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‘Fightback’ in Fundamental Dishonesty Claims: An After The Event Insurers View

Fundamental Dishonesty and ATE Insurance

The definition of ‘Fundamental Dishonesty’ is a term which has caused difficulty for both claimants and defendants since the advent of s.57 of the Criminal Justice and Courts Act 2015.  In the past year, both claimants and defendants have seen rulings from the Court in their favour, leading to increased confusion as apposed to clarity.

However, the Court of Appeal has recently assisted the Claimant’s cause, by providing support to a previous ruling in a lower Court, which held that the failure of a claimant to prove their case does not automatically mean that the claim was Fundamentally Dishonest, stripping the Claimant of its QOCS protection.

Whilst the initial case of Da Costa in the County Court did not directly deal with the finding of Fundamental Dishonestly and the loss of QOCS protection and After The Event Insurance, it still had relevance in relation to the argument.

In Da Costa, Lady Justice Black said: "The first thing to say is that a finding of fraud does not inevitably follow from a rejection of an accident claim as not proved. There may be many reasons why the claim is not proved other than that it has been fraudulently manufactured.

The words of Lady Justice Black have now been expanded upon in the Court of Appeal Case of Meadows v La Tasca (as yet unreported).

The claimant in the matter was initially unsuccessful in her tripping claim against the Defendant.  The defendant made an application asking the Court to find the claimant Fundamentally Dishonest, and upon reviewing the application and evidence, District Judge Khan concurred with the defendant and made a finding of dishonestly against the claimant.  As a result, QOCS protection was removed and the Claimant was ordered to pay the defendant’s costs in the sum of £7,210.00.

District Judge Khan ruled that he had not believed what the claimant or her witness had said had happened, describing their evidence as "riddled with inconsistencies”.

He said: "In those circumstances, it is difficult to see how this is not a dishonest claim. This is not, for example, a claim where there has been a misremembering of key events, or some confusion or lack of clarity in relation to dates, events, premises or the like. The effect of the inconsistencies… was such that I simply did not believe what Miss Meadows said to me or Mrs McGrath said to me.”

The claimant appealed this ruling, and after hearing evidence on behalf of the claimant, His Honour Judge Hodge QC overturned the finding of Fundamental Dishonesty made by Deputy District Judge Khan..  He said that;

‘It was not appropriate for the district judge to find that the accident had not happened in the circumstances described. He should have limited his decision… to a decision simply that the claimant had not made out her case on the evidence before him.’,  and went on to say that: ‘The inconsistencies and curiosities highlighted by the judge did not entitle him to go further and to find that the claim had been fabricated, and thus was fundamentally dishonest.’

The costs order against the claimant was reversed and the defendant ordered to pay an additional £12,500 for the costs of the appeal.

Claimant solicitors and After The Event Insurance providers have indicated that they are seeing a worrying trend of defendants alleging Fundamental Dishonesty where a claimant simply fails to prove their claim at trial, and this may lead to increased costs if claimants seek to appeal these findings.  Reducing the costs of litigation was of course something which the reforms of Lord Justice Jackson and the introduction of QOCS had hoped to achieve.

Given the latest Judgment in Meadows, we as ATE Insurance providers feel that there appears to be some respite afforded to the claimant, from what seemed like the latest line of attack from the defendant.  The battle may have been won by the claimant for now at least, but the war continues…

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