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Fundamental Dishonesty Clause Could Encourage Spurious Fraud Allegations

The balance between the claimant and the defendant is set to take an almighty tilt in the latter’s favour when the forthcoming Fundamental Dishonesty clause receives Royal Assent in the not too distant future.

Clauses 56 and 57, which relate directly to fundamental dishonesty within the claims process, will blatantly favour defendants within the process and is accused of unfairly targeting claimants.

There is also the very real risk that it could encourage spurious fraud allegations from determined insurers, according to the Association of Personal injury Lawyers (APIL).

The interpretation of the clause moving forward will lie in the hands of the individual judges who will formulate their opinions on whether there is a presence of fundamental dishonesty on a case-by-case basis, as and when it is alleged.

For John Spencer, APIL’s President, this process is simply unfair and he raised fears that because of the way clause is written, it could lead to time-consuming, satellite litigation revolving around what the fundamental dishonesty actually means.

He said: “The only way you can avoid that is by having a section that explains the definition, and that fundamental dishonesty does not, for instance, include exaggeration.”

“It is important that simply because a judge finds for the defendant, you don’t find the claimant being charged with fundamental dishonesty and their entire claim struck out because the judge prefers the evidence of the defence over whether they’re overplaying their injuries.”

“In the House of Lords, Lord Faulks used the words ‘fraud’ and ‘exaggeration’ for ‘dishonesty’ as if the three were interchangeable, which they’re not.”

He continued, underlining fears that the insurers could take advantage of the clause’s lack of clarity, saying: “It’s worth them flying a kite, or having a go, because the prize is so large. It is not as if there is not unscrupulous insurers out there who will use any means they can to try and get a case dismissed.”

“Lateral justice and fairness dictates that if we are going to have that provision then you need to have it applied to a defendant or their insurer in the way they conduct their case. If a claimant stands to have their whole claim knocked out then surely the same should apply to the defence.”

There is huge disappointment with the way the clauses relating to fundamental dishonesty have been handled and rather conveniently slipped through parliament.

MASS Chair, Sue Brown, said they were disappointed that the government had pushed it through and even the claims director at LV, Martin Milliner, admitted that there needed to be clearer guidelines on how the clause should be used.

Scott Rees and Co Partner David ByrneScott Rees and Co Partner, David Byrne, described the passing of the fundamental dishonesty clause, as completely unfair but unsurprising.

He said: “Obviously the lack of clarity on what the clause actually means and what being fundamentally dishonesty is defined as is going to create a lot of issues, mostly in the favour of the defendant and at the cost of the claimant and that is completely unfair.”

“But it isn’t surprising that this clause has been allowed to slip through parliament untouched. It is simply the latest in a long line of obstacles being thrown into the personal injury claim process to reduce the capability of claiming compensation.”

“I wouldn’t think it will be too long before an insurer is putting their new found advantage to good use to deny a genuine victim justice in the courts. Ironic really considering the whole idea of the clause is to reduce fraudulent behaviour, not encourage it from the defendant side, which is what any spurious allegations of dishonest effectively are.”

“It is hard to fathom how the government continue to get things so horribly wrong when it comes to access to justice. Especially when they claimed that I would always be considered as a priority.”

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