Isn’t that a super dumb argument to bring?

YES. But this is a civil case and not a criminal one, which is something to keep in mind: the rules are different. I'm not in the UK and am not all that familiar with their courts, but in general a judge hearing a civil (non-criminal) matter has much wider latitude than a yes or no decision, even when a simple yes or no decision is being requested. Judge have options and know how to use them.

If this suicidality is a lie, that's not new. It is the way of dishonest individuals to frame an issue as a false dichotomy, presenting a situation as having only two options in a way that the preferred option must be the road taken, and these are usually wreathed in misinformation and important omissions of fact. A judge has to approach it as true and hear it anyway, but generally speaking a judge is also allowed to then decide a claimant is lying, and to proceed on that basis.

Judges have already heard it all: this is not the first time this particular judge has been in the position of hearing an emotionally manipulative, possibly dishonest pleading. It's not going to go unnoticed. Because there's money involved and a legal team making the claim, the claimant himself will probably not suffer too much, but his legal team may be forced to provide further evidence, and if local law allows, the claimant's own past behavior brought into play.

Someone else in the thread posted the identity of this guy, and if it's the same one, there is a LOT of past behavior. Again, I'm not familiar with UK courts, but at some point (if local law allows) a judge is going to question why, if suicidality upon discovery of wrongdoing is such an issue for the claimant, the claimant has not restricted his own behavior or sought help for it, given that he is insisting his life is now on the line.

Unfortunately, there is another case going on in the UK right now, that of a Cambridge professor who killed himself this year after being accused of professional dishonesty. It is getting a lot of press, with a number of highly-placed people being held accountable for the various ways in which their actions may or may not have caused this young professor to take his own life. It is possible that today's unnamed guy's legal team is looking at those same headlines and seeing if they can turn the legal wind of current events to their own advantage by giving the judge reason to err on the side of excess caution.