The Criminal Justice and Courts Bill is currently before parliament and is expected to be passed into law in early 2015. The title would suggest that the Bill relates to criminal matters, but hidden within it is a provision which will require courts to dismiss personal injury claims in their entirety, where the Court is satisfied on the balance of probabilities that the claimant has been “fundamentally dishonest” in relation to the claim, unless the Court is satisfied that the claimant would suffer substantial injustice as a result.
There is already provision in the current law for claims to be struck out for fraud, following the 2012 Supreme Court case of Summers v Fairclough. This authority gives the court power to strike out the entirety of the claim, where the claimant grossly exaggerates the extent of his or her injury, including any award for genuine injury. However, in their judgment the Supreme Court made clear that the power to strike out a claim in its entirety should only be used in very exceptional circumstances. The Court still awarded the claimant compensation for the genuine element of the claim.
This allows discretion in each individual claim and it could be argued is sufficient in tackling the issue of fraud. However clearly the insurance industry do not see it is enough and have placed sufficient pressure on the Government to take matters a step further with legislation. The new provisions take away the discretion. If the Court finds the claimant to have been fundamentally dishonest in relation to the claim as a whole, they must strike out the entire claim. This means that where a Court finds a claimant who has been genuinely injured but exaggerated their injury or loss, the entire claim must be struck out with effectively a costs order in favour of the negligent defendant.
Fraudulent claims must never be condoned, so do the Courts really need legislation to tackle the issue and further legislation based upon unverified statistics? The Government’s argument for this provision is the concern that there is an increase in the number of fraudulent and grossly exaggerated personal injury claims, and the consequent effect that this has on motor insurance premiums and the resources of local and public authorities and employers. However, the Government has put forward this provision without verification of the figures provided by the insurance industry, making clear that precise levels of fraud are unknown. Can this be the correct way to tackle the problem?
It can only be hoped that the Court will place a rather narrow definition on the term “fundamental dishonesty” and a wider definition on “substantial injustice”, to avoid having to strike out entire claims, when in reality such a draconian measure is unlikely to be warranted.