Catastrophic loss and fundamental dishonesty: Where better to hide a tree than a forest?

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Catastrophic loss and fundamental dishonesty: Where better to hide a tree than a forest?

Published 3 September 2020

It is a commonly held misconception that fraudulent claims and fundamental dishonesty are problems found only in the world of low value and high volume claims: the false whiplash injury in the low impact rear-end shunt, the staged accident and the pavement trip. 

However, little could be further from the truth.  Such scenarios are, of course, very real but it would be wrong to ignore the degree of dishonesty that arises in genuine claims where the injuries are real, sometimes involving significant and large sums damages claims.

A recently reported case involved a claim amounting to £1.6 million for injuries which allegedly arose out of an incident at a theme park which did cause injury to the claimant and members of his family. The judge found the claimant to have misrepresented and exaggerated the effects of the accident, to be evasive and untruthful about his medical history, that he had failed to disclose documents and that he had lied in his evidence.  Dismissing the opinions of the claimant’s five medical experts and preferring that of the defendants, the judge assessed damages at £17,600 but determined that, as a result of his dishonesty, the claimant should receive nothing and pay the defendants costs on the indemnity basis. It is reported that the claimant now faces a bill exceeding £300,000.

DAC Beachcroft have achieved findings of fundamental dishonesty in a number of high value cases including the reported case of Kamara v Builder Depot Limited 2019.  In this case, the Claimant had been struck by a forklift truck at work and primary liability had been admitted.  The bulk of the claim was comprised of future losses but the Claimant also claimed for a small amount of past commercial care totalling £2,250 supported by invoices.  DAC Beachcroft proved the invoices were forged and, while this aspect only formed a small part of a substantial claim, the judge found the Claimant to have been fundamentally dishonest and struck out the claim in its entirety.

The threat of a fundamental dishonesty findings and the subsequent consequences can be a useful tool in persuading Claimants to settle claims at significantly lower amounts than claimed. Making “drop hands” or nuisance level, costs inclusive, offers at the same time as applying to amend the Defence to allege fundamental dishonesty, can result in a quick conclusion to claims, particularly where it is unlikely the Claimant would be able to pay the Defendant’s costs should fundamental dishonesty allegations be pursued successfully at trial.  In one such case handled by DAC Beachcroft the Claimant alleged he had developed a brain injury following a low velocity RTA in which he also fractured his knee.  He brought a claim pleaded at over £400,000 including accommodation, ongoing care and loss of earnings.  Surveillance showed him running around a field, then attempting to shoe a pony.  Once the surveillance was served, the Claimant accepted an offer to discontinue.

However, caution must still be exercised before alleging fraud as demonstrated by the recent reported case of Kilbey v Arien Contractors ltd [2019]. Here the judge rejected submissions from the Defendant that surveillance footage and social media entries showing the Claimant working and socialising amounted to fundamental dishonesty.  Despite the judge finding that the Claimant “overstated the pain levels” he did not find that the Claimant was consciously exaggerating and penalised the Defendant with an indemnity costs order.  This case is a warning that lawyers and insurers should not be over zealous and see fraud at every turning, particularly given that some very serious conditions do not necessarily manifest in an easily observable way.  In addition, Claimants with psychological conditions such as somatoform disorders can present with what appear to be grossly exaggerated symptoms, which nevertheless are still genuinely held, or at least very difficult to prove otherwise.

Nevertheless, with care, large savings are still possible on cases where there are concerns that the Claimant is exaggerating the extent of their injuries even where the strict threshold for fundamental dishonesty may not be met.  In one such case the Claimant alleged she developed Complex Regional Pain Syndrome following a fractured ankle, and brought a substantial claim in excess of £500,000 including the need for a bungalow.  Surveillance showed her standing, walking and driving. Both parties’ pain experts concluded it was impossible to advise the court on her true levels of disability but shied away from concluding that she was consciously exaggerating.  An offer to discontinue made at the same time as service of the surveillance evidence  was subsequently accepted.

DAC Beachcroft has also successfully prevented claims being pursued by early service of surveillance and social media evidence resulting in either the claim not being pursued or settlement at nuisance level before the expense of obtaining medical evidence or dealing with proceedings are incurred. In one case a Claimant with an extensive pre-existing history of Irritable Bowel Syndrome, Post Natal Depression and Occupational Stress attempted to bring a substantial claim for damages following an RTA where liability was admitted.  She alleged she had received “spinal contusions” causing physical and mental limitations.  The claim for damages included ongoing care, treatment by a wide range of medical and alternative therapies, loss of earnings and pension and totalled over £1 million.  DAC Beachcroft used a background check to show she was working from her home, and forced the requested disclosure of records including medical and HMRC, which showed that the Claimant was not as handicapped as had been alleged.  When faced with disclosing documents, likely to show  her dishonesty, the Claimant discontinued.

It could be said the larger the case the greater the degree of vigilance that is required for the exaggerated or fictitious head of loss: where better to hide a tree than in the middle of a forest?  Our leading Complex and Catastrophic Injury Team and Fraud Team are together able to assess the merits of each claim on a case by case basis, and ensure that where there are alternative explanations such as somatoform or factious conditions, meaning a finding of fundamental dishonesty is unlikely, we are still well placed to drive strong negotiated settlements. 

In cases where there is a realistic prospect of a finding of fundamental dishonesty, with its Complex and Catastrophic Injury team working closely with its market leading and innovative fraud and intelligence teams, DAC Beachcroft are working hand in hand with our clients at the forefront of counter-fraud operations helping them achieve their business objectives and to deter those who seem to believe it acceptable to lie to and mislead the courts and cheat insurers.

 For more information or advice, please contact one of our experts in our complex injury team.


Laura Wiseman

Laura Wiseman


+44 (0) 1962 705 546

Mark Bailey

Mark Bailey


+44 (0) 117 918 2062

Georgia Court

Georgia Court


+44 (0)121 698 5358

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