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Slater & Gordon – ‘Ouch’ edition.

Last April, one of those little noticed tweeks to regulatory matters, brought in by the Government without publicity, was made to the rules surrounding court costs:

(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.

Lo! A new addition to the legal lexicon. ‘Fundamentally dishonest‘. Nobody was sure precisely what it meant. Not that anybody other than a few academic lawyers were even discussing the matter.
The case of James v. Diamanttec similarly attracted little interest. A Mr James, an operator of diamond drilling equipment, was claiming £85,000 from the insurers of the now liquidated Diamanttec company as damages for the hearing loss he said he had suffered.
Mr James’ case was dismissed at trial. The Deputy District Judge Kilbane said quite firmly that, ‘the claimant has not been telling the truth here today‘. However, she did not feel able to rule as to whether this meant he was ‘fundamentally dishonest’. When the matter came back before her, she ruled that although he had ‘not been telling the truth‘ his dishonesty fell short of making him a ‘fundamentally dishonest person’.
The insurers appealed – and that appeal was granted on the basis that the correct test to be applied was whether the claim was fundamentally dishonest, rather than the claimant. Since Mr James’ principle claim was that he hadn’t been provided with hearing protection, that was ‘fundamental’ to his claim and since he had lied about that – he had been provided with protection – then his claim was ‘fundamentally dishonest’.
Mr James, and those backing him financially get to pay all the costs of his court case. 
Now, you may be wondering what this has to do with Slater & Gordon, who had nothing to do with this case?
It will have an impact on them for two reasons.
1) It is the first case to have such a ruling under the new Civil Court rules which are aimed at discouraging ‘spurious and speculative’ claims in the area of personal injuries. Personal injuries include those grey areas such as post traumatic stress suffered as a result of alleged sexual abuse at the hands of those of whom all that remains is their estate…
2) And the reason I picked up on this case, is that it was a ‘hearing loss case’, a newish area of ‘mortgage vouchers’ for the legal profession. It was the area specialised in by one Rob Terry who built up a firm called Quindell. A firm he sold to Slater & Gordon at a heavily inflated price and which nearly bankrupted the firm.
Indeed, 4,000 of those 8,000 case that Slater & Gordon’s team of due diligence lawyers pored over before the purchase, are ‘hearing loss cases’ – all now with a large red flag waving over them if any of them turn out to be ‘fundamentally dishonest’. Losing a case used used to be known as ‘coming second’, a bout of bad luck – now it might come with a reversed costs order if it turns out the client was just ‘flying a kite’.

Rob Cummings, of the Association of British Insurers, said: ‘Insurers have seen a spike in opportunistic claims for noise-induced hearing loss, fuelled by greedy claimant lawyers and claims management companies.’

This ruling will of course, apply to all personal injury cases where the case is found to be ‘fundamentally dishonest‘. Who would want to be stuck with a court order for the costs involved in suing the Savile estate? There were no less than 17 Barristers involved in one hearing.
There is a reason why I trawl through these boring case notes – they can act as an excellent pick-me-up on a glorious summer’s day. Gladden your heart indeed.
My heart, if not Slater & Gordon’s.

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