The new “Fundamental Dishonesty” rule in PI claims

Section 56 of the amended Criminal Justice and Courts ACT seems not only likely to provide a charter to Insurers to deny claims they allege to be fundamentally dishonest and, with the potentially high rewards, also encourage them to seek to gather evidence of “Dishonesty” above all else. We have already seen the first such successful challenge by Insurers.

Many will wonder how much more readily the government will accede to insurers lobbying on the subject of personal injury claims. Section 56 is yet another such piece of legislation where, hidden within its primary purpose, the ACT offers a gift to insurers not only in its concept but in the widely and loose way clause 56 has been drafted. Clause 56 can be seen as presenting a major challenge to the legal process in that its consideration of “fundamental dishonesty” brings into being, in the civil courts at least, the idea that there are degrees of dishonesty. The courts have seen a number of high profile cases come before them bringing challenges at final hearing on the issue of Quantum, and some post trial where evidence has come to light afterwards that the claimant was cheating or exaggerating the claimed loss. I would suggest it is a fine line as a claimant between putting forward your best case and some mild exaggeration. The courts were previously fairly adept at dealing with these issues pragmatically. So too were defendant’s counsel where cross examination is often supported by surveillance evidence – more on that topic later. Many a judge has been informed that the claimant had not declared his previous income for tax to HMRC – with the result that some judges largely ignored the point, as being one of those things that happens in the “grey economy” whilst others reduced or disallowed part of the claim. If this were held to be ‘fundamentally dishonest’ in the new regime then the entire claim would be struck out. The real concerns to every right-minded claimant and lawyer alike are the fictitious cases, the staged collisions and the passengers that never existed. The strongest arm of the civil and criminal law should and has been brought to bear on many such cases. However this piece of legislation allows defendants to reduce the potential claim to zero in any case where “fundamental dishonesty” is found. This leaves such claimants paying a potentially high price including previously admitted, even paid parts of a claim that reach the courts for final determination on a discrete remaining point. Now that judges are to have their discretion removed they are powerless save for the claimant trump card of “substantial injustice” which, apart from the obvious denial of dishonesty, is now the only defence to a defendant’s application of the ACT. I forecast that any previous levels of satellite litigation regarding Mitchell; LASPO; Jackson et al will pale into insignificance once this section of the ACT is applied. Insurers are likely to apply significant resource and a new vigor in the hunt for any evidence of exaggeration in the hope of convincing a judge that there is fundamentally dishonesty. Covert surveillance evidence is more likely to be employed and the already wide spread practice of stalking claimants on Facebook will become normal practice. It is time for all claimant lawyers to be more vigilant too. To fail to make your client aware of these pitfalls, and fail to remind him/her at key stages about the relevance of a statement of truth, could be considered negligent. It should no longer be considered good practice to accept your client at face value. This rings true on the larger value claims but even more so on repeat accident clients or cases involving numerous passengers. All the normal checks are still valid. The previous opt out of customer due diligence for non-transactional work arguably no longer stands the test. Furthermore I would suggest strengthening advice to clients to:- 1. Refrain from discussing their accident or damages, return to work etc. on social media 2. Remind clients that postings that they and their friends make on social media may become public (such things as videos or activity based postings that may discredit medical evidence) 3. Explain the difference between best case, exaggeration and dishonesty at an early stage 4. Warn of the consequences of dishonesty 5. Be vigilant 6. Don’t be afraid to challenge clients politely and considerately If you have any questions regarding the contents of this article please feel free to contact Nigel Cragg of Setfords Solicitors on 01403 339 898.