Substantial injustice in complex injury FD cases: the state of play

The question of whether a finding of fundamental dishonesty (FD) is to be considered substantially unjust is a hot topic amongst claimant and defendant lawyers alike given the recent case law. It is certainly an area that the courts have sought to develop over recent times as we discussed in a previous article.

There have also been significant developments around substantial Injustice in recent stand out cases involving fundamental dishonesty, which are highlighted in this latest article from our complex injury Fundamental Dishonesty SIG.

Kirsty Williams-Henry v Associated British Ports Holdings Ltd [2024] EWHC 806 (KB)

In Williams-Henry the 33-year-old claimant fell from a pier due to unsatisfactory railings and sustained significant injuries. These included a traumatic brain injury which required removal of part of her frontal lobe. Liability for the accident was agreed at 2/3 to 1/3 in the claimant’s favour. Although the claimant recovered in part from her injuries and was able to return to work, it was claimed that she had significant ongoing disabling symptoms and did not have full capacity owing to depression. As a result her claim was pitched at £3.5m on a full liability basis.

However, the claimant was found at trial to have been fundamentally dishonest. She was a poor witness, there were significant discrepancies in her DWP and employment records along with her social media posts and video surveillance, which was sufficient to warrant the finding.

The previous position for considering whether the claimant will face a substantial injustice following a finding of FD, came from the well-known case of LOCOG v Sinfield [2018] EWHC 51 in which Knowles J held that “substantial injustice must mean more than the mere fact that the claimant will lose his damages for those heads of claim that are not tainted with dishonesty”.

Ritchie J in Williams-Henry disagreed with the LOCOG approach. He stated that “the starting point is that a dishonest claimant is not suffering an injustice per se by being deprived of his/her genuine damages”. He went on to confirm that it is the dismissal of the case itself which is the trigger for the analysis of whether a substantial injustice will occur if no damages are awarded to the claimant. The conclusion was that when considering whether the removal of damages would cause a substantial injustice, the court must balance all the “facts, factors and circumstances of the case to reach a conclusion”.

Ritchie J then went on to helpfully provide a list of considerations to bear in mind when making a judgment as to whether a substantial injustice will occur:

1. The amount claimed when compared with the amount awarded
2. The scope and depth of the claimant’s dishonesty  
3. The effect of the dishonesty on the construction of the claim 
4. The scope and level of the claimant’s assessed genuine disability 
5. The nature and culpability of the defendant’s tort
6. What the court would do in relation to costs if the claim were not dismissed
7. Whether the defendant had made interim payments, and whether the claimant could afford to repay these
8. The effect that dismissing the claim will have on the claimant’s life

Consideration was also made to the burden of injustice and on whom it lies. At paragraph 178 of the judgment, the court indicated that the burden of the injustice could be transferred to the state if the claimant is seriously brain/spinally injured. Therefore, if the implication of the finding of FD is such that the state would be left to fund the ongoing treatment and care, there may be a substantial injustice.

In the Williams-Henry case, on applying the above test, Ritchie J concluded that there would be no substantial injustice by dismissing the genuine element of the claim. However, he did not order the claimant to pay back the £75,000 interim payment, stating that to do so “could, when combined with dismissal of the claim, be an injustice to the claimant because she would then be homeless, jobless, depressed and suicidal.”

Shaw v Wilde [2024] EWHC 1660 (KB)

The issue was considered further in the Keoghs case of Shaw. The articles explaining the case in more detail can be found here.

Briefly, the claimant suffered serious injuries which required multiple surgeries as a result of a motorcycle accident. The defendant, at the split liability trial, was found liable and therefore the claimant was to recover 100% of his damages. However, at that stage, FD had been alleged, therefore costs orders were delayed following the determination of FD at trial. In the meantime, the claimant had been given interim payments amounting to £150,000.

At the conclusion of trial, the judge held that the claimant had been dishonest “by the standards of ordinary decent people.” The genuine claim was valued at £1,212,390 plus interest (against a £2.5m schedule sent the day before trial).

In this case the court had to consider the following issues when it came to substantial injustice:

• Mr Shaw may have to repay the interim payments of £150,000 (as considered in Williams-Henry).
• There may be a costs liability to the defendant.
• Mr Shaw’s earnings potential was significantly reduced. He was in the same position as someone who is similarly injured but who has no legal claim to pursue and would have to rely on ‘the same state support as the victim who has no solvent tortfeasor to sue’.
• Mr Shaw may have incurred debts in the expectation of a damages award, which he would be unable to repay.
• He would need to rely on the state for his care, and items such as orthotics; “just as the victim who has no solvent tortfeasor to sue would have to do”.

It was an email from the defendant asking the claimant to reflect on the contents of an application for a further interim payment which highlighted the depths of the dishonesty. At that point, FD had not been raised by the defendant and the claimant proceeded with the application. It was held that, following receipt of the email, the claimant would have known the consequences of continuing with a dishonest claim, but continued to lie.

Of note, in Shaw it was held that any increased burden on the state is irrelevant (contrary to the considerations of Ritchie J in Williams-Henry) as the injustice must be suffered by the claimant alone (unless a serious brain/spinal injury has been suffered, which was not the case here.) This is something to bear in mind when considering FD against the injuries sustained.

It was also held that if the claimant does not produce any evidence to support their argument that there will be significant consequences for them following a finding of FD, the court will make their own inferences.

Conclusion

This is an ever-evolving area of law within the High Court, and given the opposing views taken by senior members of the judiciary, it seems likely to be an area of law that will one day be determined by the Court of Appeal.

The cases above demonstrate the developing arguments raised by claimants who seek to minimise or escape the consequences arising out of a finding that they have been fundamentally dishonest. They mark a shift in the way in which substantial injustice is considered. Previously, the dismissal of the genuine part of the claim was, in effect, the claimant’s ‘punishment’ for their dishonesty. However, these cases encourage us to consider the effect of the dismissal of the genuine part of the claim on the claimant when considering the other factors in the case. While previously the courts were told that they will know substantial injustice when they see it, and while this remains the guidance, it creates food for thought for insurers and those who are instructed by them.  

While there is still no documented case whereby a claimant has been found to have been fundamentally dishonest and still received an award for damages, these cases indicate that there are circumstances where, theoretically at least, this may occur.

For more information, please contact: Emily Eastwood, FD SIG member