Personal Injury, & Clinical Negligence

Unfettered Discretion to Determine Fundamental Dishonesty After Discontinuance

Whether allegations of fundamental dishonesty should be determined after discontinuance is subject to a wide and unfettered discretion of the judge,...

…referable only to the circumstances of the case and the overriding objective.  There is no requirement within the rules for there to be exceptionality: Alpha Insurance A/S v Lorraine Roche & Brendan Roche [2018] 1342 EWHC (QB) considered.

The rules on QOCS and fundamental dishonesty have always stated that ‘where a claimant has served a notice of discontinuance, the court may direct that issues arising out of an allegation that the claim was fundamentally dishonest be determined notwithstanding that the notice has not been set aside pursuant to rule 38.4.’  In other words, it is always open to a defendant, where there is an allegation of fundamental dishonesty, to apply to the court to determine whether, in fact, the claim was fundamentally dishonest (and thereby enforce a costs order against a fundamentally dishonest claimant).  That a claimant has discontinued his/her claim has no bearing on the court’s ability to make that determination.  Similarly, the defendant need not have applied to set aside the notice of discontinuance.  There is no guidance in the rules as to how a court should exercise its discretion.

In Alpha the Defendant had alleged that the claim brought by mother and son for injuries arising out of a road traffic accident were fundamentally dishonest.  The day before trial the Claimants served a notice of discontinuance.  The matter stayed in the list at the Defendant’s request and its witnesses attended court.  The Defendant made its application under CPR 44PD12.4(c).  HHJ Gregory refused the application as, in his judgment, there was nothing which suggested “that there is any particular exceptional quality about this particular case that should cause me to give further directions and to set aside further court time to allow this particular isolated issue of dishonesty to be ventilated.”

On appeal, Yip J ruled that HHJ Gregory had erred in law by applying the wrong test.  44PD12.4(c) did not require exceptionality.  This could be contrasted with subsection (b) (where the proceedings have been settled, the court will not, save in exceptional circumstances, order that issues arising out of an allegation that the claim was fundamentally dishonest be determined in those proceedings), which did require exceptionality.  The correct test was for the court to regard the discretion under CPR 44PD 12.4(c) as an unfettered one, requiring the weighing of all relevant considerations in accordance with the overriding objective.  There was no presumption either way and directing that there should be a determination of the issue of fundamental dishonesty should be seen to be neither routine nor exceptional.


Whilst it would not be uncommon for such cases to involve relatively modest costs, in considering proportionality, it did need to be recognised that there is a public interest in identifying false claims and in claimants who pursue such claims being required to meet the costs of the litigation. Each case will depend on its own facts. This is an area in which judges sitting at first instance must be afforded a wide margin of appreciation.  However, as HHJ Gregory had applied the wrong test, Yip J had to exercise the discretion afresh.

There had been a serious allegation involving the suggestion that the first claimant had encouraged her young son to bring a false claim and had taken him for a medical examination to support the claim.  Yip J did not regard the defendant’s case as being particularly strong, but it was nevertheless based upon evidence that was capable of being accepted.

Two factors weighed heavily in the balance for Yip J: the very late stage at which the claim was discontinued and the complete absence of an explanation from the claimants for doing so.

The claim was discontinued the day before trial. The defendant had incurred the costs of defending right through to preparation for trial and had done so because it believed that a false claim has been made. The defendant sought to enforce recovery of its costs by disapplying the QOCS regime. The defence was filed in January 2017, so the claimants had known what was being alleged for over a year. They had maintained their claim until the last moment. In addition to the expense and inconvenience caused to the defendant, court resources had been allocated for trial.  The defendant’s witnesses were prepared to attend trial and did in fact attend court on 14 February 2018.

Coupled with the lateness of discontinuance was the fact that no explanation was provided to the defendant or the court. Whilst Yip J accepted that there could be many reasons why a claimant will discontinue, where liability was not disputed, save for the allegation of fundamental dishonesty, and where the matter was close to trial, she believed that some explanation could reasonably be expected.

In the absence of any explanation, it was understandable that the defendant would feel that the late discontinuance was an attempt to avoid the consequences of the disapplication of QOCS protection and would feel aggrieved at being deprived of the opportunity to establish fundamental dishonesty and thereby recover costs.

Yip J ordered that the issue of fundamental dishonesty should be tried.  Though the decision was finely balanced, any reasonable explanation for the late discontinuance may well have tipped the balance the other way.


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