Fundamental dishonesty in injury compensation claims

In the recent case of Stanton v Hunter (2017) CC (Liverpool) (Recorder SA Hatfield QC) 31/03/2017  AC0154723CC(Liverpool), the Court was asked by the defendant to apply section 57 of the Criminal Justice and Courts Act 2015 to dismiss the claimant’s claim on the basis of fundamental dishonesty.   The consequences of such a finding are very serious for the claimant, as is demonstrated in this case.

The facts are as follows.  Mr Peter Stanton sustained multiple injuries on 27 June 2012 when he fell through the roof of an outhouse building whilst carrying out some work on the defendant’s farm in Lancashire.  Mr Stanton was taken to hospital by air ambulance where he was found to have sustained multiple lefts sided rib fractures; a fracture of the thoracic spine at T2; a comminuted and displaced fracture of the left wrist; subluxation of the left shoulder and damage to the spleen.  He underwent surgical reduction and fixation of the left wrist and was then found to have a traumatic haemo-pneumothorax.  He was treated with two chest drains but developed pneumonia which necessitated a short stay in intensive care.  He was discharged home after a month in the hospital and subsequently underwent shoulder reconstruction surgery in July 2013.  At the time of the trial, he maintained that he was still suffering from ongoing symptoms including psychological symptoms.

The defendant admitted primary liability for the accident but alleged contributory negligence.  More interestingly, the defendant also applied under section 57 of the Criminal Justice and Courts Act 2015 for the whole of the claimant’s claim to be dismissed on the basis of fundamental dishonesty.

How does section 57 operate in personal injury proceedings?

Section 57 of the Act came into force in April 2015 and states:

57           Personal injury claims: cases of fundamental dishonesty

1.  This section applies where in proceedings on a claim for damages in respect of personal injury (“the primary claim”)—
   (a) the court finds that the claimant is entitled to damages in respect of the claim, bu
   (b) on an application by the defendant for the dismissal of the claim under this section, the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim.
2. The court must dismiss the primary claim unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed.
3.  The duty under subsection (2) includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest.
4. The court’s order dismissing the claim must record a number of damages that the court would have awarded to the claimant in respect of the primary claim but for the dismissal of the claim.
5. When assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in accordance with subsection (4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant.

Mr Stanton was a taxi driver at the time of the accident and initially put forward a loss of earnings claim on the basis that he had not been able to return to work after the accident.  He also told both his own medical experts and the defendant’s medical experts that he had been unable to return to work.  The insurers obtained surveillance evidence which showed that he had been working at least to some degree.  Other records then obtained from his taxi company showed that he had worked on at least 133 occasions from 3 months after the accident over a 3 year period.

Before the trial, Mr Stanton served a final Schedule which conceded that he was doing some work and giving credit for earnings which he had received.

It is relevant that Mr Stanton had been represented by solicitors and Counsel but they had come off the record quite sometime before and he had then been assisted by his daughter for almost a year as his McKenzie friend.  He was represented by new solicitors and Counsel at trial.

On questioning about the loss of earnings claim, Mr Stanton – who was noted to be in distress during the trial – said both that he had thought returning to work meant making a profit and also that he had not had sufficient time to look at the Schedule and his previous solicitors were the ones who had put forward the claim.  He said that because he wasn’t making a profit, he didn’t think this meant that he had returned to work.  Mr Stanton also said that he had problems with literacy and with documents and that his ongoing psychological symptoms had contributed to what he had told the experts about his work position.

The defendant’s Counsel then applied for disclosure of papers held by either Mr Stanton or his current solicitors in respect of how the loss of earnings claim had been put together and what advice he had received.  The judge duly ordered disclosure and the documents disclosed showed that he had been warned by both his previous solicitor and previous Counsel about putting forward a false claim for loss of earnings and in fact, judgment had been entered against him in the sum of £53,000 in respect of his previous solicitors’ fees, their retainer having been terminated because of his conduct.

On the basis of all of the above, the judge did not accept that Mr Stanton did not understand the meaning of returning to work.  She found that Mr Stanton had put forward repeated untruths about his loss of earnings.  Even with his problems with literacy and documentation, the judge found that Mr Stanton knew that was providing false instructions and only admitted the position when the taxi company records were disclosed.  The judge said that the repeated untruths had to amount to fundamental dishonesty and she, therefore, dismissed the claim in its entirety.  She concluded that there was nothing to support Mr Stanton suffering ‘substantial injustice’ (section 57(2)) as a result, beyond that which was of his own making.

Section 57 also required the judge to consider how much the claimant would have been awarded but for the fundamental dishonesty.  She, therefore, had to consider the allegation of contributory negligence but found that there was no evidence of this.  She then assessed damages which would have been awarded at £51,625 which included £8,517.41 for loss of earnings.

It was not disputed that Mr Stanton suffered a serious and genuine injury as a result of the defendant’s negligence but he will now be completely uncompensated as a result of not telling the truth about his return to work.  Whilst his dishonesty cannot be condoned and claimants must, of course, be honest in the claims that they put forward, it seems very harsh that false statements about one part of a claim can result in a claimant not being compensated at all for serious injuries suffered because of the negligence of others.

Insurers and their solicitors are clearly aware of the power of section 57 and this case, therefore, serves as a timely reminder that injury claims lawyers must be careful to advise their clients of the very real risk of a finding of fundamental dishonesty in such circumstances and that any claim put forward, particularly in respect of financial loss, must have a proper basis.

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