Is this the end of dishonest personal injury claims?

Personal injury claimants may no longer recover damages for injury or illness when they have been fundamentally dishonest. A new law aims to prevent dishonest and exaggerated claims unless doing so would be substantially unjust.

Section 57 of the Criminal Justice and Courts Act 2015 is intended to empower the Courts to strike out claims where the defendant is able to prove that the claimant has been "fundamentally dishonest".

What happened?

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Reform and justice for all - the background of the new changes

The concept of fundamental dishonesty was introduced in major changes to personal injury law enacted in 2013. Prior to the 2013 reforms, if a defendant lost their case, they would have to pay certain costs, including ATE Insurance premiums. Following the reforms, defendants were no longer required to pay these costs if they lost, the costs being paid by the winning claimant. Some costs would be potentially payable even if the claimant lost their case.

It was recognised that some potential claimants would have been unable to afford this burden, or would be put off by the risk. Following the principle that justice should be available to all, the reforms proposed "one-way costs shifting". This ensured that the claimant would not have to pay if the other side's costs if they lost.

Insurers fight back

Insurance companies argued that if claimants did not have to pay costs even if they lost, there would be nothing to deter dishonest claimants from making false claims.

To resolve this, the concept of "fundamental dishonesty" was introduced. If the claimant was found to be dishonest, the protection of "one-way costs shifting" would be removed. The claimant would then have to pay the defendants costs if they lost their fraudulent claim.

What is "fundamental dishonesty"?

Since the introduction of fundamental dishonesty, the Courts have made attempts to clarify its meaning. The law is intended to prevent dishonest personal injury claimants from exaggerating the extent of their injuries to extract more money from a claim than is due.

In 2012, in Summers v Fairclough Homes Ltd [2012] UKSC 26 the claimant was injured in an accident at work. Over £800,000 in compensation was claimed, however, surveillance revealed that the claimant had grossly exaggerated the severity of his injuries.

At trial, the claimant was found to have fraudulently misstated his the extent of his claim, but the claim was not struck out, and an award was made for £88,716. This amount more accurately reflected the true extent of the claimant's injuries.

The new law

Under the new Criminal Justice and Courts Act 2015, the Court now has the power to strike out entirely claims such as that made in Summers v Fairclough Homes Ltd on the grounds of dishonesty. If it was found that depriving the claimant of £88,716 would not be a "substantial injustice" the claim could be thrown out.

What impact will the latest changes have?

The vast majority of personal injury claims are made honestly, by people who have experienced injury or illness and have every right to make a compensation claim. The pain, disruption and cost of any given injury or illness can have a greater impact on some people than others. The changes are not intended to "catch out" those who for whatever reason have experienced more severe consequences than would be expected.

The changes to the law are intended to prevent serious dishonesty and discourage false claims. This ensures that the Courts' resources are spared to support legitimate claimants in making personal injury compensation claims.

If you are unsure of the extent of your injuries or illness and of the effect this may have on your claim, it is recommended that you seek medical advice, if you have not already done so. Your personal injury solicitor will advise you on how to best to proceed.

Gaynor Haliday, Legal researcher

Gaynor Haliday, Legal researcher