Fundamental Dishonesty – from one extreme to another!

There has been much fanfare about this judgment in recent weeks.

The case can be accessed here: Shaw v Wilde ([2024] EWHC 1660.

The court action arose from a genuine motorcycle accident in which the claimant (Mr Shaw) sustained significant injuries to all four limbs, for which he required upwards of 20 surgeries.

He claimed significant restrictions in his function and mobility and over the piece, intimated a schedule of loss for over £6 million, citing requirements for a significant package of care, single-storey accommodation in a prime area and business class travel, among others.

However, the defender’s investigations revealed significant exaggeration of his injuries. Surveillance evidence captured him walking 900 metres unaided whilst carrying his young son, contrary to his claim of needing a stick to walk 100-200 metres. Indeed, the court found that he had largely abandoned walking aids in the autumn of 2019, long before he then intimated the aforementioned schedule of loss in 2020.

Strikingly, further evidence was obtained which showed that he had taken part in extreme sports in the post-accident period, including base-jumping abroad, indoor and outdoor climbing in the UK and taking on the heights of Mount Snowdon – the largest mountain in Wales, which the claimant asserted in evidence to be ‘a hill’ – by e-bike. He had even been cleared by his GP for tandem skydiving!

Whilst the court assessed the genuine aspect of his claim at £1.2 million, the court action was ultimately dismissed pursuant to Section 57 of the Criminal Justice and Courts Act 2015. A costly result for Mr Shaw, who now faces the possibility of having to return a prior £150k interim payment.

It remains to be seen if the judgment will be appealed.

The position in England and Wales

Readers dealing with English and Welsh claims will be well aware that section 57 provides the Court with the power to dismiss a court action where it is satisfied that the claimant has been fundamentally dishonest, unless the court is satisfied that the claimant would suffer substantial injustice.

As noted in London Organising Committee of the Olympic and Paralympic Games v Sinfield [2018] EWHC 51 (QB), the entire claim should be dismissed where there is fundamental dishonesty, unless it would cause substantial injustice. Loss of damages is insufficient to constitute substantial injustice in itself. There needs to be some other factor.

So far as Mr Shaw was concerned, the Court was not convinced that that ‘other factor’ was established. The Court held that this was not a case of mere exaggeration, rather conduct by Mr Shaw which was dishonest by the standards of ordinary decent people, having lied about his post-accident capabilities, which was central to the issue of quantum (rather than being simply incidental or collateral).

In the circumstances, his court action, including the genuine aspects, fell to be dismissed. The timing of his £6m schedule of loss in 2020, which he had certified in a Statement of Truth despite his apparent 2019 function, appears to have been a factor in the court’s decision.

The Scottish Position

So what about Scotland?

The starting point is that there is no equivalent statutory provision to section 57 in Scotland and accordingly, the deterrents against dishonest claims in Scotland are regrettably not on all fours with our counterparts south of the border.

The lead authority on the matter remains Grubb v Finlay (2018 SLT 463), in which the pursuer was involved in a low-speed road traffic accident and claimed significant restrictions in his ability to work which were untrue. Nonetheless, the court accepted that he had not been fundamentally dishonest as he had been involved in a genuine accident. In the Court’s words, he had made a ‘good, if exaggerated’ claim.

In Grubb, the Court accepted that it has the power to dismiss a court action summarily, even though there is no statutory provision akin to section 57 in Scotland. However, it must be a ‘very rare and exceptional case indeed’.

As such, having been involved in a genuine accident, Mr Grubb was awarded £6k for the genuine aspect of his claim and as ‘punishment’ for the dishonest aspects, in a pre-QOCS era, he was awarded no expenses, with two-thirds of the expenses instead being awarded to the Defender (at a time when expenses would have otherwise followed success).

Post-QOCS and Difficulties

In this post-QOCS world, the exception which one might expect to be relevant to claims involving dishonesty in Scotland is in s 4 (a) of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018. This allows QOCS to be disapplied in cases where the pursuer ‘makes a fraudulent representation in connection with proceedings’.

There are difficulties with that, however.

In a previous article, I highlighted that there has to be a finding in fact of fraud before that exemption will be applied. The reality is that, in order for there to be a finding in fact of fraud, there needs to be a hearing on evidence and, in practice, that means that insurers will require to initially ‘front up’ the significant costs associated with taking a matter all the way to proof in order to stand some hope of being able apply the fraud exemption under QOCS.

Even then, the court may not ultimately make the finding in fact of fraud to provide the basis for the QOCS disapplication under s4(a) that the defenders might be hoping for. Do note though that there are other routes to disapplication of QOCS on grounds of manifestly unreasonable or abuse of process as successfully argued by my colleague Lewis Richardson in Bruff v RSA, an RTA case which involved a false witness, a garden patio and a tale about the seaside, which couldn’t possibly have been true – you can read a summary article about that here)

Take away points

Whilst Shaw has been lauded as sending out a strong message to dishonest claimants in England and Wales, it is a timely reminder that the courts in Scotland take a fundamentally different approach – and disappointingly so from a defender’s perspective in attempts to deter and combat fraud in Scotland.

Indeed, Scottish practitioners are left wondering if, following Grubb, Mr Shaw might be £1.2m better off right now despite the apparent extent of his exaggerations, had his otherwise genuine accident occurred north of the border.

The starting point for claims involving fundamental dishonesty in Scotland is that it is very unlikely that the court action will be dismissed summarily. Though the court accepted it has the power to do so, such a measure was described in Grubb as ‘draconian’ and ‘one of last resort’.

Instead, the Scottish Courts take the arguably more human approach to compensate the genuinely sustained aspect of the injury, with censures for any dishonesty in expenses. Admirable as that may be, it is a frustrating situation for insurers in the fight against fraud and is in stark contrast to the position in England and Wales where section 57 obliges the court to dismiss the entire claim, including the genuine aspects, as Mr Shaw has found out to his detriment.

In the absence of a similar statutory provision, the strong message sent out to would-be dishonest claimants as seen in Shaw simply does not land the same way in Scotland. It seems that, short of an entirely staged incident or legislative change, insurers dealing with Scottish claims involving fraudulent or dishonest aspects should prepare themselves for having to pay out the genuine aspect of the injury and consider carefully the precise mechanics of proceeding with any attempt to seek disapplication of QOCS. From a defender’s perspective, this is a difficult juxtaposition – if the purpose of QOCS was to widen access justice, it seems rather anomalous that there are no other immediate measures, expenses issues aside, to censure those claimants who knowingly seek to misuse the Courts for such significantly exaggerated claims.