UK: Fraud Claims - 2018 In Review

Last Updated: 23 January 2019
Article by Clyde & Co LLP

Most Read Contributor in UK, March 2019

Despite the efforts of many in the Claimant lobby, the Civil Liability Act was the headline act last year in the fight against fraud. The Bill advances the Government's reform package in respect of whiplash claims following road traffic accidents, which is expected to be concluded by early 2020.

Star billing was given to a new definition of 'whiplash injury' allowing for the introduction of a tariff system for those injuries. The tariff system will significantly reduce damages awarded for those injuries.

The supporting cast of the reform package includes the creation of a new portal to handle expected increased numbers of litigants-in-person and changes to the small claims track limits for RTA personal injury claims to £5,000 and EL / PL claims to £2,000. The change to the small claims track is expected to result in the aforementioned increased numbers of litigants-in-person, as solicitors no longer find it profitable to handle these claims with only small claims costs payable.

The impact on access to justice formed part of the criticism from the Justice Committee on the reforms. However, during debates within the House of Commons, the Government made clear that the reforms are squarely aimed at those claims, which had left England and Wales typecast "as a haven of unnecessary whiplash claims."

Strong performances have also been seen in the dismissal of claims for fundamental dishonesty - by utilising the section 57 procedure under the Criminal Justice and Courts Act, which fights a form of fraud which has gone relatively unpunished in the past; the exaggerated increase of a valid claim in order to obtain additional damages.

The decision in LOCOG v Sinfield [2018] EWHC 51 (QB) provided significant guidance for what conduct constitutes fundamental dishonesty under section 57. Mr Justice Knowles found that provided the head of loss exaggerated is substantial, or substantially effects the presentation of the claim, then the dishonesty is fundamental and the whole claim will be dismissed. In LOCOG, the false gardening claim represented 28% of the overall pleaded value or 42% of special damages.

Our fraud team have enjoyed significant success over the past year in dealing with fundamentally dishonest claims of this nature. The matter of Kona v Servast was a landmark decision, the first time a claim had been dismissed pursuant to Section 57 before a final hearing and without oral evidence from the Claimant.

From a tinnitus claim falling on deaf ears to putting the brakes on a cyclist's exaggerated claim, our ground-breaking strategy utilising section 57 continues to go from strength to strength.

Clyde & Co also obtained the single highest reported award of exemplary damages against third parties in a motor fraud case. Whilst financial punishment is damaging, a custodial sentence is the greatest deterrent to fraud, and we have had recent success in applying for committal for contempt of court of claimants who have staged accidents.

In Scotland, whilst similar provisions to those in section 57 did not make their way into the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act despite extensive discussions, the Scottish Courts have also considered the issue of fundamental dishonesty in the matter of Grubb v Finlay.

The Lord Ordinary confirmed that fundamental dishonesty on the part of the pursuer can result in the summary dismissal of a claim in Scotland, yet the Court of Session did not define what actions constitute such fundamental dishonesty. In the absence of an authoritative judgment on what constitutes fundamental dishonesty, we remain of the view that the Scottish Government will need to consider the implementation of legislation similar to that of section 57.

From a legislative perspective in Scotland, the introduction of some measures within the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act did cause concern about unintended consequences.

The introduction of damages based agreements into Scotland were felt to have the potential to create a compensation culture in Scotland, similar to that the Civil Liability Act aims to curb in England and Wales.

Similarly the introduction of QOCS also raised questions about fraudulent claims and adequate safeguards against them. Some of those safeguards were already contained in the Act in the form of exceptions such as fraud, unreasonable behaviour and abuses of process.

Additional measures were also advanced to create further balance, including a ban on referral fees and a reduction of claimant costs in low-value claims. These measures may be discussed as part of an ongoing legal services review in Scotland.

As raised within the discussions in Scotland, and often the villain of the piece when fraud is addressed, claims management companies will now find themselves under the critical gaze of the Financial Conduct Authority.

The regulation of CMCs across the UK was transferred to the FCA by the Financial Guidance and Claims Act. The move was broadly welcomed as part of efforts to minimise the role of unscrupulous operators. These operators will be of concern in light of the whiplash reforms, where they may look to fill the gaps left by solicitors. It is hoped FCA oversight will force unscrupulous CMCs from the market, alongside the increased restrictions on cold calling.

Whilst the show will go on until 2020, the curtain is likely to soon fall on whiplash claims in their guise, along with the profitability which many have benefited from.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions