‘In my judgment, a claimant should be found to be fundamentally dishonest within the meaning of s 57(1)(b) if the defendant proves on a balance of probabilities that the claimant has acted dishonestly in relation to the primary claim and/or a related claim (as defined in s 57(8)), and that he has thus substantially affected the presentation of his case, either in respects of liability or quantum, in a way which potentially adversely affected the defendant in a significant way, judged in the context of the particular facts and circumstances of the litigation. Dishonesty is to be judged according to the test set out by the Supreme Court in Ivey v Genting Casinos Limited (t/a Crockfords Club), supra.
By using the formulation 'substantially affects' I am intending to convey the same idea as the expressions 'going to the root' or 'going to the heart' of the claim. By potentially affecting the defendant's liability in a significant way 'in the context of the particular facts and circumstances of the litigation' I mean (for example) that a dishonest claim for special damages of £9000 in a claim worth £10 000 in its entirety should be judged to significantly affect the defendant's interests, notwithstanding that the defendant may be a multi-billion pound insurer to whom £9000 is a trivial sum’.
The growing body of case law on s.57 (of the Criminal Justice and Courts Act 2015) ‘fundamental dishonesty’, has widely cited and followed the dicta of Mr. Justice Knowles (quoted above), at paragraphs 62 to 63 of London Organising Committee of the Olympic And Paralympic Games (LOCOG) v Sinfield  EWHC 51 (QB).
As a result, it is now firmly established that, in order to dismiss a primary claim in its entirety (including elements that are honestly advanced), the claimant’s dishonesty must go to the ‘root’ or ‘heart’ of the claim.
Judges have since elaborated on other characteristics of dishonest activity capable of engaging s.57 and, in the recent case of Roberts v Kesson & Anor  EWHC 521 (QB), the High Court was asked to consider whether dishonesty is rendered ‘fundamental’, owing to its ‘persistence’.[i]
The claimant’s dishonesty, in Roberts, related to the state of his vehicle after a road-traffic accident (RTA).
His Schedule of Loss (backed by a signed Statement of Truth) sought £10,400 in damages for the pre-accident value of his taxi cab (£13,000), which, according to his 1st witness statement, had been ‘written off’.
‘I … authorised the sale of my car for salvage, and I used the salvage value in order to hire another taxi on a cash basis’.
However, subsequent investigations, undertaken by the defendant’s insurer, brought to light that the ‘written off’ vehicle had passed its MOT months after the RTA and that this selling point had been referenced on the claimant’s Facebook account, when he sought to sell it ‘in a roadworthy condition’, for the sum of £7,000.
Having been made aware of the defendant insurer’s detections, the claimant admitted, in a 2nd witness statement, that his original statement was accurate ‘save for one small detail’.
‘The account given … is that the Claimant sold the vehicle to his brother in law … but … the brother in law persuaded the Claimant to take the damaged car back off him. So … the ownership of the vehicle was returned to him but still in its accident damaged state.
… according to the Claimant he then purchased parts for the vehicle, and engaged his brother in law to undertake the necessary repairs … it took the brother in law about a week to get the repairs done, following which the car was returned to him’.
During cross-examination at trial, the claimant reluctantly accepted that his first witness statement was ‘untrue’.
Mr. Recorder Kelbrick heard submissions on s.57 ‘fundamental dishonesty’, but determined that the accident occurred ‘more or less’ as the claimant alleged. Whilst the claim for £10,400 was rejected, on the basis that there was not enough supportive evidence, the Recorder at no stage addressed the issue specifically:
‘It is right that he [the Claimant] has accepted that he was dishonest in part when making his first statement, but I do observe that he did not persist with that dishonesty … and did not persist with it in oral cross examination today’.
On appeal, Mr. Justice Jay interpreted Recorder Kelbrick’s position, as follows:
‘What I think he is saying is that there was some dishonesty but it could not be regarded as material because the Claimant did not persist with it. The absence of any finding about whether the Claimant had been "flushed out" is somewhat surprising in this context: the inference must be that had it not been for the Insurer's endeavours the Claimant would have continued as before’.
Allowing the appeal, the High Court Judge found that the 1st instance judge had erred in having reasoned that the claimant had not been ‘fundamentally dishonest’ because he did not ‘persist’ with his dishonesty:
I do not agree with the Recorder that the correct test is one of persistence in the dishonesty because that does not reflect the language of Section 57(1)(b).
Accordingly, Jay J ruled, at paragraph 54, that:
‘… the only permissible conclusion on all the available evidence is that the Claimant has been fundamentally dishonest in advancing a false claim in the schedule of loss and a false claim in his first witness statement’.
Full text judgment can be accessed here.
[i] Neil Rose, ‘Dishonesty “doesn’t need to persist” to be fundamental’ (16 March 2020 Litigation Futures) <https://www.litigationfutures.com/news/dishonesty-doesnt-need-to-persist-to-be-fundamental> accessed 12 May 2020.