Case Analysis relating to Fraudulent Claims

September 1, 2016

The case law below demonstrates the varying nature of such claims, and the considerations which the court must take into account when faced with a potentially fraudulent claim.

The recent 2016 case of Hayward .v. Zurich Insurance Co PLC [2016] UKSC 48 questioned whether an insurer can use the law of misrepresentation to unpick a personal injury settlement, where there had been a suspicion of fraud.  The Appellants, the insurer of the respondent’s employer, in 2003 had settled a personal injury claim suffered in the workplace for £135,000.00, despite the fact that there was suspected fraud by the respondent.

In 2005, the respondent’s neighbours approached the respondent’s employer to inform them that that from observing the respondent’s conduct and activities they believed he had entirely recovered from his injury at least one year before the settlement was reached.  The insurers were informed and successfully claimed damages for deceit at the first instance; however this was successfully appealed in the Court of Appeal.  The Supreme Court unanimously allowed the appeal, finding that the insurer had not known the respondent had deliberately exaggerated his injuries to the extent that was later discovered and had done everything it could to investigate.  The fact that the insurer was aware that there may have been some misrepresentation did not prevent the court’s decision that the respondent’s fraud was what had induced them to enter into the settlement initially.  The Supreme Court restored the Judge at first instance conclusion that the settlement could be set aside, with a reduced sum paid to the Respondent as compensation for his injuries.

In Beechview Aviation Limited v AXA Insurance Limited [2015] NIQB 106 the Plaintiff brought an action when a lorry, driven by an employee of the Defendant policyholder, collided with his helicopter which was parked at his premises. The Defendants denied liability on the premise that the collision was not an accident but rather part of a fraudulent conspiracy to deliberately damage the helicopter in order to obtain insurance monies, inflate loss and receive compensation. Stephens J considered a number of factors – the seriousness if fraud was established, financial incentive and risks of detection, financial pressure, acquaintanceship and credibility of those involved. In this particular case it was decided that on the balance of probabilities the incident was not a result of deliberate fraudulent action as the lorry driver would have needed to be a co-conspirator rather than negligent as he testified.

A Republic of Ireland case saw a different outcome to a claim brought by Mr David Ward that he was the front seat passenger in a vehicle which rear-ended a second vehicle being driven by his partner, Ms Lynsey Ivory. The crash was staged, though both denied to the Garda that they knew each other. Ward and Ivory submitted a claim for personal injuries to FBD Insurance, again denying any knowledge of each other. They were successfully caught out when pictures of the two together appeared on the Facebook profiles of both parties. Had they been successful in their claims both may have received €15,000. Both received suspended sentences.

Hazlett v Robinson and others [2014] NIQB 17 – The Plaintiff sustained injuries to his left humerus, thoracic spine, left fibula and subsequently an adjustment disorder in the course of a road traffic accident when he was a rear seat passenger in a vehicle driven by the third Defendant. Save for the issue of contributory negligence for alleged failure to wear a seat belt, liability was admitted by the Defendants. In reaching his judgment Gillen LJ stated:

“This is not a case where the draconian step of striking out the claim would be justified notwithstanding my belief that the Plaintiff has on occasions exaggerated his symptoms and has fabricated a claim that he was wearing a seatbelt. He clearly has sustained significant personal injuries and must be appropriately compensated for these. His Smith v Manchester (loss of future earnings or future earning capacity) claim has probably been diluted due to the degree of work that he has undertaken since the accident but he is still entitled to compensation for such a head of loss.

I regard his assertion that he was wearing a seatbelt to be in a different category. I am satisfied that he was being deliberately dishonest in this aspect of his case and that he lied in the witness box to me when dealing with it.”

With the above cases acting as a warning it is evident that greater care by Plaintiff practitioners to ensure claims are not dishonest is required.

By Mairead O’Boyle, Solicitor and Aimee Craig, Trainee Solicitor, Cleaver Fulton Rankin.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Dispute Resolution Team at Cleaver Fulton Rankin for further advice or information.