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Fundamental Dishonesty – Sudale v Cyril John Ltd

In Sudale v Cyril John Ltd HHJ Hedley gave a potentially important judgment dealing with the question of “substantial injustice” within section 57(2) of the Criminal Justice and Courts Act 2015 which provides:

The court must dismiss the primary claim unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed

C had brought a claim for injuries suffered when he fell off a scaffold tower at work. D admitted liability but alleged contributory negligence. One of the allegations of contributory negligence (set out in D’s defence and supported by a witness statement) was that C had fully extended the wheels on the scaffold tower thereby reducing its stability.  That allegation was rejected by the trial judge who found that C had not been negligent.

The judge did, however, find that C had exaggerated his claim and that he had been fundamentally dishonest as defined by section 57. He found that the proper level of damages would have been £73,959 as opposed to the £232,000 claimed. He indicated that, given C’s fundamental dishonesty, he would dismiss C’s claim in its entirety.

The issue then arose as to whether it would cause a “substantial injustice” to C if his claim was dismissed. C argued that D’s conduct had also been fundamentally dishonest in pursuing the allegation of contributory negligence and so it would be unjust to dismiss C’s claim. C argued that the balance of justice required that judgment be given for C.

HHJ Hedley rejected this approach. Following the reasoning of Knowles J in LOCOG v Sinfield he held that section 57(2)

Does not import a consideration of the Defendant’s conduct.

      1. …the section refers solely to the claimant’s fundamental dishonesty
      2. The position of dishonest defendants was in fact considered by Parliament …Parliament did not intend dishonest conduct by a defendant to be taken into account in assessing when there is a substantial injustice to a claimant
      3. The purpose of section 57 is therefore the deterrence of exaggerated claims brought by claimants
      4. It is obvious that in any case where a claimant exaggerates the claim and section 57 applies the defendant will benefit to the extent that it will not have to pay damages to a claimant……this is a windfall….The reason for this result is the policy decision by Parliament in introducing the deterrent
      5. The injustice suffered must be that of the claimant. There is no mention of the defendant’s conduct

This interesting judgment therefore:

  • Re states the clear policy reasoning behind the section and its deterrent effect;
  • Clarifies further the nature of the issue of substantial injustice which focuses on possible injustice to the claimant alone and not on the possible windfall that would accrue to the defendant.
  • Reaffirms the point that injustice to the claimant must extend beyond simply being deprived of his damages.
  • Makes it plain that a balance of injustice test as between the claimant and the defendant does not exist.

The judgment will be of interest to all those involved in cases where the issue of fundamental dishonesty arises and provides useful guidance in the way in which the requirements of the Act are to be applied by the courts.

Written by Shaun Ferris.



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