Robin Selley

Here we are, back again to look at some more decisions from the court on the issue of honesty, or ‘dishonesty’ to be correct.

The Court of Appeal had been asked to consider whether a District Judge had been entitled to make a finding of fundamental dishonesty against a Claimant in a civil claim, even though the Defendant had not specifically requested such a finding during the trial.

In Howlett & anor v Davies & anor, a personal injury claim followed a low-speed road traffic accident and the Defendant insurer maintained that, given the low speed collision, the accident had been unlikely to cause injury. The District Judge held that the claim was fundamentally dishonest but this was appealed unsuccessfully at Swindon County Court before being moving up to the Court of Appeal.

Lord Justice Newey agreed with the initial decision in that a finding of dishonesty could be made by the trial Judge even if fundamental dishonesty has not been specifically pleaded.

It is now common in road traffic accident claims for Defendants to dispute multiple issues without specifically pleading dishonesty. However, in most instances, dishonesty is clearly implied within correspondence, pleadings and witness evidence that may be relied upon.

We routinely see Defences which clearly imply that the Defendant believes the claim to be dishonest although “fundamental dishonesty” may not have been specifically positively pleaded, but dishonesty is clearly implied.

Any Claimant and their lawyers should now clearly be on notice that such a finding could be made by the trial Judge and they should prepare the case accordingly.

Moving on swiftly to a Supreme Court judgment which has found that that a 35-year-old test for dishonesty is no longer fit for use.

In Ivey v Genting Casinos Ltd t/a Crockfords, the Supreme Court unanimously dismissed an appeal from the Claimant to recover winnings from a game of punto banco in 2012.

The Claimant used a technique called ‘edge-sorting’ in order to gain some advantage in what should be a game of chance. Having won a sizeable sum from the casino they refused to pay out on the grounds of cheating.

The Supreme Court agreed that the Claimant’s actions amounted to cheating but then went further to state that the test for determining dishonesty should also apply to criminal trials.

A ‘two-stage’ test was previously defined in the case of R v Ghosh in 1982 but the Supreme Court has now said that ‘There can be no logical or principled basis for the meaning of dishonesty to differ according to whether it arises in a civil action or a criminal prosecution” so the civil action test should now be applied.

A fundamental change to the criminal test for dishonesty

How does this affect cover under any After the Event Insurance policy for civil claims? The reality is that no insurer will cover claims which are found to be fundamentally dishonest and Defendants are well aware of this.

The test for Claimant lawyers now will be to spot those claims where a finding of dishonesty could be made.

You have been warned!