Full Case Details
Having dismissed the claimant’s appeal in this case against the decision of His Honour Judge Tindall that Mr O’Sullivan (an employee of the defendant) had not been negligent in his driving and thus the claimant’s claim failed, Mr Justice Julian Knowles went on to consider applications by the defendant for:
- relief from sanctions following the out of time filing of the Respondent’s Notice; and, if granted
- permission to cross-appeal in relation to the judge’s finding that the claim was not fundamentally dishonest, in light of which he did not disapply Qualified One-Way Costs Shifting (QOCS) under CPR r 44.16(1).
The claim involved a ‘straightforward’ road traffic accident which took place on 10 July 2014 on the Worcester Road (A450) at about 5.45pm. The judge described the accident as follows at [2-3] of his judgment:
“2. The Claimant, who was a taxi driver, was driving his BMW. There were a couple of cars in front of him. One car suddenly turned off to the left, the claimant said he slowed down to about 5 or 10 miles an hour, and suddenly without warning the defendant’s vehicle collided into the rear of the car. So the claimant’s case is that that this is very straightforwardly a rear-end shunt where the defendant was too close.
3.The defendant’s case is that there were not two cars in front of the claimant’s BMW but only the one, a hatchback, which went off to the left, and the claimant’s BMW, rather than slowing for anything like that, effectively stopped dead in the middle of the road, and that was a dangerous thing to do and, as a result the defendant’s vehicle, driven by Mr O’Sullivan, whose evidence I have heard today, did not have sufficient time to avoid the rear-end collision. The core of that case is broadly supported by a witness statement, which I have taken into account but I only attach the usual weight, from Mr Beech, who was in a car behind Mr O’Sullivan but who was not able to come and given evidence today.”
The defendant’s case was that this was a deliberately staged accident and that the claimant, in conjunction with the car in front of him, intentionally brought about the accident by braking unnecessarily and suddenly so as to cause the defendant to crash into him from behind.
The key passages of the judgment were as follows:
“9. When one comes to the actual collision itself, one is left with the distinct impression from all the evidence that Mr O’Sullivan too, when one strips away some of his conspiracy theories, is ultimately trying his best to give a clear and essentially honest case, and his essentially honest case is that the claimant stopped. Given that Mr O’Sullivan was very, very clear on that, and that struck me as entirely credible and was supported to a certain extent by Mr Beech, albeit with the usual weight I can attach to a witness in their absence, and given that the claimant was very unclear about the circumstances of the accident, I find as a fact that the claimant in fact stopped. I find as a fact, based upon Mr Beech’s evidence, that what in fact happened was that the claimant, entirely genuinely, was driving along the road, that there was a car either immediately or one in front of him, that that car performed a dangerous manoeuvre by turning left at the last moment, that the claimant braked, which was reasonable, but he over-braked and overreacted and came to a stop, which deprived Mr O’Sullivan of the opportunity – who by that stage, I am satisfied, may have been driving close to the claimant but perhaps was not driving at the 15 to 20 miles an hour he had been driving earlier – and that he did not have time to stop before the collision and, as a consequence of that, Mr 0′ Sullivan hit the claimant.
“10. Therefore, if there is any negligence in this accident, it is not by Mr O’Sullivan. There is an aspect whereby the Claimant perhaps in over-braking was negligent, but really it seems to me that the main party at fault was the vehicle which had gone to the left, and frankly it may well have been a better defendant for the claimant’s target in the action. Be that as it may, I dismiss the claim accordingly, but I also do not make any findings in relation to fundamental dishonesty.”
In light of this finding on fundamental dishonesty, the judge did not disapply QOCS and ordered that the claimant pay the defendant’s costs, not to be enforced without the leave of the court (see CPR r 44.13 et seq).
Application for Relief from Sanctions
The Defendant’s Position
Mr Poole submitted on behalf of the defendant that the Court should grant relief from sanctions under CPR r 3.9 by way of extending time for the filing of the defendant’s notice of cross-appeal in relation to QOCS.
This was due on 2 April 2019 but was not filed until 13 May 2019.
The reasons put forward were:
- First, a delay in obtaining the transcript of evidence which it was said was necessary before the Notice could be lodged. This was ordered from the transcribers promptly but not received until 1 May 2019; and
- One the defendant’s legal team then had an episode of ill-health which further delayed matters.
The Claimant’s Position
On behalf of the claimant Mr Huffer did not strenuously oppose the application for relief from sanctions, but queried whether a transcript of the evidence was necessary.
MR JUSTICE JULIAN KNOWLES:
43. I begin with whether I should grant the Defendant relief from sanctions and treat its Notice as being in time.
44. I reviewed some of the relevant authorities in this area in Deutsche Leasing (UK) Ltd v Zaskin College  EWHC 1977 (QB). I said that in Denton, supra, the court affirmed the guidance given in [40–41] of Mitchell, supra, on the approach to applications for sanctions relief, and had explained the approach in more detail as follows, at :
“A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate ‘all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b) in CPR r 3.9]’.”
45. Given the Claimant’s stance, I do not propose to deal with this issue in detail.
The breach here was serious and substantial. I am not persuaded that there was a particularly good reason for the lateness of the Notice so far as the delayed transcript was concerned, and an application for an extension of time could and should have been made before the relevant deadlines expired. That said, the lateness of the Notice fortunately did not imperil the date of the appeal hearing, and the Claimant was able to deal fully, orally and in writing, with the Defendant’s submissions.
46. Having regard to the circumstances overall, in my judgment it is in the interests of justice to grant the application and to extend time. However, I should emphasise the importance of complying with the time limits specified in the CPR and the less indulgent approach to rule breaches which the decisions in Mitchell, supra, and Denton, supra, were intended to lay down. The notes in the White Book 2019, Vol 1, at [3.9.13] make clear that just because a hearing date is not imperilled does not mean relief from sanctions will be granted. Nothing in this judgment should be taken to suggest a different approach; my decision is based entirely on the facts of this case.
Application for permission to cross-appeal
The Defendant’s Position
On behalf of the defendant, it was submitted that the claimant’s case was fundamentally dishonest about all of the following matters:
(i) the accident circumstances;
(ii) staged accident;
(iii) his credit cards;
(iv) his bank statements;
(v) the issue, therefore, of impecuniosity;
(vi) his disclosure statement;
(vii) his injuries;
(viii) his journey after the accident.
The Claimant’s Position
On behalf of the claimant in response, it was said that the appeal was without real prospects of success in that the defendant had failed to establish that the judge’s decision that the claimant was honest was plainly wrong or not properly open to him on the evidence.
Mr Huffer relied heavily on the fact that the judge had the big advantage of hearing from the claimant, and was therefore in the best position to assess his credibility and that the appeal court should not overturn his findings. He relied on Benmax v Austin Motor Company Ltd  AC 370, 375:
“it is only in rare cases that an appeal court could be satisfied that the trial judge has reached a wrong decision about the credibility of a witness.”
MR JUSTICE JULIAN KNOWLES:
47. Turning to the merits of the application for permission to cross-appeal, the grounds appear to me to be arguable, and I therefore grant permission.
48. In support of his submission that the judge was wrong to have held that the Claimant had not been fundamentally dishonest, and so wrong not to have disapplied QOCS, Mr Poole referred me to various authorities on dishonesty and fundamental dishonesty both in relation to QOCS and also s 57 of the Criminal Justice and Courts Act 2915. These included Howlett v Davies  1 WLR 948, approving Gosling v Hailo, 29 April 2014, Unreported; Ivey v. Genting Casinos (UK) Ltd  AC 391 and London Organising Committee of the Olympic Games v Sinfield  EWHC 51 (QB). In Howlett, the Court of Appeal said:
“16 As noted above, one-way costs shifting can be displaced if a claim is found to be “fundamentally dishonest”. The meaning of this expression was considered by His Honour Judge Moloney QC, sitting in the County Court at Cambridge, in Gosling v Hailo (unreported) 29 April 2014. He said this in his judgment:
’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.’
17 In the present case, neither counsel sought to challenge Judge Moloney QC’s approach. Mr Bartlett spoke of it being common sense. I agree.”
49. In Ivey, supra, the Supreme Court restated the common law test for dishonesty and, in summary, held that whilst dishonesty is a subjective state of mind, the standard by which the law determines whether that state of mind is dishonest is an objective one, and that if by ordinary standards a defendant’s mental state is dishonest, it is irrelevant that the defendant judges by different standards. Lord Hughes said at :
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
50. By CPR r 52.21, an appeal to this court from the County Court is limited to ‘a review of the decision of the lower court’. Pursuant to CPR r 52.21(3) the appeal court will allow an appeal where the decision of the lower court was either wrong or unjust because of a serious procedural or other irregularity in the proceedings. Martin Spencer J helpfully summarised the approach to taken on appeal to first instance findings of fact in this area in Molodi, supra. That was a case about fundamental dishonesty. He said at :
“39. The scope of an appellate court was further elucidated by the House of Lords in Benmax v Austin Motor Company Limited  AC 370 where it was held that there is a distinction between the finding of a specific fact and the finding of fact which is really an inference drawn from facts specifically found. In the case of “inferred” facts, an appellate tribunal will more readily form an independent opinion than in the case of “specific” facts which involve the evaluation of the evidence of witnesses, particularly where the finding could be founded on their credibility or bearing. In the course of his judgment, Viscount Simmonds LC cited from the judgment of Lord Cave LC in Mersey Docks and Harbour Board v Proctor  AC 253 at 258–9 where Lord Cave said:
“It is the duty of the Court of Appeal to make up its own mind, not disregarding the judgment appealed from and giving special weight to that judgment in cases where the credibility of witnesses comes into question, but with full liberty to draw its own inference from the facts proved or admitted, and to decide accordingly.”
Viscount Simmonds went on to say:
“This does not mean that an appellate court should lightly differ from the finding of a trial judge on a question of fact, and I would say that it would be difficult for it to do so where the finding turned solely on the credibility of a witness. But I cannot help thinking that some confusion may have arisen from failure to distinguish between the finding of a specific fact and a finding of fact which is really an inference from facts specifically found, or, as it has sometimes been said, between the perception and evaluation of facts.”
51. The Defendant submits, first, that the judge should have found the Claimant to have been fundamentally dishonest because (a) he did not disclose either on his list of documents or on his response to Part 18 questions that he held two credit cards; (b) he did not disclose that he held a second bank account. He only admitted this when it was put to him in cross-examination, but claimed that the second account was opened by the bank in error.
52. The context of these submissions is as follows. Many road traffic cases involve claims for credit hire charges. These arise where the claimant is supplied with a replacement car on credit by a credit hire company whilst his/her own car is off the road, and s/he then seeks to recover these charges from the defendant. Frequently these charges are large, and they can exceed the claimed personal injury damages. The charges levied by credit hire companies are generally greater than those levied by ordinary car hire companies. Where credit hire charges are claimed, the defendant’s insurer is generally concerned to find out whether the claimant could have afforded a replacement vehicle by some other means than by using a credit hire company, thus avoiding the increased charges (eg, by taking out a loan or by using his/her own credit card). The position was considered generally by the House of Lords in Lagden v O’Connor  1 AC 1067, . Lord Hope referred to what the Court of Appeal had said at  QB 36, , namely that in some cases it would be necessary to consider the financial ability of a claimant to pay car hire charges, and that his was a question that trial courts should be easily able to cope with. Lord Hope said of this:
“That seems to me to be a fair assessment. In practice the dividing line is likely to lie between those who have, and those who do not have, the benefit of a recognised credit or debit card. It ought to be possible to identify those cases where the selection has been made on grounds of convenience only without much difficulty.”
53. It is against this background that the Defendant says that the Claimant made a false disclosure statement in his List of Documents, which was verified by a statement of truth dated 22 March 2018, when he failed to disclose his credit cards. It says that that non-disclosure was a lie, which the Claimant then compounded in his reply to the Defendant’s Part 18 questions. Question 8 asked him whether he could have afforded to hire a vehicle other than on credit, and question 10 asked, if the earlier answer was ‘no’, that he list all his credit cards and supply supporting information such as credit limits and statements. To question 10 the Claimant replied, ‘I did not have any credit card accounts.’
54. In fact, when he came to give evidence, the Claimant admitted to having two credit cards at the relevant time, namely a Barclaycard and a card issued by Vanquis Bank. When pressed why he had not disclosed these, he said that the Barclaycard account was ‘closed’; that he did not have any access to credit on it; and that he had defaulted on his repayments. When asked by the judge, ‘Why did you not say, “I have an account but there’s nothing in it because of X, Y and Z” ?’ the Claimant answered, ‘I should have. That’s an error on my part on that.’ He did not give evidence about the other card.
55. In relation to his bank accounts, in his Part 18 replies the Claimant disclosed one account with HSBC ending **34. When he came to give evidence it was put to him that the statements he had disclosed for this account did not show the paying in by him of a cheque for £3800 from the Defendant’s insurers by way of interim payment. It was therefore put to him that he must have had another account that he had failed to disclose. The exchange was as follows:
“Q. So I suggest to you that the only possible conclusion to be drawn from that by the trial judge is that that is because you had another account.
A. Which I can disclose. I can –
JUDGE TINDAL: Yes, but did you have one, because the whole point is that the order is that you were supposed to be disclosing all your relevant accounts. So are you admitting that you have not disclosed a relevant account ?
Q. Again it’s a difficult one, because no, I didn’t have another account. HSBC made an error. The bank’s made an error on that. They gave me for the same account, I don’t know why I was given 2 cards for the same account, the same account. And like I said, I can get access to the HSBC and show you where the money went into, my HSBC account. So there was nothing hiding, that I’m storing away thousands or whatever you’re trying to …
Q. Are you denying having more than one bank account ?
A. I’m not denying it. I opened one account. They made an error, and they gave me another account. I opened one account.”
56. The judge dealt with the credit card and bank account evidence in his judgment at -. He said that ‘the position was that [the Claimant] did have a credit card, but it was ‘maxed out’; that there had been points about ‘whether there had been sufficient disclosure of bank statements’; that there had ‘not been particularly good disclosure; but that none of it had given him the impression that the Claimant had been dishonest. The judge said that his inconsistencies were explicable on the basis he was trying to recall events four years ago and that he was ‘basically an honest man’.
57. In my judgment this conclusion was not reasonably open to the judge. It was plainly dishonest for the Claimant not to have disclosed his credit cards or his second bank account and the accompanying documentation. The questions he was asked were not difficult (and he did not say that he had not properly understood them); they were in writing; he had time to consider his documentation; and he had the opportunity to take legal advice if he was unsure about how to answer and what to disclose. Even if he was telling the truth about his Barclaycard account having been closed, that did not relieve him of the obligation to disclose it and the associated paperwork. He gave no explanation at all for not disclosing his Vanquis Bank card, and his claim that somehow the bank had given him another account in error, into which he had just happened to pay his interim payment, was not credible. The Claimant’s actual state of knowledge was that he knew full well that he had two bank account and two credit cards, and that he had concealed this information. Nor, for the reasons I have given, could the Claimant’s failure be explained on the grounds that he was being asked to recall events from four years previously.
58. I have set out the judge’s reasoning but, with respect to him, he did not properly address the evidence.
This was not simply a case where there had just been ‘not particularly good’ disclosure by the Claimant. He deliberately failed to disclose highly material evidence. There was simply no basis on which the judge could properly have concluded that the Claimant had simply got confused on these issues. The only possible reasonable inference from the evidence was that the Claimant intentionally failed to make full disclosure, and that failure can only be labelled as dishonest.
Was this dishonesty ‘fundamental’, in the sense explained in Howlett, supra ? In my judgment it was. The dishonesty in question did not relate to some collateral matter, but went to the root of a substantial part of the claim. The claim for credit hire charges (and associated losses) exceeded £30 000. The importance of the Claimant giving proper disclosure about his financial circumstances needs to be emphasised. Part of the purpose of a statement of truth is to bring home to party signing the solemn nature of what s/he is doing, and importance of telling the truth.
To knowingly give a false statement of truth is a contempt of court: CPR r 17.6(1). Moreover, as the Defendant correctly observed in its Skeleton Argument, the County Court cannot carry out an assessment of the issue of impecuniosity when a litigant fails to give full financial disclosure. By doing as he did, the Claimant prevented the Defendant from carrying out a proper investigation into his claimed impecuniosity. This skewed and distorted the presentation of his claim in a way that can only be termed fundamentally dishonest.
60. It follows that the judge was wrong not to have concluded (per CPR r 44.16(1)) that the claim was not [sic] fundamentally dishonest so as to allow the order for costs made against the Claimant to be enforced to its full extent.
61. The Defendant relied on other matters but in light of my conclusion on the credit cards and bank accounts it is unnecessary for me to deal with them. Suffice to say I was not persuaded that the Claimant’s evidence about whether or not he applied his brakes was evidence of dishonesty, let alone fundamental dishonesty. That is something, as the judge observed, which could be explained by difficulties in recollection relating to a fleeting incident some years previously.
62. The Claimant’s appeal is dismissed. The Defendant’s appeal is allowed to the extent that I have indicated. I invite the parties to draw up an order reflecting the terms of his judgment.