In brief: High Court gives guidance on “substantial injustice” exception to rules on fundamental dishonesty in personal injury claims

April 12, 2024

David Illingworth, Pupil Barrister

The decision of Ritchie J in Williams-Henry v Associated British Ports Holdings Ltd [2024] EWHC 806 gives, for the first time, judicial guidance on how the courts will apply the “substantial injustice” exception to the statutory rules on fundamental dishonesty. The case is also of interest for its clarification of when and how defendants should plead fundamental dishonesty.

Substantial injustice

As Ritchie J noted in his judgment, there has to date been no case which has defined the meaning of substantial injustice. It has generally been assumed that judges will “know it when they see it”: Woodger v Hallas [2022] EWHC 1561 (QB), at [49].

In this case, having decided that the claimant had been fundamentally dishonest, Ritchie J went back to first principles. His starting point was that a dishonest claimant is not suffering an injustice per se by being deprived of his/her genuine damages.  But the consequences of that dismissal did need to form part of the analysis:

“In my judgment it is the dismissal of the claim for damages that is the trigger for the analysis of whether a substantial injustice will occur if no damages are awarded. One cannot ignore the very thing which S.57(3) takes away when considering the injustice of the taking away.”

Ritchie J then set out, at [178], a non-exhaustive list of factors the courts should consider when deciding whether dismissing a claim would cause substantial injustice:

(1) The amount claimed versus the amount of assessed genuine damages: the greater the difference, the more weight this factor will have.

(2) The scope and depth of that dishonesty found to have been deployed by the claimant. Ritchie J held that “widespread and gross dishonesty” would weigh more heavily against a finding of substantial injustice than “moderate or minor dishonesty”. Of course, at this stage of the analysis, the court has already decided that the dishonesty is “fundamental”.

(3) The effect of the dishonesty on the claim, including costs consequences.

(4) The scope and level of the claimant’s assessed genuine disability caused by the defendant. Ritchie J focused here, not on the claimant’s long-term suffering, but on the injustice of taxpayers ultimately bearing the cost of NHS treatment of a dishonest claimant who has not recovered damages.

(5) The nature and culpability of the defendant’s tort.

(6) The costs consequences if the claim is not dismissed. If the court finds substantial injustice but the genuine damages to be received by the claimant would “be substantially reduced or eradicated by the adverse costs awards, then it is less likely that [substantial injustice] will be caused by the dismissal.”

(7) Whether the defendant has made interim payments, how large are these and whether the claimant be able to afford to pay them back.

(8) The  effect which dismissing the claim have on the claimant’s life: “will she lose her house? Will she have to live on benefits, being unable to work?”

Having applied these factors, Ritchie J concluded that requiring the claimant to repay £75,000 of interim payments could, when combined with dismissal of the claim, lead to injustice. However, the defendant had decided not to apply for an order for repayment of interim payments, pointing out that the court could refuse to make such an order under CPR Part 25. The interim payments having been thus disposed of, the court held that there would not be substantial injustice caused by dismissing the claim:

“I know it looks like a large sum of money to deprive a genuinely injured person of, but by drafting and passing S.57 Parliament sought to stamp out dishonesty which is fundamental in personal injury claims and the Claimant has breached this law.

When fundamental dishonesty should be pleaded

Practitioners will be very familiar with Cojanu v Essex [2002] EWHC 197 (QB), a previous decision of Ritchie J which is often used to argue that defendants have raised allegations of fundamental dishonesty too late to be considered by the trial judge.

In this case, Ritchie J clarified his statement in Cojanu that “the section 57 defence should be pleaded”:

“I should clarify that I used “should” not “must” in the pleading ruling. Subsequent authorities have polished the pleading point. S.57 can be raised late in the day, even if there is no pleading, if it has reasonably only arisen late.”

It is submitted that the operative word in this statement is “reasonably”. Defendants do not have carte blanche to ambush claimants with fundamental dishonesty allegations at a late stage to seek a tactical advantage.