Pleadings and fundamental dishonesty: Howlett affirmed as film director’s compensation claim is dismissed

David Pinkus v Direct Line [2018] EWHC 1671, Queen’s Bench Division, Royal Courts of Justice, 2 July 2018

Summary

David Pinkus v Direct Line [2018] EWHC 1671 is another example of another claim, found to be fundamentally dishonest, being dismissed under section 57 Criminal Justice and Courts Act 2015. The claimant raised a preliminary issue as to whether the defendant should be prevented from arguing the claim was dishonest at all.

The facts

The claimant was involved in a road traffic accident on 21 August 2012, when the defendant’s insured moved lanes on the M4 motorway and crashed his vehicle into the claimant’s vehicle. Liability was admitted. The claimant, who valued his claim at £850,000, contended that he sustained minor physical injury but that he also suffered from profound psychological/psychiatric symptoms. He claimed to have developed post-traumatic stress disorder and that the accident so negatively affected his performance at work as an assistant film director, that he lost his job.

The defendant accepted that the claimant sustained a minor injury and short-lived travel anxiety/adjustment disorder but, having identified a significant number of credibility issues — including various historical posts on the claimant’s Facebook page that appeared to show him living a normal life after the accident — argued that the claim was exaggerated and/or fabricated. The defendant contended that the claim was worth no more than £2,000-£3,000.  

The claimant raised a preliminary issue at trial, which was that the defendant was not entitled to argue the claim was fundamentally dishonest, on the basis that the issue was raised too late and the related pleading was defective.

The preliminary pleadings issue. By its updated counter schedule of loss, which was served less than one month before trial and actually signed with a statement of truth on the morning of trial, the defendant sought to argue that the claim was fundamentally dishonest. The original defence made no such allegation.

The claimant took issue with the timing and the quality of the pleading. Whilst he acknowledged that it set out some details of the allegations, he pointed out that the defendant had expressed an intention to raise additional matters, “to be explored in cross-examination” and in one respect, it had used the term, "for example”. He contended that the pleading was therefore defective.

In support of this proposition, the claimant relied upon Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC, which found that an allegation of fraud must be pleaded, so that a party has notice of the case which is being made against them.

In response, the defendant relied upon Howlett v Davies [2017] EWCA Civ 1696, in which the Court of Appeal found that a district judge had been entitled to find that a personal injury claim was fundamentally dishonest, despite there being no formal allegation of fraud. In that case, in which the defendant had set out a number of areas of concern in its defence, the Court of Appeal said, “…the mere fact that the opposing party has not alleged dishonesty in his pleadings will not necessarily bar a judge from finding a witness to have been lying…”.

The defendant also pointed out that, whilst dishonesty was not expressly in issue from the outset, the original defence had denied that the accident occurred as the claimant said and it put causation and quantum in issue. The defendant had also disclosed surveillance evidence, making it apparent to the claimant that his credibility was in issue. The claimant also knew that there was a vast difference in the respective parties’ valuation of the claim and, at an earlier hearing, the defendant had served a skeleton argument, which set out that, “The credibility, honesty and reliability of the claimant [were] in issue”.

Judgment on the pleadings issue

The judge preferred the defendant’s arguments in relation to the pleadings issue. He said this:-

“12. …in the circumstances of this case the principles set out by Newey LJ in Howlett apply in preference to the principle enunciated in Three Rivers. … [The claimant] knew there were issues in relation to the medical evidence which made conscious exaggeration at least a possibility … he knew the detail of the matters in the updated counter schedule and the specific allegations of conscious and gross exaggeration…

13. Moreover, since as in any case and as set out in Howlett, it must be open to me, having heard all the evidence, to conclude that the claimant is lying or exaggerating in respect of some of his claim…

16. As I have said, in any event, it would be open to me to find that the claimant is consciously exaggerating or fabricating his symptoms or malingering and, if appropriate to make a finding on those/other grounds that he has been fundamentally dishonest. I am not convinced that there is any material difference between “conscious exaggeration”, “fabrication” and “malingering”. I am of the opinion that each involves an allegation of pretending to have an illness or disability or pretending to have greater symptoms of illness or disability to achieve a gain. I say this because at para. 64 of his closing submissions, counsel for the claimant has set out a note taken of my extemporary ruling on this issue which is preceded by the suggestion that I may have prohibited defence counsel from putting conscious exaggeration to the claimant. My ruling did not do so. Having heard the evidence and had an opportunity now to read the reports, statements and documents I am satisfied that the defence case alleging dishonesty was justifiably and properly put.”

The judgment

Having decided the preliminary issue in the defendant’s favour, the judge then carried out a methodical analysis of each area of evidence, including the claimant’s pre- and post-accident social media posts.

In comparing the claimant’s social media posts with the case he had presented, the judge remarked, “On the one hand particularly by reference to Facebook posts he seems to have been living his life normally. On the other hand, by reference to the accounts he has given to the experts and by reference to his presentation in the witness box he is a broken shell of a man unable to do almost anything”.

In respect of the defendant’s application under section 57 Criminal Justice and Courts Act 2015 for the entire claim to be dismissed, the judge adopted the approach of the High Court in LOGOC v Sinfield [2018] EWHC 51 (QB) and asked himself whether the claimant had “acted dishonestly… …and that he has thus substantially affected the presentation of his case … in a way which potentially adversely affected the defendant in a significant way”.

Perhaps unsurprisingly, in circumstances where the judge found the claimant had “deliberately fabricated the vast majority of the claim” and that the genuine element was worth just £4,500, he answered the question in the affirmative and dismissed the entire claim.

Comment

Insurers are routinely presented with claims which, they suspect, contain elements of dishonesty.

In some cases, the evidence to support their suspicions is strong and it is not difficult to make corresponding allegations of fraud at an earlier stage.

In a great many others, however, the evidence to support a suspicion of fraud may not be strong or may not become apparent until the later stages of the litigation process or, indeed, under cross-examination of a claimant at trial.

This case confirms that the approach endorsed by the Court of Appeal in Howlett (in which Weightmans acted for the successful respondent) remains good law. Provided that a claimant has fair warning of the matters which are likely to be explored at trial, there is no requirement on a defendant to plead dishonesty in order for the court to make such a finding.

It also illustrates that the courts are becoming increasingly receptive to the reliance by defendants upon evidence found on claimants’ social media accounts to undermine their claims.