ON APPEAL FROM THE COUNTY COURT AT SWINDON
HIS HONOUR JUDGE BLAIR QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE BEATSON
LORD JUSTICE NEWEY
| LORNA HOWLETT
|- and -
- and –
Respondent (2nd Claimant)
|(1) PENELOPE DAVIES
(2) AGEAS INSURANCE LIMITED
Mr Tom Vonberg (instructed by Weightmans) for Ageas Insurance Limited
Hearing date : 11 October 2017
Crown Copyright ©
Lord Justice Newey :
"Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest."
The County Court proceedings
"If, which is denied, there was an accident as alleged, [Ageas] will aver that it was a low velocity impact unlikely to cause injury with injury being unforeseeable in any event."
"(i) The Claimants [i.e. the Howletts] contend that on 27th March 2013 they were passengers in the First Defendant's vehicle when the First Defendant [i.e. Ms Davies] seems to have reversed down her drive way and into collision with a parked and unoccupied X3 belonging to a Sharon Tutton.
(ii) They claim to have been injured as a result, yet the damage to the X3 was de minimus.
(iii) Just 3 months prior, on 7th December 2012, the Claimants contend they were passengers in the First Defendant's vehicle and the First Defendant was involved in another road traffic accident wherein she was the at fault driver and the Claimants contend they were yet again injured.
(iv) The Second Defendant [i.e. Ageas] avers that this is beyond coincidence and, instead, is indicative of a staged/contrived accident and injury.
(v) This is corroborated by the fact that the Second Claimant failed to disclose this earlier accident to his medical expert.
(vi) Moreover, the First Defendant has been involved in at least 4 road traffic accidents between 2011 and 2013. Again, the Second Defendant avers that this is beyond coincidence.
(vii) This is also corroborated by the lack of full co-operation from the First Defendant, in particular as regards an inspection of her vehicle.
(viii) The Claimants and the First Defendant give an unlikely/uncorroborated journey purpose and have given inconsistent/unlikely accounts as to injury.
(ix) The locus of the purported index accident is large and unlikely to have obscured/hidden the presence of the said X3.
(x) Despite there being damage and multiple injuries, there would appear to have been no witnesses and neither were the emergency services involved.
(xi) Despite being recommended physiotherapy, the Claimants have failed to avail themselves of the same. Adverse inferences will be sought at Trial.
(xii) The Claimants instructed geographically remote solicitors either before or at the same time as they sought medical advice."
"Should the court find any elements of fraud to this claim, the Second Defendant will seek to reduce any damages payable to the Claimants to nil together with appropriate costs orders therein."
"At the beginning of the trial an application to strike out this Defence of [Ageas] was considered by the Deputy District Judge. The claimants' counsel was essentially arguing that [Ageas] should not be allowed to sit on the fence, but instead must either plead a positive case of fraud, or must accept that the accident occurred as alleged, as a result of which consequential injuries were caused. [Ageas'] counsel argued that he was not going to allege fraud, but he would challenge the credibility of the claimants as witnesses, pursuing the lines of argument advanced in the pleaded Defence. The Deputy District Judge refused to strike out the Defence and permitted [Ageas] to conduct its case as it said it would. That is what I am told happened; counsel being careful to avoid expressly accusing the claimants of fraud."
"If, as anticipated, the Court finds that the [Howletts] have sought to deceive – because they were not in the car or in the alternative that they were in the car but simply did not suffer injury as alleged (although this alternative finding is unlikely …) on either account the dishonesty by them has been fundamental and they should lose the costs protection of QOCS."
"The claim is dismissed because I do not believe the evidence of Mr and Mrs Howlett or any evidence that was sought to pray in aid of that case from Ms Davies can be relied on. In support of the description of the circumstances of the day in question, 27 March 2013, I have been told so many contrasting stories about the circumstances surrounding the accident, what led up to the accident, the accident itself, what happened after it, and then the evidence that was given by Mr and Mrs Howlett to the medical professionals (or rather not given to them) and then the misleading statements that have been made in documents that have been supplied to this court as the evidence-in-chief of the various witnesses, the reports that were made to their own solicitors about what happened in accidents, and in the oral evidence that has been given to me, that I am afraid that there is not one part of the stories explained to me by Mr and Mrs Howlett that gives me any confidence that the accident as described by them and Ms Davies on 27 March 2013 happened as described or at all. Consequently I find that no injury was suffered by them as a result of any accident and any claim they make in respect of damages must of course fail in addition."
i) In paragraph 16:"[Mr Bartlett] has said that [Ageas] has not pleaded a case of dishonesty, nor did he cross-examine on that basis. I have to disagree with him. In my judgment the defence (and I will go into detail in a moment) does make it clear that it is suggesting in the clearest possible terms to the claimants that they have not been honest and that a great deal of what they have written in their evidence is questionable and that those comments in the defence are justified by an analysis of the substantial documentations that has been prepared for the purposes of these proceedings";
ii) In paragraph 28:"In paragraph 26 of the judgment in [Vogon International Ltd v Serious Fraud Office  EWCA Civ 104] it is pointed out to me that it was never the defendant's case that Vogon were opportunistic let alone dishonest. Well, in this case I find that there are allegations of dishonesty. There was no cross-examination to that effect in the Vogon case, it says, but clearly there was cross-examination to that effect in this case, so the claimants knew what they were facing. We are told that the judge gave no indication to Vogon's witnesses or to their counsel that he was thinking of making findings of this kind. Well, I have made it perfectly plain from the get go in this case that these are matters which I have in mind and will be considering (in other words, matters of dishonesty and exaggeration), and it is submitted that the findings, in particular the findings of dishonesty, were unfair. Well, in my judgment it is not possible to say that if I come to the conclusion that there has been dishonesty in this case that I have taken anyone by surprise and therefore there is any unfairness, I have to remind Mr Bartlett that the issue of honesty was something which he put into question in these proceedings, particularly with regard to the evidence of Lorna Howlett, because after the cross-examination of her by Mr Vonberg (and there is a question mark in my mind as to whether this is a question that arose out of the cross-examination of Mrs Howlett but I allowed it in the circumstances) he asked in re-examination, 'Has the evidence you have been giving honest?'. And she said, 'Yes, I have told the truth in my evidence'. So clearly that is an issue which is thought important for the court by the claimant to resolve having considered the evidence of all parties";
iii) In paragraphs 30-32:"30. I find that there has been every opportunity given to the claimants to defend themselves and to make their case as they see fit.31. At paragraph 30 [of the Vogon judgment], the last sentence:
'More importantly, however, findings of this kind ought not to have been made when those involved have not been put on notice that they might be and have not been given the opportunity to defend themselves.'32. Plainly that opportunity has been given to Mr Bartlett on behalf of the claimants";
iv) In paragraph 33:"I find that in this case the matters that are to be decided by the court will come as no surprise to either party and have been more than sufficiently pleaded and become clear to the parties as the proceedings have developed so that there is no unfairness to either the claimant nor the first defendant in any respect";
v) In paragraph 35:"the case put by [Ageas] has been put fairly and squarely and so that the [Howletts] might understand and answer that case being made against them";
vi) In paragraph 36:"[Haringey v Hines  EWCA Civ 111] also dealt with the issue of fraud. It is not an issue I am invited to find in this case, and I will not be using that expression because the importance about the word 'fraud' is that it is a legal definition and unless it is something that is specifically pleaded, I do not believe that I have the right or the power to use it in my judgment. People may say if I come to certain conclusions in this case, 'Well, you might as well say that there has been fraudulent behaviour' but I specifically resile from using that expression in this particular case. But the important elements of that case, again, were that allegations that amounted to fraud and dishonesty and deceit were not put, they were not pleaded, but in this case, as I have found, there has been sufficient explanation and description of the allegations made in the defence and in the way the case has been conducted on behalf of [Ageas]";
vii) In paragraph 38:"So I specifically reject the submission made by Mr Bartlett that the defence and the way this case has been conducted on behalf of [Ageas] has been insufficiently clear to enable this court to reach the conclusions that there has been dishonesty in both the case that is put by the claimants in their documentation but also in their oral evidence, but I have not at this stage made any judgment as to whether in fact they have been dishonest and misleading in their statements";
viii) In paragraph 67:"Mr Bartlett on behalf of his clients had said to me that the honesty or rather the dishonesty of the claimants and perhaps the first defendant was not something that I should be deciding upon in this case because it was a matter that had not been specifically pleaded. Mr Bartlett … asked Mrs Howlett whether [she] was being honest in her evidence, and she said, 'I am not lying to this judge'. So by asking that question, despite the fact I have decided that I am able to consider the honesty of the witnesses because it is the central tenet of the job that this court has to undertake, has brought into question the issue of honesty, certainly as far as this witness is concerned, by asking that question. I am afraid I cannot agree with what Mrs Howlett said to me, that she was not lying to this judge. In my view, while she may be very confused about what she said to different people during the course of the preparation for these proceedings and giving her evidence, it is my view that she has not been telling the truth and she has been firing from the hip answering questions in a way that might benefit her case, this would but when subject to close analysis, demonstrate quite clearly that she has not been telling the truth about the circumstances of the accident or, as she alleges, any personal injury suffered by her subsequently."
The meaning of "fundamental dishonesty"
"44. It appears to me that this phrase in the rules has to be interpreted purposively and contextually in the light of the context. This is, of course, the determination of whether the claimant is 'deserving', as Jackson LJ put it, of the protection (from the costs liability that would otherwise fall on him) extended, for reasons of social policy, by the QOCS rules. It appears to me that when one looks at the matter in that way, one sees that what the rules are doing is distinguishing between two levels of dishonesty: dishonesty in relation to the claim which is not fundamental so as to expose such a claimant to costs liability, and dishonesty which is fundamental, so as to give rise to costs liability.
45. The corollary term to 'fundamental' would be a word with some such meaning as 'incidental' or 'collateral'. Thus, a claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps as to some minor, self-contained head of damage. If, on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim: a claim which depended as to a substantial or important part of itself upon dishonesty."
Mrs Howlett's case
"So long as a defendant follows the rules set out in CPR 16.5 (as this defendant did in [paragraphs 3 and 4 of the defence]) there is no need for a substantive plea of fraud or fabrication. All that is necessary is to make clear that an assertion along the lines of what is now para 6 is based on the assertions in paras 3 and 4."
"18. I would, however, wish to add my own comments about the pleaded defence of the second defendant [i.e. the relevant insurer]. It was perfectly proper to join issue on the primary facts alleged in the Particulars of Claim and as to whether there had indeed been negligence and whether the claimed losses had been caused thereby. But the pleaded defence went much further in paragraphs 7 and 9, setting out a number of matters which, it was alleged, raised 'significant concerns' as to whether or not this had been a staged accident requiring further investigation. Possibly, although I have my reservations, such a pleading could be justified as an initial holding defence. But it is a case pleaded on insinuation, not allegation. If the second defendant considered that it had sufficient material to justify a plea that the claim was based on a collision which was a sham or a fraud, it behoved it properly and in ample time before trial so to plead in clear and unequivocal terms and with proper particulars. Thereafter the burden of proof would of course have been on the second defendant to establish such a defence.
19. In the event, as I see it, the claimant was faced with a hybrid, he in effect being required at trial to deal with an insinuation of fraud without any express allegation to that effect pleaded. Realistically, the trial judge dealt with the matter in the round, concluding that the claim was not fabricated or fraudulent and that the accident had not been staged. But this sort of pleading should not be sanctioned."
For his part, Lord Dyson MR said (at paragraph 2):
"Although the terms of the pleaded defence are not relevant to the issues that have been raised in this appeal, I am bound to register my concern with the way in which what in substance is an allegation of fraud was pleaded."
"There was some debate before us about the burden of proof. Clearly the burden is on the claimants to prove that the collision occurred, by the negligence of [the defendant], and that each claimant suffered damage. Unless that is proved on the balance of probability, the claim of any particular claimant cannot succeed. Even apart from the coincidence of three events involving the third claimant and Mr Senghore there would still be plenty of material on the basis of which to question the reliability of the respective claimants, though no obvious basis for saying that any of them had deliberately invented their story. The judge might dismiss a claim, even in those circumstances, as not proved on the balance of probabilities but equally he might hold that, despite a good deal of inconsistency and internal conflict, there was enough common ground between the parties to find that the case was proved. The legal burden then remains on each claimant, but with the allegation of fraud by way of defence an evidential burden would arise on the defendant, and a substantial burden at that."
"It is … elementary common fairness that neither parties to litigation, their counsel, nor judges should make serious imputations or findings in any litigation when the person against whom such imputations or findings are made have not been given a proper opportunity of dealing with the imputations and defending themselves."
The case is, however, readily distinguishable from the present one on the facts. In Vogon, the trial judge had found the claimants to have been guilty of "an opportunistic attempt to exploit the perceived commercial naivety of the [defendants]" (paragraph 24) even though such observations were "entirely unnecessary to any decision that the judge had to reach" and (paragraph 26):
"It was never the defendants' case that [the claimants] were opportunistic, let alone dishonest. There was no cross-examination to this effect. We were told that the judge gave no indication to [the claimants'] witnesses or to their counsel that he was thinking of making findings of this kind."
The Court of Appeal thus did not need to, and did not, enter into a discussion of what a defence must contain if fraud is to be suggested.
"In general, applications for wasted costs are best left until after the end of the trial."
"I observe that one does not have to plead a claim for an award of costs on the indemnity basis (as opposed to the standard basis), so why would one have to expressly plead this more remote stage of the costs determination exercise, namely for an order for the enforcement of an adverse costs order?"
The oral evidence at the trial
"Where the court is to be asked to disbelieve a witness, the witness should be cross-examined; and failure to cross-examine a witness on some material part of his evidence or at all, may be treated as an acceptance of the truth of that part or the whole of his evidence."
"Lord Herschell LC said (at 70–71): 'Now my Lords, I cannot help saying that it seems to me to be absolutely essential to the proper conduct of a case, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intended to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.
His Lordship conceded that there was no obligation to raise such a matter in cross-examination in circumstances where it is 'perfectly clear that (the witness) has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling'. His speech continued (at 72): 'All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.'"
Lord Justice Beatson :
Lord Justice Lewison :