25/03/2025
Cases in which fundamental dishonesty is proven are somewhat rare. Rarer still are those cases in which the Claimant admits on paper to being fundamentally dishonest.
The facts
The Claimant, a motorcyclist, brought a claim against the Defendant following a road traffic incident which occurred on 20 July 2018. It was not disputed that the Defendant’s negligence caused the accident, and that the Claimant was injured as a result.
However, following the receipt of surveillance evidence, the Defendant amended his defence to plead fundamental dishonesty. It was alleged that the Claimant had seriously exaggerated his injuries.
The Claimant’s solicitors subsequently sent a letter marked “Without Prejudice - Save As To Costs” making the following offer (emphasis added):
“1. That the Claimant do pay the total sum of £20,000 to the Defendant, to cover both the interim payment of £1,500 and a contribution towards your legal costs and disbursements.
2. That the Claimant will admit that he was fundamentally dishonest in respect of some of the representations made in respect of his claim. However, it should be noted that he is only prepared to make such an admission on the basis that it be contained in a non-disclosure agreement….”
The Defendant applied for permission to put the letter into evidence, despite it being marked without prejudice.
The Court had to consider whether such correspondence would be protected by the without prejudice veil.
The general rule is that without prejudice correspondence cannot be disclosed to the Court. This is to ensure the settlement discussions can take place between parties with freedom – without the parties having to constantly think whether what they say will be used against them at a later date.
However the protection is not absolute. Where the without prejudice label is used as a cloak for “…perjury, blackmail or other unambiguous impropriety” the Court may order such correspondence admissible.
This was disputed by the Claimant, who argued that the statement was not an admission but a promise to admit. The Judge was not convinced. He accepted that the statement was an admission that the Claimant had been fundamentally dishonest.
From this finding, the Court concluded that the letter did fall within the “unambiguous impropriety exception,” and that not admitting it into evidence would present “more than a risk of the Claimant perjuring himself…” (para.21). Accordingly, the letter was disclosed. An unredacted version of the letter accompanies the judgment.
Comment
Despite the high bar set by the Court, as a team we have found that judges are increasingly more willing to find Claimants fundamentally dishonest. As well as successes in personal injury claims, we have had a recent finding of dishonesty in a property damage road traffic claim, resulting in the Court awarding indemnity costs in favour of our client.
This decision is important and useful. An application of this nature should very much be reserved as the “nuclear” button - reserved only for clear admissions of guilt. Without prejudice conversations should continue with confidence. While the decision has shown that without prejudice correspondence is capable of being relied upon, it remains a very high bar.
