Claimants lose QOCS protection for “fundamental dishonesty”

In a landmark case Horwich Farrelly, has successfully employed Section 57 of the Criminal Justice and Courts Act 2015 (CJCA) to secure the first finding of fundamental dishonesty under the extended provisions contained within the legislation. The matter, which involved three claimants including a professional boxer, saw the claims dismissed in full and an order to repay the insurer’s legal costs of £6,100.

Whilst some fundamental dishonesty provisions have been in place since the ‘Jackson Reforms’ of 2013, the CJCA 2015 provides much greater scope for sanctions to be applied to insurance fraudsters. Where a claim made after 13 April 2015 is found to be fundamentally dishonest in any part the court must now dismiss the whole claim – even if it includes a genuine element – unless to do so would cause ‘substantial injustice’.

A finding of fundamental dishonesty under the Act also results in the claimant automatically losing qualified one-way costs shifting (QOCS) protection, allowing a defendant to apply for recovery of its costs.

In the case of Hughes, Kindon and Jones v KGM, heard on 1 April 2016 at Taunton County Court, all three claimants alleged they had suffered injuries lasting 12 months, despite what was a very minor incident with the insurer’s policyholder.

At the trial Horwich Farrelly, representing KGM, raised a number of inconsistencies in the claimants’ evidence. These included the nature of injuries suffered, failure to seek medical attention and, in the case of one claimant, failing to mention the incident and injuries to their GP several months after the incident.

Jones’s claim was struck out for failing to provide witness evidence, with costs awarded to KGM. However, Deputy District Judge Eaton-Hart found that the impact was sufficient to have caused injury to Hughes and Kindon, but only for a period of just two weeks, rather than the 12 months claimed. On this basis he initially awarded the pair £750 each in damages.

The defendant insurers were advised that this was an unjust result given that, under QOCS, the insurer would liable for substantial legal costs defending what was, in essence, a grossly exaggerated claim. The court’s attention was drawn to the fact that during a medical examination six weeks after the accident the claimants had stated they were still suffering from injuries arising from the incident. Given that the judge had decided that the injury period lasted just two weeks, it stood to reason that they had lied during the examination.

The Deputy DJ was therefore requested to rule that the claims of Hughes and Kindon were fundamentally dishonest under Section 57 CJCA 2015. DDJ Eaton-Hart accepted this request.

Striking out the claims in their entirety, he said that the two claimants had “presented a deliberate inaccurate position to the medical expert for financial gain“. He also ruled that the claimants would not suffer substantial injustice from the decision.

The claimants automatically lost QOCS protection and were ordered to pay the defendant insurer costs of £6,100. The claimants’ solicitor sought permission to appeal but this was refused.