“Speculative or contingent” claims of fundamental dishonesty should be discouraged, a High Court master has said in refusing a defendant’s application to amend its defence.
Master Davison said allowing them would cause potentially unnecessary difficulties and stress to claimants.
He stressed that he did not want to “detract from the modern ‘cards on the table’ approach” of setting out a plea of fundamental dishonesty in a statement of case or written application at the earliest reasonable opportunity where the defendant has a proper basis for one.
“What I am intending to discourage are pleas of fundamental dishonesty which are merely speculative or contingent.”
In Mustard v Flower & Ors  EWHC 846 (QB), a road traffic accident claim involving an alleged brain injury, the defendant insurer, Direct Line, said the claimant had either consciously or unconsciously exaggerated her symptoms, but could not say which without exploring the issues at trial.
Direct Line sought to amend its defence to reserve the right to seek a finding of fundamental dishonestly in the event that the court found that the claimant has consciously exaggerated the nature and/or consequences of her symptoms and losses.
The claimant objected and Master Davison concluded, “somewhat against my first instinct”, that he should not allow the amendment.
The case law showed it was open to the trial judge to make a finding of fundamental dishonesty whether specifically pleaded or not, he explained.
But it would often be the case, as here, that the defendant could only decide whether to make an application under section 57 of the Criminal Justice and Courts Act 2015 after the claimant has given evidence and been cross-examined.
Direct Line argued that the contingent and provisional plea it proposed was simply giving the claimant fair warning of this possibility.
Master Davison disagreed, saying the proposed amendment served no purpose: “In the circumstances of this case, the defendant can, if appropriate, make the application without having foreshadowed it in a pleading.
“The somewhat doom-laden wording that the defendant ‘reserves the right to submit that a finding of fundamental dishonesty… is appropriate’ is unnecessary. It is not quite correct to label an application under section 57 a ‘right’ and, even if it were, there would be no requirement to have ‘reserved’ the right in advance.”
Further, as a plea of fundamental dishonesty had no real prospect of success at this time, it did not satisfy the test for granting permission to amend.
It would also cause prejudice to the claimant – a plea of fundamental dishonesty would have to be reported to the claimant’s legal expenses insurers “and opens up a theoretical possibility of them avoiding the policy ab initio. At the very least that will create an added burden of administration and costs.
“Furthermore, a finding of fundamental dishonesty has grave implications for the claimant and the proposed amendment, if allowed, would be apt to raise further fears and anxieties for which, at the present time at least, there is no proper basis.”