Claimants Hit With Double Penalty For Fraud

Wed, 18 Nov 2015

A landmark ruling may increase the disincentive for claimants to pursue fraudulent claims in all their forms

James Leslie, a Barrister with No5 Chambers specialising in fraudulent insurance claims, has secured an enforceable costs, and exemplary damages award for Royal and Sun Alliance Insurance Plc (RSA) in a case involving fraud. Mr Leslie, who was instructed by insurance industry law firm DWF LLP's Fraud Department, successfully argued that the claimants had conspired to act dishonestly when presenting claims for personal injuries suffered by them in an accident in 2013.

Mr Leslie said: “This case should undoubtedly be considered a stark reminder to claimants of the perils of pursuing fraudulent claims. It should also act as a clarion call to insurers to pursue claims of fraud with rigor, and to accompany allegations of fraud with counterclaims in deceit.”

Husband and wife, Mrs Parveen Akhtar and Mr Mohammed Khan of Birmingham, had sought damages for personal injury following a road traffic collision on 17th July 2013, when Miss Rebecca Ball, a teacher insured by RSA, collided with the rear of a vehicle being driven by Mrs Akhtar. It was claimed that Mr Khan was a front seat passenger in the vehicle at the time of the collision. 

In the defence, it was contended that the collision was induced; that any impact was at a low velocity; and that Mr Khan had not been present in the vehicle at the time of the collision. Accordingly, fraud was alleged both in the happening of the collision and in the prosecution of the cases. Further, Mr Leslie also included a counterclaim in the tort of deceit for exemplary damages, relying on the elements of fraud as contained in the Fraud Act 2006. 

HHJ Gregory, sitting at Walsall County Court on 10 July 2015, found all of the allegations in the defence proved, and consequently dismissed the claims. He disapplied QOCS and made an award of costs against the claimants on an indemnity basis. Having dealt with costs in the principal action, he then went on to consider the counterclaim, and finding it proved, ordered the two claimants to pay exemplary damages of £3,000. The judge accepted the defendant’s submission that the measure of damages sought by the defendant should be assessed by reference to the amount which the claimants would have recovered had their fraud succeeded. 

In giving judgment on the claim, HHJ Gregory said:

“I am asked to conclude on behalf of the defence that the claim that has been presented is a fraudulent claim. In that regard, the burden of proof rests upon the defence. The standard is to the balance of probabilities, but I well understand that the more grave the allegations of misconduct made, the more compelling and cogent the evidence relied upon in support of them has to be in order to reach that standard. I have found the evidence of Miss Ball to be both cogent and compelling in this case. I am satisfied and find as a fact that Mr Khan was not present in his wife’s car when such collision as occurred took place. I am satisfied that he has deliberately lied about his presence there in order to concoct, or manufacture, this claim in the hope of getting compensation, to which he knows he was not entitled. In that respect, he has been supported by his wife. She too has lied in order to support his claim. She has furthermore, in my judgment, lied in support of her own claim. They both must know that he was not there, and that they have concocted this story. That is, on any consideration, a conspiracy to defraud, which is a serious criminal matter. Even if I felt that there had been an accident which had actually caused Mrs Akhtar some injury, I would consider it appropriate to adopt the approach approved as acceptable in some cases by the Supreme Court in Summers v Fairclough Homes Ltd [2012] UKSC 26, as permitting a court to dismiss or strike-out an otherwise bona fide substantive claim because of the fraud in which that claimant has engaged in the course of the litigation to pursue another false claim. As it happens, I do not need to adopt that approach, because I am satisfied that Mrs Akhtar suffered no injury.” 

In giving judgment on the counterclaim, the judge said:

“That leaves the counterclaim. This is pleaded in deceit, [and] I cannot see for the life of me that the conduct of the claimants does not satisfy the requirements for the tort of deceit. They have made false representations, both implied and express, with regard to the presence of Mr Khan in the Peugeot, and whether or not they were injured. They knew that those representations were dishonest and, as such, false. The purpose of making those representations was to make a gain for themselves and to cause loss to the defendant’s insurers. Nothing else is required. Plainly the tort of deceit is made out. No specific loss has been suffered, so I have to ask myself whether this is a case for the award of exemplary damages. In my judgment, it plainly is. I cannot see any good reason why a defendant subjected to a fraud of this nature should not recover exemplary damages, when the fraud has been exposed and the fraudsters have failed in their aims. The fact of the matter is the defendants have been exposed to this claim, and the claimants have sought by them to secure monies to which they are not entitled. They are both equally responsible for the totality of the litigation.” 

Further reporting of this case:

On DWF

On the Insurance Times

James Leslie was called to the Bar in 2004. He is particularly experienced in the field of fraud including phantom passenger claims, induced accidents, cases of exaggeration and low velocity impact cases.

No5 Chambers is one of the UK’s premier set of barristers’ chambers with offices in Birmingham, London, Bristol and East Midlands and boasts more than 240 barristers and 28 silks.

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