justice Cockerill found that the claimant had given a fundamentally dishonest account of his medical treatment.  She also considered issues relating to “substantial injustice”

    1. I do not consider that there could be any way out for Mr Razumas via the argument on substantial injustice. It cannot in my judgement be right to say that substantial injustice would result in disallowing the claim where a claimant has advanced dishonestly a claim which if established would result in full compensation. That would be to cut across what the section is trying to achieve.
    2. In the Sinfield case Julian Knowles J had no difficulty in dismissing this argument in the context of a dishonesty which went only to part of the quantum claimed. At [89] he stated that it was plain from section 57(3):
“….something more is required than the mere loss of damages to which the claimant is entitled to establish substantial injustice. Parliament has provided that the default position is that a fundamentally dishonest claimant should lose his damages in their entirety, even though ex hypothesi, by s 57(1), he is properly entitled to some damages. It would render superfluous s 57(3) if the mere loss of genuine damages could constitute substantial injustice.”
  1. This, it seems to me, must be right. Something more is required. That something more is not made out here and so, if there were a claim it would fail at this stage.