Findings of fact and dishonesty

I have been involved in a number of cases in which it has been necessary to appeal a failure to make a finding of fundamental dishonesty.

As the case law and journals attest, the implementation of the Jackson reforms and the new rules on QOCs initially gave rise to considerable debate – mostly now settled – as to the meaning of “fundamental” in the context of CPR 44.16. Now that we know what is fundamental to a claim, however, the argument seems to have shifted in some difficult cases to whether the contested parts of a claim were dishonest.

In many cases, the question of honesty/dishonesty is straightforward. We know what a claimant has alleged and we know whether or the rejection of that allegation will entail a finding that it was dishonest – take the example of a bogus passenger claim. In some cases, however, it is not so straightforward and so this article is concerned with the practicalities of those cases.

The legal meaning of the term “dishonesty” was clarified in Ivey v Genting Casinos UK Ltd (T/A Crockfords Club) [2017] UKSC 67. Lord Hughes stated at paragraph 74:

“When dishonesty is in question, the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice, determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. Once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards or ordinary decent people. There is no requirement that the Defendant must appreciate that what he has done is, by those standards, dishonest.”

In a personal injury trial, this passage is often cited only after the trial judge has given judgment on the claim. It is in the nature of claims where dishonesty is in issue, that this is in many cases after 4pm, or even after the court building is supposed to have shut. As a result, it is unfortunate that the passage is perhaps a little more densely written than is ideal for such circumstances, whereby somewhat harried district judges, or deputies, are striving in limited time to make sense of fiercely contested evidence. There is often disagreement between the parties as to whether the findings made entail dishonesty. This should not happen. Where it does happen, it is often because the trial judge has failed to follow the steps that are required by Ivey and that in turn may be because those steps are not clearly understood by the court. The passage cited above suggests that it is a two-stage test: ascertain the (claimant’s) belief as to the facts, then apply the objective standards of ordinary decent people. In practical terms, however, there is more to it than that.

First, the court has to ascertain the facts themselves. Where the defendant wishes to argue that the claimant has been dishonest as to certain facts, it is therefore vital that it is made clear to a trial judge that findings on issues x, y and z are required. We shall return to this first stage at the end of this article.

Secondly, the court has to ascertain what the claimant has said about those facts. This is the “conduct” that is referred to in Ivey. That conduct may have been in oral evidence, in Part 18 responses, in a medical report, in a statement of case etc. As this is usually a matter of record, it should not give rise to difficulty. Problems may arise with statements of case signed by legal representatives, but that is beyond the scope of this article.

Thirdly, the court must ascertain the claimant’s beliefs as to those facts. However, those beliefs may have changed over time. Usually, the relevant question is what the claimant’s beliefs were at the time he/she made the relevant assertions about them, which may or may not equate to the time of trial. At trial, a claimant may not remember the facts at all. However, that is not to say that this was the case years earlier when a CNF was submitted, or when a statement of case was signed. For instance, a court may find that recovery from an injury was much swifter than anticipated in the Prognosis section of a medical report. At trial the claimant may be uncertain about the speed of recovery. Alternatively, the claimant may candidly admit that it was swifter than anticipated. However, it is often the case that Particulars of Claim are signed at a time years before trial and within the prognosis period, without qualifying or correcting the medical report in any way, thereby appearing to confirm it. Where this happens then, until the court finds otherwise, a defendant is left with the representation that the medical report is correct and that any claims predicated upon it (such as for loss of earnings) are also correct.

Fourthly, therefore, the question may arise after trial as to the conduct of the claimant in putting forward evidence (and, often, claims for special damages) that on the findings of fact made, were wholly without merit. Applying the objective standard to this conduct is not the hard part. The hard part is getting the trial judge to recognise what is the relevant conduct in the first place.

It can be difficult or impractical to put a trial judge on notice of the need to make these third-stage findings about beliefs until the first-stage findings concerning the underlying facts have been made. However, advocates must be warned that the time available to open these issues after a judgment has been given is likely to be very short, and the tribunal correspondingly unreceptive.

Finally, we revisit the question of what constitutes a finding of fact. This takes us back to the burden of proof and what, if anything, is established when the claimant fails to discharge it. Practitioners reading this will be familiar with the courts shying away from making findings of dishonesty when dismissing a head of loss, or even an entire claim, by purporting to find merely that a claimant has “failed to prove” that a loss, or even an injury, occurred. Lay clients, often defendants to tenuous claims of soft tissue injury following low velocity collisions, are mystified when the claims against them are thrown out without censure of the claimant. So they should be: the law is clear enough.

In Re B, 2008 UK HL 35, the House of Lords dealt with findings of fact in the context of civil proceedings. For the purposes of this article, it is sufficient to refer to two passages. First, Lord Hoffman gave definitive guidance on the confusion that sometimes arises as to the standard of proof required in civil proceedings. His 16-paragraph speech is essential reading for all practitioners routinely engaged in argument on the standard of proof in cases where fundamental dishonesty is in issue. In particular, he stated as follows:

2. If a legal rule requires a fact to be proved (a “fact in issue”), a judge or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are 0 and 1. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of 0 is returned and the fact is treated as not having happened. If he does discharge it, a value of 1 is returned and the fact is treated as having happened.

On the issues in the case, the House adopted the speech of Baroness Hale. Addressing the failure of the judge at first instance to decide whether or not something had happened, she stated as follows:

31. My Lords, if the judiciary in this country regularly found themselves in this state of mind, our civil and family justice systems would rapidly grind to a halt. In this country we do not require documentary proof. We rely heavily on oral evidence, especially from those who were present when the alleged events took place. Day after day, up and down the country, on issues large and small, judges are making up their minds whom to believe. They are guided by many things, including the inherent probabilities, any contemporaneous documentation or records, any circumstantial evidence tending to support one account rather than the other, and their overall impression of the characters and motivations of the witnesses. The task is a difficult one. It must be performed without prejudice and preconceived ideas. But it is the task which we are paid to perform to the best of our ability.

32. In our legal system, if a judge finds it more likely than not that something did take place, then it is treated as having taken place. If he finds it more likely than not that it did not take place, then it is treated as not having taken place. He is not allowed to sit on the fence. He has to find for one side or the other. Sometimes the burden of proof will come to his rescue: the party with the burden of showing that something took place will not have satisfied him that it did. But generally speaking a judge is able to make up his mind where the truth lies without needing to rely upon the burden of proof.

These dicta are of the highest possible authority. They govern the terribly difficult business of fact-finding in cases of alleged child abuse. Plainly personal injury claims are not exempt from their application. They also reflect earlier, detailed guidance from the Court of Appeal. In Stephens v Cannon [2005] EWCA Civ 222, Wilson J (later elevated to the Supreme Court) gave the judgment of the Court. Addressing the circumstances in which it might be acceptable for a trial judge to find that an allegation was simply not proven, rather than finding whether it was true or false, he reviewed the authorities and stated the following propositions at paragraph 46:

(a) The situation in which the court finds itself before it can despatch a disputed issue by resort to the burden of proof has to be exceptional.

(b) Nevertheless the issue does not have to be of any particular type. A legitimate state of agnosticism can logically arise following enquiry into any type of disputed issue. It may be more likely to arise following an enquiry into, for example, the identity of the aggressor in an unwitnessed fight; but it can arise even after an enquiry, aided by good experts, into, for example, the cause of the sinking of a ship.

(c) The exceptional situation which entitles the court to resort to the burden of proof is that, notwithstanding that it has striven to do so, it cannot reasonably make a finding in relation to a disputed issue.

(d) A court which resorts to the burden of proof must ensure that others can discern that it has striven to make a finding in relation to a disputed issue and can understand the reasons why it has concluded that it cannot do so. The parties must be able to discern the court's endeavour and to understand its reasons in order to be able to perceive why they have won and lost. An appellate court must also be able to do so because otherwise it will not be able to accept that the court below was in the exceptional situation of being entitled to resort to the burden of proof.

(e) In a few cases the fact of the endeavour and the reasons for the conclusion will readily be inferred from the circumstances and so there will be no need for the court to demonstrate the endeavour and to explain the reasons in any detail in its judgment. In most cases, however, a more detailed demonstration and explanation in judgment will be necessary.

Judges frequently dismiss a claim by finding an allegation of injury not proven. Rarely do they set out that they are, despite their efforts, unable to make up their mind either way. Never have I heard a trial judge then go on to explain why this is the case. Instead, dispatching a fundamental issue by reference to the burden of proof is often treated as a neat choice available for the purposes of avoiding unpleasant findings of fact, rather than as a measure of last resort, to be deployed only where no other option is possible.

Stephens, Re B, and Ivey, are likely to form the basis of any strong application to appeal a failure to find fundamental dishonesty. Practitioners in this field are advised to tailor their submissions to the principles set out in the passages identified in this article and, where seeking permission to appeal, to prepare their grounds accordingly.