Further Developments on Pleading Fundamental Dishonesty: Covey v Harris [2021] EWHC 2211 (QB)

The court in Covey v Harris [2021] EWHC 2211 (QB) acceded to the Defendant’s application to amend its defence to plead fundamental dishonesty made less than a month before trial. Given the court’s refusal of a similar application made by the Defendant in Mustard v Flower [2021] EWHC 846 (QB) (see Philip Davy’s blog here), one questions how the two decisions can be reconciled.

The Claimant in Covey brought a claim for some £8.8 million for multiple injuries, which she sustained in a road traffic accident in November 2013. The trial of her claim was listed for 12 July 2021. The Defendant made an application to rely on an amended Defence dated 14 June 2021 wherein it alleged that the Claimant had been fundamentally dishonest in relation to both liability and quantum and particularised its case in support of that allegation.

It appears that the Claimant had been on notice for some time that the Defendant intended to allege fundamental dishonesty. Indeed, it appears that the Claimant had, at an earlier stage of the proceedings, required the Defendant to serve an amended Defence setting out its allegations of fundamental dishonesty, which resulted in an order (extended by agreement) requiring the Defendant to do so by 2 July 2021. In the circumstances, it is surprising that the Defendant’s application to rely on the amended Defence was opposed.

In considering the application, John Bowers QC sitting as a Deputy Judge of the High Court observed that although there was no underlying obligation to plead fundamental dishonesty, it was right and fair that a Claimant knows the case they have to meet. The Judge did not consider the amendment to have been late, given the procedural history. In addition, he did not accept that there was any real prejudice to the Claimant. It appears that like the Claimant in Mustard, the Claimant here also expressed concern over the impact that allowing such an amendment could have on the funding of her claim. The Judge took a different view to the court in Mustard however, observing that the funding of the Claimant’s claim could equally be affected if the matters relating to fundamental dishonesty came out at trial, even if there had been no previous pleading.

The Judge ultimately distinguished Mustard on the basis that the Defendant in that case did not apply to plead a positive case of fundamental dishonesty.

Comment

In Mustard, the Defendant essentially sought, by its amended Defence, to reserve the right to allege fundamental dishonesty depending on how the evidence came out at trial. In Covey however, the Defendant sought to positively allege fundamental dishonesty and it appears that the Claimant had known this for some time. It seems therefore that the decisions in Mustard and Covey are distinguishable and can be reconciled.

Where a Defendant seeks squarely to nail its colours to the mast by positively alleging fundamental dishonesty and wishes to set out the particulars of its allegation in an amended Defence, it appears that the court will be more inclined to allow an application to amend, especially when the Claimant has had adequate notice of the Defendant’s intentions.