What you need to know
- In the absence of an affidavit of verification, an application under Section 26 to dismiss an action will fail where the exaggerated claim is withdrawn before trial.
- Adverse legal costs orders remain the primary penalty for fraudulent claims which are unverified and withdrawn before trial.
- Defence teams must secure affidavits of verification in advance of trial.
Section 26 of the Civil Liability and Courts Act 2004 provides a significant statutory mechanism for addressing fraudulent and exaggerated personal injury claims in Ireland. For many years, it has served as an important safeguard for defendants and insurers by making clear that dishonesty may result in the complete dismissal of a plaintiff's claim.
However, the recent Court of Appeal decision in Lynch v Motor Insurers Bureau of Ireland highlights a significant procedural limitation in its application. The judgment confirms that Section 26 cannot be used to dismiss an action if an exaggerated head of claim is formally withdrawn prior to trial and was never verified by an affidavit. This judgment raises critical questions regarding the efficacy of the current statutory framework in dealing with dishonest claims.
The plaintiff initiated personal injury proceedings following a road traffic accident, claiming €621,388 for alleged loss of earnings. This claim was based on the assertion that his injuries prevented him from continuing his work as a stonemason.
Prior to the case being heard in the High Court, the defendant obtained video surveillance showing the plaintiff carrying out physically demanding construction work without any apparent difficulty. One day before the High Court hearing, the plaintiff withdrew his claim for loss of earnings. At trial, the defendant sought dismissal of the proceedings in their entirety, arguing that the withdrawn claim for loss of earnings was knowingly false and amounted to fraudulent conduct.
The High Court declined to dismiss the case. The trial judge accepted that the claim was significant and had been advanced dishonestly. However, the claim had been withdrawn before the commencement of the trial. Crucially, the plaintiff had not provided an affidavit of verification verifying the particulars in question. As a result, the statutory requirements for dismissal under Section 26 were not satisfied. However, the plaintiff was ordered to pay the defendant’s costs for the loss of earnings claim.
The Court of Appeal upheld this strict interpretation of the legislation. As the exaggerated claim had been withdrawn before it was relied on as evidence at trial and no verifying affidavit had been sworn, the Court held that it did not have authority to dismiss the proceedings in full.
Conclusion
Ultimately, this decision serves as an important reminder of the strict and literal approach adopted by the Irish courts when interpreting the provisions of Section 26. The decision highlights a gap in the current statutory framework, where plaintiffs may advance inflated and unverified claims during the early stages of litigation and later withdraw them without automatically putting their entire claim at risk. The judgment confirms that pre-trial dishonesty may still have consequences, including adverse costs implications. However, it also demonstrates the limitations of the existing legislation. Until this legislative gap is addressed, defendants and insurers must focus on securing affidavits of verification at an early stage, ensuring that any potential exaggerations are identified and challenged at the earliest opportunity.
For more information and expert advice, contact a member of our Insurance & Risk team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
