Is ‘fundamental dishonesty’ the new battleground in industrial disease cases?

When qualified one-way costs shifting arrived, the intention behind the provision was clear: there could be consequences for costs if there was a finding of ‘fundamental dishonesty’. Nobody wanted a fraudulent party to benefit from ‘having a go’ without consequences. I also recall reactions to the Jackson reforms, when renowned analysts such as Kerry Underwood were wondering out loud, what is the definition of ‘fundamental honesty’? How far will it go? There was no interpretation or guidelines. How could we advise a client not to take out after-the-event insurance without knowing the boundaries?

Fast forward a few years and the number of cases that have come through, and been commented on, has been surprisingly small. Maybe this is because, thus far, only clear-cut cases have been decided, which has not resulted in any appeals.

In conjunction with Jackson, we have seen a rise in noise-induced hearing loss (NIHL) claims. As a lawyer who has been involved in disease for 10 years, I naively thought that, given the complexity and difficulty of NIHL cases, ‘fundamental dishonesty’ was unlikely to rear

its ugly head in industrial disease cases.

However, there was the risk that any trial loss could be pounced upon by a defendant. As with any undefined law, there is the possibility that lawyers will push the boundaries. The risk is that any case where the claimant’s evidence is not preferred at trial could then be deemed to be fundamentally dishonest.

A case handled by Ali Shah from Asons’ litigation team was, in our view, not that remarkable. There was a Coles-compliant audiogram (25.67 db hearing loss). The client also had a secondary, very similar, audiogram taken at a hearing aid dispenser when purchasing hearing aids. This was all within the limitation period.

The client worked with noisy drilling machines. The case turned on whether the court would accept the defendant evidence: they had a witness who advised that hearing protection was available and worn throughout. The claimant maintained that it was not until the latter years that hearing protection was provided and worn.

At trial the district judge rejected the claimant’s evidence, particularly in relation to hearing protection not being provided and worn early in the claimant’s employment. The judge advised that, in her view, the claimant had not been ‘telling the truth today’ in relation to the provision of personal protective equipment. The judge also stated: ‘The claimant performed inconsistently and contradicted himself while being cross-examined in the witness box.’

The question that arises when a judge uses words to describe the claimant’s evidence such as ‘inconsistent’, ‘evasive’ and ‘not… the truth’, is this: is this enough to find a claimant ‘fundamentally dishonest’?

Many a claimant lawyer has despaired at seeing a client who had given evidence in the two years or so it takes to litigate a case, turn from someone whose evidence is consistent and passionate, to a bumbling wreck at trial. This is, after all, the risk of litigation. The main worry was that these types of claimant may be pulled into the same category as ‘phantom passengers’ and ‘cash for crash’ scammers. Is contradiction in evidence under the intense pressures of cross-examination by a skilled barrister the same as being fundamentally honest? How many cases have we seen where there is a contradiction between what is in the pleaded case, witness statements and then cross-examination?

The defendants made an application for their costs, relying heavily on Gosling v Hailo & Screwfix Direct (unreported). The defendants’ main thrust of consideration is that there was a two-stage test: was the claimant ‘dishonest’; and was this dishonesty ‘fundamental’ to the case. The defendants argued that the claimant’s evidential failings about hearing protection, which were criticised by the court, and furthermore the provision of when hearing protection was provided, were ‘fundamental’ because this went to the root of the whole or substantial part of the claim.

In Gosling a claimant had exaggerated his injuries and surveillance footage emerged which contradicted the claimant’s representations in relation to his injuries. However, this cannot be lumped into the same bracket as a contradiction in the claimant’s evidence about when and if hearing protection was provided.

The main argument raised by the defendants in this case is that the claimant’s evidence was ‘dishonest’, and this ‘dishonesty’ centred around hearing protection and therefore this was ‘fundamental’ to the outcome of the case with costs being incurred. However, what part of a claimant’s evidence in any case is ever not ‘fundamental’? Isn’t the credibility of a claimant always central to any case? I would struggle to think of any case where, if the claimant’s evidence was ‘dishonest’ or not accepted by a court, it would not be fundamental. The impact of any removal of costs is draconian and any such order against claimants of modest means cannot be overestimated.

The judge rejected the defendants’ application because, in her view, the claimant had not been ‘fundamentally dishonest’, but by the same token had not told the truth, or at least his evidence was inconsistent. This is now the subject of an appeal by the defendants. In Ali Shah’s view: ‘The judge’s assertions are due to the fact that the claimant did have noise-induced deafness [20 db+]; he had worked in a very noisy environment, which was not disputed by the defendants; and he brought his claim within the three-year limitation period. Therefore he hasn’t been fundamentally dishonest. He hadn’t lied about the extent of his hearing loss, as the medical report and audiogram was an objective assessment of this. The judge has had the opportunity to consider her initial judgment, and a further opportunity to reconsider. She still arrived at the view that the claimant was not “fundamentally dishonest”.’

The key point for this discussion is the word ‘fundamental’, which places a high burden for the removal of costs protection in industrial disease cases, which the judge stated in her view had not been reached. It should be noted that industrial disease cases are very different to accident cases in terms of evidential burden. Although it would be possible for someone to overstate their disability in an industrial disease case, in NIHL cases the audiogram is a very objective assessment of any disability. Should the defendants’ appeal succeed, would this now result in virtually every trial being subject to a costs protection application? It certainly will, in our view, undermine qualified one-way costs shifting – every claimant would face a real risk, in that whoever goes into a witness box and loses would face a challenge. The defendant’s counsel would be able to allege that the judge has not favoured the claimant’s evidence on that day; therefore he has been ‘fundamentally dishonest’.

Is this uncertainty something that we need to bring into the litigation risks on a routine basis? Or should the ‘fundamental dishonesty’ provision remain for ‘cash for crash’ claimants and clients who claim they are severely disabled and are then filmed playing five-a-side football?

Ultimately, the best person to assess fundamental dishonesty is the judge who has heard the claimant’s evidence and overseen the conduct of the case. Defendant submissions that the test should be lower go to the very heart of the Jackson reforms and raise important issues in relation to access to justice.

Munir Majid is head of industrial disease at Asons Solicitors, Bolton