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Fundamental Dishonesty

Posted 16 February 2015 by Donna Scully


In its continued fight against fraud, the Government has inserted Clause 45 into the Criminal Justice and Courts Bill in the House of Lords following the Bill’s passage through the Commons. It seeks to address a source of dispute between claimants and defendants that has simmered since the Supreme Court ruled in Fairclough Homes v Summers in 2012, on whether a claimant should receive any compensation at all where they are found to have been fraudulent in the presentation of any of their claim.

The Clause allows a court to dismiss a personal injury claim if it is satisfied the claimant has been ‘fundamentally dishonest’ in the course of the case - even if the claimant might still have been entitled to damages.

In its Impact Assessment, the Government says the Clause is designed to reduce the volume of dishonest claims and to ensure that only reasonable and genuine claimants are rewarded. Worryingly, the Assessment quotes figures from the ABI suggesting that there were 59,000 ‘dishonest’ motor claims in 2013, representing 8% of all claims. They say there was a 34% increase on 2012. How and where did they get this data from? I cannot see how you can have such data and if it is accurate. The Transport Select Committee concluded in their report of July 2013 that “there is no authoritative data publically available about the prevalence of fraud or exaggeration and no consensus about what constitutes fraud”.

Insurers have expressed reservations about the term ‘fundamental dishonesty’, which is undefined. The term was debated in the House of Lords with Lord Hunt suggesting that the provision should refer simply to dishonesty. Insurers are concerned that the phrase is too wide and would introduce uncertainty to a straightforward concept. 

Donna Scully, 16th February 2015



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