Defence against the Dark Arts: protecting your client from allegations of fundamental dishonesty

June 18, 2021

Chris Richards

Introduction

This article has been adapted from a talk which was given by the author as part of the Exchange Chambers Personal Injury Webinar 2021. The talk was intended to provide helpful guidance to solicitors representing personal injury claimants who have been accused of dishonesty. The content of the article has been adapted from the speaking notes and hence refers to ‘you’ (i.e. the audience).

This article is intended as information only, rather than advice to be relied upon. Every case turns on its own facts. The author would always be happy to advise over email (richards@exchangechambers.co.uk) if there are any specific queries.

What is fundamental dishonesty?

The first section of my article concerns fundamental dishonesty itself. I will keep this short and sweet. We all know what fundamental dishonesty is. We all know that qualified one-way costs shifting protects Claimants in most personal injury claims from having to pay the costs of the other side if they are unsuccessful. This is obviously a heavy burden for Defendants. There are certain ways for the Defendant to get around this costs protection. One of these ways is to prove that the Claimant has been fundamentally dishonest. The Defendant is the one who has to prove this. If the Defendant can prove that the Claimant has been fundamentally dishonest, the claim is dismissed and the Claimant will invariably be ordered to pay the Defendant’s costs.

The dangers of fundamental dishonesty

One thing to repeat is that a finding of fundamental dishonesty is a disaster for the lay client. I have mentioned that they will be ordered to pay the other side’s costs. These costs can be enormous. The costs for typical fast track claim on the indemnity basis can be seven, eight, nine thousand pounds. If you are adding in any expert evidence, or if there have been any adjournments, the costs can go into the ‘teens’.  This can stop the client putting a deposit on a house, buying a car, getting a qualification, etc. This are genuinely life-changing sums of money. There may be other consequences. You may be going after them for your own costs if there has been a breach of the retainer. There may be an effect on their employment. If you have a client who is in a regulated profession, a finding of fundamental dishonesty can genuinely be career-ending. There may be an effect on their insurance premiums. There may even be criminal penalties.

A finding of fundamental dishonesty is also a bit of a disaster for their solicitors. A client who has been found to be dishonest will be an unhappy client who will be pointing fingers. If you look at reviews for solicitors firms some of the one-star reviews have clearly come from clients who have been at the pointy end of a finding of fundamental dishonesty. You also have to think about the risk in terms of professional negligence. This is pretty small. The finding of fundamental dishonesty is going to be a massive problem for anyone contemplating a professional negligence claim. But never say never. If there are problems with the preparation of a case, and the Judge refers to them in the judgment, it is always possible for someone to look back and say that without these issues there would not have been a finding of fundamental dishonesty. If there has been a significant effect on someone’s career, there may be an incentive to bring a claim.

This is why it is really important to make sure that everything possible can be done to strengthen claims before they get to the door of court. It is tempting for me as a barrister to say that it is advocacy which wins these cases. But I actually don’t think it is. I think it is actually the groundwork which determines the outcome more than anything else.

So – how can we do this?

The need to vet the client

The first recommendation is about vetting the client. It is worth remembering what the client is going to be doing during the trial. They are essentially going to be telling their story. They will be answering questions, and when they are doing that, they will be thinking back to the accident and the injuries that they suffered. Can they give you a consistent account that has the ring of truth to it? Can they give you an account off the cuff without using any documents as a crutch? I have conferences in cases where allegations of dishonesty are made and when I am testing a witness there are no magic barrister tricks which I use. Often the best way to catch people out is to let them tell their story and compare it to the account which they have already given. One classic question is – ‘where were they injured’? If they have previously said that they were injured in the neck, try and lead them astray. Were they injured in the shoulder? Were they injured in the back? Ask them about the duration of the symptoms. Let’s say you have the medical report in hand. The client had their accident in February, their birthday is in March, and they see the medicolegal expert in April. If they have told the medicolegal expert that they were still suffering from symptoms, ask them whether they were better by their birthday? If the client says yes, this is a red flag. If the client is struggling when you ask them these questions this is a good sign that they should reconsider going ahead. This vetting is something to do early on when the client can drop the case without any big financial penalties. But I also think it is worth keeping an eye on the client right up until trial.

The Claim Notification Form and the Particulars of Claim

If you decide to bring a claim, the starting point is the CNF. The CNF needs to be treated with care. There is a lot of really important information which is contained within the CNF. We have a description of the injuries suffered by the Claimant. We have a box to tick if there has been any time off work. We have a box to tick if there has been any formal medical attention. You may be the ones filling in the CNF but you will be doing this with information supplied by the Claimant. If there are any inconsistencies between the CNF and the other evidence you can guarantee this will be referred to later on.

There is a similar point to make about the particulars of claim. Again, it is absolutely crucial to make sure that the particulars of claim are accurate and reflect the evidence given by the client. I would always recommend having the client read the particulars of claim before approving them. I would also suggest giving the client a ‘black-box warning’ that they need to read everything that we send them extremely carefully and there can be quite unpleasant consequences if they end up approving something which is not true.

Another thing to say is this – these claims need to be progressed as swiftly as possible. The memory of your client will fade over time. As time progresses, the chance of your client going seriously off piste increases. I would suggest doing all that you can to get the case in front of a Judge as soon as you have your evidence ready.

The instruction of the medical expert

The next step may be to instruct a medical expert. There are a couple of things to mention. If the report comes back and there are any significant differences in terms of the description of the accident or the injuries it is sensible to flag these up with the client. The client may have given an inconsistent account and this may have a bearing on whether they should be continuing with the claim. Alternatively, it may be a simple mistake from the expert which they might actually be willing to correct. If there are discrepancies between the content of the medical report and some of the other documents, you may be tempted to deal with this in the witness statement. I would be very careful doing this. The client should ultimately be relying upon a medical report that they are happy with and which they have approved. It doesn’t look great if the client is saying in the witness statement – ‘the medical report says XYZ but I disagree’.

I would also make sure that the expert at some point has the chance to look at the Claimant’s medical records. This could be done in the original report or an addendum. The Defendant will get the medical records and they will point to any unhelpful entries. It is always helpful to make sure that the medical expert is aware of the entries and maintains their opinion. This also reduces the risk of the Defendant putting the medical records to the expert in Part 35 questions and you then being surprised by the medical expert changing their view.

The evidence which may be available early on

If you are instructed shortly after the accident, you may need to act fast in order to secure the evidence which will be important later on. The classic example is CCTV. This often wiped on a weekly or monthly basis. You may need to try and get it as soon as possible. One other example in road traffic accident cases is the vehicles themselves. The vehicles will need to be examined shortly after the accident in order for the engineer writing the report to be able to draw useful conclusions. If you are going to take photographs showing the condition of the vehicles, this needs to be done while the vehicles are in the same condition as they were in immediately after the accident.

The need to consider making Part 36 offers

It is sometimes easy to see cases involving allegations of fundamental dishonesty as not being especially attractive. The evidence is complicated, the prospects of success can be low, the fees are usually fixed.

But I actually think that cases involving allegations of fundamental dishonesty can be attractive – at least, from a lawyer’s perspective. The reason for this is Part 36 offers. Part 36 offers can often be a double-edged sword. If you make a really attractive offer, it will probably be accepted, and you won’t be able to bill much in the way of costs. But the great thing about cases involving allegations of fundamental dishonesty is that you can make really attractive Part 36 offers very early on and a lot of the time they will not be accepted. The Defendant will have a bee in their bonnet about dishonesty and will not settle. You can quite easily end up recovering nine, ten, eleven thousand pounds in indemnity costs for relatively straightforward cases where the costs would otherwise be fixed. Tell me where else you could do that!

The offers should be made early enough for the costs to pose a risk to the Defendant. Making an offer shortly before trial is fine but an offer which has a few days of indemnity costs attached is much less dangerous to the Defendant than an offer which has a year or more of indemnity costs. I would try to make an offer as soon as you are confident about the valuation of the claim.

The offers will also need to put the Defendant at risk. An offer which represents 100% of the pleaded value is not something which any Defendant is going to be particularly worried by. There will be litigation risk and it may be appropriate to include a discount.

The offers will need to be based on the actual duration of the symptoms. We were talking earlier about a client who has an accident in February, and who has an examination in April. Let’s say the prognosis takes him to November. That would be 9 months of symptoms. That might be worth £3,300. If you make an offer based on the prognosis and it turns out during the trial that the Claimant recovered in June, the offer puts the Defendant at no risk at all.

The offers will also need to be accompanied by indemnity costs schedules. Any Part 36 offer which does not have an indemnity costs schedule is no longer as much of a risk to the Defendant. In continuing to trial the Defendant may only be risking paying the additional 10% on the damages and a few pounds in penalty interest. The indemnity costs schedule is the bomb which you can throw at them.

The need to consider the Defence – and advise appropriately

When the Defence arrives, consider it closely. Does the Defendant allege that your client has been dishonest? Does the Defendant put your client’s honesty (as opposed to their credibility in general) in issue? What are the reasons given?

If it is clear that the Defendant may be hunting for a finding of fundamental dishonesty, this is the time to advise your client. Here is something which I want to be quite clear about. The advice has to be personalised in order to be effective. It is not enough in my view to write a generic letter saying ‘the Defendant has put honesty in issue and the consequences if the court finds against you are XYZ’. The client has to know how likely this is to happen. What are the strengths? What are the weaknesses? What are the possible options? How likely is it that they will win? How likely is it that they will lose? How likely is it that the Judge will find them to be dishonest? You also need to be advising them about what they should be doing. Are you advising them to go ahead or are you advising them to explore alternatives? I understand this is a heavy burden in the context of cases where the costs are fixed. But the client has to fundamentally be in a position where they know what could happen and what should happen.

I think it is important to give the client an opportunity at this stage to bring the claim to an end. It is sometimes the case that a conflict of interest which develops. It may be in the client’s best interests to bring the claim to an end. However, the client doing so leaves you either writing off profit costs and disbursements or attempting to recover them from the client. Neither of these is an attractive proposition. I hope I can comfort you by saying that in my experience there is nothing which is a truer indication of a Claimant who is going to lose at trial than a Claimant who tells me that they wanted to drop the case a long time ago. The client ultimately has to want to go ahead. If the client does want to bring the claim to an end once the defence arrives I can say with some confidence that it is unlikely to affect the eventual outcome.

If the client wants to go ahead, I always think it is worth filing and serving a reply to defence. The reply to defence can say that the Claimant is an honest witness and any allegation of dishonesty will be strongly resisted. But there is something is more important. If you win, you will probably end up with an award of fixed costs. But if you win, you will have proven that your client is an honest witness. The allegation of dishonesty will have failed. This is a really big thing. You have a client, who has come along to court, who has given honest and truthful evidence, and has been called a liar. There are many people who would have lost their livelihood, if the allegation was made out. There may be people in the audience who share my view that allegations like this should not be made lightly. How can you fight back? One way is to make clear in the reply to defence that you will be asking for the costs to be paid on the indemnity basis if the allegation of dishonesty is pursued and is unsuccessful. I tend to do this as a matter of course. It is certainly a difficult request to make. The Judge may say no. But it is possible. I have got indemnity costs before (albeit with a slightly different case). Pleading the reply in this way can be a good way of warning off the Defendant from alleging dishonesty without a solid evidential foundation.

Being careful with disclosure

The next part of my article deals with disclosure. The headline is – be careful. You can do a lot of damage (and open yourself up in terms of ‘prof neg’) if you disclose privileged documents. The classic example is witness questionnaires. If you have sent the client a witness questionnaire, and they have filled this in, and this has been done (and I paraphrase) for the purpose of the litigation as opposed to anything else, it is likely to be privileged. You do not need to disclose the document if the client does not wish to. I sometimes see witness questionnaires which have been disclosed and relied upon probably because the client has drawn a nice sketch diagram. Be very careful. You will need to read it line by line in order to make sure that there is nothing harmful in there, or to make sure that it is on balance more helpful than harmful. You may need to take instructions from your client about the disclosure of any document like this. Worst comes to the worst – get them to do a fresh sketch diagram.

The witness statements

The witness statements are the bedrock of any claim. They are an opportunity for your client to tell their side of the story away from the hurly-burly of cross-examination. They can tell their story start to finish.

The first question is who should be drafting the witness statements. My view is that it should be whoever is responsible for the claim. I know there are agencies who will draft witness statements for you. I see many of them. The witness statements cover the basics and do the job. But the reality is that you will have a better idea of the issues which will be important. You will have a better idea of the strengths and weaknesses of your case. The agency may not. I think you can always tell when a witness statement has been drafted by the solicitor. They are often just better.

When writing a witness statement, you are often trying to make sure that the best parts of your client’s evidence are front and centre. You may need a more holistic approach when drafting a witness statement in a case where your client may be accused of dishonesty. If the client is uncertain about some things, it can sometimes be sensible to make that clear. I will give you an example. We were talking earlier about a client who has an accident in February, the examination is in April, and the prognosis takes him to November. The client tells you that he might have recovered by July but he was definitely better by August. There is nothing wrong in saying this in the witness statement. The worst thing to do would be to try to put a positive spin on things and say that the symptoms “were recovered by August”. This would technically be true. But it doesn’t really represent your client’s evidence. It certainly wouldn’t look good if the Claimant was asked about the duration of the symptoms and they went back to saying that they may have resolved by July.

On a similar note, there is something that I see quite often. This is when the witness statement does not say when the symptoms actually resolved but simply refers to the prognosis. The witness statement will say something like, “the doctor thought I would get better in 9 months and I recovered within his prognosis”. The client often recovers before the end of the prognosis period. Saying that the client recovered within the prognosis is technically correct. But it looks really, really bad if the client says when questioned that they recovered before the end of the prognosis. We all know why this is done. If the Defendant wants to settle the claim they have no choice but to rely upon the prognosis. There are some skilled barristers who are actually turning this into an allegation of dishonesty. You recovered before the end of the prognosis, you have said that you are relying on the prognosis because you are exaggerating the claim, you are dishonest. My view is that the client should always be given the chance to state the actual duration of their symptoms.

It is also sensible to be precise about the severity of the symptoms. Let’s say the client tells you that the symptoms at their worst were 8/10 in severity. You could write that the symptoms were 8/10. But this may put the client in danger. One of the reasons that Defendants often refuse to settle cases where dishonesty is alleged is because there is a mismatch between the severity of the reported symptoms and the lack of any formal medical attention. There is a big difference between a sweeping statement that “the symptoms were 8/10”, and “the symptoms were 8/10 at worst but this did not last for very long and this was controlled with painkillers”.

If the Defendant has made particular criticisms in the Defence, make sure you give the client the chance to respond. The Defendant may point out that there has been some time between the accident and the claim being brought. The client may be able to explain why this was.

The witness statements are also another opportunity to vet your client. When you are taking the statement, are they describing the accident and the injuries in a consistent manner which has the ring of truth to it? Or are they hopelessly inconsistent and vague? This can be another opportunity to press the big red panic button.

The supporting evidence

I have talked about the Claimant. The Claimant may not be the only person who can give useful evidence. This is crucial. You may have a case concerning a road traffic accident. Perhaps it is one of those familiar and beloved cases where the Defendant is disputing the force of the collision. The Claimant will have been in the car. They can describe the force of the impact. But what about the other people in the car? There are frequently friends and family who were travelling as well. They can give evidence about the force of the collision. Sometimes they will be poor witnesses and you will not want them to play a part. But often they can give crucial evidence. They may also be able to give evidence about the injuries suffered by the Claimant. Can they remember the Claimant complaining about their injuries? Can they give evidence about the effect upon the Claimant’s employment or personal life? I remember a case where a Claimant brought along their grandmother. Their grandmother was absolutely appalled that anyone could suggest that their granddaughter was not telling the truth and her evidence blew the Defendant away. I appreciate that friends and family will not be independent and this goes to weight. However, they can still give useful evidence.

On a similar note, there may be other documentary evidence proving that a Claimant has genuinely been injured. Be prepared to think out of the box. If the Claimant has been absent from work, or on light duties, can you get a letter from their employer? If the Claimant has not been able to go to their gym, can you get a letter from them? This can be a double-edged sword. If you find documents which are harmful you may need to take instructions about disclosure. However, this evidence can be genuinely devastating. If you have a Defendant who says that your client has not been injured and you have a letter from their employer saying that they were on light duties for two weeks this can really change the perspective.

What about engineering evidence?

I mentioned earlier those familiar and beloved cases where the Defendant is disputing the force of a car accident. One way to prove that an accident was forceful is to obtain a report from a forensic engineer. These reports can be expensive and I can well imagine that in cases where the costs are fixed you will not be particularly enthusiastic about obtaining one. There is an obvious risk that the cost of a report will not be recovered. There is also no guarantee that the report will be helpful. This is probably why reports from forensic engineers are quite rarely seen in cases on the fast track. However, there is still a place for them. Let’s say you have a case where on the one hand there is excellent evidence for the client being injured, a really trustworthy professional client, but on the other hand there is no apparent damage to the vehicles, and the client as a result is at risk of a finding of fundamental dishonesty, I would strongly consider obtaining a report. It is sometimes the case that damage is not visible on a purely visual inspection, or for example from photographs. All that you need is for the engineer to confirm that the visual condition of the vehicles may not reflect the force of the impact and that will change the complexion of the whole case.

The Defendant might obtain their own report. The report will probably say that there is no apparent damage to the vehicles, and there cannot have been a forceful impact. You cannot just leave the report and see what happens. You have to challenge these reports head on. Have you got permission for Part 35 questions? If not, get permission. Get the Part 35 questions drafted. This is difficult and technical stuff and it is well worth getting counsel to do it. You can also consider getting your own expert evidence. If you have two competing experts it is going to be difficult for the Defendant to resist an allocation to the multi-track and that is when the costs risk to them will spiral.

What if the Defendant raises honesty later on?

One thing that I have come across from time to time is a case where the Defendant pleads a defence which is totally straightforward. The Defendant denies breach, or if they accept breach, they put the Claimant to proof about causation. There is no indication that the Defendant is going to be hunting for a finding of fundamental dishonesty. You then prepare the case in a totally normal and straightforward way. You don’t do the additional enquiries which I have mentioned earlier because, frankly, there is no need. What then happens sometimes is the Defendant tells you, perhaps in correspondence, that in fact they are going to be hunting for a finding of fundamental dishonesty. My view is that you have to respond to this. If there is evidence showing that your client is an honest witness you will need to get this before the court. If there is evidence concerning honesty which is not before the court it would be sensible to make an application to rely upon it. You might also consider asking permission to file and serve the reply to defence that we discussed earlier on. If you have been blindsided by the allegation of dishonesty you will have a good argument on costs.

Preparing for trial

Here are some recommendations in terms of preparing for trial.

The client needs to be given a copy of the trial bundle and needs to be encouraged to read it cover to cover. There should be nothing in the bundle which should come as a surprise to them on the day of trial. A hard copy of the bundle in my experience is much more likely to actually be read by the client than a PDF attached to an email.

I would always suggest making sure that the client gets to court at least an hour before the hearing. There is actually quite a lot that your counsel will need to discuss with the client and this rarely in my experience takes less than an hour.

One thing to bear in mind is that the stress levels of the client have a direct effect upon how they perform during the hearing. These cases are ones where the client care needs to be bulletproof. Does the client know where they are supposed to be going? Do they know who their barrister is going to be? Do they know how long the hearing is going to last? This means that they can arrange childcare, parking, and so on. Do they have a mobile number for you just in case something goes horribly wrong on the day? A client who is cool, calm and collected is much more likely to be able to deal with the cross-examination than one who is rushing and panicked.

If you have made Part 36 offers, or if you are going to be asking for indemnity costs more broadly, make sure that the costs schedules are filed and served. I would suggest filed any offers or schedules in a sealed envelope with a note to say that they should not be looked at until the costs are being dealt with.

A few final words on the case law

A lot of the case law which deals with fundamental dishonesty is not especially helpful to Claimants. This is not particularly surprising. It is the insurers who have the resources to get suitable cases appealed up to the High Court in the hope that a helpful authority will be generated. But there are some useful cases dealing with dishonesty, memory and so on. It is helpful to be aware of these cases just in case you need them.

Howlett v Davies [2017] EWCA Civ 1696

= Defendants do not need to plead fundamental dishonesty. However, Defendants should still set out in their Defence the matters which may lead the judge to such a finding.

Long v Elegant Resorts Ltd [2021] EWHC 1330 (QB)

= The courts should be wary in drawing conclusions adverse to the honesty of a Claimant from evidence concerning issues which were peripheral in nature or where the issues had not been highlighted to the Claimant before the trial.

Re H and Others (Minors) [1996] AC 563

= Where serious allegations are made, the stronger the evidence should be before the allegation is deemed to be proven.

In re B [2008] UKHL 35.

= There is no blanket rule requiring a higher standard of proof with regard to serious allegations. However, the court must have regard to the inherent likelihood that each competing interpretation of the evidence is correct.

Lillie v Newcastle City Council [2002] EWHC 1600 (QB)

= The presumption of innocence should be the starting point when considering allegations of criminal conduct. It is worth remembering that dishonesty in the context of a civil claim may also be a crime.

Walton v Kirk [2009] EWHC 703

= Exaggeration is not diagnostic of dishonesty and honest claimants may still exaggerate parts of their evidence.

Lalani v Crump Holdings Limited [2007] EWHC 47 (Ch)

= The court may choose to reject the evidence of a witness, or prefer the irreconcilable account of another witness, without making a finding that a witness has been dishonest.

= The attempt to remember events in the past may itself result in memories becoming distorted.

Gestmin SGPS S.A. v Credit Suisse (UK) Ltd [2013] EWCH 3560 (Comm)

= The fallibility of human memory is an important consideration when assessing the credibility of witness evidence.

Clarke v Maltby [2010] EWHC 1201 (QB)

= This is an example of a case where the court ordered costs to be paid on the indemnity basis where a Defendant made allegations of dishonesty in a personal injury claim which were not established at trial.

The possibility of appealing

We have been talking about how to avoid findings of fundamental dishonesty. But what happens when it all goes wrong? If your client is found to have been fundamentally dishonest, is this time to say goodbye to your client? Do you cut them loose and send them a bill? Not always. There may well be grounds of appeal. From speaking to others, it seems that there are few findings of fundamental dishonesty where there is not something which can be challenged. You may not be able to overturn the decision. But you may not need to. Most courts separate out the initial leave to appeal from the actual appeal. If you don’t get leave to appeal, there are usually no costs for you to pay. But if you do get leave to appeal, the costs risk to the other side increases. They may not be willing to risk defending against the appeal. You may be able to agree with them something akin to a drop-hands. You may need to pay for counsel to draft the grounds of appeal and skeleton argument. But for some clients this may be money well spent.