Findings of fundamental dishonesty, as an exception to qualified one-way costs shifting (QOCS), were made following a successful defence of a ‘slam-on’ motor fraud involving a £53,000 credit hire claim.

Background

Findings of fundamental dishonesty, as an exception to qualified one-way costs shifting (QOCS), were made following a successful defence of a ‘slam-on’ motor fraud involving a £53,000 credit hire claim.

Clyde & Co acted for UPS Ltd in its successful defence of fraudulent claims for injury, loss of earnings, credit hire, storage and recovery charges totalling c.£70,000.

UPS contended that the two Claimants had deliberately induced a road traffic accident on the A406 by slamming on their brakes in front of a UPS delivery lorry. The case was listed for a two-day trial.

Prior to trial, the Second Claimant's claim was struck out for failing to serve any witness evidence. The day before the trial was due to start, the First Claimant filed a notice of discontinuance.

The case fell under the QOCS regime, but before the section 57 Criminal Justice and Courts Act 2015 Fundamental Dishonesty came into force.

UPS proceeded to trial and sought findings of fundamental dishonesty against both Claimants, notwithstanding that the Claimants would not be giving evidence, in order to secure an enforceable costs order.

Outcome

HHJ Harris QC considered the case on paper and found that the claims were fundamentally dishonest within the meaning of CPR r.44.16. Permission was given to enforce costs against the Claimants, which were to be assessed on the indemnity basis.

Lessons Learned

  • This case serves as further clarification as to the direction in which the concept of fundamental dishonesty as an exception to QOCS is being developed, and the extent to which it is being embraced by the courts.
  • The finding is in line with recent judicial authority on the issue. In Khan v Rahman and Haven Insurance Group [2016], a finding of fundamental dishonesty was made on paper (but following an application for summary judgment, rather than discontinuance). This was significant as the CPR make no provision for a finding of fundamental dishonesty following summary judgment. Notably, both parties/drivers denied the presence of the Claimants and the outcome may have been different, or a hearing may have been required, had the third party driver supported the bogus claims.
  • Valentin is therefore a helpful clarification to illustrate other circumstances where a fundamental dishonesty finding may be made on paper, i.e. a paper assessment is seemingly therefore still possible even where there is a liability dispute between the parties.
  • If the Claimants had been found to be fraudulent at trial and proceedings had been brought after s. 57 came into force, the Judge would not have been permitted to make a s 57 finding of fundamental dishonesty, as the statute requires that 'the Claimant is entitled to damages' before such a finding can be made. Accordingly, a substantive finding of fundamental dishonesty would make no difference to the outcome of the case where a finding of fraud or full dismissal of the case has been made.