Fraud in RTA Claims - Litigation Tactics & Procedures for Claimants Adam Gadd Friday 4th September pumpcourtchambers.com

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1 Fraud in RTA Claims - Litigation Tactics & Procedures for Claimants Adam Gadd Friday 4th September 2015 pumpcourtchambers.com

2 Fraud in RTA Claims - Litigation Tactics & Procedures for Claimants Background Responsibilities of solicitors/counsel Pleadings Burden of proof Disclosure Fairclough Homes v Summers Fundamental dishonesty in QOCS Fundamental dishonesty s.57 Courts and Criminal Justice Act 2015 Committal

3 Background Greater awareness of fraudulent claims Increasing cost to the insurance industry 2.1 billion cost, 50 per policy Consequent increasing media coverage and government action Increased varieties of fraud Increased specialisation by lawyers

4 Background What is fraud? Derry v Peek (1889) 14 App. Cas 337 A false representation made knowingly without belief in its truth or reckless as to whether it was true or not

5 Responsibilities of solicitors/counsel Medcalf v Mardell [2002] UKHL 27 It was unfair to make wasted costs orders against leading and junior counsel, who had allowed allegations of fraud and other impropriety to be made in a draft notice of appeal to which they had put their signatures, where legal professional privilege precluded them from adducing evidence as to whether they had had any reasonably credible material before them to prove those allegations.

6 Responsibilities of solicitors/counsel At the preparatory stage the requirement is not that counsel should necessarily have before him evidence in admissible form but that he should have material of such a character as to lead responsible counsel to conclude that serious allegations could properly be based upon it.

7 Counsel s duty under Code of Conduct Responsibilities of solicitors/counsel rc9 Your duty to act with honesty and integrity under CD3 includes the following requirements:.1 you must not knowingly or recklessly mislead or attempt to mislead anyone;.2 you must not draft any statement of case, witness statement, affidavit or other document containing:.a any statement of fact or contention which is not supported by your client or by your instructions;.b any contention which you do not consider to be properly arguable;.c any allegation of fraud, unless you have clear instructions to allege fraud and you have reasonably credible material which establishes an arguable case of fraud;.d (in the case of a witness statement or affidavit) any statement of fact other than the evidence which you reasonably believe the witness would give if the witness were giving evidence orally;

8 Responsibilities of solicitors/counsel Reasonably credible material includes material that is not yet in trial ready form (see Medcalf v Mardell)

9 Pleadings CPR 16.5 Contents of defence (1) In his defence, the defendant must state (a) which of the allegations in the particulars of claim he denies; (b)which allegations he is unable to admit or deny, which he requires the claimant to prove; and but (c)which allegations he admits.

10 Pleadings (2)Where the defendant denies an allegation (a)he must state his reasons for doing so; and (b)if he intends to put forward a different version of events from that given by the claimant, he must state his own version. (3)A defendant who (a)fails to deal with an allegation; but (b)has set out in his defence the nature of his case in relation to the issue to which that allegation is relevant; shall be taken to require that allegation to be proved.

11 Pleadings 16PD 12 Personal injury claims 12.1 Where the claim is for personal injuries and the claimant has attached a medical report in respect of his alleged injuries, the defendant should: (1) state in his defence whether he (a) agrees,(b) disputes, or(c) neither agrees nor disputes but has no knowledge of, the matters contained in the medical report, (2) where he disputes any part of the medical report, give in his defence his reasons for doing so, and(3) where he has obtained his own medical report on which he intends to rely, attach it to his defence.

12 Pleadings 12.2 Where the claim is for personal injuries and the claimant has included a schedule of past and future expenses and losses, the defendant should include in or attach to his defence a counter-schedule stating: (1) which of those items he (a) agrees,(b) disputes, or(c) neither agrees nor disputes but has no knowledge of, and (2) where any items are disputed, supplying alternative figures where appropriate.

13 Pleadings Hussain v (1) Amin (2) Charters Insurance Ltd [2012] EWCA Civ 1456 As to C's pleaded defence, it was perfectly proper to join issue on the primary facts alleged in the particulars of claim and as to whether there had been negligence and whether the claimed losses had been caused thereby. But the defence went much further, setting out a number of matters which, it was alleged, raised "significant concerns" as to whether or not this had been a staged accident requiring further investigation. Such a pleading could possibly be justified as an initial holding defence. But it was a case pleaded on insinuation, not allegation.

14 Pleadings Hussain v (1) Amin (2) Charters Insurance Ltd If C considered that it had sufficient material to justify a plea that the claim was based on a collision which was a sham or a fraud, it behoved it properly and in ample time before trial so to plead in clear and unequivocal terms and with proper particulars. Thereafter the burden of proof would of course have been on C to establish such a defence. A pleading of the type served by C should not be sanctioned (paras 18-19

15 Pleadings Common features of fraud defences: Links between occupants of vehicles (database searches, social media etc) Inconsistencies in evidence eg medical evidence, CNFs, pleadings Previous claims history

16 Pleadings Tactics for Claimants? Call medical reporter Proper preparation of pleadings Get previous history from C and any links before issuing Reply?

17 Pleadings Failure to plead fraud: Regina Fur Co v Bossom [1958] 2 Lloyd's Rep. 425 a defendant is entitled to say I require this case to be proved strictly, and admit nothing.... Where such is the form of the pleading,... it is not permissible for [the Defendant] to proceed to put forward some affirmative case which they have not pleaded or alleged; and it is not, therefore, right that they should, by crossexamination of the plaintiffs or otherwise, suggest such an affirmative case

18 Burden of Proof Rule Ei qui affirmat non ei qui negat incumbit probatio

19 Burden of Proof Proof rests on he who affirms it not on he who denies it

20 Burden of Proof Standard Re H & Ors (Minors) [1996] AC 563, pg 18 The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence

21 Burden of Proof Although the result is much the same, this does not mean that where a serious allegation is in issue, the standard of proof required is higher. It means only that the inherent probability of an event is itself a matter to be taken in account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.

22 Caution! Rasoul v Linkevicius & Grouparama Insurance (Oct 2012) Lawtel Document No. AC The second defendant insurer (G) applied for a wasted costs order against the claimant's solicitors' firm (S).

23 Caution! S had acted for the claimant driver (R) in a road traffic accident claim. G was the defendant driver's insurer. On receiving the claim, G wrote to S clearly alleging that the claim was fraudulent. Following the commencement of proceedings, G re-asserted the allegation of fraud in its defence. R's witness statement did not contain an integral statement of truth, and two other witness statements from alleged passengers (W1 and W2). R, who was Kurdish, did not give evidence at trial because he was allegedly illiterate and there was no evidence that his statement had been read to him before he signed it or that he knew what his evidence was. It emerged that both witnesses had given their statements over the phone to S. W1 alleged that his statement was a substantial expansion on what he had told S and informed the court that he had translated for W2 on the phone with S. In evidence, W2 denied that she had spoken to S before she received her statement. The judge dismissed the claim.

24 Caution! S submitted that although the fraud allegation was raised early, it had not been particularised or detailed. It also submitted that it had been counsel who had taken R's statement and that it did not know that R could not understand English.

25 Caution! HELD: A wasted costs order against S was wholly appropriate as there was clear evidence of at least incompetence which could fairly be termed as negligence, Ridehalgh v Horsefield [1994] Ch. 205 applied. G had given the clearest possible warning that it considered that the case could not be proved and was fraudulent. S had still not produced evidence of a proper, signed statement of truth from R, W1 or W2 which had been taken before proceedings were issued, and that alone was evidence of incompetence in a small claim. Furthermore, despite an earlier request, S only provided the details of counsel who had allegedly taken R's statement at the instant hearing. Those details were not in the attendance notes nor was there any hint that an interpreter was present or that R could not understand, by reading or writing, in any language.

26 Caution! Considering the circumstances of the allegations, and the defence allegation of fraud, it was also curious that S had not seen the two witnesses face-to-face. The course of the trial well demonstrated the weakness, if not the inappropriate nature, of the claim and well supported G's assertions. A solicitor's proper competent work would have ensured that the case collapsed long before the trial took place (see paras 26-31, 33-34, 36 of judgment).

27 Disclosure CPR 31.4 Meaning of document 31.4 In this Part document means anything in which information of any description is recorded; and copy, in relation to a document, means anything onto which information recorded in the document has been copied, by whatever means and whether directly or indirectly.

28 Disclosure CPR 31.6 Standard disclosure what documents are to be disclosed Standard disclosure requires a party to disclose only (a)the documents on which he relies; and (b)the documents which i)adversely affect his own case; ii)adversely affect another party s case; or iii)support another party s case; and (c)the documents which he is required to disclose by a relevant practice direction.

29 Disclosure Video Surveillance = document? Senior v Holdsworth [1976] QB 23; Garcin v Amerindo Investment Advisors Ltd [1991] 4 All ER 655 Should be set out in list but not inspected as covered by privilege

30 Disclosure Douglas v O Neill [2001] EWHC 601 (QB) a defendant in possession of surveillance evidence should make the decision to rely upon it and disclose it as soon as reasonably possible after receiving sufficient material setting out the Claimant s case, which has been endorsed with a statement of truth so as to enable the surveillance material to be used effectively. If a defendant fails to do so, and the failure to do so has unacceptable case management implications, then that defendant risks being unable to rely upon that material.

31 Disclosure Request for pre-action disclosure? (1) This rule applies where an application is made to the court under any Act for disclosure before proceedings have started. (2)The application must be supported by evidence.

32 Disclosure (3)The court may make an order under this rule only where (a)the respondent is likely to be a party to subsequent proceedings; (b)the applicant is also likely to be a party to those proceedings; (c)if proceedings had started, the respondent s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and(d)disclosure before proceedings have started is desirable in order to i)dispose fairly of the anticipated proceedings; ii)assist the dispute to be resolved without proceedings; or iii)save costs.

33 Disclosure CPR 18.1 (1) The court may at any time order a party to (a)clarify any matter which is in dispute in the proceedings; or (b)give additional information in relation to any such matter,whether or not the matter is contained or referred to in a statement of case.

34 Disclosure 16PD 1.2 A Request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet.

35 Disclosure White Book, 2015, pg 584 Requests for further information will not be allowed if they go solely to cross-examination as to credit; see Thorpe v Chief Constable of Greater Manchester [1989] 1 W.L.R. 665; [1989] 2 All E.R. 827, CA. Requests for further information which are merely fishing will not be allowed. These are requests for information in which a party is trying to see if they can find a case, either of complaint or defence, of which they know nothing or which is not yet pleaded; see Hennessy v Wright (No.2) (1890) 24 Q.B.D. 445, CA.

36 Disclosure 16PD 5.5 (1) Where the second party has made no response to a Request served on him, the first party need not serve the application notice on the second party, and the court may deal with the application without a hearing. (2) Sub-paragraph (1) above only applies if at least 14 days have passed since the Request was served and the time stated in it for a response has expired.

37 SUMMERS v FAIRCLOUGH HOMES LTD [2012] UKSC 26 The appellant company (F) appealed against a decision of the Court of Appeal ([2010] EWCA Civ 1300) upholding a refusal to strike out a personal injury claim brought by the respondent (S).

38 SUMMERS v FAIRCLOUGH HOMES LTD S had been injured in an accident at work while employed by F. After a trial, the judge found for S on liability, leaving damages to be assessed. S put his claim at more than 800,000, but undercover surveillance subsequently revealed him to have grossly exaggerated the effect of his injuries. At the trial on damages, the judge found that while he had undoubtedly suffered serious injuries, he had also fraudulently misstated the extent of his claim. He declined to strike out S's claim as an abuse of process, but instead awarded damages of only 88,716. F appealed against the judge's refusal to strike out S's claim. The Court of Appeal dismissed the appeal, finding that it was bound by Ul-Haq v Shah [2009] EWCA Civ 542, [2010] 1 W.L.R. 616 and Widlake v BAA Ltd [2009] EWCA Civ 1256, [2010] C.P. Rep. 13 and had no power to strike out the claim in its entirety.

39 SUMMERS v FAIRCLOUGH HOMES LTD The issues were (i) whether a civil court could strike out a statement of case as an abuse of process after a trial at which the defendant had been held liable in damages to the claimant in an ascertained sum; and (ii) if so, in what circumstances the power should be exercised.

40 SUMMERS v FAIRCLOUGH HOMES LTD HELD: (1) Notwithstanding the decision in Ul-Haq, the court did have jurisdiction to strike out a statement of case under CPR r.3.4(2) for abuse of process, or under its inherent jurisdiction, even after a trial in which the court had made a proper assessment of liability and quantum, Ul-Haq overruled and Widlake considered. The fraudulent exaggeration of a claim was an abuse of process, and the language of the CPR supported the existence of a jurisdiction to strike out a claim for abuse of process even where to do so would defeat a substantive claim. Under the CPR, the court had a wide discretion as to how its powers should be exercised and the position was the same under its inherent jurisdiction. judgment of the Court of Appeal was affirmed (paras 63-64).

41 SUMMERS v FAIRCLOUGH HOMES LTD However, for many of the reasons given in Ul-Haq, the power to strike out after a trial was to be exercised only in very exceptional circumstances. The court would only exercise that power in the rare event of its being satisfied that the abuse was such that the claimant had forfeited his right to have his claim determined, Masood v Zahoor [2009] EWCA Civ 650, [2010] 1 W.L.R. 746 approved (see paras 33, 36, of judgment). Where a claimant had obtained judgment on liability, with damages to be assessed, that amounted to a possession for the purposes of the European Convention on Human Rights Protocol 1 art.1. Depriving him of that possession by striking out his claim was only permissible if it was in the public interest and was a proportionate response.

42 SUMMERS v FAIRCLOUGH HOMES LTD While it was in the public interest that there should be a power to strike out a statement of case for abuse of process, the courts had to scrupulously examine the circumstances of each case in order to ensure that striking out was a proportionate means of achieving the aim of controlling the process of the court and deciding cases justly. It would only be in the very exceptional case that it would be just and proportionate for the court to strike out an action after a trial. Striking out was always a last resort, even more so where to do so would deprive the claimant of a substantive right to which he had been held to be entitled.

43 SUMMERS v FAIRCLOUGH HOMES LTD While it was very difficult to think of circumstances in which striking out after a trial would be proportionate, such circumstances might include a case where there had been a massive attempt to deceive the court but the award of damages would be very small. While all reasonable steps had to be taken to deter fraudulent claims, in the vast majority of cases the correct approach was to assess liability and quantum and give judgment in the ordinary way. A party who fraudulently exaggerated a claim would have difficulty persuading a judge that any of his evidence should be accepted, and he could expect to be penalised in costs. While a Part 36 offer was of no real assistance to a defendant who wished to protect his costs position, there was no reason why he could not make some form of Calderbank offer to settle the genuine claim and to settle the costs on the basis that the claimant would pay the defendant's costs in respect of the fraudulent aspects of the case on an indemnity basis.

44 SUMMERS v FAIRCLOUGH HOMES LTD Finally, a person who fraudulently exaggerated a claim could expect to face criminal charges or committal to prison for contempt of court, South Wales Fire and Rescue Service v Smith [2011] EWHC 1749 (Admin) approved (paras 46-61). (2) It was neither just nor appropriate to strike out the action in the instant case. While there had been a serious abuse of process, S had nonetheless suffered significant injury as a result of F's breach of duty and, on the judge's findings, was entitled to damages of 88,716. To that extent only, the judgment of the Court of Appeal was affirmed (paras 63-64).

45 SUMMERS v FAIRCLOUGH HOMES LTD Fallout? (1)FAYYAZ (2)YASSER (3)SHAZAD v ALLIANZ INSURANCE PLC (2014): A claim brought by three claimants for damages for personal injuries and other losses arising out of a road traffic accident was struck out in its entirety as an abuse of process. The fact that one of the claimants was found not to have been present or involved in the accident and that all three had colluded in presenting that dishonest claim was found to have tainted the entire claim.

46 SUMMERS v FAIRCLOUGH HOMES LTD ILMI PLANA v FIRST CAPITAL EAST LTD (2013) A claim for damages following an accident at work was struck out where video footage of the claimant demonstrated that the claim was fraudulent. DIANE SCULLION v ROYAL BANK OF SCOTLAND (2013) The whole claim for damages by a claimant who had misled the defendant, the medical experts and the court as to the effects of her injury would be struck out.

47 SUMMERS v FAIRCLOUGH HOMES LTD BARBARA FARI v HOMES FOR HARINGEY (2012) A personal injury claim was struck out under CPR r.3.4(2)(b) as an abuse of the court's power where the claimant had grossly exaggerated the extent of her injuries. (See also contempt proceedings: [2013] EWHC 757 (QB))

48 Fundamental Dishonesty in QOCS CPR 44.16(1) Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest

49 Fundamental Dishonesty in QOCS MICHAEL JOSEPH GOSLING v (1) HAILO (2) SCREWFIX DIRECT (2014) CC (Cambridge) (Judge Moloney QC) 29/04/2014 G had suffered a serious knee injury following an accident with a ladder manufactured by the first defendant (H) and sold by S. The defendants conducted covert surveillance to see whether G's injury was as great as he claimed. A video showed him shopping at length one morning, without using a crutch. However, that afternoon, G went to an appointment with a doctor instructed by the defendants, claiming that he had constant pain and used a crutch, and that his wife did the shopping for him. Medical experts said the video evidence showed that G was being dishonest about his problems. G settled with H for a reduced amount of damages plus costs, and discontinued against S. S therefore had a costs order in its favour under CPR r Ordinarily that could not be enforced because of QOCS, but S sought to enforce it on the basis that the claim, regarding both liability and quantum, was "fundamentally dishonest" within r

50 Fundamental Dishonesty in QOCS Held: (1) CPR PD 44 para.12.4(c) gave the court discretion as to whether, following discontinuance, the costs issues arising out of a fundamental dishonesty allegation should be determined. Whether it did so was to be determined in the light of the overriding objective and considerations of proportionality (see para.26 of judgment). (2) If S's case as to liability could be established, that would show that the claim was fundamentally dishonest. However, the evidence in relation to it was not so clear that it could justly be determined on the papers alone without hearing oral evidence. Further, it would not be proportionate to have a substantial oral hearing, involving calling G and expert witnesses. It would also be unnecessary given that there was a much stronger case of dishonesty in relation to damages. There would therefore be no determination of dishonesty in relation to liability (para.33).

51 Fundamental Dishonesty in QOCS (3) "Fundamental dishonesty" had to be interpreted purposively and contextually. It determined whether the claimant was deserving of the protection extended, for social policy reasons, by QOCS. A claimant should not be exposed to costs liability merely because he had been dishonest regarding some collateral matter or some minor, selfcontained head of damage. If, however, the dishonesty went to the root of the whole or a substantial part of the claim, that would be a fundamentally dishonest claim. G had put the overall value of his claim at around 80,000, half of which was general damages for pain, suffering and loss of amenity and half special damages, including 17,000 for future care, which depended on his evidence as to knee pain. One would normally expect that arthroplasty would reduce to a minimum the continuing pain and disability caused by a knee injury, and the doctors had concluded that that had happened. However, G had chosen to maintain that he was suffering from continuing pain requiring a crutch. Around half of a claim for general damages attributable to a knee injury would be linked to serious ongoing pain and lack of function. Accordingly, regarding the substantial matters of future care and general damages, the dishonesty, if established, was fundamental to those heads of damage, and thus to around half the total claim in damage terms. Dishonesty crucial to such a large part of the claim was sufficient to characterise the claim as fundamentally dishonest (paras 44-49).

52 Fundamental Dishonesty in QOCS (4) The costs of a hearing to allow G to give evidence and cross-examine the experts would raise serious proportionality issues. No authority had been cited to support the proposition that before any finding of dishonesty was made, a person had to be given the opportunity to be heard in oral evidence. It would depend on all the circumstances and would need to be considered in the context of proportionality. There would be some cases where the evidence was clear and overwhelming. In cases where the issue could only be justly determined by oral evidence and cross-examination, the court would have to consider whether it was proportionate to pursue that enquiry. In the instant case, oral evidence would not be necessary or appropriate in the light of the video and the dramatic contrast between G's conduct in the morning and his statements to the doctor in the afternoon. There was both conduct that was only explicable as intended to deceive and statements that were demonstrably false. That was combined with the doctors' expert evidence that the video was inconsistent with G's complaints. The evidence passed the threshold permitting the court to deal with the application summarily. Accordingly, the order for costs could be enforced to its full extent, notwithstanding QOCS. The court had considered whether to require G to pay only part of S's costs, but decided not to do so. G had already recovered a substantial proportion of his costs from H, and r.38.6 provided that the order was one for all the costs to be recoverable without any question of apportionment (paras 51-60).

53 Fundamental Dishonesty in QOCS SAMIA NAMA v ELITE COURIER CO LTD (2015) The court removed the claimant's protection from a costs liability, pursuant to CPR r.44.16(1), after finding that her claim in respect of a road traffic accident was fundamentally dishonest. Some evidence had been deliberately manufactured and the claimant had been dishonest as to whether there had been a passenger in her car at the time of the accident.

54 Fundamental Dishonesty in QOCS LEONEL ZIMI v LONDON CENTRAL BUS CO LTD (2015) A claim for damages for personal injury arising from an alleged collision between the claimant's vehicle and a bus was dismissed as the collision had not occurred. Applying the exception within CPR 44.16(1) on qualified one-way costs shifting, the defendant was awarded its costs as the claimant had been fundamentally dishonest.

55 Fundamental Dishonesty in QOCS JULIE CASSELDINE v DIOCESE OF LLANDAFF BOARD FOR SOCIAL RESPONSIBILITY (A CHARITY) (2015) A claimant in a failed personal injury claim was protected from paying the defendant's costs by the qualified oneway costs shifting rules in CPR r where, although she had entered into two conditional fee agreements, the second had been entered into after the date when the QOCS rules had been introduced so that if she won at trial the defendant would not have had any liability to pay any additional liabilities.

56 Fundamental dishonesty s.57 Courts and The Criminal Justice Act Personal injury claims: cases of fundamental dishonesty 1)This section applies where, in proceedings on a claim for damages in respect of personal injury ( the primary claim ) a) the court finds that the claimant is entitled to damages in respect of the claim, but b) on an application by the defendant for the dismissal of the claim under this section, the court is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim. 2) The court must dismiss the primary claim, unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed. 3) The duty under subsection 2) includes the dismissal of any element of the primary claim in respect of which the claimant has not been dishonest. 4) The court s order dismissing the claim must record the amount of damages that the court would have awarded to the claimant in respect of the primary claim but for the dismissal of the claim.

57 Fundamental dishonesty s.57 Courts and The Criminal Justice Act ) When assessing costs in the proceedings, a court which dismisses a claim under this section must deduct the amount recorded in accordance with subsection 4) from the amount which it would otherwise order the claimant to pay in respect of costs incurred by the defendant. 6) If a claim is dismissed under this section, subsection 7) applies to a)any subsequent criminal proceedings against the claimant in respect of the fundamental dishonesty mentioned in subsection 1) b), and b) any subsequent proceedings for contempt of court against the claimant in respect of that dishonesty. 7) If the court in those proceedings finds the claimant guilty of an offence or of contempt of court, it must have regard to the dismissal of the primary claim under this section when sentencing the claimant or otherwise disposing of the proceedings.

58 8) In this section Fundamental dishonesty s.57 Courts and The Criminal Justice Act 2015 claim includes a counter-claim and, accordingly, claimant includes a counter- claimant and defendant includes a defendant to a counter-claim; personal injury includes any disease and any other impairment of a person s physical or mental condition; related claim means a claim for damages in respect of personal injury which is made a)in connection with the same incident or series of incidents in connection with which the primary claim is made, and b) by a person other than the person who made the primary claim. 9) This section does not apply to proceedings started by the issue of a claim form before the day on which this section comes into force.

59 Fundamental dishonesty s.57 Courts and The Criminal Justice Act 2015 In force 13 April 2015 Guidance in fact sheet accompanying the bill: attachment_data/file/330722/fact-sheet-unjustifiedpersonal-injuryclaims.pdf?_ga=

60 Fundamental dishonesty s.57 Courts and The Criminal Justice Act This clause provides that in any personal injury claim where the court finds that the claimant is entitled to damages, but is satisfied on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the claim taken as a whole, it must dismiss the claim entirely unless it is satisfied that the claimant would suffer substantial injustice as a result. 7. This provision applies in both primary claims (for example where the claimant grossly exaggerates his or her own claim) and related claims (for example where the claimant colludes in a fraudulent claim brought by another person in connection with the same incident or series of incidents in connection with which the primary claim is made).

61 Credit Hire Claims: Update on Law and Tactics Paul Mertens - Friday 4 th September 2015 pumpcourtchambers.com

62 Credit Hire - Typical Issues Need to hire Type of vehicle Duration of hire Rate of hire Mitigation Consumer regulations compliance.

63 Credit Hire - Typical Issues In addition, the following are often raised in pleadings: Ownership? V5? Qualified driver? Insured driver? MOT?

64 Why are so many issues raised? Defendant lawyers typically raise these: To encourage an early settlement (or possibly to scare / intimidate ) Eg. require the Claimant to confirm whether impecuniosity is pursued and requiring substantial disclosure.

65 Debarring provision and impecuniosity Draft directions are sometimes sought as follows: The Claimant do by [date] provide copies of statements for all his bank and credit card accounts for the period from three months prior to the date of the accident until the final date of car hire, failing which the Claimant shall be debarred from asserting impecuniosity

66 Debarring provision and impecuniosity Zurich Insurance PLC v Umerji [2014] EWCA Civ 357 In a claim for damages which included the cost of hiring a replacement car after a claimant's car was written off in an accident, a recital which debarred the claimant from relying on impecuniosity applied to justification for the duration of hire just as much as justification for the payment of credit hire rates. The debarring order did not contain any form of qualification and the two claims of impecuniosity operated in the same way as a matter of law

67 Debarring provision and impecuniosity What should not be requested (but sometimes is ) Copies of spouse s / partner s financial details Details of investments that cannot be immediately realised Details of the availability of soft loans from friends and family (detail for cross-examination only)

68 Part 18 Questions How else is pressure applied? Often raised to try and obtain useful information to argue down the quantum of the claim. Questions designed to illicit disclosure of documents relevant to knock-out points. Part 36 Offers NB: Defendant s offers can override QOCS, up to the limit of the damages recovered.

69 What not to do!! Panic!! Cooperate with requests without any thought to tactical considerations. Think about: When to provide information? How fully to answer? Whether to refuse requests on legitimate grounds?

70 Credit Hire - Areas to address in evidence Need to hire Type of vehicle Storage Costs Time taken to repair The end of the hire period Delivery and collection charges Rate of hire: daily rate vs weekly rate Impecuniosity Special Damages

71 Need to hire Aim = to prove that the Claimant needed to hire a replacement vehicle at all. Why = A Defendant may argue that hiring a vehicle was unreasonable and unnecessary and that the Claimant failed to mitigate their loss. The need for a replacement car is not self-proving : Giles v Thompson [1994] 1 AC 142 (per Lord Mustill at p.167)

72 Need to hire how to prove it Areas to address: Availability of other vehicles within the family / business (eg. fleet cars). Public transport. Check that the routes required for work etc. would not be well served by public transport, or at the required times of day. Explain why public transport may not be suitable, eg. young children / mobility issues etc. Accessibility of local amenities (eg. supermarkets, schools etc ).

73 Type of vehicle Aim = to prove that the type of vehicle hired was not excessive. Why = a Claimant who needs to hire is entitled to a replacement vehicle of a reasonably equivalent type, save in cases where such a vehicle in unavailable, in which case a Claimant is entitled to a limited degree of betterment. Note: if the vehicle the Claimant hired was bigger or better than his / her own, the Defence will argue that the costs of hire were excessive and should be reduced to the amount that would have been needed to hire an equivalent car: Lagden v O Connor [2004] 1 AC 1067 (per Lord Hope at 27).

74 Type of vehicle how to prove it Where available, the Claimant s evidence should demonstrate that the car hired was the closest comparable vehicle available (ask for confirmation from the rental company). Be aware that a Defendant s comparables evidence may be adduced to disprove this, but often these are not limited to the local geographical area which is required. NB: possible to argue that an equivalent vehicle which is a different brand is acceptable, if it has the same characteristics (engine size, seats, boot space etc.). BUT: Consider whether additional features are necessary at the time of hire (eg. sat-nav if only driven locally; air-conditioning in the winter).

75 Storage Costs Aim = to argue that it was necessary for the Claimant to store his / her car in a storage facility. Why = A Defendant will often argue that these costs were unreasonably incurred and are therefore unrecoverable.

76 Storage Costs how to prove it From a Claimant s perspective, vital to consider where the Claimant stored their vehicle prior to the accident and if there is any reason why this was no longer possible. Garage? Driveway? On-street parking? If so, with or without a permit? If with a permit, is it possible to transfer the permit to a temporary vehicle? Insurance position eg. only insured if kept off-street? Consider obtaining Google Streetview images that might support the Claimant s case (eg. if no space at property).

77 The time taken to repair Aim = to demonstrate that the Claimant only allowed the repairing garage to retain their vehicle for as long as was necessary to carry out the repairs. Why = A Defendant will often argue that the number of days of hire was excessive and the expenditure for these days, unreasonable and unrecoverable.

78 The time taken to repair how to prove it Need to know: When the vehicle was taken into the garage? When the Claimant authorised the repairs? When the repairs were completed? Clients should be advised at an early stage to contact the repairing garage to chase up repairs.

79 The time taken to repair how to prove it Surprising how often a Claimant being cross-examined will admit that they did not telephone the garage once during this period, to hurry the garage up. Insurers may also be able to confirm if they chased on the Claimant s behalf. NB: Garages will often not prioritise work when they are aware that the owner has a hire-car.

80 The time taken to repair how to prove it If a garage does delay, consider seeking a contribution from it for causing part of the Claimant s (potentially unrecoverable) loss: Garage has a duty of care to repair a vehicle within a reasonable time If delay excessively, the garage is arguably contributing to the Claimant s loss and this may be recovered: Charnock v Liverpool Corp [1968] 1 WLR Claims will each turn on the facts, but to show foreseeability of loss, it is likely to be necessary to show that the garage was aware that the Claimant was hiring a replacement vehicle.

81 End of hire period Aim = to demonstrate that the Claimant received their vehicle back as soon as possible following the completion of the repairs. Why = If there is a delay in accepting receipt of the repaired vehicle, the Defendant may argue that the costs of any days of hire after the repairs were completed were unreasonably incurred and are unrecoverable.

82 End of hire period how to prove it Make sure that the Claimant covers this in their witness statement: When was the Claimant told the vehicle was ready for collection? When was the repaired vehicle returned? If there was any delay, is there any reason for this? Of course, sometimes unhelpful evidence may be better avoided in the hope that the Defendant will not challenge this point

83 Delivery and collection charges Aim: To show that it was reasonable for his vehicle to be collected and delivered back to his house / place of work Why: Because delivery and collection charges are only recoverable where it was reasonable for the Claimant to require this (eg. if public transport would not have sufficed)

84 Delivery and collection charges how to prove it Burden is on the Claimant to prove that it was reasonable - the need is not self-proving : Burdis v Livsey [2003] QB 36 (at 153) Consider adducing positive evidence: Location of garage. Availability of others to transport the Claimant to and from the garage. Time of collection (specified or unspecified, especially if this would impact on days of hire).

85 Rate of hire: daily rate vs weekly rate Aim = to show that the Claimant was justified in hiring on the basis used. Why = Defendants often argue that the rate of hire was excessive (and therefore that a Claimant failed to mitigate his / her loss) and the Claimant ought to have hired on a weekly-basis. HOWEVER: Whilst the weekly-rate is likely to be significantly cheaper, Claimants rarely know nor are they told how long repairs will take

86 Rate of hire: daily rate vs weekly rate how to win on this issue Check with the Claimant when he / she was told how long the repairs would take and what they were told If the Claimant did not know how long the repairs would take, consider saying so. NB: burden on the Defendant to prove, by comparables evidence, that there was a difference between the rate chosen and other rates available.

87 Impecuniosity Aim = to demonstrate that a Claimant needed to hire on credit terms due to their financial circumstances. Why = If the Claimant cannot show that he / she needed to hire on credit terms, then he/she will be restricted to recovering at the basic-hire rate only.

88 Impecuniosity how to prove it A genuinely impecunious Claimant will be able to prove it through the production of bank and credit card statements etc. NB: the existence of a credit facility is important (Lagden v O Conner [2003] UKHL 64) but not determinative (Pattni v First Leicester Buses Ltd [2011] EWCA Civ 1384) Before disclosing these statements, check them carefully for regular payments or references to other accounts, eg. to savings / credit-cards / ISAs. NB: Undisclosed accounts may prevent the Claimant arguing impecuniosity or as a minimum, affect their credibility.

89 Impecuniosity how to prove it Remember affordability should be assessed against basic hire rates and not the credit hire rate that was used

90 Special Damages Aim = to show that items of special damage were necessarily incurred and were reasonable in amount. Why = because any items that are found to be unnecessary will be disallowed and any that are excessive, will be reduced.

91 Special Damages how to prove them Ensure all losses can be proved with invoices. If an impecunious Claimant is seeking for future treatment expenses, consider whether they could have obtained the same on the NHS and if they did not, whether they will do so in the future. Incidental expenses not recoverable without evidence of costs incurred and should not be used as a makeweight. NB: most telephone calls are free these days as part of a callbundle The costs of an engineer s report is generally held to be a disbursement and not part of a party s damages.

92 Part 36 Offers A well-pitched Part 36 Offer can put considerable pressure on the other side. NB: A Claimant who fails to beat a Defendant s Part 36 offer will not be entitled to QOCS protection and will be liable for the Defendant s costs from the expiry of the relevant period, up to the limit of the damages recovered ( wipe-out costs).

93 Hardip Singh v Rashed Yaqubi [2013] EWCA Civ 23 A property developer whose claim for a replacement Rolls Royce Phantom was dismissed due to the lack of evidence of an actual need for a replacement had the decision upheld in the Court of Appeal. The court made it clear that for a claim to succeed, specific and detailed evidence of need should be provided. The required need is not self-proving.

94 Opoku v Tintas [2013] EWCA Civ 1299 CA (Civ Div) The Court of Appeal held that it was reasonable for the trial judge in a claim for damages following a road traffic accident to have found that an impecunious claimant taxi driver could be expected to raise funds for the replacement of his car after a reasonable period of time had elapsed. The period of hire was reduced accordingly.

95 Zurich Insurance Plc V Sameer Umerji [2014] EWCA CIV 357 The Court of Appeal held that because a claimant was debarred from raising the issue of impecuniosity he could not claim a lack of resources for not repairing or replacing his damaged car sooner.

96 Zurich Insurance Plc V Sameer Umerji [2014] EWCA CIV 357 In the claim for damages which included the cost of hiring a replacement car on a credit basis after a claimant s car was written off in an accident, a recital which debarred the claimant from relying on impecuniosity applied to justification for the duration of hire just as much as justification for the payment of credit hire rates. The debarring order did not contain any form of qualification and the two claims of impecuniosity operated in the same way as a matter of law.

97 Karl Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93CA (Civ Div) This case was concerned with how the court should assess the basic hire rate (BHR) and whether it should be a subjective test or whether it should be an objective test.

98 Karl Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93CA (Civ Div) The Court held that Judges looking to identify the basic hire rate should seek out the lowest reasonable rate charged by a mainstream supplier operating in the Claimant s local area. The Court emphasised that the exercise remained an objective one.

99 Contact details Paul Mertens Paul Mertens has a busy civil practice, encompassing personal injuries, employment law, commercial contracts and land law (both Landlord & Tenant and Real Property). Paul has successfully represented parties in a wide range of courts and tribunals, including claims in the High Court of Justice. Paul has extensive experience of representing both Claimants and Defendants in road-traffic accident claims, across the small claims, fast- and multi-tracks. He also has expertise in dealing with costs, including costs budgeting and representation at detailed assessments. His personal injuries practice also encompasses occupier s liability claims, where he has recently assisted a claimant to recover substantial damages for permanent facial scarring as a result of burns, and claims against employers. He is currently instructed on behalf of the Ministry of Defence in relation to claims brought by service personnel for Noise-Induced Hearing Loss.

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