Legal View - Rule Interpretation Confusion Around Fundamental Dishonesty

The interpretation of the rules around ‘fundamental dishonesty’, and more specifically section 57 of the Criminal Justice and Courts Act 2015, is a subject that has plagued practitioners since its inception, according to Winn Solicitors' Head of Litigation Adam Thorpe.

That confusion is even more acute when a claim involves both personal injury and a vehicle damage claim or credit hire.

The central question is this: if the claimant is fundamentally dishonest in relation to the personal injury claim, should the whole claim, including the credit hire, be dismissed or can the vehicle damage and hire still be awarded as an ‘honest’ element of the claim?

It has come to light in recent months that the industry has been getting the answer to this completely wrong.

The long-standing and assumed position was that the term ‘primary claim’ in the legislation encompassed all elements and that the whole claim should be dismissed. In 2019 the first instance Appeal decision in Basir v Larizadeh was widely reported as offering supportive guidance for this proposition (albeit the claimant was unrepresented). In that case, a July 2014 passage from Hansard was referred to and a quote from Lord Justice Faulks QC was referred to in support.

That position remained the norm for several years until a recent spate of appeals and cases were run on the subject involving various firms. It is well known that at least one High Court Appeal was recently compromised in the claimant’s favour.

Leading Counsel identified three key arguments in those cases:

1.       Analysis of the statutory language: s. 57 relates only to the PI elements of the claim.  Both ‘fundamental dishonesty’ and the resulting sanction of dismissal are expressly connected to ‘the primary claim’ – that being the ‘claim for damages for personal injury’ within the ‘proceedings’.

2.       Human Rights: Legislation must be construed consistently with rights afforded by the Human Rights Act – specifically the protection of an individual from interference in property rights.

3.       Enactment History: The real killer blow comes from Hansard and the passage of the bill through the House of Lords on 22 October 2014. Lord Hunt of Wirral (a Conservative peer with declared interests in DAC Beachcroft) tabled an amendment to the bill, which was for the ‘primary claim’ to include other elements with the specific example of credit hire given. The government opposed the amendment due to potential unintended consequences around subrogated claims. Lord Hunt’s amendment had been rejected and was therefore withdrawn.

This offers definitive insight into the fact that other elements of the claim were considered for inclusion, but specifically rejected by the government. It also shows that the reliance in Basir on a Hansard extract from an earlier stage of the bill’s passage was misplaced.

It appears the above analysis is being rapidly adopted and the correct approach, which represents a significant U-turn and will no doubt impact a significant number of claims.

In a recent case at Winns, the same issue arose. The issue of whether the whole claim could be dismissed was adjourned to a separate hearing with Skeleton arguments ordered for both parties. Deploying the above arguments led to a judgment allowing the hire and payment over by the defendant of nearly £12,000 – an outcome obviously of benefit to the hire company but also the claimant in being able to discharge his contractual liabilities.

It is a good example of the complexities and differing interpretations of the multitude of rules now governing personal injury and road traffic accident work, and it will be interesting to see from here whether this becomes a settled issue or one that continues to arise at Trial.

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