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Published 17 August 2020
For insurers the decision of Mr Justice Spencer on appeal in the case of Pegg v Webb & Anor  EWHC 2095 (QB) can be taken as a welcome vote of confidence in the process of pursuing dishonesty and supportive of a robust approach being taken by the courts.
Many, if not all, of those acting for insurers in cases involving applications for declarations of fundamental dishonesty will at some time have found themselves despairing when what they considered to be solid evidence has proved insufficient to satisfy the trial judge to make the finding sought. While there may be an apparent reluctance on occasion for findings of fundamental dishonesty to be made at trial, many defendant lawyers would doubtless feel that this reluctance goes too far on occasion and that a firmer line needs to be taken with those who bring demonstrably false claims.
In Pegg the defendant’s argument that the accident was either bogus or staged was not accepted by the judge who concluded that there had been a genuine accident in which the claimant had been a passenger in one of the vehicles. However, the defendant’s arguments did not end there.
The defendant’s case was also that the claimant had misled his medical expert. On this the defendant was successful, the judge finding that there had indeed been a failure by the claimant to give the expert relevant information and that what he had represented about the longevity of the injuries was inconsistent with his own evidence at trial such that no reliance could be placed upon the medical report and, with no supporting medical evidence, the claim had to fail.
However, the judge at first instance declined to make a finding of fundamental dishonesty. The defendant appealed asserting that in failing to make a finding of fundamental dishonesty the judge had ignored or failed to take adequate account of matters which pointed to fundamental dishonesty that were "staring him in the face" and that he had failed to follow his own findings to their logical conclusion.
Spencer J reviewed the evidence that had been before the trial judge and in allowing the appeal, dismissed the claim with an endorsement of there being a finding of fundamental dishonesty in relation to the claim for damages. In doing so he said “In my judgment,………., no judge could reasonably have failed to have come to the conclusion that the claim for damages as presented by the Claimant in this action was a fundamentally dishonest one, perpetrated by fundamentally dishonest accounts to the only medical expert and in the various court documents.”
Given that the defendant had failed to establish that the accident was bogus or staged, the judge on appeal ordered the claimant to pay 70% of the defendant’s costs to be assessed on the indemnity basis.
This is not the first time that a failure by a trial judge to make a finding of fundamental honesty has been overturned on appeal – indeed Spencer J referred to his own judgment in the DAC Beachcroft case of Molodi v Cambridge Vibration Services - nor is it likely to be the last.
There will always be cases where the claimant will fail but the judge declines to find fundamental dishonesty. Where the claimant has appeared to be confused or mistaken in evidence, rather than dishonest, dismissal of the claim itself is a good outcome.
It is to be hoped, however, that the decision of the High Court will encourage other courts and judges to take a firm line with the dishonest and make findings of fundamental dishonesty when the evidence leads to the conclusion that a claimant has acted in such a manner. If no finding is made and, to paraphrase the wording of Spencer J, no judge could reasonably have failed to come to the conclusion that the claimant had been fundamentally dishonest, then insurers and their advisers should be ready to appeal those decisions.
The lack of a finding also adversely impacts on, and effectively prevents, the bringing of committal proceedings or a private prosecution against the would-be claimant, increasingly popular courses of action.
Not all appeals will succeed, but pursuing to appeal those cases where the evidence truly justified a fundamental dishonesty finding but one was not made, even with the attendant costs, is an important step in the fight against fraud.
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