Kate Donachie

In England and Wales, the treatment of fraudulent cases is set out in statute; in Scotland the courts are bound to interpret and apply the common law. Recent cases put the consequences of those different approaches into sharp focus.

In England and Wales, section 57 of the Criminal Justice and Courts Act 2015 requires the courts to dismiss in its entirety, any claim in which the claimant is held to have acted with “fundamental dishonesty”. In LOCOG v Sinfield [2018] EWHC 51 (QB) it was concluded that fundamental dishonesty was established if the dishonesty “substantially affected the presentation of its case… in a way which adversely affected the defendant in a significant way.” This approach was applied in Pinkus v Direct Line [2018] EWHC 1671 (QB) where, although the judge accepted that there had been some injury; the entire claim was dismissed because the claimant’s significant exaggeration rendered him “fundamentally dishonest”.

Those decisions can be contrasted with that in Grubb v Finlay [2018] CSIH 29, an Inner House case. There, the claimant was found to have lied in a number of significant areas but the first court also found that the accident had a caused a limited amount of pain, suffering and loss of amenity. The defender argued that the claim should be dismissed because of the dishonesty but the court awarded the claimant a small amount in damages. On appeal, the Inner House confirmed that the claimant should be compensated for the genuine part of his claim and that his claim wasn’t fundamentally dishonest because it had something genuine at its core.

Grubb demonstrates that a Scottish claimant significantly exaggerating his claim will be awarded damages for any genuine loss. In England and Wales, such a claim would be dismissed in its entirety. And this is not a purely academic observation because the divergence is not occurring in a vacuum; its effect must be viewed in the context of significant changes afoot in civil litigation both North and South of the border.

In Scotland, we will soon have qualified one-way cost shifting, whereby in most cases the claimant will not be responsible for the other side’s legal costs if the claimant loses. In addition, reform of the discount rate, which is applied to calculate damages, is likely to result in higher awards for Scottish claimants than their English counterparts. There are concerns that this difference might encourage “forum shopping” where claimants seek to raise their claims in Scotland rather than England.

At the same time, in England and Wales; the Civil Liability Act 2018 will introduce a fixed tariff of damages for whiplash injuries and will result in far lower awards for claimants in England and Wales than those in Scotland.

Of course, we cannot know just what the future holds, but at the moment it looks as though the rewards for the fraudulent claimant will be higher in Scotland and the consequences less severe; it is difficult to avoid the conclusion that we will see more fraud as a result.

Kate Donachie is a managing associate at Brodies LLP