A recent High Court decision has added to the growing body of cases which demonstrate the judiciary’s willingness to adopt a strict approach when applying the rules relating to fundamental dishonesty.
Under section 57 of the Criminal Justice and Courts Act 2015, a court can dismiss a personal injury claim if it is satisfied that, on the balance of probabilities, the claimant has been fundamentally dishonest in relation to the claim. S.57 requires that such a claim must be dismissed unless the court is satisfied that the dismissal would cause the claimant to suffer a substantial injustice.
In the case of Razumas v Ministry of Justice, the High Court followed other recent judgments in defining fundamental dishonesty as dishonesty that goes to the root of either the whole claim or a substantial part of the claim (as set out in the 2017 case of Howlett v Davies – see here). In Razumas, a former prisoner sued the Ministry of Justice for negligent medical care that led to the amputation of his left leg from above the knee. Although it was common ground that the medical care Mr Razumas had received was indeed deficient, the fact that the claimant had lied about arranging a GP appointment whilst out on licence broke any chain of causation that might have existed.
Razumas’ legal team argued that even if there was no such appointment, this untruth was minor and, given the many instances of deficient medical care suffered by the claimant, the lie went nowhere near the root of the case. The judge disagreed and held that the lie substantially affected the presentation of his case because, if the representation had been true, the claimant would have been entitled to relief. The lie pertained to the one main claim and therefore it was fundamental.
On this point the judge also referred to London Organising Committee of the Olympic and Paralympic Games v Sinfield, a High Court decision issued in January, in which the court set out a useful illustration of what constitutes “a substantial part of the claim”. In that case the judge stated that a dishonest claim for special damages of £9,000 in a claim worth a total of £10,000 would be judged to affect the defendant’s interests significantly, “notwithstanding that the defendant may be a multi-billion pound insurer to whom £9,000 is a trivial sum”. The particulars of that case were that the claimant, who had been injured whilst volunteering at the 2012 London Games, was found to have been dishonest in his claim for special damages for gardening costs (LOCOG’s lawyers had discovered that he had actually employed the gardener since 2005 and therefore not just as a consequence of his injuries). Although his other losses were not in dispute, the gardening costs made up over half of the entire claim and the judge therefore found that the dishonesty was fundamental and the entire claim was dismissed.
In both Razumas and Sinfield the claimants protested that to lose their claims on the basis of the false statements would lead them to suffer a substantial injustice. The argument was made particularly firmly in Razumas, with attention drawn to the disproportion between the misrepresentation and the consequence of depriving a now very ill man of damages. However, demonstrating that a court will not easily be swayed by the “substantial injustice” defence, the claimants’ pleas were not accepted in either case.
The judge in Razumas stated that it could not be right to say that it would be a substantial injustice to disallow the claim given that it had been advanced dishonestly and that had the lie been established as truth it would have resulted in the full compensation. Such a decision would, she held, “cut across what the section [of the Act] is trying to achieve”. This decision was guided by Sinfield in which the judge stated that, in order to establish substantial injustice, something more than loss of damages to which the claimant is entitled was needed: if the mere loss of genuine damages could constitute “substantial injustice” then the section of the Act under which the exception is established would be rendered superfluous. In both cases, “something more” was required and in neither case was it found to have been made out.
Fraud, of course, cuts across every type of insurance and it is thought that £2.5 billion worth of fraudulent claims are made every year, with half of them going undetected. Insurers invest over £200 million each year fighting against false claims. Given this context, the current run of hard-line decisions should offer insurers some assurance that the courts, at least, are on the same side of the battle lines.