Fraudulent credit hire claim leads to successful tort of deceit claim for costs of investigating such credit hire & exemplary damages

Judy Dawson discusses how a combination of a quick witted insurer claims handler, a tenacious solicitor, and the expertise of the Park Square Barristers Civil Fraud Team led to a successful result against a fraudulent Claimant.

The Facts

Mrs K was involved in a road traffic accident due to another driver’s negligence. The fault driver’s insurer swiftly received an RTA1 Claims Notification Form claiming personal injury, vehicle damage and credit hire provided by a particular firm. Concerns about the credit hire firm led to the insurer fee-earner adopting an instinctive and highly successfully approach; he authorised payment for the vehicle damage and personal injury claim however asked an outside agency to provide static surveillance on the road outside Mrs K’s address.  The agency provided footage showing that during the period of hire not only was there no sign of another vehicle but also a woman who appeared to match the description of the Claimant was regularly using another vehicle. Enquiries with the DVLA revealed that such vehicle had been registered to Mrs K since shortly after the accident.

Subsequently proceedings were brought by Mrs K for the cost of hire, purported physiotherapy treatment (which in line with many such claims was suspected never to have been carried out) and miscellaneous expenses.

The Defence

Despite the admission of breach of duty, because the insurer had promptly paid out on the vehicle damage and personal injury claims, a full Defence could be entered on the grounds that the Defendant had no outstanding liability to the Claimant. The Defence denied the hire and was accompanied by a tort of deceit claim for the payment to the outside agency who had been charged with validating the claim, plus exemplary damages. The Defence was carefully drafted, stating that it was assumed that the credit hire claim was based on an averment that the Claimant had no access to any other vehicle during the period of hire and asked for any contradiction to that to be served within 21 days and specifically requesting a Reply, signed personally by the Claimant in view of the pleading of fraud. The Defence did not spell out the fact that the Defendant had surveillance evidence so as to prevent any tailoring of subsequent evidence. The Claimant served a Reply specifically stating that she had no access nor used any other vehicle during the hire period.

Subsequent Tactics

Immediately on receipt of the Reply, in a bid to keep costs to the minimum, the Defendant’s solicitor (from DAC Beachcroft) served the surveillance evidence. The Claimant failed to serve any witness evidence and her solicitors came off record. The claim was struck out following the Claimant’s breach of an unless order and the Defendant solicitor applied for judgment on the counterclaim together with a finding of fundamental dishonesty

The Result

The application hearing was conducted by Peter Wilson, also of Park Square Barristers Civil Fraud Team. Judgment was given on the counterclaim for the costs of the surveillance evidence plus exemplary damages based on 50% of the value of the credit hire claim (just short of £5,000). Further the Defendant was awarded its costs of the main action (which had been struck out) and the counterclaim, with a finding of fundamental dishonesty so that the Court gave the Defendant permission to enforce such costs order, pursuant to CPR 44.16(1). Finally the Defendant was awarded its costs of the application summarily assessed at just under £2,000.

Discussion

Whenever a party believes it has evidence of fraud, it is important that it explores every possible explanation and ensures that such evidence cannot be “explained away”, preferably before it reveals it. In this case, whilst it appeared on face value that the Claimant had access to another car and therefore did not need a hire vehicle, the footage was over a short period only and it was necessary to ensure that the Defendant had evidence of dishonesty and was not met, for instance, with an explanation that whilst she had had the use of another vehicle for those couple of days, for the rest of the hire period her husband had needed that car for work and therefore she needed the hire vehicle. There was a tactical strategy therefore agreed between solicitor and insurer to properly plead fraud (as there was credible evidence) but not reveal the evidence on which that was based and to draw the Claimant out into revealing the extent of her dishonesty. It was therefore decided to draft a Defence inviting a Reply.

This claim was issued prior to 13^th April 2015. Had it been issued after that date, the Defendant insurer would have been able to ask the Court to strike out the entire claim (even if it had not paid the general damages and vehicle damage claim) pursuant to section 57 of the Criminal Justice and Courts Act 2015. As it is, on a quick calculation, the Claimant’s greed in adding on a fraudulent credit hire claim will have effectively reached the same result with her (genuinely deserved) damages for vehicle damage and personal injury being more than cancelled out by the costs and exemplary damages that she will now have to pay.

Insurers get bad press for delaying paying claims; in this case the insurer settled the claims for personal injury and vehicle damage at the outset and before any litigation was contemplated. The litigation was solely for advancing the fraudulent claim. Had it not been for the instinctive action of the insurer claims handler in arranging surveillance (noting that the same would be prohibitively expensive to arrange in large numbers of cases) this fraud would not have been discovered.

Judy Dawson and Peter Wilson are both leading members of the Park Square Barrister Civil Fraud Team and have been recognised for their expertise in this area by both Chambers and Partners and the Legal 500. They are both one of the number of barristers at Park Square Barristers practising exclusively in this area, encompassing credit hire fraud, fraud rings, induced and staged accidents.