The Chilling Effects of Fundamental Dishonesty

A salutary reminder about the application of the principles of fundamental dishonesty was provided in the recent judgment of Cotter J in Muyepa v Ministry of Defence [2022] EWHC 2648 (KB).   M sought nearly £3 million in damages for suffering a Non-Freezing Cold Injury (NFCI) as a result of alleged breaches of statutory duty and negligence by the MOD.

NFCI is most prevalent where military personnel have endured prolonged exposure to a cold and wet environment on deployments and training exercises.  The injury causes damage to the nerve fibres typically in the hands and feet.  It can cause lasting debility including numbness, paraesthesia and pain. Symptoms are usually worse in cold conditions.  NFCI is not usually a deteriorating condition absent further cold exposure.  In a case of mild to moderate exposure, full recovery is possible.  A diagnosis of NFCI is largely dependent on the history given by the patient and there is usually limited objective and independent evidence to diagnose the condition.

M, a soldier in 40 Regiment, alleged that he suffered with NFCI while participating in a promotion course in Wales in February/March 2016.  He was diagnosed with the condition and it was recommended that he should not work in cold environments.  He claimed that his symptoms significantly worsened after he worked in cold hangars over the winter of 2016 to 2017.  He was downgraded in June 2017 and medically discharged from the Army in January 2018.  He claimed that his ongoing symptoms had left him severely disabled, such that he limped, used a stick, alleged shooting pains up his legs and a loss of balance and needed assistance from his wife.

Cotter J found that the M had consciously and dishonestly exaggerated his symptoms for financial gain.  The evidence of M and his wife was fundamentally undermined by damning video evidence, taken from social media and surveillance, which the Court used to objectively assess M’s presentation.  The Court also had the benefit of a witness for the defence, a solider who had suffered a NFCI himself who had known the Claimant since 2013/2014 and who had come forward after he saw a newspaper article about the case.  Cotter J’s findings in respect of M’s evidence were devastating.  He found that M had not been consistent on important aspects of his symptoms, such as whether they were better in warmer temperatures and that he had consciously exaggerated complaints of disability and pain to the medical legal experts.   A number of M’s alleged symptoms, eg for the use of the stick and the limp, could not be explained by an organic cause and there were “plain, incontrovertible and very significant inconsistencies” between M’s version of events and the video footage.

It was accepted that M had suffered with a mild and likely improving NFCI and M was awarded £97,595.33, a mere 3.25% of his originally pleaded sum, although the schedule was amended as the trial progressed to £1,694,975.  The overall award was therefore 5.5% of the finally pleaded sum.

It is perhaps unsurprising that the Judge found M to be fundamentally dishonest.

The judgment provides a useful overview of the relevant principles of fundamental dishonesty.  Section 57 of the Criminal Justice and Courts Act 2015 is the starting point, which states that if the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in the primary claim or a related claim, then the court must dismiss the primary claim unless it is satisfied that the claimant would suffer substantial injustice.

The court must consider whether dishonesty has been made out according to the test in Ivey v Genting Casinos UK Limited (t/a Crockfords Club) [2018] AC 391, and the court has to find that the dishonesty is properly characterised as “fundamental”.  In Howlett v Davies [2017] EWCA Civ 1696, HHJ Moloney QC elaborated that “fundamental” meant that it had to go to the “root of either the whole part of his claim or a substantial part of his claim” and the claimant should not be exposed to a costs liability if his dishonesty related merely to a collateral matter or a minor, self-contained head of loss.

In this matter, Cotter J found it helpful to answer the following three questions when considering whether M’s fundamental dishonesty was in relation to the primary claim or a related claim:

“(a) At what stage and in what circumstances did the Claimant’s dishonest conduct start? In some cases the true core of the claim, the base, can be determined without considerable difficulty and the dishonesty can be traced to a point/time when the Claimant decided to consciously exaggerate for financial gain, for example after an operation or treatment has alleviated symptoms. The timeframe may be an extended period, residual symptoms gradually ease, or sharply defined. In other cases it may be more difficult to identify when the dishonest conduct started. In any event the court is entitled to proceed with considerable caution in answering this question given the limits of any reliable evidence.

(b) Does the dishonesty taint the whole of the claim or is it limited to a divisible element?

(c) How does the value of the underlying valid claim (which the court must assess) compare with that of the dishonestly inflated claim? There is no set ratio as to what constitutes fundamental dishonesty but it is usually important to consider relative values.”

Such questions provide useful guidance for any personal injury lawyer considering how to apply the fundamental dishonesty test.

The Judge concluded that the Claimant started to deliberately and significantly exaggerate his symptoms at a very early stage and before his claim, from March/April 2017 in order to secure a discharge from the Army with a financial settlement.  The fact that this type of injury was one which depended primarily on the Claimant’s reporting of his symptoms was, in Cotter J’s view, a significant factor in determining whether the dishonesty tainted the whole claim.  He found that the indisputable visual evidence and the fact that the Claimant had persistently, significantly and dishonestly exaggerated his symptoms tainted the whole claim and made it very difficult to assess the extent of any true underlying claim.  There were no realistic grounds for finding that the Claimant would be caused a substantial injustice if the claim were dismissed.  The claim was dismissed accordingly.  Although costs were not dealt with in the judgment, the result means that M would not be able to benefit from the costs protection under Qualified One Way Costs Shifting (QOCS) and would bear D’s costs.