Weightmans and Local Authorities; working together to disrupt and deter fraudulent claims

Fraudulent claims seem to be regarded, by claimants at least, as a “shot to nothing”, in that even if they are caught out, they can simply abandon their claims without consequence; their own costs having been dealt with on “no win no fee” and funded by others and the defendant’s costs being unenforceable by virtue of qualified one way costs shifting (“QOCS”).

But this is not the case at all. As we will see, QOCs protection can and will be removed by the court where fundamental dishonesty is established. Costs orders can be significant and, whilst additional work and expense can occur in establishing those rights, doing so (and advertising that success) is an effective way to deter potential fraudulent claims, which is likely to be cost effective in the medium term.

In the first of three recent cases, our client had no choice but to defend, as the claimant maintained his claim all the way to court. This highway trip claim was presented in the Portal and because, in relation to the defect there seemed no defence, liability was then admitted. By the time the case was particularised, and disclosure given, myriad evidential discrepancies were apparent, and the admission was partly withdrawn to allow causation to be fought. The inconsistencies related to the time of the accident, the claimant’s pre accident condition (he had been involved in another accident recently that he failed to disclose to medical experts) and his post-accident recovery. 

That combination of factors allowed the Judge, having heard the claimant’s evidence, to conclude that:

“The inconsistencies go beyond mere aberration. In all the circumstances, the location of the accident, the failure to corroborate who was there and who saw what, all of which are dishonest, they all go to the root of the case, there is fundamental dishonesty in the way this case is being presented and brought.”

Accordingly, the Judge dismissed the claim, made a finding of fundamental dishonesty, assessed costs payable by the claimant at £10,000 and gave the defendant permission to enforce those costs, thereby removing QOCS.

The second of the three cases had a slightly more difficult path, as the claimant discontinued his claim shortly before trial. This time the claimant had driven his car into a pothole and sustained injury and vehicle damage. Once again there was no evidence to defend the defect itself but significant “red flags” in relation to the claim including:

• his failure to reveal to his medical expert multiple other injury claims;
• a repair document dated three weeks after the named garage had been dissolved;
• bank statements revealing that he was working when he claimed that he could not;
• no contemporaneous injury report; and
• conflicting evidence including an apparent inability to recall whether or not airbags had deployed and the car had left the road.

The claimant had failed to accept an early “drop hands” offer and continued his claim until three weeks before trial, causing our client to incur significant expense. Once he realised that no payment would be forthcoming, he abandoned his claim, almost certainly hoping that would be the end of it.

Of course, when a claimant discontinues a claim the automatic costs order (in a QOCS case) is that the claimant must pay the defendant’s costs of the action on the standard basis, such costs not to be enforced without the permission of the court.

An application can be made, post discontinuance to seek permission to enforce those costs where the claim is fundamentally dishonest (the burden falling on the defendant to establish fundamental dishonesty on a balance of probabilities). Here, that application was successful and the claimant was ordered to pay costs of around £20,000 forthwith.

Our final case in this trilogy required a further step to enforce as the claim was brought on behalf of a minor (at least she was at the time of the accident) by her father acting as litigation friend. Here the claimant alleged that she had been injured when falling from a piece of playground equipment. The Local Authority had received an anonymous tip that the injury actually occurred when the claimant fell from the roof of an industrial unit nearby. Dishonesty was therefore pleaded in the defence. The claimant explained that it was likely that the “tip off” had come from the litigation friend’s ex-partner and was vindictive and untrue. Utilising the claimant’s suggested ID, we located the ex-partner, who not only gave a witness statement but also provided a snapchat video of the claimant on the roof.

At our application for permission to rely on the witness statement and video evidence, the claimant’s solicitors came off record, and the claimant was ordered to state whether the claim was to proceed. There was no response and so the claim was struck out. 

We were instructed to apply for costs on the indemnity basis and permission to enforce. By then the claimant had attained majority. The litigation friend had been required, as is normal, to provide the claimant with an indemnity in relation to costs and had not taken the necessary procedural step to absolve himself from that liability. The court ordered that the litigation friend pay the defendant’s costs, on the indemnity basis, forthwith and assessed at just under £70,000.

Fraud is now the largest single crime type. Fraudulent insurance claims are rising at an alarming rate, fuelled at least, in part, by increasingly fewer personal interactions, the availability of AI and the (false) assumption that there is little chance of detection and an even lower chance of sanctions. There are sanctions, and costs orders are just one of those. As an industry we must exercise those rights to costs recovery where we can to demonstrate to claimants that there are real consequences for bringing dishonest claims.