Findings of ‘Fundamental Dishonesty’ Against Non-Attending Claimants: Wise v Hegarty & Alpha Insurance A/S (Middlesbrough County Court, 9 July 2019)

The case of Wise v Hegarty & Alpha Insurance A/S regarded personal injury and credit hire claims, arising out of a road traffic accident (RTA), involving the claimant and 1st defendant.

It was alleged that the claimant had sustained modest personal injuries (soft tissue) and damage to her vehicle.

There was broad agreement between the parties that there had been a collision at or about the time, date and place purported, but there were discrepancies over the exact details of the collision.

Mid-way through proceedings, the 1st defendant’s insurance company (the 2nd defendant) joined the action and was granted permission to rely on (telematics) evidence, in support of its allegation that the claimant’s case was ‘tainted by fundamental dishonesty, indeed more than tainted by it, it was a wholly dishonest claim’; it was possible that the parties had conspired to invent a fraudulent claim.

In December 2018, the trial was listed for 9 July 2019 and His Honour Judge Gargan was satisfied that the claimant had acquired sufficient knowledge of the trial date.

Nevertheless, the claimant failed to attend trial and could not prove her claim.

Normally, in these circumstances, the claim is dismissed and the trial does not go ahead.

Flying in the face of normality, however, the defendant motor insurer asked HHJ Gargan to conduct a trial on the issue of ‘fundamental dishonesty’.

Wise therefore dealt with the issue of whether it was appropriate to make a finding of ‘fundamental dishonesty’, under CPR 44.16(1), against a party who was absent at trial.

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Counsel for the 2nd defendant (Mark Roberts) cited the case of Alpha Insurance A/S v Roche & Anor [2018] EWHC 1342 (QB), in which Mr. Roberts successfully argued, on behalf of the appellant, that Practice Direction (PD) 44 paragraph 12.4(c) is an ‘unfettered discretion’ that ‘does not require exceptionality’.

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In effect, Mrs. Justice Yip, in a judgment that we examined in edition 233 of BC Disease News (here), disapplied the claimant’s qualified one-way costs shifting (QOCS) protection. She did so, even though a notice of discontinuance was served the day before trial, which would ordinarily have brought proceedings to an immediate halt.

The alleged parallel between Alpha Insurance and Wise was that both claimants were endeavouring to use procedural glitches to circumvent the costs implications of maintaining ‘fundamentally dishonest’ claims up to and around the date of trial.

Wise to this, the Circuit Judge observed, at paragraphs 8 and 9, that:

‘... even when notice of discontinuance is served, the court may direct that issues arising out of an allegation that a claim was fundamentally dishonest can still be determined.

In my judgment, if such an order can be made where the claim has been discontinued, it can necessarily be made where the claim has not yet been determined and the Claimant has simply failed to attend’.

To that end, the Judge permitted the defendant to call evidence on the issue of ‘fundamental dishonesty’ – to all intents and purposes, extending the list of previously understood exceptions to QOCS.

Having later surmised that ‘the alleged collision simply did not take place’ and it was ‘difficult to think of something ... more fundamental … than that’, HHJ Gargan dismissed the claim, ‘save that there ... [was] ... a finding of fundamental dishonesty against the Claimant and the First Defendant’.

Full text judgment can be accessed here.