Download Liability Brief - Kennedys

More documents

Recommendations

Info

the power to impose such a sanction. Instead of striking out the claims, the Court penalised the Claimants in costs, which negated the compensation awarded. Kirk v Walton [2009] - the Claimant claimed damages in excess of £770,000 but later accepted £25,000, following disclosure of surveillance evidence. The Claimant was fined £2,500 following contempt proceedings and was ordered to pay a significant part of the insurer’s costs. Such a sanction can only be an effective deterrent where the costs order and fine outweigh the compensation. Contempt of court The latest decisions on contempt of court suggest that the courts’ stance has changed and that exaggerated claims are now considered just as serious as fabricated claims. The decisions do, however, raise the question of whether the courts consider exaggerated claims brought against the Motor Insurers’ Bureau, a non-profit organisation and a last resort, as more serious than exaggerated claims brought against insurers: Motor Insurers’ Bureau v Richards and others [2011] - Mr Richards sought to recover damages in excess of £2m following a road traffic accident. His claim was supported by witness evidence from his sister and foster father. The MIB obtained surveillance footage which showed that Mr Richards was severely exaggerating the extent of his injuries. He subsequently withdrew his claim and the MIB pursued contempt proceedings against all three. Mr Richards received a four month custodial sentence, his sister 14 days and his foster father 14 days, suspended for six months. Motor Insurers’ Bureau v Shikell and others [2011] - Mr Shikell claimed damages in excess of £1.2 million against the MIB following a road traffic accident in which he suffered a head injury. The MIB pursued contempt of court proceedings against Mr Shikell, his father and a witness after they obtained surveillance evidence which showed Mr Shikell had exaggerated his claim. Mr Shikell and his father received custodial sentences of 12 months and the witness was fined £750. esure Services Ltd v Shah [2011] - esure brought contempt proceedings against Mr Shah arising from what was believed to form part of a wider fraudulent conspiracy. He was sentenced to six months imprisonment following the proceedings. Brighton & Hove Bus & Coach Company Ltd v Brooks and others [2011] - contempt proceedings were brought against three family members for supporting the exaggerated personal injury claim brought by the mother of Page 8 of 10
the family. The exaggeration was exposed after surveillance evidence was obtained by the insurer. Two of the Defendants were found to be in contempt. The Judges considered the false statements made by the Defendants over a period of two and a half years to be “serious contempt”, but declined to impose immediate imprisonment sentences, instead suspending the sentences for 12 months. When considering the judgment, it is apparent that the Court did not consider exaggerating a claim to be as severe a contempt as bringing an entirely fictitious claim: “this is not a case where the entire claim put forward … was a false one.” Lane v Shah [2011] - contempt proceedings were brought against the Claimant and her family after they signed false statements of truth supporting an exaggerated injury claim. The Claimant had originally claimed special damages totalling almost £637,000 in addition to general damages. Ultimately, the Claimant accepted an offer of £10,000. This was offset against the insurer’s costs of investigating the fraud. The Court described the statements as “calculated, deliberate lies” and imposed immediate sentences on the Claimant and her family of six and three months. Alternative approaches Are contempt proceedings the only and the best means by which insurers can get across the message that fraudulent claims will not be tolerated? Custodial sentences will clearly send the right message to those bringing fraudulent claims, but is the costly and lengthy process worth it? Following Ali v esure Services Ltd [2011], orders for committal for contempt of court can be heard before one judge sitting in the High Court, where the proceedings are already proceeding in the High Court, thus saving the time and expense of transferring the claim to the Divisional Court. Where proceedings remain in the county court, the application for committal must still be made to the Divisional Court. Are costs sanctions considered a serious consequence to claimants committing fraud? In many cases, claimants faced with adverse costs orders do not have the means to satisfy the orders. Unless a claimant owns a property, or has other identifiable assets, it is uneconomical for insurers to throw good money after bad in an attempt to recover what is owed. Should the insurer’s appeal in Summers v Fairclough Homes Ltd succeed, insurers could seek the strike out of all (even genuine) parts of claims where fraud exists. However, some commentators see the decision in Ul-Haq v Shah as a hurdle to the appeal. Could the fact that Summers features an exaggerated, rather than a fabricated, claim mean that the Supreme Court may not consider the fraud to be “as serious”? Page 9 of 10
Page 1 and 2: 13 January 2012 Liability Brief Wel
Page 3 and 4: Credit hire: mitigation of loss Cre
Page 5 and 6: clinical negligence and credit hire
Page 7: Courts’ powers A court has the po

Download Liability Brief - Kennedys

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?