DAC Beachcroft Scotland have successfully secured settlement in a case in which the pursuer sought damages of £900K. The largest head of claim was future wage loss. We obtained expert evidence and secured intelligence which showed that the pursuer was in fact fit to work. This enabled us to secure a settlement of just £35K plus costs.
Katie Anderson, a solicitor in in our Glasgow Office, was the lead lawyer on the case. She considers the steps taken to secure this result and considers what the outcome might have been had the accident occurred south of the border, having regard to the different approaches to fundamental dishonesty.
Background and accident circumstances
The pursuer purchased a vehicle from Arnold Clark. She claimed that there was a defect in the vehicle which caused her to be involved in an accident. Liability was admitted. We were instructed on behalf of Arnold Clark and their insurers, Axa XL, to defend the claim on quantum only. The pursuer complained of ongoing pain and reduced function in her shoulder. She claimed to have developed scapular winging attributable to long thoracic nerve palsy. She complained of ongoing chronic mechanical and neuropathic pain more than 4 years post-accident. The pursuer resigned from her job in the care sector. She claimed that she was unable to work on a full time basis and was unable to work in her pre-accident role. She was a woman in her 30s and the claim for future wage loss was substantial. The pursuer’s valuation (schedule of loss) totalled more than £900K. We obtained our own expert opinion from an orthopaedic surgeon and instructed a vocational report. Even on this evidence, we were of the view that a realistic worse case valuation of the claim, if the pursuer’s evidence was accepted, was £700,000. While there was some debate between the experts as to the precise diagnosis, it was accepted that she had ongoing shoulder pain which limited function to the extent that she could not work in her pre-accident role.
Investigations and strategy
We instructed an expert in pain medicine to examine the pursuer. He opined that the pursuer was not suffering from a pain disorder. He identified a number of strange behaviours exhibited during interview and suggested that we obtain intelligence searches.
DAC Beachcroft’s in house intelligence team prepared an extensive intelligence report which revealed that the pursuer was the director of a company. Further investigations revealed that the company was linked to a pub local to the pursuer. The social media pages for the pub appeared to show that the pursuer had been running the pub since around two months prior to her raising court proceedings. We prepared a dossier which was presented to the pursuer at the pre-trial meeting (JSM). The pursuer admitted to everything, and in so doing effectively destroyed her credibility. We argued that this revelation threw all of the evidence in the case into doubt. The pursuer could not prove that she was not fit for work.
In light of this evidence we successfully negotiated a settlement of just £35K, plus costs, which was a saving of over £600K on our own realistic worst case estimate.
Fraud and Fundamental Dishonesty in Scotland
The pursuer’s failure to disclose that she had been running a pub went to the very heart of her claim. Before entering into settlement negotiations, we therefore considered if this was a suitable case to argue fundamental dishonesty and to move to have the claim struck out in its entirety.
Fundamental dishonesty is not enshrined in statute in Scotland. The court has an ‘inherent power, in appropriate circumstances, to dismiss an action summarily, even in the absence of a rule permitting it to do so.’ This is a ‘draconian’ power which is seen to be an option of ‘last resort’ (Grubb v Finlay [2018] CSIH 29). The courts have also made it clear that they will almost always require to hear evidence before making a finding of dishonesty, which means that a proof (trial) will be required (Keenan v EUI [2021] Rep LR 11).
Fundamental Dishonesty in England and Wales
The statutory basis in England and Wales for a finding of fundamental dishonesty is set out in s57(1) of the Criminal Justice and Courts Act 2015 (the Act). Such a finding can be made where the court decides that the claimant is entitled to damages but is satisfied that, on balance, he or she has been fundamentally dishonest in relation to the primary or a related claim. There is no definition of fundamental dishonesty set out in the Act and it has been left to the courts to define its meaning. Where such a finding is made the whole claim must be dismissed even if only part of it is dishonest unless the court finds that the claimant would experience substantial injustice.
The court might not find a claimant to have been fundamentally dishonest where a claim has simply been overstated, providing that this is not deliberate. In Gosling v Hailo [2014] 4 WLUK 770 the court said that the dishonesty must go to “the root of either the whole…claim or a substantial part of it”.
The case of Mustard v Flower [2021] EWHC 846 (KB) re-affirmed that a defendant does not need to plead fundamental dishonesty to make a s57 application or to disapply QOCS on that basis. There is no need to plead it on a speculative basis (the courts would frown on this in any event) but the claimant must have sufficient opportunity to deal with the issues that could lead the judge to make the finding.
Note that costs orders made against the claimant can be enforced to their full extent, with the court’s permission, in a case where fundamental dishonesty has been found as set out in CPR 44.16(1).
Summary
In the present case, the pursuer suffered an injury, albeit the extent of her symptoms and level of function was in doubt. Liability was admitted. She made a “good, if exaggerated claim” (Grubb v Finlay). In Grubb the Lord Ordinary found that to have dismissed the claim would have been an injustice because the pursuer in that case had a proven entitlement to damages. Not to award these to the pursuer would have been an injustice. For this reason, our view is that, in our case, it would have been extremely unlikely for a Scottish court to have found that the pursuer was fundamentally dishonest.
The outcome would probably have been different had this claim been brought in England and Wales. Although s57(2) of the Act does provide that a claim will not be dismissed if the claimant would suffer substantial injustice thereby, the definition of “substantial injustice” is less broad than in Scotland. In LOCOG v Sinfield [2018] EWHC 51 (KB), the judge said that, for a pleading of substantial injustice to succeed “something more is required than the mere loss of damages to which the claimant is entitled”. On this basis, the pursuer in our case would probably have failed had she tried to convince the court that dismissing her claim would cause her substantial injustice.
Claire Newcombe, Head of Counter-Fraud for Scotland said “This is a great example of how our excellent intelligence team can assist with the defence of grossly exaggerated claims. The concept of Fundamental Dishonesty and how it can best be developed into Scotland is always at the forefront of our minds when dealing with such cases”.
Our Casualty Injury Team deals with cases like this on a regular basis. For more information or advice, please contact one of our experts.
