In a significant shift for Q1 2026, the Court of Appeal has penalised a defendant with indemnity costs following a failed application to dismiss a claim under Section 57.

The ruling in Hakmi v Various (January 2026) is an update for insurers and solicitors: pleading fundamental dishonesty without a robust, objective evidentiary basis now carries a direct financial penalty that bypasses standard cost caps.

The End of “Tactical” Dishonesty Pleas

For several years, alleging Fundamental Dishonesty (FD) became a frequent defensive maneuver to neutralise Qualified One-Way Costs Shifting (QOCS). However, the Hakmi decision suggests the judiciary’s patience with speculative FD pleas has exhausted.

The court clarified that while Section 57 remains a mandatory tool to strike out dishonest claims, the burden of proof rests heavily on the defendant. Simply pointing to “clinical inconsistencies” or “unusually high symptoms” is no longer sufficient to trigger a strike-out. If the defendant fails to prove dishonesty at trial, they are increasingly likely to face indemnity costs, which are significantly more punitive than standard costs.

The Rising Cost of Procedural Delay

While practitioners may still elect to reserve their position on fundamental dishonesty until after the exchange of evidence, the “wait and see” approach now carries significant cost liabilities. Under the 2026 landscape, if a defendant maintains an allegation of dishonesty in court without a “smoking gun,” they are no longer just risking a lost application—they are risking indemnity costs for the duration of that plea.

The strategy is shifting from “wait and see” to “vet and verify” at the earliest possible stage.

Pleading dishonesty is increasingly seen by the judiciary as a serious professional step that must be justified by available evidence at the time of the plea, rather than a tactical placeholder.

Impact on Medico-Legal Instructions

The 2026 landscape places a higher premium on the initial medical screening to identify risks early. A recurring theme in recent appellate decisions is the sharp distinction between a claimant who is “unreliable” and one who is “fundamentally dishonest.”

The courts are increasingly critical of Section 57 allegations that fail to account for functional overlay—where a claimant’s symptoms are real to them but lack an organic medical explanation. If an expert cannot definitively rule out a psychological or non-organic cause for the presentation, a fundamental dishonesty plea is unlikely to succeed.

To mitigate the risk of indemnity costs, any such plea must now be supported by objective evidence that goes beyond clinical suspicion:

• Objective Contradictions: Direct evidence (such as social media activity, DWP records, or surveillance) that proves the claimant is physically performing tasks they told the medical expert were impossible.

• Differential Diagnosis: Specialist testimony that specifically addresses the “malingering vs. functional overlay” divide, providing a clear clinical basis for why the presentation is a deliberate attempt to deceive.

Sources:

• Court of Appeal: Hakmi v Various [2026] EWCA (Decided 16 January 2026).

• Statute: Section 57, Criminal Justice and Courts Act 2015.

• Rules: CPR 44.16 (Exceptions to QOCS) and CPR 44.3 (Court’s discretion as to costs).

• Government Report: Public Accounts Committee (PAC) – Clinical negligence in the NHS (30 January 2026).

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