Pleading & Litigating Fraudulent Motor Claims Arun Katyar CPD Ref: AVV/CHRW 12 King s Bench Walk, Temple, London EC4Y 7EL, Tel: 020 7583 0811, Fax: 020 7583 7228, Video Conferencing: 020 7583 4190 E-mail: chambers@12kbw.co.uk, Website: www.12kbw.co.uk, DX 1037 Chancery Lane 1
Pleading & Litigating Fraudulent Motor Claims; Introduction What types of road traffic litigation come under the fraud umbrella? From malingering chancers to intricate fraud rings. A common cause to defeat fraud. Practical guidance and discussion. What is Fraud? As defined by the OED:- The using of false representations to obtain an unjust advantage or to injure the rights or interests of another. The tort of deceit. Derry v. Peek (1889) LR 14 App Cas 337 False Representation. Knowledge. Reliance. Loss. Statistics The cost of fraud to the motor insurance runs to billions. 2
About half of the estimated cost comprises fraudulent motor claims. An estimated 30,000 staged accidents per annum in the UK (in 2009). Ever increasing insurance premiums. Accident hotspots. The Burden & Standard of Proof The legal & evidential burdens; on C (by default). An evidential burden placed upon D when fraud is raised. See Francis v. Wells & Churchill [2007] EWCA civ 135) The legal burden remains on each claimant, but with the allegation of fraud by way of defence an evidential burden would arise on the defendant and a substantial burden at that Authorities on point:- Hornal v. Neuberger Products Ltd [1957] 1 QB 247, Re H [1996] AC 593 at 586-587, Re Doherty [2008] UKHL 33 at paras 23/29, Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2008] 3 WLR 1. R(N) v. Mental Health Review Tribunal (Northern Region) [2005] EWCA Civ 1605) The standard of proof is the civil standard. A succinct summary of the overall position is provided by R(N):- 3
"Although there is a single civil standard of proof on the balance of probabilities, it is flexible in its application. In particular, the more serious the allegation or the more serious the consequences if the allegation is proved, the stronger must be the evidence before a court will find the allegation proved on the balance of probabilities. Thus the flexibility of the standard lies not in any adjustment to the degree of probability required for an allegation to be proved (such that a more serious allegation has to be proved to a higher degree of probability), but in the strength or quality of the evidence that will in practice be required for an allegation to be proved on the balance of probabilities." [Emphasis Added] Types of Fraudulent Motor Claim Fictitious Accidents. Staged Accidents. Contrived / Induced / Slam on Accidents. Bogus / Phantom passengers. Low Velocity Impact. Exaggerated injury and/or losses. Pleading Fraud Professional obligations of the pleader. 4
Professional obligations of Counsel; Para. 704, Bar Code of Conduct (8 th Edn):- Drafting documents A barrister must not devise facts which will assist in advancing the lay client's case and must not draft any statement of case, witness statement, affidavit, notice of appeal or other document containing: (c) any allegation of fraud unless he has clear instructions to make such allegation and has before him reasonably credible material which as it stands establishes a prima facie case of fraud [Emphasis Added] Medcalf v. Mardell [2002] 3 WLR 172. Procedural requirements; See Part 16 of the CPR. Requirements for the Particulars of Claim; see CPR 16.4 and Para 8.2 of the Practice Direction to Part 16. Requirements for the Defence; See CPR 16.5 of the CPR. Fraud v. Suspicion of Fraud the Twelfth Night defence. Kearsley v. Klarfeld [2006] 2 All E.R. 303. The presentation & particularisation of the fraud pleading; some examples. An important judgment call. Tell Tale Signs of a Fraudulent Claim Relevance of Locality & Ethnicity. Multiple vehicle occupancy giving rise to multiple injury claims. 5
Varying descriptions / inconsistencies / reported number of passengers. Links between occupants; address searches / credit searches / social networking websites. Use of material on Facebook; Locke v. Stuart & AXA [2011] EWHC 399 (QB) Criminal convictions. Damage inconsistency. Defendant driver disappears. Route. Absence of police or other emergency service involvement. Claims history. Targeting of commercial vehicles. Policy details; recent inception / online policy / instalments / unpaid premiums) / hire vehicles. Recent vehicle acquisition. Older / high mileage vehicles / previous write offs. Disproportionate / high credit hire claims. 6
Referrers of work / third party beneficiary companies. Fraud Rings A cluster of claims, interconnected claims, linked by a variety of common features. These claims form a series of fraudulent conspiracies. E.g. the Locke v. Stuart & AXA case involved a ring of 9 deliberately fabricated road traffic accidents with the following common features:- Locality; a constant. Referrer; same accident management company. Policy; all hire vehicles. Multiple Occupancy; yes. Links between occupants; residential address / Facebook links. Of the cluster of 9 claims, only 1 proceeded to trial. Concerns raised in Parliament about the proliferation of fraudulent claims; see report by the House of Commons Transport Committee paper; "The cost of motor insurance" HC 591 (Published on 11 th March 2011):- We also received worrying evidence about the scale of organised motor insurance fraud. The Association of Chief Police Officers referred to there being 30,000 staged accidents in 2009 and explained 7
in some detail how such accidents are arranged to enable claims to be made. The way forward combating fraud Data sharing / Data Protection Act 1998 s.29(3) requests. National Databases. Fraud detection systems at point of inception. Orders for personal attendance at interlocutory hearings. Further regulation of third party beneficiary companies. Conclusions Common interest in detecting fraud. Scrutiny of claims at an early stage. Need for care, consideration and judgment before defending a claim based upon fraud. Referral Fees. 8