This week we thought we’d use a couple of recent cases to illustrate a pleading point and a procedural point surprisingly often forgotten, though naturally not by us. Next week we will bring you a summary of the European Commission report on the application of the new(ish) Package Travel Directive, which may inform interpretation of the Package Travel and Linked Travel Arrangements Regulations 2018 going forward, even in the light of Brexit. We read these 22 page reports so you don’t have to…
Pleading Fundamental Dishonesty: Mustard v Flowers & Anor  EWHC 846 (QB)
With the issue of fundamental dishonesty becoming an increasingly prominent feature of litigation in the travel sector, the recent decision in Mustard v Flowers & Anor  EWHC 846 (QB) is an important refresher of the principles that apply to a pleading of dishonesty.
The underlying claim (which is ongoing) arose out of a road traffic accident which took place in January 2014. The claimant’s stationary vehicle was struck from behind by a vehicle driven by the first defendant. The claimant alleges that she sustained a subarachnoid brain haemorrhage and a diffuse axonal brain injury, which left her with cognitive and other deficits. There were marked differences between the parties’ experts as to the claimant’s presentation and the interpretation of her medical records, imaging and complex medical history. The defendant’s medical experts considered that the claimant suffered no brain injury, whereas the claimant’s medical experts considered that the claimant suffered a serious brain injury, albeit with the caveat that the manifestations of that injury were subtle.
On 10th February 2021 the defendant applied to amend the Defence at the request of the claimant, who wanted the defendant to withdraw averments regarding the speed of the impact and also wanted further clarity as to the defendant’s case on the medical evidence. The controversial amendment was as follows:
“4.4 The Claimant’s accounts of the RTA and its immediate aftermath, and the nature and severity of her symptoms both before and after the accident have varied over time, are unreliable and are in issue. They have been exaggerated (or in the case of her pre-RTA history minimised) either consciously or unconsciously – the Third Defendant cannot say which absent exploring the issues at trial. In the event that the Court finds that the Claimant has consciously exaggerated the nature and/or consequences of her symptoms and losses, the Third Defendant reserves the right to submit that a finding of fundamental dishonesty (and the striking out of the claim pursuant to section 57 Criminal Justice and Courts Act and/or costs sanctions including the disapplication of QOCS) is appropriate.” (Master Davison’s emphasis).
Counsel for the claimant objected to this amendment on the basis that the proposed amendment amounted to an allegation of fraud that was not properly particularised and for which there was no basis in the evidence. This was contrary to Rule 9 of the Bar Standards Code of Conduct, which required “reasonably credible material which establishes an arguable case of fraud” before such a case could be pleaded. Counsel for the Defendant responded by arguing that the amendment was not a “positive averment of dishonesty”. On the contrary, the amendment had the simple purpose of alerting the claimant to the nature of its case at trial so as to ensure the claimant was not ambushed. The amendment identified the contentious areas of the evidence and made clear that the details would be explored at trial. The question was whether this amendment should be permitted.
At the outset of his analysis, Master Davidson reminded himself of the principles laid down in Howlett v (1) Davies (2) Ageas Insurance Limited  EWCA Civ 1696 and Pinkus v Direct Line  EWHC 1671. Those cases made clear that it was not strictly necessary to include an allegation of fundamental dishonesty in the pleaded defence. It was necessary, however, for the claimant to be given adequate warning of, and a proper opportunity to deal with, the factual allegations that gave rise to the possibility of a conclusion of fundamental dishonesty. In Howlett, for example, the insurers did not use the words “fraud” or “dishonesty” in their pleading, though they raised twelve particulars in which the claimant’s credibility was said to be in question and these included an allegation that the accident had been staged or contrived. In that scenario, the fact that fundamental dishonesty was not expressly pleaded did not preclude the judge’s finding of dishonesty because the pleadings raised the factual issues giving rise to the possibility of fundamental dishonesty. The claimant had been given adequate warning of those issues and it could not be said that the claimant had been ‘ambushed’.
With those principles in mind, Master Davidson refused the underlined aspect of the controversial amendment (see above). The reasons were as follows:-
1) The proposed amendment served no useful purpose – the defendant could make a fundamental dishonesty application without raising it in the pleading. The defendant did not need to “reserve the right” to raise fundamental dishonesty at trial.
2) At the time of the application, a plea of fundamental dishonesty had no real prospect of success and therefore, even pleaded on a contingent basis, did not satisfy the test for granting permission to amend.
3) The amendment caused prejudice to the claimant. In particular, a plea of fundamental dishonesty has to be reported to the claimant’s legal expenses insurer and opens up a theoretical possibility of them avoiding the policy ab initio. It also created, at the very least, an added burden of administration and costs. Moreover, the amendment would be apt to raise further fears and anxieties in the claimant which, at the time of the application, had no proper basis.
Master Davison then permitted the non-underlined (see above) aspect of the amendment. This aspect of the pleading referred to the claimant’s exaggeration of her symptoms, though the defendant did not plead that such exaggeration had been or was conscious. The proposed amendment merely made it clear that the defendant intended to explore these issues at trial. Moreover, Master Davison was concerned that if the amendment was not allowed, Counsel for the Claimant would use that as a basis for an invitation to the trial judge to limit the scope of the defendant’s cross-examination of the claimant. That would plainly be unfair to the defendant, not least because the defendant had a respectable body of evidence that the claimant had exaggerated (either consciously or unconsciously) her symptoms.
Master Davison emphasized that his judgment was not intended to detract from a “cards on the table approach”. Where the Defendant has a proper basis for a plea of fundamental dishonesty and intends to raise it, then that should be set out in a statement of case. What Master Davison was intending to discourage were pleas of fundamental dishonesty which are “merely speculative or contingent.” Practitioners in this area would do well to keep these principles in mind.
About the Author
Henk Soede was called to the Bar in 2019. Since April 2020, he has been instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims. He is eager to build on his experience in these areas, but accepts briefs in all chambers’ areas of work.
Communicating with the Court: Bell & Anor v Brabners LLP  EWHC 560 (QB)
It is sometimes worth reminding ourselves of straightforward principles, none more straightforward than this: if you are communicating anything substantive or procedural (essentially anything liable to be disputed) to the Court, you must copy in the other side. It really is that simple, but all too often forgotten and there is rarely – if ever – a good excuse. Not only is it obviously good practice, and the subject of repeated judicial criticism (see below for one particularly egregious recent example), but it is required by the Rules:
39.8 (1) Any communication between a party to proceedings and the court must be disclosed to, and if in writing (whether in paper or electronic format), copied to, the other party or parties or their representatives.
(2) Paragraph (1) applies to any communication in which any representation is made to the court on a matter of substance or procedure but does not apply to communications that are purely routine, uncontentious and administrative.
(3) A party is not required under paragraph (1) to disclose or copy a communication if there is a compelling reason for not doing so, and provided that any reason is clearly stated in the communication.
(4) A written communication required under paragraph (1) to be copied to the other party or parties or their representatives, must state on its face that it is being copied to that person or those persons, stating their identity and capacity.
(5) Unless the court directs otherwise, a written communication which does not comply with paragraph (4) will be returned to the sender without being considered by the court, with a brief explanation of why it is being returned.
(6) In addition to returning a communication under paragraph (5), where a party fails to comply with paragraph (1) the court may, subject to hearing the parties, impose sanctions or exercise its other case management powers under Part 3.
(7) Paragraph (1) does not apply to communications authorised by a rule or practice direction to be sent to the court without at the same time being provided to the other party or parties or their representatives
Mr Justice Fordham in Bell & Anor v Brabners LLP  EWHC 560 (QB), having received a letter consisting of five pages of submissions from the Respondent to an application for permission to appeal, and having discovered that the same was not copied to the Applicant’s representatives, said the following:
“The Respondent, through the lead solicitor with conduct of this matter, has apologised. I mention these circumstances because it is a cardinal principle of the conduct of proceedings before the Court that, absent an identified compelling reason, a party’s communications with the Court on matters of substance or procedure (unless they are purely routine, uncontentious or administrative) must always be copied to the other parties to the proceedings. It is inappropriate, and unjust, to seek to communicate with the Court without this transparency. This cardinal principle is clearly recorded in CPR 39.8. Observance of it is important. Having said that, and having taken the steps I have described, in the circumstances of the present case I am satisfied that I am able fairly to deal with this application on its merits.”
About the Author
One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.
We were interested to read that an American court has found that the Republic of France has the right to use the domain name France.com. If it had ever occurred to us to think about it, we would have assumed that this would have been the case in any event, but in 1994 a cheeky New Yorker of French parentage registered the domain name and began to use it to promote French tourism in America. The French government appears to have been blissfully unaware of this until the American went a step further and brought proceedings in Paris alleging trademark infringement against a Dutch company also using the name. Alas, the French government then intervened and asserted the exclusive right to use the term “France” commercially, contending that under French law, the name “France” cannot be appropriated or used commercially by a private enterprise, because doing so violates the French Republic’s exclusive right to its name and infringes on its sovereignty. Perhaps unsurprisingly the Paris Court of Appeal found in favour of the French government, and the domain name passed into the hands of the Republic. The New Yorker, possibly thinking that he might get a more favourable hearing in the courts of his homeland, brought proceedings in Virginia against the French government, which the latter resisted, asserting sovereign immunity. The Court of Appeals for the Fourth Circuit agreed, and the claim will now be dismissed. We wonder whether the erstwhile owner of the domain name regrets bringing proceedings in Paris in the first place; he’s not the first litigant to end up worse off than when he started, and we don’t suppose he’ll be the last.