The High Court has found the Claimant who misled a medical expert was fundamentally dishonest, overturning the first instance finding in the County Court; costs were ordered payable to the Defendant pursuant to CPR 44.16. However, although the Claimant had misled the medical expert, the Defendant did not prove the accident was bogus, as alleged in its defence. On that basis, the High Court ruled the Claimant should not be liable for the entirety of the Defendant's costs and instead 70% was appropriate. The decision demonstrates the discretion open to the court after making a finding of fundamental dishonesty, in particular the level of costs award to be made in favour of the Defendant pursuant to CPR 44.16.
Pegg v (1) Webb (2) Allianz Insurance  EWHC 2095 (QB)
The Claimant pursued a personal injury claim following a road traffic accident. The Second Defendant (D2) alleged that the accident had never occurred or was contrived. The claim proceeded to a two day multi-track trial to address these allegations.
During the trial, D2 also alleged the Claimant had exaggerated his injuries to an extent that he had been fundamentally dishonest. These inconsistencies were addressed during cross-examination. D2 argued there was “a complete change of his case in relation to the longevity of his injuries” which was “an indication of dishonesty.”
His Honour Judge Rawlings found the Claimant had proved his case, and the accident was genuine.
In respect of the allegation regarding the exaggeration of injuries, it was found the Claimant had failed to give the medical expert relevant information, meaning his evidence at court was inconsistent with his medical report. The medical report could therefore not be relied upon.
HHJ Rawlings acknowledged the Claimant should have informed the medical expert about previous knee problems and other accidents. However, whilst finding that the Claimant had been asked about previous relevant injuries, he was not satisfied the Claimant had been dishonest.
The Claimant's claim was dismissed but D2 was ordered to pay 60% of the Claimant's costs.
D2 appealed HHJ Rawlings' decision arguing the costs order was wrong, and the judge was also wrong to find there was no fundamental dishonesty. D2 submitted that HHJ Rawlings had failed to take his own findings to their logical conclusion, as the body of evidence meant that no reasonable judge could have failed to conclude the Claimant had been fundamentally dishonest.
In response, the Claimant submitted HHJ Rawlings had taken a rounded view of all the evidence in the trial and was fully entitled to conclude the Claimant had not been dishonest. Even if there was a finding of dishonesty in relation to non-disclosure of the previous accident and medical history, this was not sufficient to find the Claimant fundamentally dishonest.
The damages in this case were confined to pain, suffering and loss of amenity, and the cost of physiotherapy. Therefore, Mr Justice Martin Spencer held that dishonesty as to the extent of the injuries would be fundamental as the injury was the very basis of the claim. In this case there were factors which “pointed strongly, if not inexorably, to the conclusion that the Claimant had been dishonest in his presentation of his injuries to the expert instructed”.
As a result, Spencer J concluded that “no judge could reasonably have failed to have come to the conclusion that the claim for damages as presented by the Claimant in this action was a fundamentally dishonest one”.
The appeal was allowed, with the order being endorsed with a finding of fundamental dishonesty.
On the issue of costs, the court noted that whilst there was fundamental dishonesty in relation to the injuries, D2 had failed to prove fundamental dishonesty in relation to the accident itself. D2 conceded it would be appropriate to reflect this in the costs order and suggested the Claimant should pay 70% of D2's costs.
Despite the finding of fundamental dishonesty, the Claimant argued D2 should still pay the Claimant's costs, reducing the amount from 60% to 40%.
Mr Justice Spencer had “no hesitation in rejecting” this, but noted that “a significant part of the evidence and court time was directed towards the question whether the accident was bogus”. Therefore, an adjustment was required to reflect D2's failure to prove that the accident was contrived or had never occurred.
The court agreed with D2's submission and concluded the Claimant should pay 70% of D2's costs, to be assessed on the indemnity basis.
What can we learn?
- This case represents the successful appeal of a non-fundamental dishonesty finding. The judgment was carefully considered post-trial and D2 was able to argue that the trial judge had failed to take “adequate account of matters pointing to fundamental dishonesty which were 'staring him in the face' and he failed to follow his own findings to their logical conclusion.”
- Defendants should continue to carefully assess what evidence they have in relation to fundamental dishonesty. Both the County Court and High Court acknowledged that the claim had moved from the fast-track to the multi-track, with a significant amount of court time used, in order to consider whether the accident was bogus as alleged. As shown in both costs orders, the courts can penalise defendants if fundamental dishonesty is not made out.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.