David Pegg v (1) David Webb (2) Allianz Insurance PLC [2020] EWHC 2095 (QB)


Martin Spencer J held that a judge had erred in dismissing a personal injury claim but not finding that the Claimant had been fundamentally dishonest and, given the finding of fundamental dishonesty, CPR Rule 44.16 applied so that the Claimant lost the Qualified One Way Costs Shifting (“QOCS”) costs protection.


This appeal arose from a low-value claim for damages arising from a road traffic accident, where the Claimant was a front-seat passenger in a car that was rear-ended by another vehicle driven by the First Defendant. At trial, the Second Defendant argued that there was fundamental dishonesty on the part of the Claimant in two respects: first in relation to the collision itself (it either did not happen or was staged), and secondly (if the collision was found to be genuine) in relation to the injuries and damages said to have resulted from the collision.

At trial, the judge found that the collision was genuine but went on to find that the Claimant had not made out his case in relation to the nature and extent of the injuries suffered in part because he had pre-existing injuries and in part because he had suffered a quad bike accident after the index collision, which meant that his claim fell to be dismissed as he had failed to prove any injury or loss at all. The trial judge made clear that, in respect of the injuries, he had not found that the Claimant had been dishonest. He then went on to order the Defendant to pay 60% of the Claimant’s costs, even though the claim had been dismissed, on the basis that the allegations of fundamental dishonesty made by the Defendant had turned what would otherwise have been a one-day fast-track claim into a two-day multi-track claim.

The Defendant insurer appealed the decision at first instance on two grounds. First that the trial judge was wrong in failing to make a finding of fundamental dishonesty pursuant to CPR Rule 44.16 against the Claimant. Secondly that the costs order was wrong in principle. The Defendant accepted the trial judge’s finding that the collision was genuine.


Martin Spencer J explained the meaning of the concept of fundamental dishonesty at [19] to [21] of his judgment by reference to the now well-known cases of Gosling v Hailo, 29 April 2014 (unreported), which was endorsed by the Court of Appeal in Howlett v Davies [2017] EWCA Civ 1696. He held at [20] that, in the present case, “where the damages claimed are confined to pain, suffering and loss of amenity in relation to the injuries and the cost of physiotherapy, dishonesty as to the extent of the injuries would … be fundamental because the extent of the claimant’s injuries is not merely incidental or collateral but forms the very basis of the claim. This is shown by, if nothing else, the fact that the learned judge, having been unable to find the injuries claimed proved, dismissed the claim.”

As to the meaning of “dishonesty”, Spencer J referred to the test set out by the Supreme Court in Ivey v Genting Casinos Limited (t/a Crockfords Club) [2017] UKSC 67, which explains that the court must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts and then determine whether his conduct was honest by applying the (objective) standards of ordinary decent people.

He also referred to his own remarks (in the context of whiplash cases) in Molodi v Cambridge Vibration Maintenance Service [2018] EWHC 1288 (QB) that the problem of fraudulent and exaggerated whiplash claims is well recognised and judges in the county court should approach such claims “with a degree of caution, if not suspicion”, before going on at [25]to consider carefully the evidence that had been before the trial judge in relation to the nature and extent of the injuries. That evidence, he held, “pointed strongly, if not inexorably, to the conclusion that the Claimant had been dishonest in his presentation of his injuries” and that the trial judge had failed to deal with that evidence adequately or at all. In summary, those factors included:

  • The fact that the Claimant had not sought any medical assistance at all after the index accident. Rather he instructed solicitors, who then arranged for physiotherapy. That should have “immediately have raised at least a suspicion in the mind of the judge”.
  • In contrast, the Claimant attended A&E and the walk-in centre after his quad bike accident but failed to mention the index accident to the clinicians there nor did he refer to the injuries and symptoms arising from that accident. Spencer J referred to this as “the first deafening silence”.
  • The Claimant had failed to inform his medico-legal expert about the quad bike accident and the only inference was that he had deliberately done so in order to mislead the expert about the effects of the index accident. This was the second incidence of deafening silence.
  • The position was “significantly aggravated” by the fact that the Claimant told his own expert “positive lies” about the longevity of his injuries (the injuries were resolved by the time he saw his expert), and about his physiotherapy being ongoing when he had been discharged after only four sessions.
  • The Claimant “compounded the dishonesty” by lying about the longevity of his injuries in his witness statement and by adopting his expert’s description of the injuries and prognosis for recovery when he signed the Statement of Truth in the Particulars of Claim and signed his witness statement. This formed the basis of his claim for damages.

Given those factors, Spencer J held that no judge could reasonably have failed to have come to the conclusion that the claim for damages as presented by the Claimant was dishonest. The appeal would therefore be allowed and the order dismissing the claim would be endorsed with a finding of fundamental dishonesty on the part of the Claimant in relation to the claim for damages [25].

As to costs, the parties agreed that in the event that the first ground succeeded, the costs order could not stand. The Defendant submitted that CPR 44.16 would be satisfied so that the Claimant would lose his QOCS costs protection. However, the Defendant also conceded that it would be appropriate to reflect the fact that it had failed to prove fundamental dishonesty in relation to the accident itself so that the Claimant would only be liable to pay 70% of the Defendant’s costs. Spencer J agreed that this was the correct order given that a significant part of the evidence and court time was directed towards the question whether the accident was bogus and the parties had colluded. Spencer J had no hesitation in rejecting the submission made on behalf of the Claimant (“perhaps somewhat boldly”) that the Defendant should pay 60% of the Claimant’s costs.


This is yet another decision in an increasing number of cases where fundamental dishonesty has been advanced successfully by defendants, thus depriving a claimant of the costs protection usually afforded by QOCS following the 2013 Jackson reforms.

There are in fact two separate and distinct regimes relating to fundamental dishonesty which can result in a claimant being required to pay the defendant’s costs where there has been a finding of fundamental dishonesty. The first relates to unsuccessful claimants pursuant to CPR Rule 44.16. The second relates to successful claimants unders.57 of the Criminal Justice and Courts Act 2015.

As the trial judge dismissed the claim, the allegations of fundamental dishonesty raised by the Defendant fell to be considered in accordance with CPR Rule 44.16, which creates an exception to the QOCS regime by imposing liability on unsuccessful claimants to pay costs where they are found to be fundamentally dishonest on the balance of probabilities.

The Defendant had failed in relation to its allegations that the collision had not occurred or was staged but the trial judge found that the Claimant had not made out his case in relation to the nature and extent of the injuries so that his claim was dismissed. In other words, the trial judge found that the Claimant was unsuccessful. However, rather unusually, the trial judge awarded the unsuccessful Claimant 60% of its costs.

Given the finding of fundamental dishonesty on appeal, it followed that the Claimant would lose his costs protection pursuant to CPR 44.16. However, because the Defendant had lost on the issue of whether the collision was genuine, an issue which had taken up significant court time, it would only be able to recover 70% of its costs from the Claimant.

It is arguable that it would have been open to the trial judge to find that the Claimant had succeeded in his claim (having found that the collision was genuine) but then to go on to find that no award of damages should be made as he had not proven that he had suffered any loss or injury (or alternatively that the Claimant was entitled to nominal damages only if any loss or damage was found to be attributable). This would clearly not have changed the trial judge’s failure to make a finding of fundamental dishonesty but, on appeal, it would have meant that the issue of fundamental dishonesty would fall to be considered under the second separate regime unders.57 of the 2015 Act, as has in fact been the approach in cases such as Pinkus v Direct Line [2018] EWHC 1671 (QB) where the claimant sought substantial damages for injuries suffered following a car accident. The defendant admitted causing the collision but disputed the nature and severity of the damage and consequential injuries. Although fundamental dishonesty had not been pleaded expressly, the claim was dismissed at trial in accordance withs.57 on the basis that the claimant was found to have deliberately and consciously exaggerated the facts around the accident, his consequential symptoms, and his pre-index situation so that his dishonesty was found to be “close to the heart” of the claim. The claimant would have been awarded damages but fors.57, but his claim was dismissed and he was ordered to pay the defendant’s costs on an indemnity basis. Similarly, in Sudhirkumar Patel v Arriva Midlands Limited [2019] EWHC 1216 (QB), the defendant insurer relied on surveillance evidence to challenge the claimant’s expert evidence that the claimant lacked capacity. His expert’s previous assessment was found to have been made on the basis of incorrect information gleaned from the claimant’s dishonest presentation and from false information from the claimant’s son. It was held that the lifetime care needs claimed to be consequential upon the untenable psychiatric diagnosis were fundamentally dishonest and there would be no substantial injustice in dismissing the claim. (See also Razumas v MOJ [2018] EWHC 215 (QB)).

Where fundamental dishonesty is found in relation to successful claimants, the court is required to dismiss the entire claim, and the otherwise successful claimant is required to pay the defendant’s costs subject to a deduction of damages as assessed by the court that would have been awarded but for the finding of fundamental dishonesty (s57(5)). Where the notional damages are lower than the assessed costs, the claimant will have to pay the difference to the defendant.

There is room for argument that some judges would have awarded the Claimant some albeit very minimal damages for PSLA that resolved within weeks but the assessment of the Claimant’s damages by the trial judge in the instant case was of course nil and therefore unders.57 there would be nothing to deduct from the Defendant’s costs. It is also questionable whether the costs order in favour of the Defendant would be reduced to reflect the fact that it had failed in relation to the question of whether the collision was real. Under CPR44.16 there is express provision that the court may determine the costs attributable to the claim having been found fundamentally dishonest as it thinks “fair and just”. Such equivalent provision is not present ins.57 and therefore the costs outcome for the Defendant arguably may have been even more favourable if the matter was decided unders.57.