THE COURTS WILL RARELY DETERMINE ALLEGATIONS OF FUNDAMENTAL DISHONESTY AS A PRELIMINARY ISSUE

In Stannard -v- Euro Garages Ltd [2022] EW Misc 3 (CC) HHJ Walden-Smith dismissed the defendant’s application that the issue of alleged fundamental dishonesty be heard as a preliminary issue and the action struck out. The judge held it was inappropriate for there to be a determination of matters that involved serious allegations when there were factual disputes.

“Where there are disputes on the factual conclusions that a court should reach, it is not in my judgment appropriate to make what is, effectively, a summary judgment finding.“

THE CASE

The claimant brings an action for damages for personal injury.   The defendant sought, at a preliminary hearing, to set aside a judgment, based on an admission, and to strike out the claim on the basis that the claimant was fundamentally dishonest.

THE UNUSUAL NATURE OF THE APPLICATION

The judge commented on the unusual nature of the application.

5. Unusually, this application is being made before the commencement of the trial and the court has therefore not heard any evidence from the Claimant or been able to make any judgment about that live evidence. Euro Garages rely upon the witness statements that have been exchanged between the parties, the expert evidence and surveillance evidence that was disclosed to Mr Stannard prior to 18 January 2021. It is denied by Mr Stannard that Euro Garages can rely upon that surveillance evidence as it is averred that Euro Garages have failed to comply with the Order of Ms Recorder McAllister which required Euro Garages to allow for the inspection of the full and unedited footage, together with surveillance witness statements and original recording data/SD Cards by 18 January 2021. I will deal with that dispute later in this judgment.

6. Euro Garages contend that it is appropriate to bring this application to strike out the claim of Mr Stannard prior to any trial of the quantum issues, on the basis that the same is fundamentally dishonest, relying upon a single decision in the High Court: Patel v Arriva Midlands Ltd [2019] EWHC 1216. In Patel v Arriva, HHJ Melissa Clarke, sitting as a deputy judge of the High Court, determined that it was appropriate to dismiss that claim for damages for personal injuries on the basis that the claim was fundamentally dishonest. The entitlement to damages had been determined and she found that it was not necessary for the quantum assessment to take place on the facts of that case before making the section 57 determination: the issue as to whether a section 57 application should be determined before a quantum trial being whether it could be justly determined at that point. I invited Counsel for Euro Garages to research whether there were any other cases in which a section 57 determination had been made prior to the quantum trial, but was unable to identify any other example and it does not appear that this case has been followed in any subsequent decision in either the High Court or the County Court.

A PAPER DETERMINATION WAS UNSUITABLE IN THIS CASE

It would be unfair for there to be a paper determination of allegations of fundamental dishonesty.

1. 44. A paper determination of fundamental dishonesty, without the claimant having the opportunity of promoting his case through his oral evidence and that of his witnesses, and removing any opportunity to explain presentation, would be in the circumstances of this matter unfair.   The court is obliged to ask itself (per Asplin J in  Tesco Stores v Mastercard) whether there are real grounds for believing that a fuller investigation will add to or alter the evidence relevant to the issues that it must determine.

1. 45. In this case, there are real grounds for believing that a fuller investigation will add to the evidence relevant to the issues that need to be determined.     Euro Garages have not yet applied for a variation of the Order that required the provision of the SD cards for inspection.  If Euro Garages do successfully apply for a variation of the Order of Ms Recorder McAllister then Mr Stannard will then have the opportunity to challenge the interpretation of that surveillance evidence promoted by Euro Garages and provide his own explanation for his presentation.   The court will  inevitably be assisted in any determination as to whether Euro Garages is able to establish, on the balance of probabilities, that Mr Stannard has been fundamentally dishonest, if it has the ability to assess the “live” evidence of Mr Stannard and others.

1. 46. Another matter raised by Euro Garages for the purpose of establishing that Mr Stannard has been fundamentally dishonest is that he initially represented that he had lost his job as a consequence of his injury.  In fact, he could not continue with his job as a driver as he had been disqualified.  Euro Garages contend that he must have known that he was disqualified.   The representatives for Mr Stannard put forward an argument that Mr Stannard had not been aware of his disqualification and that his claim for loss of earnings is not, in any event, established to be fundamentally dishonest.     Euro Garages contend that it is unlikely that he had not received the letters from his employer that he had been disqualified and further argue that there is some documentary evidence that he had been told in person that he had been disqualified.   These are all issues that can only be determined by full consideration of the evidence with Mr Stannard being given a fair opportunity to put forward his version of what happened in order that the trial judge can make a decision on a sure foundation.

1. 47. The third issue raised by Euro Garages, to support a defence of fundamental dishonesty, is that Mr Stannard has claimed for the costs of care for himself at the same time as he is providing care for his mother and receiving a carers allowance from the Department for Work and Pensions.     Mr Stannard has acknowledged in his Schedule of Loss that he has received carer’s benefits for providing assistance to his mother from 9 April 2018, which date is confirmed in his witness statement.  Euro Garages contend that there is an inconsistency in the dates as he applied for a carer’s allowance on 20 December 2017 and in that document he had said he had been providing care since 10 May 2017.   Again, this is a matter of dispute and not something that can be determined without Mr Stannard having a fair opportunity to put forward his version of events in order that the judge  is able to make a fully reasoned decision.

Conclusion

1. 48. The law relating to fundamental dishonesty is now well-settled.   The key aspects are summarised in the most recent case of Cojanu v Essex NHS Partnership.   While  Patel v Arriva establishes that in a suitable case an application could successfully be made to strike out proceedings and/or for a finding of fundamental dishonesty before the quantum hearing, this will only be in rare and highly unusual situations.

1. 49. I can fully understand that, in the interests of saving costs and time,  solicitors acting for defendants may wish to find ways of bringing to a swift end those claims that they consider to show elements of fundamental dishonesty.   However, in order for a court to be satisfied that a defendant has established fundamental dishonesty on the balance of probabilities, it is necessary for the court to have all the evidence and for that evidence to be subjected to the rigours of cross-examination. 

1. 50. In this case, Mr Stannard does not accept the allegations made by Euro Garages that he has exaggerated his injuries or acted in a way inconsistent with the history he gave to the medics.  He has explanations to give with respect to why he says he believed his job loss was due to the injury and with respect to his claim for care.  He is entitled to put those arguments before the court and, particularly in cases such as this where a finding of fundamental dishonesty can have a severe negative impact on an individual,  the court does not lightly shut out someone from being able to put their case forward fully.    Where there are disputes on the factual conclusions that a court should reach, it is not in my judgment appropriate to make what is, effectively, a summary judgment finding.

1. 51. The decision in Patel was based on particular facts.  It is not a case which can  easily be applied to other scenarios.    In the circumstances of this matter, a fuller investigation is required and I refuse the application for dismissal pursuant to the provisions of section 57 of the CJCA 2015 or that it should be struck out as an abuse of process at this time.   The defendant may renew  its arguments at the trial of this matter once evidence has been heard.

52. There are costs issues arising from this determination and with respect to the hearing that could not take place in December 2021 due to the lack of bundles in court.  I have received some submissions on these points, but wish to hear more now that this judgment has been given.   Directions will also need to be given for the future conduct of this case.