Application of Ivey in Fundamental Dishonesty

Tue, 17 Aug 2021

Stacey J has been the latest High Court judge to be asked to determine an appeal from the finding at first instance that a claimant was not dishonest, despite obvious problems with the claimant’s case. 

The major point to be taken from Michael v IE&D Hurford Ltd t/a Rainbow [2021] EWHC 2318 (QB) is that a claimant must be dishonest within the meaning of Ivey v Genting Casinos UK Ltd t/a Crockfords Club [2017] 3 WLR 1212. This requires an examination of the subjective knowledge of the claimant before the objective assessment of whether they are dishonest by the standards of ordinary people. In other words, what the claimant knew or understood needed to be assessed before going on to test that by reference to objective standards. It is not what his solicitors knew. It was not what he should have known. It was only what he did, as a matter of fact, know.

Mr Michael’s claim had various difficulties. 8 sessions of physiotherapy were claimed but his evidence was that he only attended one. Failing to give disclosure of credit card statements added to his problems and failing to include a second job in his Reply setting out his impecuniosity was another issue. In short, his claim included elements that were on the face of the signed documents wholly contrary to his actual evidence and his disclosure statement was deficient in certain respects. One can understand why the Defendant appealed.

However, the test under s.57 Criminal Justice and Courts Act 2015 is whether the claimant is dishonest, a matter Stacey J stressed at paragraph 51. The dishonest presentation of a claim, which is not prepared by the claimant, is not necessarily the same as dishonesty by the claimant for the purposes of a s.57 application. The crucial comments are at paragraphs 48 and 49, with emphasis added:

“48. The Recorder was entitled to conclude that if there had been dishonesty it was not on the part of the [claimant]. It may also be relevant to note that the troubling aspects related to the heads of claim - such as the physiotherapy and credit hire claim - would not be paid to the [claimant] himself, but to solicitors for settlement of the purported invoices.

49. It is too bold a submission to assert that an inaccurate pleading or defective disclosure statement is synonymous with the respondent's fundamental dishonesty… The test of recklessness is different to the test of dishonesty, even though recklessness in signing a false statement of truth, or disclosure statement may result in committal proceedings under CPR 81.18. But contempt of court is a different concept to dishonesty. There may also, of course, be cases where signing an inaccurate witness statement, statement of case or disclosure statement will be evidence of dishonesty… but it does not automatically follow. In this case the [claimant] was able to provide an honest explanation.”

The proper, rigorous legal analysis to lead to a finding of fundamental dishonesty, with the proper consideration and application of the Ivey test central to that process, is typified by the following extracts:

“52. … The discrepancies are explained by his lack of understanding. He rejected the submission that inaccuracies in the [claimant’s] statements of case and disclosure list were evidence of dishonesty but "it does not seem to me that I could be confident that the Claimant really knew what the basis of the claim made on his behalf was."

55. For the reasons the Recorder set out, as fact finder he found that the [claimant] was not dishonest. The Recorder in effect found that the [claimant] did not know about the claim for physiotherapy and other invoices claimed on his behalf and it is perhaps unsurprising that as a consequence he found that the [claimant] was not dishonest…”

It is a sad fact that personal injury litigation is often poorly conducted. The importance of documents and ensuring they are accurate is often not explained to claimants. Statements are copy and paste based on a series of set questions which lead to statements that contain less than the full picture. The identification of problems or a change from what is ‘normal’ in such cases requiring a different approach does not always occur. They are often unclear or unsure of what is happening, do not question or challenge the solicitor (or file handler) who should know best and so sign what they are told. Terminology and concepts are thrown around that mean little to the reasonable person on the street. People do become confused. This case is a timely reminder, without undermining the importance of calling out dishonesty where it happens, of the correct legal test that should be applied before such a finding is made.

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