Following on from the Government’s recent proposals for whiplash claim reform, a section has been added to the Criminal Justice and Courts Bill to dismiss claims where there is a finding of fundamental dishonesty.

The Bill itself mainly deals with criminal matters, but section 45 has been inserted to deal with fraudulent personal injury claims. The draft wording provides that when a court finds both that (1) the claimant is entitled to damages; and (2) the claimant has been fundamentally dishonest, then on application by the defendant, the court must dismiss the claim in its entirety - unless it is satisfied that the claimant would suffer substantial injustice as a result.

The concept of fundamental dishonesty already exists as an exception to qualified one way costs shifting (QOCS) introduced as part of the civil justice reforms in 2013. Section 45 of the Criminal Justice and Courts Bill adopts and adapts the concept to not only deprive a dishonest claimant of costs protection, but to deny them their damages award as well. 

Section 45 provides that when a court dismisses a claim for fundamental dishonesty, it may order the claimant to pay the defendants costs up to the value of the amount of damages that would have been awarded had there been no finding of fundamental dishonesty. This does not sit comfortably with the prior existence of the QOCS exception and the recent decision in Gosling -v- Screwfix.

Debate continues in Parliament as to the meaning of ‘fundamental dishonesty’ and ‘substantial injustice’. The draft wording of the bill provides no definition of these key phrases. However, the prevailing view is that the court would exercise its discretion sparingly (as suggested in the Summers -v- Fairclough case) and so there remains a risk that the concept of fundamental dishonesty in this context could evolve separately to that applied for QOCS - although, the subjectivity of ‘substantial injustice’ should allow the court to use its discretion where appropriate.

Whilst there is some uncertainty as to how these concepts will be defined or interpreted, the Bill sends a clear message that dishonesty will not be tolerated and this aim should, in our view, be welcomed.

The Bill has had its second reading in the House of Lords and is currently back in the House of Commons for approval of amendments. Watch this space!