Fundamental dishonesty only relates to personal injury claims and only concerns the conduct of the Claimant.
If a Claimant loses a personal injury claim, there is cost protection available to the Claimant under the Qualified One-way Costs Shifting (QOCS) principle. Essentially QOCS means that the Claimant will not bear any liability of cost in a personal injury claim. However, this protection is not available under rule 44.16 of the CPR, where the claim is found on the balance of probabilities to be fundamentally dishonest. Simply put, dishonesty that is fundamental! A finding of fundamental dishonesty is one of the reasons that QOCS protection is lost. Such a finding means the whole claim will be dismissed under Section 57 Criminal Justice and Courts Act 2015 (the “Act”).
Dishonesty is not defined in any statute, explanatory notes, the CPR or any practice direction. The only source available is the case laws.
Examples of Fundamental Dishonesty
In the case of Gosling -v- Hailo & Screwfix, the judge stated that: “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.”
The same rule applied in the case James -v- Diamanttek , where the judge allowed a costs order to be enforced against a Claimant who had lost an industrial disease compensation case against his former employer because test in Rule 44.16 was satisfied and QOCS protection was removed.
Section 57 of the Act applies to all personal injury claims and allows a Defendant to seek dismissal of a claim on the basis of fundamental dishonesty.
Honest Claimants have nothing to fear from fundamental dishonesty.
Section 57 of the Act entitles the court to dismiss claims which, on the balance of probability, are fundamentally dishonest. Dismissal of the claim is mandatory unless the court is satisfied that the Claimant would suffer substantial injustice if the claim were dismissed.
In conjunction with section 57 of the Act, CPR 44.16 enables the court to set aside the usual rule that QOCS will apply, so if a case is held to be fundamentally dishonest, the Defendant should be able to recover costs.
There is a distinction between fundamental dishonesty under CPR 44.16 and section 57 of the Act. The former relates to wholly false claims. The latter relates to claims which are genuine but the Claimant is found to be dishonest in some respect. Neither CPR r.44.16, nor s.57 of the Act offers a definition of what constitutes fundamental dishonesty.
How fundamental dishonesty works in practice
It is for the Defendant to apply to the court for a finding of fundamental dishonesty and it need only be successful in establishing that the Claimant has been dishonest in respect of one element of the claim for the court to dismiss the case as a whole.
In the case of Howlett v (1) Penelope Davies (2) Ageas Insurance Limited  Lord Justice Newey considered, at paragraph 32, that “Where findings properly made in the trial judge’s judgment on the substantive claim warrant the conclusion that it was “fundamentally dishonest” an insurer can, I think, invoke CPR 44.16(1) regardless of whether there was any reference to fundamental dishonesty in its pleadings.” So, in the light of this judgment, a judge was not precluded from making a finding of fundamental dishonesty even when there was no express pleading of fraud.
The Judge Hodge QC in the case, Meadows -v- La Tasca  EW Misc B28 (CC), stated that: “It was not appropriate for the district judge to find that the accident had not happened in the circumstances described. He should have limited his decision, as he did in his first extemporary judgment, to a decision simply that the Claimant had not made out her case on the evidence before him. In my judgment, the inconsistencies and curiosities highlighted by the judge did not entitle him to go further and to find that the claim had been fabricated, and thus was “”fundamentally dishonest””.