Interim Payments in Cases of Alleged Fundamental Dishonesty: Mehmood (by his litigation friend Mrs Islam) -v- Mayor [2024] EWHC 1057 (KB)

People may look back on 2024 as the “year of the elections”, or the year that football almost came home (again), or perhaps even the year of “brat summer” … For personal injury practitioners, however, 2024 may be accurately described as the year of fundamental dishonesty.

The ongoing case of Mehmood forms part of the patchwork of authorities that have emerged over the course of this year. This article will examine the case’s significance as to interim payments in high value, serious injury claims, whilst weaving in pertinent aspects of some of 2024’s other authorities concerning fundamental dishonesty.

Background

The Claimant ran a restaurant/takeaway and, at the time of the incident, was 46 years old. He suffered a significant brain injury arising from a road traffic accident on 10^th January 2019 and brought a claim by his litigation friend, asserting a lack of capacity. The Defendant accepted primary liability but sought a finding of contributary negligence on behalf of the Claimant. The Defendant also disputed the Claimant’s alleged lack of capacity in an amended defence and ran a case of fundamental dishonesty, inviting the court to dismiss the catastrophic injury claim in its entirety under section 57 of the Criminal Justice and Courts Act 2015 (CJCA 2015).

The Defendant’s defence of fundamental dishonesty relied on surveillance footage from the takeaway purporting to show the Claimant taking orders from behind the counter, as well as written medical evidence from three experts. The Claimant relied on three of their own expert reports and submitted that the work carried out in the footage was mundane when compared to the Claimant’s previous administration of the business.

The Claimant made an application to approve a previous voluntary interim payment of £10,000 and for an order making a further interim payment in the sum of £75,000. Given general damages for PSLA alone were to exceed £200,000, the court under usual circumstances would have most likely ordered the interim payments. Owing to the live issue of fundamental dishonesty, however, the Defendant argued that no such payments should be made as the court could not be confident that the Claimant would recover the substantive claim.

Law and Procedure

Section 57 of the Criminal Justice and Courts Act 2015 – Dismissing a Claim due to Fundamental Dishonesty

Under section 57, CJCA 2015, should the court find that a claimant has been fundamentally dishonest in relation to a primary claim that would otherwise entitle the claimant to damages, then it must dismiss the claim unless the claimant would suffer substantial injustice.

The case of Kirsty Williams-Henry -v- Associated British Ports Holdings Ltd [2024] EWHC 806 (KB) has set eight non-exhaustive criteria to be considered when determining the statutory exception of “substantial injustice”:

1. The amount of the dishonest damages claimed compared to the amount of the genuine damages that would have been awarded.
2. The scope and depth of the dishonesty.
3. The effect of the dishonesty on the construction of the claim by the claimant and the defence of the claim by the defendant.
4. The scope and level of the claimant’s assessed genuine disability caused by the defendant.
5. The nature and culpability of the defendant’s tort.
6. A consideration of the costs order that would be made if the claim was not dismissed.
7. Any interim payments already made.
8. The effect of the dismissal on the claimant’s life.

Rule 25.7 – Applications for Interim Payments

CPR rule 25.7 contains the conditions that need to be satisfied and the matters to be taken into account when considering an application for interim payments. Where a defendant has admitted liability to “pay damages” and a claimant would be awarded a substantial amount of money if the matter were to proceed to trial on quantum, the claimant would succeed in obtaining an order for interim payment under rules 25.7(1)(a) and (c). The court applies the first limb of the well-established test in Cobham Hire Services -v- Eeles [2019] EWCA Civ 204: aggregate the likely award for PSLA, past losses, and accommodation, and award a proportion of the total.

In the instant case, however, the court was invited by the Defendant not to grant interim payment pursuant to rule 25.7(4), which dictates that: “The court must not order an interim payment of more than a reasonable portion of the likely amount of the final judgment.” The likely amount of the final judgment was, in the Defendant’s submission, zero, pursuant to the defence of fundamental dishonesty. The Defendant’s position was that rules 25.7(1)(a) and (c) were therefore disapplied, as the Defendant had only admitted primary liability but not to pay any resulting damages.

Outcome

The court determined that the live issue of whether the Claimant was fundamentally dishonest as to the extent of his injuries could only be resolved at trial and not on a summary basis. The trial judge may, for example, find the Claimant was merely exaggerating his symptoms but had not been fundamentally dishonest, so would calculate the award accordingly. Further, even if the trial judge did make a finding of fundamental dishonesty, they would then have discretion under section 57, CJCA 2015 as to whether to dismiss the claim in its entirety. The award the Claimant may expect to receive at trial therefore ranged from nothing to the full sum sought, so the likely award was impossible to aggregate.

The court ruled that the Defendant was correct that the requirements of rules 25.7(1)(a) and (c) were not satisfied, as by virtue of the plea of fundamental dishonesty the Defendant had denied liability to “pay damages”.

Tactical defences of fundamental dishonesty and costs consequences

Not all allegations of fundamental dishonesty are by themselves necessarily capable of preventing an interim award; defendants should properly plead the allegation with evidence in support. Nor should any such allegation be taken lightly or used cynically to a defendant’s advantage. Following from an earlier Court of Appeal case this year, defendants were warned that a defendant who makes an allegation of fundamental dishonesty “runs a very significant risk that, if the allegations fail, indemnity costs will be awarded against them” (Hiren Thakkar and Ors -v- AXA Insurance UK plc [2024] EWCA Civ 552).

Final comments

Whilst a clear precedent has been set in respect of fundamental dishonesty preventing interim payments in high value claims, defendants must be mindful of overplaying their hand. The court in the case of Mehmood did not allow the application due to the significant amount of written evidence before it and fundamental dishonesty being properly pleaded in the amended defence. Serious cost consequences follow defendants who tactically plead fundamental dishonesty and that will apply aplomb to those who seek to prejudice a claimant’s case or ability to litigate by flippantly raising fundamental dishonesty as a means of defeating an interim application.