On 28 January the High Court handed down judgment on an interlocutory appeal in Kasem v University College London Hospitals NHS Foundation Trust [2021] EWHC 136 (QB). Saini J struck out the Claimant NHS Trust’s statement of case for a defective pleading of common law deceit.

The Facts

In May 2013 Mr Kasem underwent a procedure on his right shoulder carried out by a surgeon in the employ of the Trust. Mr Kasem asserted that procedure was performed negligently. Mr Kasem claimed that by reason of the alleged negligence he was left with permanent and serious ongoing symptoms. His claim was pleaded in excess of £600,000.

The Trust made an offer to settle Mr Kasem’s claim for £75,000. This offer was accepted.

Following the acceptance, the Trust obtained information which allegedly showed that the Claimant had made dishonest representations.

The Trust issued proceedings in deceit against Mr Kasem, arguing that it was induced into making the offer.

The Strike Out Application

Mr Kasem made an application to strike out the Trust’s claim or have summary judgment entered on two grounds:

  1. the claim was an abuse of process in that it relied upon the Part 36 offer made in the original proceedings; and
  2. the claim in deceit was defective: it had not been properly particularised.

That application was partially successful before HHJ Baucher sitting in the County Court at Central London. She found that the reliance upon the Part 36 offer was an abuse of process and ordered that the claim was struck out under CPR 3.4(2)(a). She did not address Mr Kasem’s criticism of the particularisation issue and went on to give the Trust liberty to apply to amend its particulars of claim and to have its claim reinstated.

Reinstatement of the Claim

The Trust duly amended its Particulars of Claim to remove the reliance upon the Part 36 offer, but left the pleading on deceit unchanged. It successfully applied to have its claim reinstated. Upon reinstating the claim, HHJ Baucher found that applying Lipkin Gorman v Karpnale Ltd [1998] 1 WLR 1340 it was clear to Mr Kasem that fraud and dishonesty were being alleged. The claim in deceit was properly pleaded.

The Appeal

The decision was appealed on the basis that the Judge had erred in concluding that the claim in deceit was properly particularised.

Saini J allowed the appeal and struck out the claim. In doing so, he highlighted three important take-home points for practitioners:

(1) Pleading Deceit

At [34], Saini J identified five fundamental matters which must be pleaded with “sufficient particularity”:

  1. a representation of fact made by words or by conduct and mere silence is not enough;
  2. the representation was made with knowledge that it was false, i.e. it was wilfully false or at least made in the absence of any genuine belief that it was true, or made recklessly, i.e. without caring whether the representation was true or false;
  3. the representation was made with the intention that it should be acted upon by the Claimant, or by a class of persons which will include the Claimant, in the manner which resulted in damage to him;
  4. the Claimant acted upon the false statements; and
  5. the Claimant has sustained damage by so doing.

He referred to the guidance in Three Rivers District Council v Governor and Company of the Bank of England (No.3) [2003] 2 AC 1 at [186]: the primary facts which will be relied upon at trial must be pleaded.

Further, he outlined the reflection of this guidance in the CPR at Practice Direction 16, paragraph 8.2(1); the Admiralty and Commercial Courts Guide at paragraph C1.2; and the Chancery Guide at paragraph 2.8(1).

(2) Distinguishing Between Pleadings in Deceit and Defences of Fundamental Dishonesty

At [40], Saini J rejected the Trust’s submissions that the law on fundamental dishonesty applied (specifically Howlett v Davies [2018] 1 WLR 948; and Pinkus v Direct Line [2018] PIQR P20). Those cases were concerned with what the Defendant must plead and prove when raising allegations of dishonesty or fraud, and a claim in deceit was different.

In practice, the same strict pleading criteria will not apply to defences of fundamental dishonesty for the purpose of disapplying qualified one-way costs shifting.

(3) Section 57 of the Courts and Criminal Justice Act 2015: A Shield Not a Sword

Finally at [52], Saini J reminded us that section 57 of the Courts and Criminal Justice Act 2015 provides no cause of action. A deceit claim must be pleaded as such. This is an important consideration for any Defendant looking to unravel a compromised claim.

Conclusion

Do not underestimate the importance of a pleading.

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