Thin Evidence, Thick Costs: The Price of a Failed Dishonesty Allegation

15/01/2026

By Sophie Walmsley

Those engaged in personal injury litigation will invariably come toe-to-toe with allegations of fundamental dishonesty at one stage or another. In recent years, it seems such allegations have been on the rise. The cynics may argue that this is a not so discrete attempt to subvert the usual QOWCS rules which would otherwise protect a Claimant from an enforceable costs order. However, the question arises as to whether these allegations can or ought to be raised with impunity and what happens when a case of fundamental dishonesty fails?

Oliver Manley and Emily Girvan-Dutton have recently written an article on the admissibility of surveillance evidence which may be of relevance here.

The first aspect to consider is whether allegations of fundamental dishonesty have been properly and reasonably pursued. There can be many legitimate concerns as to a party’s credibility that arise during the course of litigation, for example, a Claimant who professes to be profoundly disabled due to his or her accident-related injuries and who is later seen in surveillance undertaking the same activities they have proclaimed they are unable to do. In recent times, such concerns may also arise from a perusal of a parties’ or witnesses’ social media revealing the injured party to be less injured than their pleaded case would lead you to believe. It is recognised that an allegation of fundamental dishonesty does not need to be pleaded (though it may be a matter of good practice to do so either by way of Defence, Amended Defence, or Counter-Schedule), the salient issue is whether the Claimant has been given sufficient notice.

It is one thing to raise an allegation of fundamental dishonesty, and another in pursuing the matter to trial in the face of all the evidence. This may seem an obvious statement, however recent case law has highlighted the need to keep these allegations under review as to whether they ought to be maintained through to trial. There are cases in which the answer will invariably be “yes”. 

The effects of pleading and/or alleging fundamental dishonesty on the litigation cannot be understated, particularly in cases in which costs recovery is limited by the fixed costs regime. These allegations often create additional work being undertaken by both the Claimant and Defendant, and thus often results in mounting costs. Moreover, at trial, such allegations need to be properly and carefully put to any respective Claimant or witness, usually resulting in more extensive witness evidence, cross-examination and additional time for submissions and judgment. The impression of some may be that there has been no real consequence (in terms of any costs orders) for a Defendant who raises an allegation of fundamental dishonesty, maintains those allegations at trial, and fails.

The first case that warrants analysis on this position is that of Thakkar & Ors v Mican & Anor [2024] EWCA Civ 552. The case concerned a road traffic accident in which Mr Thakkar and Mr Patel alleged that Mr Mican drove his van into their vehicle. Mr Mican stated that in fact it was Mr Thakkar who has pulled out from a parked position and caused the collision.

Mr Mican and his insurer filed a defence challenging the credibility and honesty of the Claimants. The Defendants sought to amend their Defence at a CMC to plead fundamental dishonesty, this application was refused, the judge noted that all the Defendant had were “doubts” and she challenged the basis for any pleading of fundamental dishonesty. The Defendants were not prevented from putting the issues at trial, notwithstanding they were not (and did not need to be) pleaded.

Saliently at the bottom of paragraph [6] of the judgment of LJ Coulson it is said “however, I would add that such allegations should only be raised if it is appropriate to do so, and in accordance with the professional obligations of both counsel for the respondents and his instructing solicitors”. The comments made by the judge at the CMC was not to be construed as some “open-ended permission to the respondents to run dishonesty arguments come what may”.

Following trial, the judge found in favour of the Claimants, there was no explicit address of the allegation of fundamental dishonesty but instead found, as is fairly commonplace in road-traffic claims, that she preferred the evidence of the Claimant’s witness. The issue on appeal concerned whether the Defendants should pay costs on the indemnity basis due to their defeated case of fundamental dishonesty.

The Court of Appeal firstly rejected that there was a presumption or a ‘starting point’ of indemnity costs or a reversed burden of proof (i.e. for the paying party to show why indemnity costs should not be awarded) in these circumstances, as such would fetter the court’s broad discretion. At paragraph [28] the Court states:

“because the making of a dishonest claim will very often attract an indemnity costs order against a claimant, a failed allegation of dishonesty will very often lead to the making of an indemnity costs order against the defendant, on the simple basis that “what is sauce for the goose is sauce for the gander”: see Tomlinson LJ in Manna v Central Manchester University Hospitals NHS Foundation Trust [2017] EWCA Civ 12; [2017] 1 Costs L.R. 89 at [42]. A defendant who makes allegations of this kind therefore runs a very significant risk that, if the allegations fail, indemnity costs will be awarded against them.”

The Court of Appeal did not find that the judge at first instance had erred in law either in her consideration of the Defendants’ conduct or by applying the wrong test. The Court of Appeal went further, and whilst recognising that a different judge may have made a different order, that was not the salient test on appeal and found that the Judge reached a conclusion which was open to her and that her conclusions on costs were not perverse. The Claimants’ appeal was dismissed.

The take-away from this decision was that judges ought to have regard to the relevant legal test and consider whether the threshold for indemnity costs has been met in the circumstances of the case.

The case of Hakmi v East & North Hertfordshire NHS Trust & Anor [2025] EWHC 2597 (KB) perhaps highlights the different approach a court may take. Mr Hakmi was an orthopaedic surgeon who suffered from a stroke in September 2016 for which he was successfully treated with thrombolysis. Unfortunately, on 16 November 2016 Mr Hakmi suffered a further stroke. His claim centred upon the alleged failure to offer thrombolysis to him following that second stroke. Mr Hakmi alleged he was seriously affected and disabled as a result. Quantum had been agreed subject to liability.

The Defendant argued, during proceedings and at trial, that Mr Hakmi had deliberately underperformed at neuropsychological testing in order to advance his claim. The judge commented that should such an allegation be found proven this would cast doubt on the credibility of Mr Hakmi’s evidence. The claim was ultimately dismissed but the judge did not find that Mr Hakmi had exaggerated his claim, by way of deliberate underperformance in testing. The judge noted his observations of Mr Hakmi during cross-examination in that he had difficulty in answering questions but did not accept that Mr Hakmi was trying to mislead the court. Further, it was stated that such allegations, if they have been found proven, would likely have serious consequences on his registration and employment. The judge accepted Dr Hakmi’s poor performance on the tests was likely due to his psychological condition at the time of assessment. It was said that any “under-performing” would run contrary to the efforts Mr Hakmi had taken to rehabilitate himself.

The Court went on to address the issue of costs, noting relevant correspondence including notice given by Mr Hakmi’s solicitors that if fundamental dishonesty failed, they would make an application for costs. The Court further noted that the trial went ahead and the Defendant continued to pursue fundamental dishonesty, which on exploration with Counsel was said to have been with “careful consideration”.

Of significance is this quotation taken from paragraph [133]:

“I do not accept that to make such an order, where a claimant fails, undermines the costs regime. If anything it is the converse, not to make such an order would give a defendant a free tilt at raising the issue of fundamental dishonesty. The evidence in this case was properly explored at the trial and found increasingly wanting. It would have been open to Mr de Bono to have abandoned the issue after the close of evidence, or indeed earlier, but he did not do so.”

The Court went further at paragraph [134]:

“It seems to me that I should make an order for costs that reflects that the defendants failed to establish fundamental dishonesty. As Mr Kellar has pointed out there was unfavourable national press coverage on the first day of trial and the consequences for Mr Hakmi, as I have said above, if the allegation had been found proved, would have been disastrous for his reputation and career. In my view, the order I make should reflect a percentage of the costs from the time that the issue was raised in the defendants’ counter-schedule, which is dated 18 March 2025. I consider that Mr Kellar’s submission that it should be 25% is too high, and accept in part Mr de Bono’s submission that some of the costs would have been incurred in any event.”

The Court ultimately ordered that the Defendants pay 15% of Mr Hakmi’s costs from the date the issue was raised in the Defendant’s Counter-Schedule to be subject to detailed assessment albeit on the standard not the indemnity basis.

Whilst it is right that the issues raised in both the authorities cited above are not new, it perhaps demonstrates a reinvigorated effort of the courts to entertain costs orders against Defendants where fundamental dishonesty is pursued through to trial and fails. Whilst there appears to be no cohesive approach as to when a court may ultimately award such costs, be that on the standard or indemnity basis, the following points seem to arise:

1. Allegations made without a proper basis or where evidence is “wanting” are more likely to attract the ire of the court;
2. Defendants should properly keep the question of fundamental dishonesty under review, including through trial and to the point of closing submissions;
3. The consequences of an allegation of fundamental dishonesty need to be considered in the context of each case including:
   • The additional work which may have been required (supplemental statements etc);
   • The strength of the evidence to support such an allegation;
   • The consequences of such an allegation (noting in Mr Hakmi’s case this had garnered negative press attention and the potential effect on his career); and
   • The conduct of the parties.
4. Simply because an allegation fails this does not create a presumption in favour of indemnity costs or a shifting of the burden of proof onto the Defendant.

The authority in this area should not be read so as to discourage Defendants from properly raising concerns about a Claimant’s honesty or credibility. However, the above hopefully serves as a cautionary tale as to the potential perils of alleging dishonesty particularly when such an allegation fails, and more so in circumstances where the evidence supporting the same is thin on the ground.