fraud in rta claims - litigation tactics & procedures for claimants

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Fraud in RTA Claims - Litigation Tactics & Procedures for Claimants

Adam Gadd – Friday 4th September 2015

• 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

Fraud in RTA Claims - Litigation Tactics

& Procedures for Claimants

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

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

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.

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.”

Responsibilities of

solicitors/counsel

• Counsel’s duty under Code of Conduct

• 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;

Responsibilities of

solicitors/counsel

• ‘Reasonably credible material’ includes material that is

not yet in trial ready form (see Medcalf v Mardell)

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, but

which he requires the claimant to prove; and

(c)which allegations he admits.

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.

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.

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.

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.

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

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

Pleadings

• Tactics for Claimants?

• Call medical ‘reporter’

• Proper preparation of pleadings

• Get previous history from C and any links before issuing

• Reply?

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 cross-

examination of the plaintiffs or otherwise, suggest such

an affirmative case”

Burden of Proof

• Rule Ei qui affirmat non ei qui negat incumbit probatio

Burden of Proof

• Proof rests on he who affirms it not on he who denies it

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…

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.”

Caution!

• Rasoul v Linkevicius & Grouparama Insurance (Oct

2012) Lawtel Document No. AC0135642

• The second defendant insurer (G) applied for a wasted

costs order against the claimant's solicitors' firm (S).

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.

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.

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.

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).

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.

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.

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

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.”

Disclosure

• Request for pre-action disclosure?

• 31.16—(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.

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.

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.

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.

Disclosure

• White Book, 2015, 18.1.2 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.”

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.

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).

SUMMERS v


• 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.

SUMMERS v


• 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.

SUMMERS v


• 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).

SUMMERS v


• 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, 41-43 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.

• 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.

SUMMERS v


• 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.

SUMMERS v


• 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).

SUMMERS v


• 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.

SUMMERS v


• 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.

SUMMERS v


• 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))

SUMMERS v


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

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.38.6.

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.44.16.

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).

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, self-

contained 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).

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).

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.

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.

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 one-

way costs shifting rules in CPR r.44.17 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.

Fundamental dishonesty

s.57 Courts and

The Criminal Justice Act 2015

• 57 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.

5) 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.


s.57 Courts and


8) In this section—

“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.


s.57 Courts and


• In force 13 April 2015

• Guidance in fact sheet accompanying the bill:

• https://www.gov.uk/government/uploads/system/uploads/

attachment_data/file/330722/fact-sheet-unjustified-

personal-injury-

claims.pdf?_ga=1.144571376.479237727.14411876820


s.57 Courts and


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/330722/fact-sheet-unjustified-personal-injury-claims.pdf?_ga=1.144571376.479237727.14411876820













• 6. 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).


s.57 Courts and



Credit Hire Claims:

Update on Law and Tactics

Paul Mertens - Friday 4th September 2015

Credit Hire - Typical Issues

• Need to hire

• Type of vehicle

• Duration of hire

• Rate of hire

• Mitigation

• Consumer regulations compliance.

Credit Hire - Typical Issues

• In addition, the following are often raised in pleadings:

• Ownership?

• V5?

• Qualified driver?

• Insured driver?

• MOT?

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.

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”


• 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


• 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)

How else is pressure applied?

• Part 18 Questions

• 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.

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?

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

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)

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…).

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).

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).

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.

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).

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.

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.


• 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.


• 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 1498.

• 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.

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.

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…

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)

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).

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…

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.

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.

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.

Impecuniosity – how to prove it

• Remember affordability should be assessed against basic hire rates and not the credit hire rate that was used…

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.

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 call-

bundle…

• The costs of an engineer’s report is generally held to be a disbursement and not part of a party’s damages.

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).

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.

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.

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.

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.

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.

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.

Contact details Paul Mertens

0207 353 0711 [email protected] 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.

mailto:[email protected]





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