Impact of fundamental dishonesty allegations on interim payments

The High Court has provided guidance as to the impact of allegations of fundamental dishonesty on a claimant’s application for an interim payment recently in the case of Mehmood (By his Litigation friend Mrs Asma Islam pending determination by the court) v Harry Mayor [2024] EWHC 1057 (KB).

The claim was for damages for personal injury caused by a road traffic accident on 10 January 2019 when the Claimant was riding a motorcycle in a collision with the Defendant's vehicle. The Claimant allegedly suffered a significant brain injury, and a number of orthopaedic, soft tissue and related injuries. The Claimant brought the claim by a Litigation Friend, as it was claimed that he lacked capacity.

The claimant applied for an interim payment of £75,000 against the defendant to fund rehabilitation and treatment costs. He also applied for retrospective approval of an interim payment already made in the sum of £10,000.

The defendant had originally admitted primary liability and a trial was listed to determine contributory negligence, causation and quantum. The defendant however undertook surveillance of the claimant and obtained evidence which showed that the claimant was opening and closing his restaurant, working long shifts and interacting normally with customers. The defendant therefore amended his defence to plead that the claimant had been fundamentally dishonest and that therefore he was not liable to pay any damages and the claim should be dismissed pursuant to the Criminal Justice and Courts Act 2015 s.57.

The defendant sought to dispute the request for interim payments on the basis that the claimant had not satisfied the conditions needed in CPR 25.7(1)(a) for an interim payment, namely that " the Defendant against whom the order is sought has admitted liability to pay damages or some other sum of money to the Claimant. " As the Amended Defence sought a dismissal of the claim pursuant to s. 57 the Defendant submitted that it had not admitted liability to pay damages to the Claimant. The Defendant also relied in this regard upon CPR 25.7(4) in that  “The court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment."

The claimant submitted that there was a good explanation for the surveillance. Further the claimant would suffer prejudice if he did not receive the interim payment as he would be unable to fund the appropriate care and therapy. The amount sought was stated to be a modest financial element in the context of the importance of obtaining such a payment to the Claimant, to allow for rehabilitation and therapies recommended by the medical advisors.

The court confirmed that the issue as to whether the Claimant was exaggerating the effect of his injuries, and if he was being fundamentally dishonest could only be resolved at trial when the oral evidence of the medical experts and of the witnesses of fact was heard. It would then be for the trial judge to consider the consequences of such a finding and the range of what the Claimant may expect to recover was from nothing to the full amount he was seeking. In any event, the Defendant was correct that the requirements of CPR 25.7(1)(a) were not satisfied. By virtue of the plea of fundamental dishonesty the Defendant had effectively denied liability to " pay damages " to the Claimant, and sought dismissal of the claim under either s. 57 or under the jurisdiction outlined in Summers v Fairclough [2012] UKSC 26. The judge accepted that this decision may cause injustice to the Claimant if, at trial, he succeeded in his claim, and the Defendant's case on fundamental dishonesty was not accepted, as he would not receive the funds for the recommended rehabilitation by way of an interim payment. But given the requirements for ordering an interim payment were not met they were unable to consider granting the application.

This decision is not surprising, but does provide a useful confirmation in respect of the application of CPR 25. Ultimately if interim payments were granted in such cases, and the allegations of fundamental dishonesty succeeded, this could create greater difficulties for the parties in respect of the potential recovery of such funds. Should however you have any queries over the approach to such issues please do not hesitate to contact Forbes for assistance with the same.