Neutral Citation Number: [2008] EWHC 1896 (QB)
Case No: BM80031A
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
ON APPEAL FROM THE BIRMINGHAM COUNTY COURT 
Case No. 7BM00846 (Mr Recorder Parkes QC)

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 31/07/2008

Before :

THE HONOURABLE MR JUSTICE WALKER
- - - - - - - - - - - - - - - - - - - - -
Between :

	(1) Mr Wasim UL-HAQ (2) Mrs Samara KHATOON (3) Mrs Zahida PARVEEN	Claimants and Respondents to the Appeal	
	- and -		
	Ms Anita SHAH 
 	Defendant and Appellant	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Mr Ralph Lewis QC and Mr Alasdair Brough (instructed by Morris Orman Hearle) for the appellant
The respondents were neither represented nor present at the hearing of the appeal.
Hearing date: 16 June 2008
- - - - - - - - - - - - - - - - - - - - -
Judgment
Mr Justice Walker : 
Introduction
1.	In May 2006 a collision occurred in Smethwick, Birmingham. The defendant, Ms Shah, drove her Peugeot car into a Rover car which was stationary in front of her, having stopped at traffic lights. The Rover car belonged to the first claimant, Mr Ul-Haq. It was common ground that he was in the driver’s seat of the Rover, and that also in the Rover were his wife (the third claimant, Mrs Parveen) and their two children. In addition, however, Mr Ul-Haq’s mother (the third claimant, Mrs Khatoon) said that she was in the Rover at the time of the collision. Mr Ul-Haq claimed against Ms Shah for minor damage to his car. In addition he, Mrs Khatoon, and Mrs Parveen all claimed against Ms Shah for minor whiplash injuries which they said were caused by the collision.
2.	Ms Shah admitted liability for the collision. The incident nevertheless gave rise to a fast-track trial before Mr Recorder Richard Parkes QC in Birmingham County Court. As the judge pointed out in his reserved judgment, the matter would never have come to trial if the only claims advanced had been those of Mr Ul-Haq and Mrs Parveen. The central issue he had to determine was whether or not Mrs Khatoon was really, as she and her fellow claimants maintained, a passenger in the car at the time of the collision. On that central issue Ms Shah advanced a counterclaim (1) seeking a declaration that Mrs Khatoon had not been in the car at the time of the collision, (2) seeking damages for deceit by Mr Ul-Haq, Mrs Khatoon, and Mrs Parveen in that regard, and (3) asserting that no claim should be allowed by Mr Ul-Haq and Mrs Parveen because they had been complicit in the fraudulent assertion that Mrs Khatoon was a passenger.
3.	The judge resolved the central issue in favour of Ms Shah. He found that Mrs Khatoon’s claim was entirely fraudulent as she had not been in the car at the time of the collision, and that Mr Ul-Haq and Mrs Parveen had conspired with Mrs Khatoon to present the fictitious claim that she was present. Accordingly the judge dismissed Mrs Khatoon’s claim with costs assessed on the indemnity basis at £2,666. He rejected a submission (“the Discretion Submission”) that in these circumstances he should strike out the claims by Mr Ul-Haq and Mrs Parveen. Having rejected that submission he went on to assess damages and interest payable to Mr Ul-Haq and Mrs Parveen in amounts of £2,585.38 and £2,259.37 respectively. Ms Shah’s counterclaim was dismissed by the judge: no declaration was needed in the light of the findings recorded in his judgment, no loss caused by the deceit had been identified, and the assertion about public policy had been dealt with by him when considering and rejecting the Discretion Submission. The judge concluded, however, that the deceitful conduct of Mr Ul-Haq and Mrs Parveen made it appropriate to order that each should pay two thirds of Ms Shah’s costs of defending their respective claims, that figure of two thirds being in each case assessed on the indemnity basis as £1,777. The total costs payable to Ms Shah were thus £6,220. The judgment sums payable to Mr Ul-Haq and Mrs Parveen totalled £4,844.75. The judge permitted these sums to be set off against the costs, leaving a net balance of £1,375.25 costs payable by Mr Ul-Haq, Mrs Khatoon and Mrs Parveen to Ms Shah. Ms Shah now appeals, by permission of HHJ McKenna sitting as a deputy High Court Judge, against the judge’s refusal to strike out the claims of Mr Ul-Haq and Mrs Parveen
The Discretion Submission
4.	Mr Brough appeared for Ms Shah at the trial. His skeleton argument seeking permission to appeal (“the Appellant’s Initial Skeleton Argument”) described the Discretion Submission in paragraph 3:
It was submitted on behalf of the Appellant that, by reason of their collusion in the Second Respondent’s fraudulent claim, the otherwise (genuine) claims of the First and Third Respondents should be struck out …
5.	This was reflected in the grounds of appeal in the Appellant’s Notice: 
The Judge erred in law in that :
(1) he should have struck out two Claimants’ claims ; and
(2) he should not have distinguished the case from the precedent referred to in the Skeleton Argument
6.	The foundation for the Discretion Submission lay in CPR 3.4 (2). So far as material, CPR 3.4 provides as follows
3.4-(1) in this rule… reference to a statement of case includes reference to part of a statement of case. 
(2) The court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim:
(b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order.
(3) When the court strikes out a statement of case it may make any consequential order it considers appropriate.
(4) … 
(5) Paragraph (2) does not limit any other power of the court to strike out a statement of case.
7.	The substance of the Discretion Submission involved two propositions. The first was that CPR 3.4 (2) gave jurisdiction, in that it conferred a discretion to strike out Mr Ul-Haq and Mrs Parveen’s claims at any stage prior to judgment. The second was that because Mr Ul-Haq and Mrs Parveen had colluded in Mrs Khatoon’s false claim the court’s discretion under CPR 3.4 should be exercised by striking out their claims. On both these propositions it was said that the judge should adopt the approach taken by HHJ Hawkesworth QC in Khan & Ors v Hussain & Ors (“the Khan case”). The Khan case was the case referred to in sub-paragraph (2) of the grounds of appeal. It was decided on 16 May 2007 by HHJ Hawkesworth QC sitting in Huddersfield County Court in his capacity as a Circuit Judge dealing with an appeal from a decision of a District Judge following a fast track trial. 
The facts and outcome in the Khan Case
8.	There were three claimants: Mr Khan, Mr Shah and Mr Mayat. They said that they were passengers in a car which was involved in a collision. There were two cars in the collision, one white and one red. The white car was driven by the first defendant Mr Hussain. The red car was driven by the second defendant Mr Ashraf. The first sentence of paragraph 2 of HHJ Hawkesworth’s judgment says that Mr Khan, Mr Shah and Mr Mayat alleged that they were passengers in Mr Hussain’s white car. It is clear, however, from the remainder of paragraph 2 and from the judgment as a whole that their allegation was that they were passengers in the red car. Mr Ashraf as driver of the red car brought a part 20 claim against Mr Hussain. 
9.	Mr Hussain was uninsured and the Motor Insurers Bureau (“the MIB”) was accordingly joined as third defendant. The MIB put in a defence which expressly denied that Mr Mayat was a passenger in Mr Ashraf’s car. At trial Deputy District Judge Smythe accepted this contention. However he stopped short of saying that each of Mr Kahn, Mr Shah and Mr Ashraf had fraudulently colluded in Mr Mayat’s claim, and he rejected a submission that such collusion would entitle him to strike out their claims. 
10.	HHJ Hawkesworth QC allowed an appeal by the MIB. He held that the Deputy District Judge ought to have held that Mr Khan, Mr Shah and Mr Ashraf were lying to support a false claim, so that one of their friends could recover damages in the accident when he was not in fact there at all (paragraph 6). HHJ Hawkesworth QC added at paragraph 9:
Unhappily such fraudulent claims are now legion.  They occupy the court time of District Judges and Circuit Judges in West Yorkshire literally week in and week out. My own judicial experience reflects, I have no doubt, that of many of my brethren throughout the country. Just about every variant of a fraudulent claim comes before the curt, including deliberately staged collisions, damage caused to vehicles which have never been in collision at all, claims deriving from the most trivial touching of vehicles, and claims in which a driver will assert that his car was carrying other members of his family including his children, when in fact none were present but all of whom have reported to a hospital or their General Practitioner that they have been injured, and who are then able to produce an apparently independent expert’s report confirming the fact of such injury. (Such was the case in respect of Mr Mayat). The cost to the insurance industry and to other honest policy holders must be very substantial. In addition, and of more relevance to these proceedings, the cost in court time in trying such cases is very high, with the added knock-on effect of casting suspicion onto many genuine claims so that claimants are put to proof of their legitimate and genuine claims for compensation when in other circumstances they might not have been called upon to do so.
11.	After referring to judicial observations in previous cases HHJ Hawkesworth QC said that Deputy District Judge Smythe ought to have held that he had power to strike out the three claims under CPR 3.4. Exercising that power afresh, HHJ Hawkesworth concluded that the claims should be struck out, and he accordingly allowed the MIB’s appeal.
12.	I turn to cases prior to the Khan case which HHJ Hawkesworth QC took into account in reaching his decision. 
Earlier cases
13.	The leading case on this aspect of the court’s discretion under CPR 3.4 is Arrow Nominees Inc v Blackledge  [2001] BCC 591. A petition had been brought in November 1998 alleging unfair conduct in relation to the affairs of a company (“the company”). The first petitioner (“Arrow Nominees”) owned 24% of the shares in the company. Arrow Nominees was controlled by Nigel Tobias (“Nigel”), the partner and co-habitee of Lorraine Blackledge (“Lorraine”). She was the second petitioner and was also the holder of 24% of the shares in the company. The remaining 52% was held by another company (“Blackledge plc”) which was owned by Graham Blackledge (“Graham”) and his wife Margaret Blackledge (“Margaret”), the uncle and aunt of Lorraine. The respondents to the petition were Graham, Margaret and Blackledge plc (“the Blackledge respondents”). Part of the claim concerned alleged agreements in 1994 (“the 1994 agreements”) as to terms on which Blackledge plc would supply merchandise to the company.
14.	In August 1999 Nigel and Lorraine swore affidavits recording that in May/June 1999 Nigel had placed forged letters in his accountant’s file and had altered certain diary entries. Nigel’s affidavit added that this represented the sum total of the evidence he had “created.” An initial strike out application was made by the Blackledge respondents, but it was unsuccessful. In a judgment given on 2 November 1999 Evans-Lombe J held that what was presented to him as the past conduct of Nigel did not justify the Draconian course of striking out. He went to emphasise that he was dealing with the application on the evidence then before him. If further evidence emerged to show that other documents had been suppressed or altered, the application could be renewed. The renewed application would be likely to succeed if the court were led to the view that “contrary to Nigel’s denials, he has not made a clean breast of his fraudulent activities.”
15.	The trial began on 10 November 1999. During the course of evidence for Nigel and Lorraine they and their witnesses were cross-examined extensively. At the conclusion of their case, and at the invitation of the judge, the Blackledge respondents led the evidence on which they wished to rely in connection with the falsification and destruction of documents. At that stage Evans-Lombe J heard submissions and concluded that Nigel had “not made a clean breast of his fraudulent activities,” and that in addition to the admitted forgeries there was a serious risk that further documents had been forged and that other documents containing relevant information damaging to the petitioners’ case had been destroyed. Evans-Lombe J nevertheless held, among other things, that the petitioners had shown a prima facie claim for relief and that the Blackledge respondents failed to establish a substantial risk that there could not be a fair trial of the issues raised by the petition. The reason for these holdings was that while Nigel’s fraudulent conduct prevented a fair trial of the part of the petition based on the 1994 agreements, Evans-Lombe J considered that it did not prevent a fair trial of other parts of the petition (“the unaffected complaints”).
16.	On appeal the Court of Appeal (Roch, Ward and Chadwick LJJ) struck out the petition. Chadwick LJ held at paragraphs 51-53 that the unaffected complaints gave rise to no arguable ground for relief. He continued at paragraphs 54-56:
54. It would be open to this court to allow the appeal against the judge's refusal to strike out the petition on that ground alone. But, for my part, I would allow that appeal on a second, and additional, ground. I adopt, as a general principle, the observations of Millett J in Logicrose Ltd v Southend United Football Club Ltd (The Times, 5 March 1988) that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules – even if such disobedience amounts to contempt for or defiance of the court – if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled – indeed, I would hold bound – to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.
55. Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. That, as it seems to me, is what happened in the present case. The trial was ‘hijacked’ by the need to investigate what documents were false and what documents had been destroyed. The need to do that arose from the facts (i) that the petitioners had sought to rely on documents which Nigel Tobias had forged with the object of frustrating a fair trial and (ii) that, as the judge found, Nigel Tobias was unwilling to make a frank disclosure of the extent of his fraudulent conduct, but persisted in his attempts to deceive. The result was that the petitioners' case occupied far more of the court's time than was necessary for the purpose of deciding the real points in issue on the petition. That was unfair to the Blackledge respondents; and it was unfair to other litigants who needed to have their disputes tried by the court.
56. In my view, having heard and disbelieved the evidence of Nigel Tobias as to the extent of his fraudulent conduct, and having reached the conclusion (as he did) that Nigel Tobias was persisting in his object of frustrating a fair trial, the judge ought to have considered whether it was fair to the respondents – and in the interests of the administration of justice generally – to allow the trial to continue. If he had considered that question, then – as it seems to me – he should have come to the conclusion that it must be answered in the negative. A decision to stop the trial in those circumstances is not based on the court's desire (or any perceived need) to punish the party concerned; rather, it is a proper and necessary response where a party has shown that his object is not to have the fair trial which it is the court's function to conduct, but to have a trial the fairness of which he has attempted (and continues to attempt) to compromise.
17.	Ward LJ agreed with Chadwick LJ. He added at paragraphs 72-75 and 77:
72 When exercising any power under the rules, the court must, by virtue of r 1.2, seek to give effect to the overriding objective. The overriding objective in its rightful place at the forefront of the rules is in these terms: 
(1) These Rules are a new procedural code with the overriding objective of enabling the courts to deal with cases justly.
(2) Dealing with a case justly includes, so far as is practicable–
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate–
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issue;
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly; and
(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases.’
It is not at all clear to me to what extent, if at all, the judge had the overriding objective in mind as setting out the parameters for the exercise of his discretion. He correctly saw at the beginning of his judgment that the source of his power to strike out lay in r 3.4 but he did not trace back through the case management rules to r 1.1. Even though this was a reserved judgment it may still be unfair to the judge to engage in too close a textual analysis of his judgment and infer from the omission of express reference to the overriding objective that he did not direct himself to it. Consequently I prefer to assume he had it in mind. Nevertheless, there is still every indication that he regarded the risk of a fair trial not being possible as the factor of crucial, even overriding, weight. It undoubtedly is a factor of very considerable weight. It may often be determinative. If the court is satisfied that the failure to disclose a document or the effect of a tampered document can no longer corrupt the course of the trial, then it would be a factor of much less and perhaps even little weight in considering a strike out. Where, in my judgment, Evans-Lombe J erred, was to treat the question of a fair trial as the only material factor. It was not: other matters have now to be put in the scales and weighed.
73 The attempted perversion of justice is the very antithesis of parties coming before the court on an equal footing. The matter has become hugely more expensive (to an extent we did not appreciate until we were told when application was made for a freezing order that the amount of the appellant's costs overall and on a solicitor and own client basis may be in the region of £1.5m). The judge commented at the beginning of his judgment (para. 2) that ‘the hearing has run for 29 days greatly exceeding the parties' estimate.’ The original estimate was three weeks and we were told another week to ten days would be required to conclude the matter even on the limited basis that the judge would still permit. The judge did not, however, treat cost and time as elements of the overriding objective. He did not appear to allot to the case an appropriate share of the court's resources while taking into account the need to allot resources to other cases. In this day and age they are elements of case management which must not only be seen to have been placed in the scales but also given due and proper weight when assessing how justice is to be done to the parties and to other litigants. The balance must be struck so that the case is dealt with in a way which is proportionate to the amount of money involved in the case, its importance and complexity and the financial position of the parties. Mr Tobias stood to gain much had his fraud gone undetected. He was seeking on behalf of the minority shareholders to wrest control of the company from the majority and he persisted in that claim even to the point of his cross-appeal. He bolstered his claim by what the judge found to be a ‘campaign of forgery’ and, more importantly, the judge was not satisfied with the explanation given for it. He found (para. 51): 
‘In his evidence Nigel sought to give the impression that his forgeries came about as a result of an impulsive moment of madness flowing from his disappointment that his case was not adequately supported by the documents. In my judgment, so far from that being the case, it is apparent that the process of forgery, which Nigel admitted to, was sophisticated and must have taken some time to complete including the special *647 manufacture of headed note paper of the defunct Tobias family company. But for the slip up with relation to the telephone number shown on the headings it would, in all probability, not have been discovered.’
Any notion that this was a petitioner coming to the Court of Equity with clean hands is utterly dispelled by the devastating conclusion in para. 44: 
‘I am not satisfied that I have received from Nigel a truthful picture of the circumstances of the forgeries which he admits.’
74. This was, therefore, a flagrant and continuing affront to the court. Striking out is not a disproportionate remedy for such an abuse, even when the petitioners lose so much of the fruits of their labour.
75. Even if the judge were correct in his analysis that all effect of the 1994 agreement could be excised from the petition and a prima facie case could be made out of what remained, I am quite clear that, if the CPR are to receive a correct start, then this court must make the clear statement that deception of this scale and magnitude will result in a party's forfeiting his right to continue to be heard.
…
77. I have had the opportunity to read in draft the copy of the judgment of Chadwick LJ and I agree with it. I have added these words of my own simply to underline that the principles to apply are those in the new procedural code. They are encapsulated by the need to do justice, case by case. In this case it is no more than justice in that broad sense that the petitioners should be denied the relief which they sought to obtain by persistent cheating.
18.	Roch LJ agreed with both judgments.
19.	There is nothing new about a party advancing a case which either in whole or in part is dishonest. It has long been recognised that a special rule applies to a dishonest claim under a policy of insurance. An insured who is discovered to have advanced such a claim will not merely be deprived of the amount of the fraudulent claim. The insured will also be debarred from recovering the amount of a claim which could have been made instead of the fraudulent claim: see Axa General Insurance Ltd –v- Gottlieb and Gottlieb [2005] EWCA Civ 112.
20.	In a non-insurance context the problems posed by a dishonestly exaggerated claim were considered by Gibbs J in Kelly –v- Churchill Car Insurance [2006] EWHC 18 (QB). In his judgment in that case Gibbs J made reference to observations of Laws LJ in Molloy –v- Shell UK Ltd [2001] EWCA Civ 1272. While Laws LJ had suggested that the court might refuse to entertain such a claim, Gibbs J took a different approach. In the case before him, new evidence emerged after trial. A sum of £1,500 had been agreed as the cost of repair of Mr Kelly’s car following a collision for which the defendant (“Churchill”), standing in the shoes of its insured, admitted liability. At trial Mr Recorder Lewis QC awarded sums for three additional heads of damage: (1) Pain, suffering and loss of amenity, (2) inconvenience, and (3) loss of earnings. He also awarded interest at a rate appropriate to each head of claim. The new evidence showed that each of heads (1), (2) and (3) had been advanced fraudulently. The approach taken by Gibbs J was explained in paragraphs 13-19 of his judgment:
13 Mr Skeate [counsel for Churchill], in the course of the adjournment before this hearing, helpfully set himself the task of seeking any authority which would support the application of a rule, similar to that relating to insurance claims, to partly fraudulent claims in negligence. His research led him to the judgment of the Court of Appeal in Molloy v Shell UK Limited [2001] EWCA Civ 1272.  The Court was there considering a fraudulent loss of earnings claim by the respondent/claimant (Molloy) in the context of what would have been the appropriate costs order by the court below. It was not concerned with the point as to entitlement or otherwise to damages which arises in the present case. However, in the course of his leading judgment at paragraph 18 Laws LJ said (obiter): “For my part I entertain considerable qualms as to whether, faced with manipulation of the civil justice system on so grand a scale, the court should once it knows the facts entertain the case at all save to make the dishonest claimant pay the defendant’s costs.”
14 I can, with respect to Laws LJ, see the attraction of the suggested approach. It would act as a deterrent to dishonest claims and demonstrate the court’s disapproval of the gross abuse of its process. At the same time, it is easily apparent that the approach, if widely adopted, would also give rise to the very difficult questions. For example, there would be the problem about where to draw the line. It is not uncommon for a claimant to be believed on one issue, but disbelieved on another. Mr Skeate invites me, if I accept this approach in principle, to define its scope and give guidance about it. He suggests that perhaps only gross or substantial abuse should lead to the Draconian measure of disallowing the claim altogether. He refers in this context to the Overriding Objective of the CPR “of enabling the court to deal with cases justly”, and submits that disallowing the claim altogether may be necessary in order to achieve that objective.
15 Having considered Mr Skeate’s submissions with care, I am not persuaded that I should depart from the basic principle of the law of negligence, and disallow compensation for proven or admitted loss caused by a tortfeasor. The fact that a claimant dishonestly puts forward unjustified heads of loss should not disentitle him in law from recovering such head or heads of loss as are indisputably made out. The special rule relating to avoidance of insurance claims is, as it seems to me, confined to the special considerations governing that area of the law. I can find no support for an equivalent or similar rule relating to claims in tort. …
16 In the present case, I think that the application of well-established principles can ensure that justice is done. I can vary or set aside as appropriate the relevant aspects of the Recorder’s findings on each head of damage, and penalise the respondent in costs, so as to place the appellant in no worse position (subject to enforcement) than it would have been if it had simply paid the respondent the amount it conceded it owed him. I can do so by having regard to the fresh evidence, and by assessing the effect that such evidence would probably have had on the Recorder’s findings.
17 First I set aside the damages for loss of earnings, which is fraudulent. I then have to consider the damages for pain suffering and loss of amenity and for inconvenience. The evidence in support of the former consisted simply of doctor’s notes, based, I am satisfied, solely on the respondent’s own reporting of his symptoms. The inconvenience suffered by the respondent was similarly based solely on what he himself said. It is possible that the respondent suffered some degree of pain suffering and/or inconvenience; but knowing the extent to which he has perjured himself in the course of these proceedings, I cannot be satisfied that what he said would have been sufficient to establish any ascertainable loss under these heads. The justice of the case is not served by referring these issues back for re-hearing. Accordingly I set aside the awards under these heads. The remaining head of loss for which damages were awarded was the cost of repair. This is admitted, and will accordingly stand. 
18 As regards interest, the court has a discretion whether or not to award interest. I am satisfied that discretion should be exercised to disallow interest, and that had he known the true position the Recorder would inevitably have reached the same view.
19 As regards costs, by CPR 44.3 (2)(a) the general rule is that the unsuccessful party should pay the successful party’s costs but (b) the court may make a different order; by (4)(a) the court must have regard to the conduct of the parties. In the present case, I have no doubt that the seriousness of the respondent’s conduct should be reflected by an order setting aside the order as to costs made by the Recorder, and by ordering the respondent to pay the costs of the original claim and of this appeal, both on an indemnity basis.
21.	It may be noted, however, that Gibbs J was not referred to Arrow Nominees, nor (despite the reference in paragraph 14 of his judgment to the overriding objective) were any submissions apparently addressed to him as to the exercise of a discretion under CPR 3.4 (2).
22.	Two “phantom passenger” cases decided prior to the Khan case were mentioned by HHJ Hawkesworth QC in his judgment in that case. The first of these “phantom passenger” cases was Ghalib and Ghaffar v Hadfield, a decision of HHJ Phillips after a trial at Preston County Court. In his judgment dated 29 January 2004 HHJ Phillips recorded that Mr Ghalib was the driver and Mr Ghaffar the front seat passenger in a Nissan car. Miss Hadfield’s Metro car collided with the Nissan car. In proceedings brought by Mr Ghalib and Mr Ghaffar Miss Hadfield accepted that the collision was caused by her negligence. A Mr Sadik alleged that he was a rear seat passenger in the Nissan at the time of the collision, and brought proceedings against Miss Hadfield. However notice of discontinuance of those proceedings was given four months before the trial. Mr Ghalib and Mr Ghaffar had said, and continued to say in their oral evidence, that Mr Sadik was in the car. HHJ Phillips found that both had lied when they said Mr Sadik was a passenger in the car at the time of the collision, and that their motive was to clothe Mr Sadik with a claim against Miss Hadfield which, in reality, he had never had. After examination of the judgments in Arrow Nominiees HHJ Phillips concluded that the proper approach was to consider two questions: (1) to what extent had the claimants  failed to help the court to further the overriding objective, taking into account the definition of that objective in CPR 1.1; and (2) whether, in the light of the conclusions on (1), to exercise the court’s discretion to strike out the statements of case under CPR 3.4 (2). 
23.	On question (1) there had been a failure to comply with the overriding objective in two principal respects. The first was that putting forward false witness statements calculated to mislead the court was the antithesis of helping the court to further the overriding objective of dealing with cases justly. The second was that by their conduct, far from saving expense, the claimants had increased the costs of the litigation substantially. A trial which should have lasted for a day or less lasted for two and a half days before judgment. It had received a disproportionate share of the court’s resources.
24.	Turning to question (2), three factors pointed towards a strike out. First, the breaches of CPR 1.3 were substantial. Second, the claimants’ claims were of limited value and the loss to them of those claims would itself be a limited one. Third, it was on the cards that a trial would have been avoided altogether had it not been for the breaches of the overriding objective. As against that three factors pointed away from a strike out. First, a fair trial of all relevant issues had taken place – in this respect, the case could be distinguished from Arrow Nominees. Second, the claimant’s misconduct was in relation to a claim by a third party which was no longer before the court. Third, there had been misconduct on the part of the defendant, who had deliberately lied about the occupants of her own car until entering the witness box. Weighing those factors HHJ Phillips decided not to strike out the claims. Turning to their substantive merits, however, he rejected the claimants’ evidence of injury on credibility grounds. 
25.	The second “phantom passenger” case was Patel and others v Ali, a decision dated 30 January 2006 by Mr Recorder Wilby sitting in the County Court. The second, third and fourth claimants in that case all said that they were passengers in the first claimant’s car at the time of a collision with a car driven by the defendant. It was accepted that the collision had been caused by the negligence of the defendant. Mr Recorder Wilby, however, was satisfied that there had been only two passengers in the car. He dismissed each of the second, third and fourth claimant’s claims as he was not satisfied that any one of them could be held to have been one of the two passengers. The first claimant’s otherwise valid claim was struck out under CR 3.4(2). Recorder Wilby took this course after directing himself that the two questions which arose were those identified by HHJ Phillips in the Ghaffar case, and concluding that the various factors in the case before him pointed in favour of exercise of the power to strike out. 
The analysis in Khan
26.	HHJ Hawkesworth QC at paragraph 10 of his judgment cited passages from Arrow Nominees. In reliance on those passages Mr Turner QC, on behalf of the MIB, submitted that under the CPR regime the court could introduce wider public interest considerations. Reference was made to the decision of HHJ Phillips in Ghalib, and to the decision of Mr Recorder J Wilby in Patel. Mr Turner distinguished Kelly v Churchill Insurance Company by basing his client’s appeal on the court’s powers under CPR to further the overriding objective.
27.	The submission of Mr Wilson in opposition to Mr Turner focused on the intrinsic justice of the particular case. There was extrinsic evidence supporting the claimed injuries. The dishonesty concerning Mr Mayat was collateral to the individual claims for damages. Reliance was also placed on a suggestion in the 2006 edition of Civil Procedure that:
If the failure to comply with a rule, practice direction or court order has not rendered a fair trial impossible, an order striking out a case, even for contumacious breach, is likely to be a breach of ECHR Article 6 as being a breach of the respondent’s right to determination of his civil rights and obligations at a fair and public hearing within a reasonable time by an independent tribunal.
28.	As to the last point, HHJ Hawkesworth QC said at paragraph 15 of his judgment:
In this case however the Claimants have had a hearing and in my judgment a fair trial has taken place. The Second Defendants have been able to rely upon material emanating principally from the police which has shown that the claim of Mr Mayat was fraudulent. While the argument in relation to Article 6 was fully developed by Mr Wilson on this appeal, it seems to me that the use of the CPR and in particular the provisions of the overriding objective are not inimical to the principles of proportionality. The balance of interests that has to be struck between the individual Claimant and the wider public interest is always a difficult one. However a restriction upon the right of a Claimant to pursue his own genuine claim where he is also supporting the fraudulent claim of a fellow litigant is not in my judgment disproportionate. 
29.	HHJ Hawkesworth QC referred to two other cases which in his view did not cast doubt upon the MIB’s primary submission that “the court has power under CPR 3.4 to strike out a claim where either individually or together claimants have sought to deceive the court and have hindered the search for justice by the filing of lying witness statements.” He noted a submission by Mr Wilson that the existence of a criminal sanction for the giving of perjured evidence and of the sanction of adverse costs orders would be sufficient to protect the public interest. As to that he commented that those sanctions were certainly ones which he had to bring into the equation in deciding where to strike a proper balance. 
30.	On this basis HHJ Hawkesworth QC concluded as follows:
My conclusion is however that the Deputy District Judge was wrong to reject the Second Defendant’s submission that he had the power to strike out the three claims under CPR 3.4. Accordingly it is open to me as an appellate court to exercise my discretion afresh. The three claims were all modest in value; £1,500 in the case of Mr Khan, £1,520 in the case of Mr Shah and £2,000 in the case of Mr Ashraf. Those claims I have little doubt would in all probability have been settled without the need for a trial on the issue of liability or quantum had they not allied themselves to the fraudulent claim of Mr Mayat. For all the reasons that Mr Turner QC has advanced on behalf of the Second Defendant I do not consider that I should regard their dishonesty as something purely collateral and therefore immune from the court’s exercise of its sanction to strike out under the CPR. Their own witness statements were an attempt to obstruct the just disposal of these proceedings; they failed to help the court to further the overriding objective; their cases should be struck out. Accordingly the appeal is allowed.
31.	I should also mention a case decided subsequent to the Khan decision. This is Bashir & Ors –v Ahmed & Ors, a decision of HHJ McKenna on 2 November 2007 during the course of a trial in Birmingham County Court. Two sisters, Sadia and Adila Bashir, were passengers in the car of their father, the first defendant Mr Bashir Ahmed, when it collided with another car allegedly driven by the second defendant Mr Asif Khaliq. As Mr Khaliq was not insured the MIB was joined as third defendant. Mr Ahmed’s insurers, Fortis Insurance Ltd, were joined as fourth defendant. At the trial neither Mr Ahmed nor Mr Khaliq were represented. HHJ McKenna found that Adila and Sadia had colluded with their father and with their mother Mrs Abida Nasreen and sister Tamina Bashir in fraudulently asserting that the latter were also passengers. Adopting the approach of HHJ Phillips in Ghaffar and that of HHJ Hawkesworth QC in Khan, HHJ McKenna’s analysis of relevant factors led him to conclude that he should dismiss not only the fraudulent claims of Mrs Abida Nasreen and Miss Tamina Bashir but also the genuine claims of Adila and Sadia Bashir. 
The Judge below
32.	The judge noted that it was accepted by Mr Pitchers for the claimants that the court had jurisdiction to strike out. As to the exercise of that jurisdiction the judge said in paragraphs 26 and 27 of his judgment;
26. … It follows from my primary conclusion that the First and Third Claimants have colluded in advancing a false claim by the Second Claimant, but it does not follow that their own claims are false or that they themselves did not suffer injury. They were undoubtedly in the car when it was struck at a speed which, taking the evidence as a whole, I find was somewhere between 4 and 10 mph. In the circumstances it would not be surprising if the First and Third Claimants [suffered] some mild whiplash injury. But should I prevent them from recovering because of what I have found was their collusion – and in my view particularly the First Claimant’s collusion, he plainly being the dominant figure – in a fraudulent claim by another person? That is what Mr Brough urges on me, in reliance on the decision of Judge Hawkesworth QC in the case of Khan and others v Hussein & others, where a claim was struck out under CPR 3.4(2) after a trial involving very similar facts to the trial of the present action. … 
27. I have looked at the authorities referred to by Judge Hawkesworth QC, and in my judgment none quite supports the submission for which Mr Brough contends. …
33.	The judge’s analysis of the authorities led him to identify four classes of case. The first was the rule about insurance claims. That did not apply because these were not insurance claims. The second involved cases where for good public policy reasons a claim or head of loss founded on an illegal act would not be permitted. For example, it was not possible to claim for the loss of earnings which could only have been gained through deceit. This, too, had no application to the present case. The third class of case fell within the principle of Arrow Nominees. Here the judge cited Chadwick LJ’s observation that a litigant who was determined to pursue proceedings with the object of preventing a fair trial had forfeited his right to take part in the trial. As to that, the judge said:
I do not think that the First or Third Claimant fall into that category either, nor that a judgment in their favour would be unsafe.  There is no reason to suppose that their own individual claims have been dishonestly advanced, although in the circumstances I must naturally examine their evidence as to injury and loss with particular care.
34.	As to the fourth class of case, the judge said:
“Fourthly, there are dicta of Laws LJ in a short ex tempore judgment in Molloy –v- Shell UK  [2001] EWCA Civ 1272 which suggest  that the right course may be dismissal of a claim when the court is faced with ‘manipulation of the civil justice system on so grand a scale’ (that was a case where an injured claimant put forward a false claim for loss of earnings when in reality he had found further employment) but Laws LJ’s remarks were obiter and are, it seems to me, of uncertain application. In particular, I do not think that it would be right to regard them as extending to a case where two claimants, although involved in supporting a false claim by another person, themselves advance apparently sustainable claims
35.	The judge then stated that he found more assistance in the judgment of Gibbs J in Kelly –v- Churchill. He cited passages from the judgment of Gibbs J set out above and noted that Gibbs J considered that the application of well established principles could ensure that justie was done, in part by making an order for indemnity costs. 
36.	At paragraph 29 the judge turned to the judgment of Ward LJ in Arrow Nominees and the approach taken by HHJ Hawkesworth QC in Khan, saying:
Judge Hawkesworth QC decided his case on a different basis, foreshadowed by the judgment of Ward LJ in Arrow Nominees, and not apparently canvassed before Gibbs J in Churchill Car Insurance –v- Kelly. Ward LJ considered the impact of the Civil Procedure Rules, holding that the question of whether a fair trial could be held was only one factor to be put in the scales. Bearing in mind the overriding objective of the CPR as set out at CPR 1.1 he found the attempted perversion of justice in that case to be the very antithesis of parties coming before the court on an equal footing, and to have taken a wholly inappropriate share of the court’s resources, and regarded the striking out of the claim as a proportionate remedy for the petitioners’ abuse. Even if the judge was right to conclude that a prima facie case could be made out for what remained of the claim once the tainted material was cut away, Ward LJ was clear that the court ‘must make the clear statement that deception of this scale and magnitude will result in a party’s forfeiting his right to continue to be heard’ ([75]). Following that guidance, Judge Hawkesworth QC decided that he could not regard the dishonesty of the other claimants as purely collateral to the dishonesty of the one claimant whose whole claim was fraudulent: their own witness statements were an attempt to obstruct the just disposal of the proceedings, they failed to help the court to achieve the overriding objective, and in consequence their claims were struck out under CPR 3.4.
37.	At paragraph 30 the judge expressed his conclusions in this way:
In the present case, the First and Third Claimants have put their names to Particulars of Claim which confirm the truth of what I have found to be the false claim of the Second Claimant. They did not sign the statement of truth themselves, but they must have authorised their solicitor to do so. They have put in and signed false witness statements placing the Second Claimant in the car with them, and they have given false evidence to the same effect. If they had not done so, there would have been no trial of liability and it is highly unlikely that there would have been any dispute about damages. The claim has in effect been ‘hijacked’ by the need to deal with a fraudulent claim by one of the three claimants, colluded in by the others. The Claimants’ behaviour has been the antithesis of assisting the court to achieve the overriding objective. It has placed the defendant and her insurer on a footing which has been far from equal, it has incurred a great deal of unnecessary expense, and it has wasted the court’s time. All this is true, and extremely serious. I am prepared to accept (given Mr Pitchers’ concession) that there is a jurisdiction under CPR 3.4(2)(c) to strike out a claim after trial, even though – but for failure to comply with the rules – the claim is perfectly sustainable in itself. Nonetheless, it seems to me that the jurisdiction to strike out even during a trial is likely to be exercised very rarely (see eg per Colman J in National Westminster Bank plc –v- Rabobank Nederland [2006] EWCH 2959),  and it will be rarer still at the conclusion of a trial. The main function of CPR 3.4(2), it seems to me, is the case management function of enabling the court to dispose of issues and claims in advance of trial (see in particular CPR 1.4(2)(c)), whether because they are hopeless, or abusive, and thereby to save time and costs, or because a fair trial would not be possible, not to penalise a claimant who – though in some respects dishonest – has put forward an otherwise sustainable claim which has been fairly tried and properly determined. Arrow Nominees, by contrast, was a case which was stopped before trial, where its continuation would have given rise to a substantial risk of injustice. I therefore respectfully decline to follow the course taken by Judge Hawkesworth QC, and will not strike out the First or Third Claimant’s claims. That is not to rule out the possibility of costs consequences of the kind envisaged by Gibbs J in Churchill Car Insurance, which will be a matter for argument. 
The submissions on appeal
38.	Mr Ul-Haq and Mrs Parveen did not attend the hearing of the appeal. Nor did anyone attend on their behalf: they have withdrawn instructions from their legal representatives. 
39.	Mr Ralph Lewis QC for Ms Shah supplemented the Appellant’s Initial Skeleton Argument with a Further Skeleton Argument date 9 June 2008. He submitted that it was quite wrong of the judge “to continue to entertain” the claims of Mr Ul-Haq and Mrs Parveen and award them damages. He identified four respects in which the judge had been wrong:
i)	The judge had rightly held that the fraudulent plot must have been hatched in the short period of perhaps an hour or so between returning from the scene of the collision and setting off for the hospital. Mr Lewis submitted that it must have been initiated by Mr Ul-Haq and/or Mrs Parveen, for Mrs Khatoon was Mr Ul-Haq’s mother and could not speak English. He submitted that the judge had failed to factor in that Mr Ul-Haq and Mrs Parveen were initiators and prime movers behind the fraud.
ii)	The judge had relied on the decision of Gibbs J in Kelly v Churchill. However there was a significant distinction between the case of dishonestly over-egging the claim on the one hand and otherwise legitimate litigation which had been cynically engineered to encompass and conceal a spurious claim by an additional “party”. The first involved simple mendacity while the second involved abuse of process.
iii)	The judge’s comments in paragraph 30 of his judgment showed a reluctance to employ CPR 3.4 after hearing the evidence at trial. However in the present case cross-examination during trial had been the earliest opportunity for Ms Shah to demonstrate that Mr Ul-Haq and Mrs Parveen had abused the process of the court in the way that they did. Further, the court’s powers of case management remained available until the end of the litigation. 
iv)	The judge had failed to have regard to public policy, which required that the court address the growing problem of motor insurance claim fraud, and “phantom passenger” claims in particular. The phenomenon of “phantom passenger” claims had rightly been of concern to HHJ Hawkesworth QC in Khan, and had become sufficiently widespread to have given rise to the decisions in Ghalib, Patel and Bashir. Mr Lewis submitted that other court users and honest holders of motor insurance policies had a legitimate expectation that courts would utilise all the case management powers available to them in appropriate cases to discourage misuse of the courts resources and attempts to obtain insurance monies by fraud in this way.
40.	Mr Lewis also sought to argue that the judge had been wrong to say that the claims of Mr Ul-Haq and Mrs Parveen had been the subject of a fair trial. On the contrary the judge ought not to have made any finding that Mr Ul-Haq and Mrs Parveen were injured at all, for their credibility was irretrievably damaged – or could not fairly be assessed - by their participation in the fraud. Lest it were concluded that this did not fall within the appellant’s notice, Mr Lewis put forward a proposed amendment along with written submissions in support. 
Analysis
41.	I am persuaded that Mr Lewis’s third criticism of the judge’s approach is sound. Paragraph 30 of the judgment refers to CPR 3.4 (2)(c), whereas Mr Lewis on the appeal focussed on CPR 3.4 (2)(b). Whether sub paragraph (b) or sub paragraph (c) is adopted may not matter greatly for present purposes. What troubles me is that the judge in paragraph 30 approached the matter on the basis of a proposition that CPR 3.4 (2) had as its main function intervention where a fair trial would not be possible, and accordingly that action against a claimant who had been in some respects dishonest but had put forward an otherwise sustainable claim which had been fairly tried and properly determined would be action falling outside the main function of CPR 3.4 (2). That proposition is manifestly inconsistent with the judgment in  Arrow Nominees of Ward LJ with whom Roch LJ agreed. 
42.	I also consider that there is force in Mr Lewis’s second criticism. It seems to me that the judge gave overriding weight to the decision in Kelly v Churchill. However that was not a case where CPR 3.4 (2) was relied upon. I consider that the analysis by Gibbs J in Kelly v Churchill is valuable, but I do not think that in a case under CPR 3.4 (2) it can have overriding weight, for it was decided without reference to the Court of Appeal decision in  Arrow Nominees.
43.	More generally, in my view the questions of law arising in a case of this kind under CPR 3.4(2) in the light of the decision in Arrow Nominees were accurately identified by HHJ Phillips in Ghaffar. The first question involved analysing the extent to which a claimant had acted contrary to the overriding objective. The second question involved examining whether, in the light of the court’s conclusions on the first question, it would be right to exercise the discretion to strike out the claimant’s statement of case. These questions are clearly set out in HHJ Hawkesworth QC’s judgment in Khan, but I have not found any reference to them in the judgment below, or any recognition that the approach identified by HHJ Phillips is the correct approach. 
44.	The discretion exercised by the judge below was a case management discretion. It follows that I must be particularly cautious before interfering with it. Nevertheless for the reasons I have given I conclude that the discretion was exercised on a wrong basis and I therefore proceed to consider for myself the appropriate way in which as a matter of discretion I think it right to exercise the powers under CPR 3.4 (2). Starting with the first question, the extent to which there had been a breach of the overriding objective, participation in a fraudulent attempt to mislead the court was a serious breach of the overriding objective of dealing with cases justly. Participating in the fraud also increased the costs of litigation and wasted the courts resources, for it necessitated a trial in circumstances where the individual claims of Mr Ul-Haq and Mrs Parveen would probably not have required a trial at all. In his first criticism of the judge’s approach, Mr Lewis seeks to argue that Mr Ul-Haq and Mrs Parveen were more than mere participants in the fraud and must have been the instigators and prime movers. The judge certainly considered that Mr Ul-Haque was “the dominant figure” – see the quotation above from paragraph 26 of his judgment. I doubt whether the evidence before the judge enables me to go beyond this. It is right that the decision to advance a fraudulent claim on behalf of Mrs Khatoon must have been taken shortly after the accident. In that period, however, Mr Ul-Haq and Mrs Parveen were with Mr Ul-Haq’s father at his home. The judge found that Mr Ul-Haq’s father also gave dishonest evidence. While it may be unlikely that Mrs Khatoon instigated the fraud, it is impossible to say with the requisite degree of confidence that any one or more or Mr Ul-Haq, Mrs Parveen and Mr Ul-Haq’s father is likely to have been the instigator. I do not think that I can properly characterise the breach of the overriding objective by Mr Ul-Haq and Mrs Parveen as being a breach which they instigated, as opposed to being a breach which they participated in. 
45.	Turning to the second question, there are factors which point in favour of striking out. First, as the judge found, the breaches of the overriding objective were extremely serious. Second, striking out the claims of Mr Ul-Haq and Mrs Parveen would not deprive them of particularly substantial sums. Mr Lewis, in his fourth criticism of the judges approach, asserts that a further significant factor is a legitimate expectation that the court would take steps to counter the growing problem of motor insurance claim fraud. I can well understand HHJ Hawkesworth QC’s concern about frauds of this kind generally and the current prevalence of “phantom passenger” claims in particular. On the material available to me, however, I do not think that this can be regarded as a particularly strong consideration in the context of CPR 3.4 (2), and certainly not as an overriding consideration. There are many types of fraudulent claim, and at any one time there will be particular types that are prevalent. The common law, whether for good reasons or for bad, has identified fraudulent claims under insurance policies as calling for a special rule. The flip side to that particular coin is that outside the area of claims under insurance policies there is no special rule for particular classes of case. CPR 3.4 (2) enables a court to strike out a claim by reference to the factors identified in Arrow Nominees. Those factors will be case specific. If particular classes of claim are said to require a more severe application of CPR 3.4 (2) than other classes of claim, then there is a risk of elevating those classes of claim into a special category akin to that which the common law only recognises in relation to insurance claims. Moreover, as Gibbs J observed, there are other ways - apart from striking out - of penalising wrongdoers. In the present case the award of indemnity costs led to an overall result under which Mr Ul-Haq and Mrs Parveen got no benefit at all and were liable to pay a net balance to Mr Shah -  on top  of such liability as they may have had to pay their own legal teams costs. For all those reasons I do not think it would be right to take the approach of HHJ Hawkesworth QC in this respect.
46.	It may be recalled that HHJ Hawkesworth had regard to the existence of a criminal sanction for the giving of perjured evidence. In the present case I have no information as to whether there are likely to be criminal proceedings against anyone. I therefore treat this aspect of the matter as neutral.
47.	Turning to factors pointing against striking out, the judge found misconduct of Mr Ul-Haq and Mrs Parveen only in relation to a claim by another party. A second point in this regard, and in my view a particularly important one although not overriding, is that the judge considered that a fair trial of all relevant issues had taken place. In both these respects Mr Lewis seeks to contest the judge’s conclusions. In that regard he would wish to rely upon the points which he urges in the proposed amendments to the appellant’s notice and in his written submissions. 
48.	The judge found that Mr Ul-Haq and Mrs Parveen genuinely suffered the minor injuries for which they claimed. I consider that any challenge to this finding undoubtedly requires permission to amend. I refuse permission, for I can see no reason to think that the judge – dealing as he was with a fast track trial – approached this aspect of the matter in the wrong way. In particular: 
i)	In paragraph 27 of his judgment the judge said expressly that in the circumstances he must examine their evidence as to injury and loss with particular care. Mr Lewis has asked me to examine some of the documentary material. I decline to perform a partial exercise of this kind. The judge saw and heard the evidence, and he had the whole of the documentary material before him. The mere fact that Mr Ul-Haq and Mrs Parveen had lied in support of Mrs Khatoon’s claim did not prevent the judge from concluding they had themselves suffered injury. 
ii)	Mr Lewis drew attention to passages in paragraphs 26 and 27 of the judgment. In paragraph 26 the judge said “it follows from my primary conclusion that [Mr Ul-Haq and Mrs Parveen] have colluded in advancing a false claim by [Mrs Khatoon], but it does not follow that their own claims are false or that they themselves did not suffer injury.” In paragraph 27 of the judgment the judge said that there was “no reason to suppose” that Mr Ul-Haq and Mrs Parveen’s individual claims had been dishonestly advanced. In my view the reason the reason the judge expressed himself in this way was that there was no express assertion by Ms Shah that Mr Ul-Haq and Mrs Parveen’s individual claims were fraudulent. This can be seen in the stance of Ms Shah in the re-amended defence and counterclaim. In paragraph 1 care was taken to state that Ms Shah alleged that the claim made by Mrs Khatoon was constructed for the purposes of financial gain and was fraudulent. No such allegation was made in relation to Mr Ul-Haq and Mrs Parveen. Similarly, the Appellant’s Initial Skeleton Argument made reference (as quoted above) to the “genuine” claims of Mr Ul-Haq and Mrs Parveen. If there had been any argument that the alleged injuries of Mr Ul-Haq and Mrs Parveen had been concocted then I have no doubt that the judge would, in this painstaking reserved judgment, have examined the argument and analysed it with care.
49.	There is a further factor which in my view calls for careful consideration. This concerns the precise nature and extent of the dishonest conduct, as assessed when answering the first question. Mr Lewis suggested a distinction between “mere mendacity” and “abuse of process”. I do not think it is as simple as that. The circumstances of individual cases will be particularly important. In some the harm caused by lying and the blameworthiness of the individual may be small. In others the position may be different to varying degrees. In the present case, as the judge said, the wrongdoing was extremely serious. It was not, however, the worst of its kind. It did not, for example, involve the forgery of documents. Nor did it involve a determination to persevere with dishonesty even after being found out. Both these factors were present in Arrow Nominees and in my view were important factors in the decision to strike out the petition in that case. 
50.	Weighing all these factors I consider that this is a case where the lies about Mrs Khatoon had no substantial impact on the court’s ability to resolve the case fairly. There was an impact on the individual claims of Mr Ul-Haq and Mrs Parveen in this sense: if they had not lied about Mrs Khatoon their claims would have been settled without a trial. I do not accept that there is any reason to think that their lies about Mrs Khatoon made it impossible for the court to consider their claims fairly. Their lies were extremely serious. For the reasons I have given, however, they did not involve conduct falling squarely within a category which could be described as of the worst kind. It is important that, outside the special class of insurance claims, other fraudulent claims are not routinely treated in the exceptional way which the common law recognises is appropriate in the context of insurance. Exercise of the court’s power to award indemnity costs against Mr Ul-Haq and Mrs Parveen in the manner adopted by the judge deprives them of any practical benefit from the bringing of proceedings, and thus effectively forfeits their genuine claims to damages. Moreover it exposes them to a significant net liability to pay costs. In my view this outcome justly reflects the seriousness of their breaches of the overriding objective, and there is no additional need to strike out their claims. The upshot is that I consider it right to make the order which was in fact made by the judge.
Conclusion
51.	I have reached the same conclusion as the judge, albeit by a different route. It follows that this appeal must be dismissed.