A PERCEPTION ON DECEPTION PART I Ruwena Khan Introduction No legal practitioner will have failed to note that in recent years personal injury claims have attracted a great deal of attention in the media; similarly, the government s 1 increasing involvement due to the dramatic increase in the number of such claims and the cost to the insurance industry, especially arising out of road traffic accidents, has been palpable. Although consideration has to be given to the fact that there has been an increase in the number of cars on the roads which will have contributed to the increase in road traffic accidents and subsequent personal injury claims, there also appears to have been an escalation in the propensity to make a claim and not simply arising out of road traffic accidents. Some have argued this is potentially due to the advent of no win no fee arrangements, but there is a firm belief that there has also been a significant rise in fraudulent PI claims. What is being done to counter the perceived increase in fraudulent personal injury claims? The Transport Committee proposed further ways to combat fraud, including better information sharing between insurance companies, brokers, comparison sites and DVLA with the aim of insurers gaining access to information held by the other agencies and verifying information provided by drivers. 2 The Department of Transport and the insurance industry have met to discuss ways forward on how to implement this. 3 The Department of Transport has expressed its support for the proposal to have a dedicated Police Unit on Insurance Fraud, paid for by the industry. Earlier this month David Cameron held talks with various Motor Insurance 1 By way of example, the House of Commons Transport Committee held a session in March 2011 during which representations were made from the insurance industry (The Cost of Motor Insurance, Transport Committee's Fourth Report, March 2011) 2 Ibid 3 The Cost of Motor Insurance: Government Response to the Committee's Fourth Report of Session 2010-12, September 2011. 1
Companies to discuss methods to prevent Britain becoming the whiplash capital of Europe. Insurers are undoubtedly taking a more robust stance in tackling fraud in such claims. 4 This is evident from the prevalence of defences which are putting claimants to proof, resulting in even the most straightforward of claims being litigated. Staged accidents and/or fabrication is clearly a cause for concern but insurers are also litigating matters where there is an allegation of a mere exaggeration of injuries. This approach has in turn resulted in a greater number of reported cases dealing with allegations of fraudulent/dishonest claims. Insurers are not stopping at robust litigation, seeking dismissals of claims by way of adducing extensive evidence of conspiracies to defraud and obtaining surveillance evidence. Even after the conclusion of litigation, applications are being made to set aside judgements/settlements based on fresh evidence, appeals are being brought, committal proceedings are being pursued and punitive costs orders are requested (Part II considers this scenario). In conjunction with this, the courts have also taken a more vigorous approach to personal injury claims, even in cases where allegations of fraud are not pleaded by the defence. Given the media headlines, government involvement and various police 5 discoveries of organised criminal groups seeking to defraud insurance companies and the legal system, the courts are weary of cases which contain any trace of dishonesty or fabrication by witnesses. Part I of this Article looks at some of the more recent cases in this area and the approach of the court and Insurer during litigation. Part II will consider the postlitigation conundrum. 4 Fraudulent claims are costing the insurance industry some 2 billion per year (The Cost of Motor Insurance, Transport Committee's Fourth Report, March 2011). 5 The Association of Chief Police Officers informed the Transport Committee that there had been some 30,000 staged accidents in 2009, referring to the people who are involved as 'organised crime groups'; 2
The Insurers Approach During Litigation To Catch A Thief Surveillance evidence can be a very powerful tool for insurers for obvious reasons. The effect of that evidence will of course depend on the quality of it. A genuine claimant may be able to 'explain away' what at first blush seems to be incontrovertible evidence. Sometimes claimants make themselves believe that they are unable to do certain activities when in fact they are able to carry out other activities requiring equal or greater mobility or dexterity. This could be perceived as exaggeration, but there may be an underlying psychological or other reason for this. Tavenor Joe Douglas (by his Litigation Friend) v O'Neill [2011] EWHC 601 QB T suffered serious multiple injuries as a result of having been knocked down by a car. There was a medical dispute as to the severity of long-term brain damage and the degree to which his mobility had been reduced. T maintained that he was restricted in his ability to walk and drive, but O disputed that. O undertook surveillance evidence of T whilst it was waiting for service of documents. Shortly after receiving the witness statements and the experts' reports, O's surveillance DVD was served, showing a wholly different picture than contended for by T. O made an application to adduce the DVD surveillance evidence at the trial. The Application was granted on the basis that a surveillance DVD was a document, not a piece of witness evidence; under CPR r.31.6 a party was required to disclose documents on which it relied. It was accepted that if this surveillance evidence was to be disclosed on the standard disclosure form then it would alert the claimant to the fact of surveillance. The interests of justice militated in favour of O being permitted to use it. Further, the court accepted that O was entitled to wait until witness statements had been served by T, signed with a declaration of truth, before disclosing the evidence. The delay in service of it had not been caused by apathy or an attempt to take unfair advantage of T so that he could be said to have been 'ambushed'. 3
Should A Con Get None? It has been argued by Insurers that if a claim involves any element of fraud or dishonesty, then the entire claim should be dismissed. However, the courts have taken a more concrete approach to such cases, allowing the proven genuine elements of the claim to succeed, dismissing the fraudulent elements and ordinarily making appropriate costs orders to mark their disapproval. Shah v Ul Haq [2009] EWCA Civ 542 Mr Ul Haq was driving his car with his wife as the passenger. Mrs Shah drove into collision with Mr Ul Haq's car so that both he and his wife suffered minor whiplash. It was claimed also that Mrs Khatoon, Mr Ul Haq's mother-in-law, was a passenger in his car. A counterclaim was made by Mrs Shah for a declaration that Mrs Khatoon was not a passenger and she sought damages for deceit. It was quite clear on the evidence that Mrs Khatoon was not a passenger in the vehicle. Mr Ul Haq and his wife had lied about this, but it was found their personal injury claims were genuine and they were awarded damages accordingly. On appeal to the Court of Appeal, it was held that the fact that the claimant puts forward unjustified heads of loss does not mean he cannot recover those that are justified/genuine. A court may mark its disapproval in costs, as was the case here. Costs Penalties Where there have been allegations of fraud/dishonesty proven or otherwise during a case, insurers will undoubtedly insist on adverse costs orders against the claimant. However, this can cut both ways and the court may deem it appropriate to penalise any party in costs including the insurer defendant and third parties. 4
Martine Widlake v BAA Ltd [2009] EWCA Civ 1256 Following an injury at work, M had been covertly filmed by BAA performing activities apparently without discomfort. Both medical experts agreed that the surveillance evidence did not show any evidence of overt disability, but were not agreed on whether M was deliberately exaggerating the severity of her symptoms or whether the difference in her account and her behaviour in the video could be explained by her use of analgesia. M s own witness evidence was inconsistent and the value of the claim changed dramatically from a future loss of earnings claim in the region of 150,000.00 to just under 24,000.00 by the time of the third schedule of loss. After consideration of all the evidence, it was held that M had exaggerated her symptoms in order to manipulate the civil justice system. HHJ Seymour QC awarded damages to the Claimant of 5,552.38, exclusive of interest, but nevertheless ordered M to pay BAA s costs of the action as BAA was effectively the winner. However, on appeal to the Court of Appeal, it was decided that the Judge at first instance had misdirected himself and erred in characterising M s actions as an attempt to manipulate the civil justice system on a grand scale. In the circumstances, it exercised its discretion on costs afresh. The starting point was to consider who the unsuccessful party was. Since M had recovered more than the payment into court she had succeeded. It was necessary to then consider to what extent the exaggeration caused the incurring or wasting of costs. The Court of Appeal highlighted the distinction between a concocted claim and an exaggerated claim and indicated that Judges must be astute to measure how reprehensible conduct is. It balanced the fact that BAA did not properly protect itself by making a sufficient Part 36 offer against M s failure to make any offer at all and negotiate. It bore in mind the exaggerated nature of the claim and the fact that M s dishonesty must be penalised. Overall the appeal was allowed and an order of 'no order as to costs' was substituted. 5
Clarke v Maltby (Costs) (2010) EWHC 1856 (QB)(Owen J) The claimant was a solicitor claiming damages for a liability admitted road traffic accident. Fraudulent exaggeration was not pleaded though that was the tenor of the defendant's counter-schedule and cross-examination at trial. These allegations were put to the claimant at trial without any support from the instructed experts for such allegations. The claimant succeeded in her claim and the issue was whether the claimant's costs should be paid on an indemnity basis as a result of the unfounded allegations raised against her. Consideration was given to whether there were non-normal circumstances in the claimant s case to justify awarding costs on an indemnity basis. Owen J was of the view that there were. The failure by the other side to plead fraud or exaggeration yet their pursuit of such an allegation at trial, in the face of all the evidence, did take the matter out of the ordinary. Moreover, given the claimant was a solicitor the allegation of deliberate exaggeration was particularly distressing as it would have serious consequences for her professionally if so found. The defendant's counter-schedule had suggested that the claimant's solicitors had persuaded her to reduce her working hours in order to inflate the value of her claim. This serious allegation was only withdrawn by the defendant at trial. Ahmed v Elliott & Others (2010), Burnley County Court The Claimant s taxi was damaged by the Defendant in a rear end collision. The Claimant brought a claim for hire of a black taxi (hackney carriage) as part of his claim. The Defendant successfully joined the hire company as a Defendant to proceedings. The Defendant succeeded in proving that the hire company never had any black taxis for hire. The Claimant claimed that references to a black taxi should have referred to a plated private hire vehicle. It was found that the hire claim was invented and the Claimant had never hired from the hire company. The hire company was a party to the instigation of a false claim. In those circumstances it was held reasonable for the hire company to be ordered to pay the Defendant s costs of investigating and defending the hire claim. 6
Jackson v Rea, Birmingham County Court (17.2.2012) Nigel Jackson, 52, submitted a personal injury claim after he had allegedly sustained an injury from a road traffic accident in Birmingham on 16 July 2010. The accident occurred when R had pulled forward in his car and bumped into the rear of J's car at only a few miles per hour. J then alleged he suffered whiplash type injuries lasting many months. In a trial that was held on Friday 17 February 2012 at Birmingham Civil Justice Centre, J's evidence was inconsistent when compared to his original witness evidence and information given to medical experts. Even as the trial began when J was asked what he did for a living, he said he was an 'entertainer' but on his claim form it stated he was an electrical engineer. When questioned about the change in his profession, he said in open court he got cheaper car insurance premiums by saying he was an electrical engineer. Stuart Vann, CEO at Esure, said: "We take a strong, hard-hitting approach to fraud, and its prevention and detection is ingrained in our company culture. It's tackled head on and isn't tolerated. No matter the size of claim, if fraud is suspected, we aren't deterred by the prospects of trials or legal costs. Protecting and supporting our honest policyholders whilst bringing fraudsters to justice is paramount. Our claims operations teams are at the coalface in dealing with and defeating this insidious type of fraud." Mark Hudson, partner and head of fraud at Horwich Farrelly, said: "This is an excellent result for our defendant and Esure. In the last 12 months, there is a significant shift toward us in the battle against fraudulent personal injury claims. Judges are much more aware of the sort of dishonest behaviour that is happening in every town and city than they have ever been, and are helping in the battle against fraud. 7
Conclusion It is not just claimants that have to watch their step during the litigation process, defendants and third parties alike have to ensure that they do not take a tumble either. Part II to follow imminently... RUWENA KHAN Zenith Chambers 26 th March 2012 8