Pleading & Litigating
Fraudulent Motor Claims
Arun Katyar
CPD Ref: AVV/CHRW
12 King’s Bench Walk, Temple, London EC4Y 7EL,
Tel: 020 7583 0811, Fax: 020 7583 7228, Video Conferencing: 020 7583 4190
E-mail: chambers@12kbw.co.uk, Website: www.12kbw.co.uk, DX 1037 Chancery Lane
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Pleading & Litigating Fraudulent Motor Claims;


Introduction

What types of road traffic litigation come under the fraud umbrella?

From malingering chancers to intricate fraud rings.

A common cause to defeat fraud.

Practical guidance and discussion.
What is Fraud?

As defined by the OED:“The using of false representations to obtain an unjust advantage or to
injure the rights or interests of another.”


The tort of deceit.

Derry v. Peek (1889) LR 14 App Cas 337

False Representation.

Knowledge.

Reliance.

Loss.
Statistics

The cost of fraud to the motor insurance runs to billions.
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

About half of the estimated cost comprises fraudulent motor claims.
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An estimated 30,000 staged accidents per annum in the UK (in 2009).

Ever increasing insurance premiums.

Accident hotspots.
The Burden & Standard of Proof

The legal & evidential burdens; on C (by default).

An evidential burden placed upon D when fraud is raised.

See Francis v. Wells & Churchill [2007] EWCA civ 135)
“…The legal burden remains on each claimant, but with the allegation
of fraud by way of defence an evidential burden would arise on the
defendant and a substantial burden at that…”

Authorities on point:Hornal v. Neuberger Products Ltd [1957] 1 QB 247,
Re H [1996] AC 593 at 586-587,
Re Doherty [2008] UKHL 33 at paras 23/29,
Re B (Children) (Care Proceedings: Standard of Proof) [2008]
UKHL 35, [2008] 3 WLR 1.
R(N) v. Mental Health Review Tribunal (Northern Region) [2005]
EWCA Civ 1605)

The standard of proof is the civil standard.

A succinct summary of the overall position is provided by R(N):-
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"Although there is a single civil standard of proof on the balance of
probabilities, it is flexible in its application. In particular, the more
serious the allegation or the more serious the consequences if the
allegation is proved, the stronger must be the evidence before a
court will find the allegation proved on the balance of
probabilities. Thus the flexibility of the standard lies not in any
adjustment to the degree of probability required for an allegation to
be proved (such that a more serious allegation has to be proved to a
higher degree of probability), but in the strength or quality of the
evidence that will in practice be required for an allegation to be
proved on the balance of probabilities."
[Emphasis Added]


Types of Fraudulent Motor Claim

Fictitious Accidents.

Staged Accidents.

Contrived / Induced / ‘Slam on’ Accidents.

Bogus / Phantom passengers.

Low Velocity Impact.

Exaggerated injury and/or losses.
Pleading Fraud

Professional obligations of the pleader.
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
Professional obligations of Counsel; Para. 704, Bar Code of Conduct
(8th Edn):“Drafting documents
A barrister must not devise facts which will assist in advancing the lay
client's case and must not draft any statement of case, witness
statement, affidavit, notice of appeal or other document containing:
…
(c) any allegation of fraud unless he has clear instructions to make
such allegation and has before him reasonably credible material
which as it stands establishes a prima facie case of fraud…”
[Emphasis Added]

Medcalf v. Mardell [2002] 3 WLR 172.

Procedural requirements; See Part 16 of the CPR.

Requirements for the Particulars of Claim; see CPR 16.4 and Para 8.2
of the Practice Direction to Part 16.

Requirements for the Defence; See CPR 16.5 of the CPR.

Fraud v. Suspicion of Fraud … the “Twelfth Night” defence.

Kearsley v. Klarfeld [2006] 2 All E.R. 303.

The presentation & particularisation of the fraud pleading; some
examples.


An important judgment call.
Tell Tale Signs of a Fraudulent Claim

Relevance of Locality & Ethnicity.

Multiple vehicle occupancy giving rise to multiple injury claims.
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
Varying
descriptions
/
inconsistencies
/
reported
number
of
passengers.

Links between occupants; address searches / credit searches / social
networking websites.

Use of material on Facebook; Locke v. Stuart & AXA [2011]
EWHC 399 (QB)

Criminal convictions.

Damage inconsistency.

Defendant driver disappears.

Route.

Absence of police or other emergency service involvement.

Claims history.

Targeting of commercial vehicles.

Policy details; recent inception / online policy / instalments / unpaid
premiums) / hire vehicles.

Recent vehicle acquisition.

Older / high mileage vehicles / previous write offs.

Disproportionate / high credit hire claims.
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

Referrers of work / third party beneficiary companies.
Fraud Rings

A cluster of claims, interconnected claims, linked by a variety of
common features.

These claims form a series of fraudulent conspiracies.

E.g. the Locke v. Stuart & AXA case involved a ring of 9 deliberately
fabricated road traffic accidents with the following common features:
Locality; a constant.

Referrer; same accident management company.

Policy; all hire vehicles.

Multiple Occupancy; yes.

Links between occupants; residential address / Facebook links.

Of the cluster of 9 claims, only 1 proceeded to trial.

Concerns raised in Parliament about the proliferation of fraudulent
claims; see report by the House of Commons Transport Committee
paper; "The cost of motor insurance" HC 591 (Published on 11th
March 2011):“We also received worrying evidence about the scale of organised
motor insurance fraud. The Association of Chief Police Officers
referred to there being 30,000 staged accidents in 2009 and explained
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in some detail how such accidents are arranged to enable claims to be
made”.


The way forward – combating fraud

Data sharing / Data Protection Act 1998 s.29(3) requests.

National Databases.

Fraud detection systems at point of inception.

Orders for personal attendance at interlocutory hearings.

Further regulation of third party beneficiary companies.
Conclusions

Common interest in detecting fraud.

Scrutiny of claims at an early stage.

Need for care, consideration and judgment before defending a claim
based upon fraud.

Referral Fees.
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