Shah v Ul-Haq & Ors

A claimant does not forfeit damages proved to be due merely because the claimant dishonestly exaggerated the claim or supported another person’s false claim. The special rule governing fraudulent insurance claims does not apply generally in tort or contract.

Nor does CPR 3.4(2)(b) permit a genuine claim to be struck out simply to punish collateral fraud. Strike-out may be justified where misconduct makes a fair and reliable trial impossible. Once a fair trial has produced reliable findings, the court must give effect to them. Dishonesty may instead be addressed through costs sanctions and, where appropriate, criminal proceedings.

Following a road accident caused by the appellant’s negligence, three claimants brought associated claims. The recorder found that two claimants had suffered genuine minor injuries but had conspired to support a third claimant’s false assertion that she had been a passenger. He dismissed the false claim, awarded damages on the genuine claims and imposed adverse costs orders.

Walker J dismissed the appellant’s first appeal. On this second appeal, the appellant argued that the genuine claims should have been struck out under CPR 3.4(2) as an abuse of process. The central issue was whether a court may strike out a genuine claim because its claimant participated in fraud concerning an associated claim.

1. Appeal dismissed. The claimants were entitled to retain the modest damages awarded for their genuine injuries, although the Court of Appeal reached that conclusion for reasons different from those of Walker J. Smith LJ delivered the leading judgment. Moses LJ and Toulson LJ agreed.
2. There is no general rule of substantive law under which dishonest exaggeration, or dishonest support for another person’s claim, extinguishes an otherwise valid cause of action. A claimant who proves some loss recovers the damages appropriate to that loss, even if the claimant dishonestly attempted to recover more. The rule under which fraud may defeat an entire claim is special to insurance contracts and does not extend generally to tort or contract. Any wider forfeiture rule would require careful definition and was a matter for Parliament, not judicial innovation.
3. CPR 3.4(2)(b) did not authorise the court to strike out the genuine claims merely because the claimants had supported a false claim in the same proceedings. A mixture of genuine and false claims does not, of itself, turn the genuine claims into an abuse of process. Using a case-management power to deprive claimants of accrued substantive rights as punishment would serve no legitimate case-management purpose.
4. [2000] EWCA Civ 200 was confined to misconduct which jeopardised the fairness and reliability of the trial. Strike-out may be required where dishonesty makes any favourable judgment unsafe, prevents the court from doing justice, or creates a substantial risk of injustice. It is then a protective response to the impossibility of a fair trial, rather than a punishment.
5. The recorder had conducted a fair trial, detected the dishonesty and made reliable findings. Having done so, he was required to give judgment on the claims tried. He could mark the waste of time and money through costs sanctions, as he did, but could not withhold proved damages as punishment for the collateral fraud.

1. Court of Appeal (Civil Division): Dismissed the second appeal. It upheld the damages awarded on the genuine claims, although on reasoning different from that of Walker J.
2. High Court, Birmingham District Registry: Walker J dismissed the appeal from the recorder. He accepted that CPR 3.4(2) conferred a discretion to strike out the genuine claims but declined to exercise it.
3. Birmingham County Court: Recorder Richard Parkes QC dismissed the fraudulent passenger claim, awarded damages for the two genuine injury claims and imposed adverse costs orders on the claimants.