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Problem issues and problem clients

How to win the case when the client isn’t straightforward

This seminar provides practical advice on common "problem cases" arising from the

behaviour and lifestyle of clients. The seminar includes discussion of:

• criminality;

• tax evasion;

• exaggeration and malingering;

• allegations of fraud;

• surveillance evidence;

• the impact on quantum; and

• costs consequences.

The types of case with which we are concerned can (very roughly) be divided into

three types: (1) clients with a pre-existing history of “bad” behaviour who have good

claims; (2) clients whose conduct of the claim leads to allegations of

exaggeration/malingering/fraud; and (3) clients whose conduct after the accident may

‘descend’ into what can loosely be called amoral, immoral or illegal behaviour.

There are two ways of thinking about “fraudulent” claims.

The clunking fist

This approach – dare one say common to Defendants and insurers - is that fraudulent

claims must be identified and fought to a Carthaginian conclusion. Marcus Grant

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encapsulates this mindset in a paper he gave to the Personal Injury Bar Association in

October 2006: “Dishonest claims: how to spot them, and eliminate them”.1

“Spotting” a fraudulent claim involves recognising certain facts that may indicate the

possibility of some kind of deception. The indications are essentially generic in the

sense that they are not specific to the particular case under consideration but apply to

a wider class of case. Such “indicators” are various and diffuse.

Factors that may indicate a claim that is itself fraudulent include the type of accident;

the geographical location of an accident; the race, ethnicity, age, or sex of the person

making the claim; the history of previous claims made by the Claimant and his and

her witnesses, their families and extended families, friends, ex-partners, and persons

occupying or having previously occupied the same properties.

A bona fide claim may be transferred to the insurer’s fraud department when a certain

trigger occurs: perhaps most commonly when there is a significant divergence

between the presentation of physical symptoms and the lack of any organic

explanation.

The seismograph

The alternative approach is that each case and each individual are different. A legal

representative takes into account the particular facts of the case, the peculiarities of

the client, and the specific findings of the medical experts. Conscious of the generic

characteristics of the claim, the Claimant’s representative is ultimately highly

1 http://www.piba.org.uk/documents.php

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sensitive to the needs and aspirations of his or her client which dictate the progress of

the action. The content of the claim and the way in which it is brought are shaped by

these considerations.

The two approaches are not necessarily inconsistent. They are partly explained by the

different sources of information available to the parties as well as their opposing

economic interests. There has to come a time in the course of the claim when insurers

have to acknowledge that the particular facts of the case may not support an allegation

of fraud. Likewise the accumulation of evidence that undermines the Claimant’s bona

fides may lead the Claimant’s representatives to the conclusion that the claim can no

longer be won.

Unfortunately, one of the endemic problems with these cases is that the prospects of

success cannot be evaluated properly until a significant amount of time and resources

have already been devoted to the claim. The issues may only crystallise after

proceedings have been issued: when it comes to serving the defence; at the disclosure

stage; after service of witness statements; or at trial.

The stakes are high. Allegations of fraud cannot be made lightly and the consequences

of getting it wrong have significant costs and reputational implications for both the

Claimant and Defendant and their legal representatives. While recent authorities

highlight the risks involved they are of less assistance in offering guidance on how to

avoid the potential pitfalls.

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1. Legal Principle and the Defence of Illegality

“not so much a principle as a safety valve”

Professor Andrew Burrows

1.1 Committing fraud is an illegal act. The relevant defence is that of illegality. It

is not a defence that accrues for the benefit of the defendant to protect its

economic interests or legal rights but a matter of public policy. Lord

Mansfield explained in 1773 that this was not a defence that accrued solely or

even for the benefit of the defendant:

The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds

at all times very ill in the mouth of the defendant. It is not for his sake, however, that the

objection is ever allowed: but it is founded in general principles of policy, which the

defendant has the advantage of, contrary to the real justice, as between him and the plaintiff. 2

1.2 The illegality defence operates as a rule of public policy by which an

otherwise perfectly proper claim will not be allowed to proceed or a particular

head of loss cannot be recovered because it offends public conscience or

morality.3 The defence covers more than acts which are ‘illegal’ but those

which the courts find morally offensive. Aldous LJ appears to consider it a

fundamental of English law:

There is in my view but one principle that is applicable to actions based upon contract, tort or

recovery of property. It is hat public policy requires that the courts will not lend their aid to a

man who founds his action upon an immoral or illegal act. 4

2 Holman v Johnson (1775) 1 Cowp 341 at 343.

3 The defence applies to criminal acts not because they are ‘criminal’ per se but because the acts

themselves offend against public morality. 4 Standard Chartered Bank v Pakistan National Shipping Corporation [2000] I Lloyd’s Rep 218 at

232.

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1.3 Three problems inevitably emerge from the operation of such a principle. The

first is that it sits uncomfortably with the positivist utilitarian jurisprudential

tradition in England and Wales which seeks to draw a distinction between the

operation of law and practice of morality. Secondly, it allows for considerable

uncertainty about the variety of conduct that will attract the opprobrium of the

courts. There will be different approaches within the judiciary, in particular

there may be generational differences about what conduct is tolerated within

contemporary civil society as opposed to that which is ‘immoral’. The third

and most immediate practical difficulty is the extent to which illegality or

immorality ‘founds’ the claim: how closely connected must the impugned act

be to the remedy sought?

Ex turpi causa

1.4 The maxim ex turpi causa non oritur actio (no case can be brought relying

upon an evil cause) applies to only part of the illegality defence. The defence

itself is based on considerations of public policy whereas the maxim is

concerned with one aspect, the factual connection between the illegal act and

the remedy sought. It offends public decency to allow a man or woman to

profit from his or her illegal acts. The courts should not “recognise a benefit

accruing to a criminal from his crime”.5 However, there is a competing public

interest that bona fide claims should be litigated and proper remedies awarded.

Lord Bingham described the court as being engaged in a balancing exercise:

Where issues of illegality are raised, the courts have to steer a middle course between two

unacceptable positions. On the one hand it is unacceptable that any court of law should aid

or lend its authority to a party seeking to pursue or enforce an object or agreement which the

5 Per Lord Atkin in Beresford v Royal Insurance Company Ltd [1938] 586 at 599.

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law prohibits. On the other hand, it is unacceptable that the court should, on the first

indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse

all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss

to the unlawfulness of his conduct.6

1.5 The Law Commission considered that the number of factors to be taken into

account, and the varying significance placed on the conceptual justification for

the defence, meant that cases have not always followed the same reasoning

and the results were unpredictable.

1.6 Some examples:

Clunis v Camden and Islington Health Authority [1998] QB 978 (CA)

The plaintiff had been detained in hospital for treatment of a mental disorder. The hospital

discharged him and he stabbed a man to death. He pleaded guilty to manslaughter on the

grounds of diminished responsibility and was sentenced to be detained in hospital. The

plaintiff sued the health authority, alleging that it had been negligent in discharging him and

not providing adequate care and claiming damages for his loss of liberty. The health authority

applied to strike out the action on the ground that damages could not be recovered for the

consequences of the plaintiff's own unlawful act. The court accepted this submission. The

plaintiff has been convicted of a serious criminal offence. A plea of diminished responsibility

accepts that the accused's mental responsibility is substantially impaired but it does not

remove liability for his criminal act. The court ought not to allow itself to be made an

instrument to enforce obligations alleged to arise out of the plaintiff's own criminal act

Vellino v Chief Constable of Greater Manchester [2002] 1 WLR 218 (CA)

The claimant was well known to local police, who had called on several occasions to arrest

him at his second floor flat. He had sometimes evaded arrest by jumping from his kitchen

balcony or hanging from it and dropping to the ground. Having failed to appear in court one

day, he was visited at his flat by a police sergeant and several constables with an arrest

warrant. A noisy party was in progress in the flat. The claimant was arrested after a struggle,

and held by a sergeant and a constable. One of the guests at the party punched the sergeant,

who let go of the claimant, but the constable held onto him. There was conflicting evidence as

to what had happened next. The judge inferred that the officers had permitted the claimant to

jump from a bedroom window, fracturing his skull and suffering severe brain damage and

tetraplegia. The claimant had to rely on his criminal conduct in escaping lawful custody to

found his claim. The crime of escape was a serious one; it is a common law offence for which

the penalty is at large. It is almost invariably punished by a sentence of imprisonment,

although the length of the sentence is usually measured in months rather than years.

Revill v Newbery [1996] QB 567 (CA)

The Court of Appeal upheld the award of damages to a burglar who was shot by an occupier.

To deny the claimant compensation for an assault which went beyond self-defence was a

different thing from denying him the fruits of his crime.

6 Saunders v Edwards [1987] 1 WLR 1116, 1134:

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Cross v Kirkby (CA) (Lawtel:Unreported 18/2/2000)

The claimant was engaged in hunt sabotage on the defendant's land. The claimant attacked the

defendant with a baseball bat. The defendant started to walk away but the claimant persisted

in the attack. To ward off further blows the defendant hit the claimant on the side of the head

with a single blow causing a fracture of the skull. The claimant commenced proceedings

seeking damages for the injuries sustained. The judge concluded that the defendant's

disproportionate unlawful use of force prevented him from relying on the defence of ex turpi

causa. The defendant successfully appealed. The defendant had been under attack "likely to

cause serious injury". The defendant had been defending himself from attack. The defendant

took steps to avoid becoming involved. The fact that the blow had been "hard" as judged by

medical experts was not a sufficient ground for rejecting the most potent evidence that the

defendant had acted in self-defence and the appeal therefore succeeded on this point. To

suggest that the claimant was not criminally responsible was absurd given that the act of the

defendant had been the very kind of act on which the claimant himself had moments before

been engaged. In the present case the claimant's injury originated and arose from his own

criminal conduct and the court ought not to countenance a claim for damages so founded.

National Coal Board v England [1954] AC 403

The House of Lords ruled that a claim by the injured claimant should succeed notwithstanding

the fact that he and a fellow employee, acting in concert, had knowingly broken regulations

under the Coal Mines Act 1911 designed to prevent workmen coupling up explosives. The

purpose of Parliament in passing the relevant Act was to provide a remedy in circumstances

where there had been a breach of statutory duty by the employer.

Res v Atkinsons Kitchens & Bathrooms Ltd (2006) QBD (Crane J)

The claimant (C) brought an action in negligence against his employer, the defendant

company (D), as a result of personal injuries sustained in a road traffic accident. In the course

of his employment, C had been driving D's van on a motorway, accompanied by his manager

(M), when he lost control of the vehicle and sustained serious injuries. No other vehicle was

involved. C maintained that he had fallen asleep at the wheel after working for around

nineteen hours with only one break and had not had a sufficient rest period prior to starting

work, in breach of the Working Time Regulations 1998. D submitted that the doctrine of ex

turpi causa prevented C from recovering damages, since C had been driving dangerously in

excess of the speed limit and had been sending and receiving text messages on his mobile

phone. The fact that C had been driving dangerously shortly before the accident would not

trigger the application of the ex turpi causa principle as C had not been driving dangerously at

the particular time of the accident.

Gray v. Thames Trains Ltd and another [2009] UKHL 33 The claimant was a passenger on a train involved in a major railway accident. He suffered

post-traumatic stress disorder which he alleged had been caused by the accident. Whilst

suffering from that disorder he killed a man. His plea of guilty to manslaughter on the ground

of diminished responsibility was accepted by the Crown and he was ordered to be detained in

a hospital under the Mental Health Act. The claimant brought an action in negligence against

the defendants, included damages for loss of earnings after his detention, for loss of liberty

and damage to reputation, and for feelings of guilt and remorse consequent on the killing, all

of which he claimed had resulted from the post-traumatic stress disorder caused by the

defendants. The House of Lords ruled that in order to avoid inconsistency in the justice system

a civil court would not award damages to compensate a claimant for an injury or disadvantage

which the criminal courts had imposed for a criminal act for which he was responsible; the

criminal court by its sentence had found the claimant to have had personal responsibility even

if he had acted with diminished responsibility; that, moreover, the fact that the claim for loss

of earnings had arisen prior to the claimant carrying out the criminal act which had resulted in

the detention and so would have prevented him from working in any event did not entitle the

claimant to damages for loss of earnings during detention.

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The Law Commission

1.7 The Law Commission described the illegality defence as “technical, uncertain

and sometime arbitrary. It often lacks transparency. Occasionally it produces

results which may appear unduly harsh.” The Law Commission did not

recommend legislation but recommended that in exercising a discretion to

allow some form of illegality to act as a defence to the claim “the courts

should take into account a list of factors such as the seriousness of the

illegality involved and the proportionality of denying relief.” 7

1.8 The Law Commission explicitly allowed for situations in which “there may be

good reasons to deny normal rights to a claimant involved in illegal conduct”.

There were five public policy justifications:

1. furthering the underlying purpose of the rule the claimant has infringed.

2. consistency in the application of the law.

3. preventing a party from making a profit from his or her own wrong.

4. deterring illegal conduct.

5. maintaining public confidence in the system of justice.

While the Law Commission did not recommend a change to the law it called

for greater transparency in decision making.

7 The Law Commission Consultation Paper No 189 The Illegality defence. A Consultative Report

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Factors to Consider

1.9 The courts are reluctant to lay down any formulaic test or rules. The Law

Commission suggests that in each case it is necessary to consider whether the

application of the illegality defence can be justified on the basis of the policy

considerations that underlie the defence, but there are still considerable

difficulties in anticipating to what extent these policy concerns will justify

debarring the claim or part of the claim. For example:

• What is the extent of any illegality that may render the defence

appropriate: a serious crime or a trivial offence?

• In what way does the crime/illegal act have to be linked to the claim?

• Does there have to be a mental element to the crime or act? If the claimant

is not aware of any illegality would this make a difference?

• What difference does it make if the Claimant and others are engaged in

illegal activity?

• To what extent can the court take into account the “bargaining position” of

the parties?

• What is the position if the illegality relates only to part of the claim not the

whole?

• How will the court approach “the repentant claimant”?

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2. Criminality and Tax Evasion

“... there remain certain fundamental principles essential to any just and civilised society

which provides the rails within which the unruliest horse may safely run.”

Lord Justice Waite

2.1 The circumstances in which causes of action arise from criminal activity are

few and far between cf. Clunis, Gray v Thames Trains, Revill v Newby. In

many instances the defence of illegality is inappropriate. It is hard to see how

an unlawful profit can be made from a personal injury itself. Cases like Clunis

and Gray can be distinguished – at least in part - in that the criminal acts

occurred after the injury had been sustained, and it is these acts rather than the

injury itself that gave rise to the defence. The court is only likely to bar the

claim when the injury is so closely related to the crime itself, cf. Vellino. Even

in these circumstances the illegality defence may only be an effective bar to

part rather than the whole of the claim, cf. Gray v Thames Trains where

damages for lost earnings were recovered up until the act of manslaughter.

2.2 A far more common problem is illegal activity unconnected with the

circumstances of the accident itself but related to pre-accident earnings or

lifestyle. This can take several forms. A party’s lifestyle may be funded by

criminal activity. Income can be earned in whole or in part by unlawful or

illegal means. A party may have avoided paying tax or national insurance. In

general these are bona fide claims, an injury has been sustained as a result of

the defendant’s negligence, but the innocent party’s character is tainted by a

prior history of illegal behaviour.

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2.3 The court’s historical approach in general has been to allow recovery to reflect

the validity of the claim but to take into account the particular circumstances

of the claim in determining the amount of compensation.

Examples

Earnings based on criminal activity

Burns v Edman [1970] 2 QB 541 (CA)

The deceased was a career criminal. The dependency claim brought by his wife and children

failed as it was based solely on the proceeds of the deceased’s life of crime. The money came

into the deceased’s hands unlawfully.

Earnings based partly on illegal/unlawful activity

Bagge v Busses [1958] NZLR 630

The deceased was a lorry driver. A large part of his income was derived from a contract he

had with a milk company. Evidence at trial indicated in carrying out driving under this

contract he had contravened statutory regulations requiring drivers to rest one day a week: a

criminal offence. The deceased’s widow was allowed to claim for lost dependency based on

money earned under the contract. As a matter of fact this income would have been earned

from the diary company notwithstanding the breaches in the regulations. However, it was a

legitimate consideration to take into account what the Claimant would have earned had the

regulations been complied with.

Tax Evasion and Benefit Fraud

Hunter v Butler [1996] RTR 396 (CA) A widow claimed for dependency under the Fatal Accidents Act as a result of her husband’s

death in a road traffic accident caused by the negligence of the Defendant. The widow’s

dependency included reliance upon supplementary benefit fraudulently obtained by the

deceased prior to his death and undeclared wages. Recovery of claims based on such incomes

sources offended against public policy: (1) such recovery assumed continuing illegal

behaviour into the future; (2) the proceeds of illegality could not in principle be treated in the

same way as earnings; and (3) recovery under the Fatal Accident Act was a matter of pounds,

shillings, and pence “derived from wages honestly earned or income honestly received”.

Duller v South East Lincs Engineering (Unreported 2 May 1980; see Kemp & Kemp 8-

005) The claimant sought recovery of part-time earnings as a barman. Before the accident he had

not declared these earnings for tax and national insurance. The claimant was entitled to

recover lost earnings as special damage and future loss. The money was lawfully obtained. It

was only later that illegality had occurred as a result of the failure to declare income to the

revenue. The claim was not based on an unlawful act. Credit had to be given for tax and

national insurance.

Newman v Folkes [2002] PIQR QBD (CA)

The claimant sustained severe injuries in a road traffic accident. Liability was apportioned.

There was no doubt that N would be unable to return to his pre-accident work as a motor

trader but there was substantial difficulty in establishing his level of earnings because he had

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never paid income tax or national insurance contributions and had no books or accounts. The

failure to pay tax did not debar the claimant from advancing a claim for past or future loss of

earnings. A claimant who derived income from a legal source was entitled to rely on the loss

of that income to found a claim although it could be necessary to made adjustments for unpaid

tax and national insurance. In the Court of Appeal Ward LJ commented that the claimant’s

claim was “little short of scandalous … a concoction of lies and deceit”. Although he claimed

£ 285, 000 and £ 1, 000, 000 for past and future loss of earnings, he received £ 159, 000 and £

387, 000 respectively.

Post Accident failure to declare earnings to the revenue

Morton v Portal Ltd [2010] EWHC 1804 (QB) QBD (Walker J)

Whilst carrying out some roofing work, M had fallen through a missing pane of glass and was

paralysed for life. M admitted that he had misled his accountant and HM Revenue and

Customs by doing "cash jobs" which were not entered into his company accounts. He also

admitted routinely overstating the cost of materials and understating the cost of labour in order

to reduce the tax liability. Those deceptions had the effect of understating the profits of his

company. M claimed £1.72 million for past and future loss of earnings, but eventually

accepted £385,000 for that element of his claim. P argued that M should be ordered to pay its

costs on the issue of past and future loss of earnings as he had grossly exaggerated the amount

of his claim on that issue. M had now accepted that the past and future loss of earnings claim

was worth very much less than had originally been contended. However, that fact did not itself

show that there had been exaggeration within CPR r.44.3 (5) (d). That paragraph could not

have been intended to be satisfied merely because a genuine claim was overestimated.

Exaggeration for the purposes of that rule must indicate conduct meriting criticism. While the

court did not underestimate the seriousness of M's illegitimate fiscal adjustments in his

company accounts, they were deceptions made with a view to minimising the company's tax

liabilities. It could not be assumed that a person who was willing to deceive the Inland

Revenue should be regarded as someone who was equally willing to deceive a court, or had

done anything else in his dealings with the court such as would merit criticism. Whether the

case was taken as a whole, or whether one considered the lost earnings claim alone, overall M

was the winner.

Post Accident failure to declare earnings as part of the claim

Molloy v Shell UK Ltd [2001] EWCA Civ 1272 (CA)

M worked for S as a scaffolder on an oil platform in the North Sea. During the course of his

employment, M fell on a ramp and injured his back. In his particulars of claim, M stated that

he had been unable to work for two and a half years and claimed loss of earnings for that

period. S admitted liability and made a payment into court of £20,000, which included

interest. M filed a schedule of loss claiming over £300,000 for past and future loss of earnings,

including the fact that he would never be able to return to the oil platform. Days before the

trial, S discovered that M had in fact returned to the oil platform as a scaffolder and had

worked there on a fairly regular basis for three years. The claim had been grossly and

deliberately exaggerated. The judge awarded M just £18,897, which was less than the gross

amount paid into court, and ordered him to pay 75 per cent of S's costs. The judge recorded

that M had grossly deceived his GP and medical experts who had examined him, concluding

that he had been spectacularly dishonest. The Court of Appeal held the judge was wrong in

ordering M to pay only 75 per cent of the costs. It was obvious that M did not better the

payment in and the only way in which the judge's discretion should have been exercised was

to award S all of its costs. The judge was obliged under CPR Part 44.35 to consider M's

conduct in the case. M had abused the court's process and in such circumstances the court

should wonder whether, following such an abuse of the civil court process, M's claim should

be considered at all.

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Obtaining pecuniary advantage by deception

Hewison v (1) Meridian Shipping (2) Coflexip Stena Offshore Ltd (3) Flex Installer

Offshore Ltd [2002] EWCA Civ 1821 (CA)

A merchant seaman’s claim for loss of earnings was prohibited because the claim depended

on the proposition that he would have continued deliberately to conceal his epilepsy from his

employer. The court should apply a broad test of whether the claim was based substantially on

an unlawful act. The unlawful act was the commission of the criminal offence of obtaining a

pecuniary advantage, namely his continued employment for reward, by deception. That deceit

was essential to his claim for loss of future earnings. Ward LJ (dissenting) thought that the

claim was not founded upon illegality because he had no need to plead, and had not pleaded

the illegality. His claim was not closely connected or inextricably bound up with his own

illegality. The real reason for his dismissal was not his dishonesty but his epilepsy and his

consequent inability to perform his work properly and safely.

Major v Ministry of Defence [2003] EWCA Civ 1433 (CA)

When she was 13 years old M had crashed a snow mobile at a Royal Marine base. M suffered

depression leading to post-traumatic stress disorder. M had been employed by the Royal Air

Force since 1997. In order to be admitted to the RAF she had given false information in her

medical examination concerning whether she had ever self-harmed. The defendant ('MOD')

had alleged illegality on the basis that M had committed the offence of obtaining a pecuniary

advantage by deception. The recorder held that M could not claim in respect of her service in

the RAF because she had obtained it by an untrue statement. M's appeal was allowed. Her

claim was based on the fact that she could not serve in the RAF because the MOD, by the

accident, had prevented her from doing so. M's claim was for general loss of future earnings,

and the earnings that M would have received in the RAF were a cogent indication of what her

future earnings would have been had it not been for the injury. As M was not claiming for

actual wages as such, but was relying on the wages she had been paid as an indication of her

value on the labour market, the fact that M had obtained employment by lying was not

relevant to quantification of the claim. Unlike Mr Hewison, who was congenitally unable to

work without telling lies, M had been put in the position of being unable to work by the tort of

the MOD. The fact that M would have to behave deceitfully in obtaining any employment was

a fact that she was entitled to complain about. M should have received damages on a basis

unaffected by her answer in 1997.

Related Fraud

Shah v (1) Ul-Haq (2) Khatoon (3) Parveen [2009] EWCA Civ 542 (CA)

S had conspired with another to support her fraudulent claim. The Court of Appeal was

unaware of any reported case in which a judge had dismissed the whole of a claim because he

had found that it had been dishonestly exaggerated. The invariable rule was that, where a

claim had been dishonestly exaggerated, the judge awarded the limited damages which were

appropriate to his findings. It was well established that a claimant would not be deprived of

damages to which he was entitled because he had fraudulently attempted to obtain more than

his entitlement. There was no logical justification for suggesting that a claimant who lied

about another person's claim should be treated more severely than a claimant who lied about

his own claim. In certain circumstances, the power to strike out might be deployed during a

hearing where it became apparent that it would not be possible to have a fair trial or because,

without some corrupted evidence, which had to be disregarded, the claim could not succeed,

In the instant case, there was no suggestion of an unfair trial. Time and money had been

wasted, caused by U's dishonesty, but the judge had seen through that dishonesty and reached

entirely proper findings.

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Illegal Heads of Loss

Surrogacy

Briody v St Helen's & Knowsley Area Health Authority (QBD Ebsworth J) (Lawtel:

Unreported 21/1/2000)

The claimant submitted that the defendant’s negligence deprived her of child-bearing capacity.

The claimant was attempting to obtain damages to acquire a child by surrogacy methods

which did not comply with the present law as it was based on a commercial arrangement with

a woman in the USA. The court would not award damages to enable an unenforceable and

unlawful contract for surrogacy to be entered into.

Head of Loss Claim tainted by Illegality

Churchill Car Insurance v Kelly [2006] EWHC 18 (QB) (Gibbs J)

During the hearing, K had produced a letter purporting to show that he had been dismissed by

his employer because of his non-attendance at work due to the accident. K had also stated that

an employment tribunal had allegedly considered his dismissal. C had been ordered to pay

damages to K, including a sum for loss of earnings. After the hearing C obtained fresh

evidence that K had been dismissed because of theft of a tax disc belonging to his employers.

The vehicle he had been driving at the time of the accident had been displaying the stolen

disc. C maintained that but for K's decision to drive unlawfully displaying a stolen tax disc the

accident would not have happened. C argued that K should not be able to rely on his unlawful

conduct as a basis for a claim and that public policy demanded that he should not receive any

damage Permission to appeal and to adduce fresh evidence was granted. K had embarked on a

calculated and dishonest scheme to obtain money from C by fraud and forgery that involved a

deliberate deception of the court and the giving of perjured evidence. However, the fact that K

had dishonestly put forward unjustified heads of loss did not disentitle him in law from

recovering heads of loss that were indisputably made out. Whilst K's conduct was

reprehensible, the accident had no sensible causal connection with the use of the tax disc, but

arose directly from the negligence of D. However, justice could be achieved by varying or

setting aside as appropriate the relevant aspects of the court's findings on each head of damage

and penalising K in costs so as to place C in no worse than it would have been if it had paid K

the amount it conceded it owed him.

Agheampong v Allied Manufacturing (London) Ltd (Unreported: HHJ Dean QC London

CC, 30 June 2008)

The defendant admitted liability for an accident. The pre-accident value of the car and

miscellaneous expenses were paid. The costs of recovery, storage, and the hiring of a

replacement vehicle were in issue. His vehicle had no compulsory third party insurance at the

time of the accident. He had committed the offence of using a vehicle on a road without

insurance. The court found that he had intended in the future to drive without compulsory

insurance. His claim was dismissed as it was tainted by illegality.

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3. Malingering and Exaggeration

“Out of timber so crooked as that from which man is made nothing entirely straight can be

built.”

Immanuel Kant

3.1 Mr. Lawrie’s failure to convince the court that he was entitled to future loss of

earnings illustrates certain common factors in claims involving exaggeration

and malingering:

• The description of relatively trivial accident.

• Contemporaneous medical records describing a modest injury.

• A fairly prompt (initial) return to work.

• Symptoms attributed to the accident in the aftermath which were not

reported or recorded at the time.

• Having to leave work for unrelated reasons.

• A discrepancy between the symptoms claimed and the injury.

• Symptoms continuing for longer than one would expect.

• Symptoms that can not be explained by any organic cause.

A Case Study

Mr. Lawrie was an information systems manager. He commuted daily to London from Leicester. On 26

April 1991 Mr. Lawrie was travelling on an intercity train between Leicester and London. During the

journey he was passing by the buffet counter when the shutter to the counter swung out and hit him. At

trial Mr. Lawrie gave an account of a modest head injury (i.e. no, or no significant, loss of consciousness

or post-traumatic amnesia). This account of the injury was supported by the contemporaneous medical

records. A mark had been found but the skin was not broken. Mr. Lawrie had not gone to the doctor

because he thought that his symptoms - a headache and blurred vision in the right eye would improve.

He had continued his daily commute to London until October 1992 when he was made redundant. He

had not had any permanent work since then bar one brief spell (the trial was in 1998). There was

evidence that redundancy had occurred because of the company’s financial circumstances. Mr. Lawrie

had not reported episodes off work were as a result of the injury although he had reported an unrelated

gall bladder problem. The Claimant’s case was that the accident had caused cranio-cerebral damage

based on expert medical evidence. As a result of the accident Mr. Lawrie said that he could not carry out

any useful work commensurate with his pre-accident ability and level of employment. The disabilities

alleged were varied but all were said to have resulted from the accident. His claim for future loss of

earnings was unsuccessful. (Lawrie v BRB Unreported QBD: 10.9.08: Dan Brennan QC)

16

• Inconsistencies in the claimant’s evidence (already apparent or which

would become apparent at trial).

• Difficulty in attributing inconsistency and inaccuracy in the claimant’s

evidence to honest mistakes.

• Disproportionally. A lack of proportion between what it is claimed is being

suffered and the accident, injury, or presentation of the Claimant. (If Mr.

Lawrie’s account had been believed his injuries “would have amounted to

a tragic picture of memory loss, disability and the collapse of family and

career”).

• Inconsistent test results. Neuropathology testing revealed defects that were

inconsistent with Mr. Lawrie’s claim.

• Experience/common sense of lawyers or medics. Medically, the disability

Mr. Lawrie claimed was against established experience and learning.

• Evidence of other factors that may have caused change or altered

behaviour. In Mr. Lawrie’s case this was the loss of his job.

• A mixture of genuine symptoms and “false’ or exaggerated symptoms. Mr.

Lawrie recovered general damages for some minor injuries and special

damages claims for a year.

• The demeanour of the Claimant at trial. The judge found that Mr. Lawrie

“had a cynical interpretation of litigation”.

• An explanation. The explanation for Mr. Lawrie’s symptoms might be

psychogenic (unconscious behaviour) or deliberate. The judge found he

had deliberately created his symptoms and that they were the product of

simulation for gain.

Definitions

Malingering

3.2 Conscious exaggeration or malingering is a deliberate decision to feign

injuries or suggest that they are more serious or severe than they actually are.

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Exaggeration

3.3 Exaggeration falls into two categories ‘conscious’ or ‘unconscious’.

3.4 In a medico-legal contest conscious exaggeration has to be considered on a

sliding scale from a recognisable and generally understandable overstatement

of symptoms to deliberate exaggeration for gain that would justify an

allegation of fraud with all its intended consequences.

3.5 ‘Unconscious’ exaggeration is usually categorised as a “functional overlay”

and is distinct from malingering or deliberate exaggeration. Unconscious

exaggeration could be a manifestation of a psychiatric disorder: anxiety,

neuroses, somatic disorder; chronic pain disorder, or depression.

3.6 The existence of such a functional overlay is usually indicated by the

unpredictable repose of the patient to standard physical, psychological,

neurological, or neuropsychological tests; or by evidence (usually video

surveillance) showing the patient behaving in a way contrary to his or her

history. Observing the Claimant walking into the consultation with a limp and

leaving without one is perhaps the classic case: see Digby v Essex CC [1994]

PIQR P53 (CA). In such cases obtaining expert evidence is essential though

very often fails to provide conclusive evidence.

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Evidence

Expert Evidence

3.7 These are cases in which the quality of the expert evidence is of enormous

importance. Unconscious exaggeration or functional overlay cannot be proved

without corroborating expert evidence even if is just to prove a negative: that

the Claimant is not exaggerating or embellishing his or her account. Even in

he case of a genuine claimant the court will not award damages for symptoms

which have no apparent organic explanation.

Cassie v Ministry of Defence [2002] EWCA Civ 838 CA

C had a continuing and ongoing back complaint. Medical evidence was attained which

effectively confirmed an ongoing problem, but was unable to find an organic basis. On 12

November 1999 C was discharged from the army as medically unfit. In April 2000, he was

examined by a chartered psychologist but his evidence was not before the judge at trial. The

judge concluded that C may well have had ongoing symptoms, but was unable to conclude

that they resulted from the accident.

3.8 Where supportive expert evidence is obtained the defendant and/or the judge

will have to provide cogent reasons as to why such evidence should not be

followed.

Willson v Ministry of Defence [2007] EWCA Civ 485 CA

W, who had been serving in the RAF as a helicopter pilot, had suffered a neck injury whilst in

a simulator. W suffered from continuing pain in his neck and limited function, and was

eventually medically discharged from the RAF more than 18 months after the accident. At the

hearing to assess damages the MOD contended that W's symptoms were exaggerated. The

judge held that W had made a full recovery three months after the accident. W contended that

the judge had erred in his decision and had failed to consider the medical evidence that he had

been suffering continuing problems with his neck at least until the time he was discharged.

The Court of Appeal held that while the judge had found that there was exaggeration by W,

that was not determinative of whether the accident had caused W's symptoms for longer than

three months or whether it had led to his discharge. The judge had failed to consider the

medical evidence which did not suggest that W was deliberately fabricating his symptoms. If

the judge rejected the medical evidence it was incumbent on him to say so and give reasons

why. The judge had failed to spell out his findings and to give reasons for those findings,

accordingly the matter had to be remitted for rehearing.

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In Mr. Willson’s case there was an organic explanation for continuing

symptoms.

3.9 Considerable care must be taken when there is a divergence between the

client’s medical history and the expert:

Smith v Rod Jenkins t/a Rod Jenkins Marine [2003] EWHC 1356 (QB) QBD (Gibbs J)

C contended that his head injury caused him to be permanently unfit for work and to be in

permanent need of a significant level of care to enable him to lead a reasonably normal life. C

submitted evidence to the effect that he was depressed, verging on suicidal, subject to mood

swings and suffered poor concentration and a lack of enjoyment of life. C's consultant

neuropathologist gave evidence to the effect that C's head injury made no contribution to his

continuing condition. He identified post concussion syndrome ('PCS') as a possible cause of

C's continuing difficulties. The judge found that C's symptoms were not caused by organic

brain injury.

Perhaps inexorably Gibbs J. was driven to the conclusion that C. had

exaggerated his symptoms and their impact upon his life.

Video Surveillance

3.10 In most cases the evidence upon which the defendant will rely is video

surveillance. The efficacy of such evidence in exposing inconsistency in the

claimant’s evidence and the divergence between a pleaded personal injury and

observable activity can be devastating.

Booth v Britannia Hotels Ltd [2002] EWCA Civ 579 CA

B worked as a chamber maid for the defendant and in November 1991 sustained a crush injury

to her left hand. In 1995 the defendant paid £1,000 into court, shortly after which B reported

that she was suffering from reflex sympathetic dystrophy. The defendant increased the

payment into court to £2,500. B provided a schedule of loss in the sum of £617,000 but five

weeks before the assessment of damages hearing the defendant disclosed video of B showing

full movement inconsistent with RSD. On 2 December 1998 the parties agreed that B would

accept the payment into court and that the defendant would pay B's costs on the standard

basis.

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3.11 The ubiquity of surveillance evidence is a problem. First, its evidential status

is misunderstood and abused (for which see section 4 below). Secondly, its

forensic utility is problematic. While in cases of clear dishonesty or

exaggeration its impact can be determinative, in many cases footage will be

inconclusive. Functional overlay cannot be shown in a film. In some cases the

video itself will become the focus of dispute between the experts.

Carss v Oxfordshire County Council (1994) CA

A college lecturer appealed against decision awarding him £4,000 damages for injury to his

back when he fell down stairs In his judgment the judge had carefully ‘dissected’ and

compartmentalised the medical evidence particularly in light of video evidence. In this case

the evidence established that the plaintiff had a vulnerable back. It would have been unfair to

the employer to let the injury to the disc be confused with other symptoms which could and

should properly be ascribed to the fall. The judge in the circumstances was entitled to come to

the conclusions he did from the evidence of the video film of the plaintiff working with his

lawnmower, driving his MG car, and his conduct on his visits to London to conclude that the

plaintiff was not so badly injured as he made out and that the plaintiff exaggerated the effect

of his injuries on his life style. To arrive at these findings the judge had to consider the

plaintiff's position at work and his general character.

3.12 A claimant depicted by video surveillance acting in a way supposedly

incompatible with her medical history can still be honest.

Rogers v Little Haven Day Nursery Ltd QBD (Bell J) 30/7/99

The claimant asserted that pain had progressed from her wrist, up her right arm and into her

shoulder rendering her right wrist virtually useless. A video was taken of the claimant which

showed her carrying boxes with both her hands, and opening a gate and holding numerous

small items with her right hand. She did not use her right hand as her dominant hand, but

when she did use it she did so without any sign of pain. A doctor who examined the claimant

in October 1998, after the video was taken but without seeing it, reported that the claimant had

pain from the neck through to her right hand 100 per cent of the time. In the witness box the

claimant did not use her right arm and said she only used her left hand to carry out her work.

The judge’s finding that the claimant was honest and genuine took into account several

factors: (1) The evidence and reports of some of the doctors was unsatisfactory in certain

respects. (2) The claimant’s demeanour in the witness box: she did not use her right arm and

said she only used her left hand to carry out her work. (3) Although there was no anatomical

reason why the claimant should not be able to use her right arm and hand normally such

organic symptoms as there may have been were of very minor importance. (3) The claimant

had a somatoform pain disorder which meant that she presented to the doctors without any

calculated acting. The disorder was genuine, not malingering. (4) Her conscious exaggeration

did not fall outside the bounds expected in litigation. (5) From time to time, when the

21

somatoform connection was broken for some reason or other, the claimant could use her right

arm.

Honest Exaggeration

3.13 The case of Ms. Rogers is probably one of ‘unconscious’ exaggeration, but

even when the client has exaggerated this does not mean that he or she is

either dishonest or unreliable. There can be clients who fall within the

category of ‘honest exaggeration’.

Darg v Commissioner of Police for the Metropolis [2009] EWHC 684 (QB) (Sir Robert

Nelson) 31/3/2009

The claimant mechanic (D) claimed damages for personal injuries he alleged had resulted

from cuts he sustained whilst he was repairing a car belonging to the defendant police force.

Nine months later he was diagnosed as suffering from carpal tunnel syndrome (CTS) He

claimed that since the accident he had developed crippling pains throughout his body and he

gave up work. The police admitted liability for the accident but disputed both that it had

caused D's medical conditions and the extent of his symptoms, which they contended he had

exaggerated. They produced secretly recorded films showing D engaging in everyday

activities and pursuing his hobby of air-gun shooting. The judge held D had to some extent

exaggerated the extent of his disability; however, he had not been wholly dishonest in his

presentation of the claim and he had not pretended to have symptoms that did not exist. He

had suffered from a genuine disability even though on occasions he presented the worst

aspects of that disability as if they were the norm. Those findings had been taken into account

in assessing causation as well as in determining the extent of his disability. There were four

matters to take into account in assessing the extent of D's disability: his good character, his

pre-accident and post-accident work record, the fact that he suffered from CTS and thereafter

CRPS, and that he was a man who was anxious about his health. He was a well respected,

reliable employee with no history of work problems or sickness absences; nor was he

dishonest. However, in light of the evidence it was clear that his disability had been

exaggerated. D was anxious and felt the need to establish what he regarded as a genuine and

serious disabling illness. There was no suggestion that he was not suffering from some

continuing level of disability but it was less serious than he had portrayed.

Evidence of some exaggeration

3.14 There will be many cases in which clients have exaggerated some aspects of

the claim but not others. If there is a pattern to such overstatement the courts

may infer a design to inflate the value of the claim. It is perhaps more common

that a client ‘over eggs’ certain aspects of his claim. This can be done for a

mixture of reasons: genuine attribution, obsession, a sense of grievance. A

more basic problem, however, can be an inability and failure to distinguish

22

between those consequences of an accident and injury which are causally

linked to the accident and recoverable in the claim and those losses that are

perceived as consequential by the Claimant. This is one of the reasons why the

courts are more likely to take a careful approach, separating out those claims

that have a proper basis from this which may not.

Nizami v London Clubs Management Ltd [2004] EWHC 947 (QB) (McKinnon J)

In 1999 N banged his head on an open locker door while in L's changing rooms. He continued

to work after the accident. In June 1999 he suffered a panic attack at work and had not been

back to work since. N's case was that he had lost his job with L and had not been able to

undertake remunerated work since June 1999. L argued that N had been fit to work since

October 1999 and had been working since that time in the family cafe, as proven by

surveillance evidence. L claimed that N had been malingering and/or had failed to mitigate his

loss. The judge thought it was going too far to say that N's credibility was in tatters. However,

it was necessary to look at his evidence with some care and circumspection. N had suffered

quite severe headaches as a result of the accident, but they were not sufficiently severe to lead

him to take time off work. The panic attack 11 weeks after the accident had the effect of

exacerbating N's headaches and caused him to take time off work. There was no satisfactory

evidence that N had had headaches before the accident. N was not a malingerer, but there had

been some exaggeration by him of his inability to return to work. He could have returned to

work by the beginning of July 2003.

Effects of exaggeration

Exaggeration and Treatment

3.15 The claimant’s conscious or unconscious reaction an actual or perceived injury

will inevitably impact on the provision and efficacy of medical or

psychological treatment. Where a claimant has exaggerated some symptoms

genuine symptoms may remain untreated.

Smith v Rod Jenkins t/a Rod Jenkins Marine (see 3.11 above)

The judge found that C had been taking conscious steps to exaggerate his disability, however,

it was more probable than not that there was a degree of continuing mental disorder

attributable to the effects of the accident. C's failure to respond to the treatment on offer at a

rehabilitation course was to a substantial extent conscious. Had he chosen to respond to the

treatment, his condition would have improved. C would probably have been able to return to

work approximately five years after completing the rehabilitation. However, it was probable

that the path back to employment would not have been easy and there would have been a

vulnerability to loss of earnings for several years.

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Exaggeration and causation

3.16 Where there is evidence of ongoing injury which lacks an organic explanation

evidence of exaggeration can fatally undermine the causation aspect of the

claim.

Thorp v Sharp [2007] EWCA Civ 1433 (CA)

T had suffered an accident in the course of her employment for which S had admitted liability.

T had injured her hip and alleged that she had been caused permanent disability by way of

chronic pain. In the subsequent proceedings, experts instructed by the parties produced a joint

report. Both experts were puzzled by the continuation of chronic pain suffered by T where

there was no definable orthopaedic cause and were unable to establish a definite diagnosis. S's

expert was of the opinion that T's injury should have resolved itself within three to six months,

whilst T's expert considered that it should have resolved itself within a year. Psychiatric and

psychological reports were also adduced but ruled out any psychiatric illness on T's part. The

judge stated that the issue to be determined was whether the court could be satisfied on the

balance of probabilities that pain experienced by T after a 12-month period had been caused

by the index accident. Having considered the medical history and evidence, he found that T

was a truthful witness and was indeed suffering pain, although she was prone to exaggeration.

He found that although the experts could not say that the pain was not related to the accident,

the evidence had not shown that it was related to the accident, so that on the balance of

probabilities he was unable to find the link. The judge therefore awarded T a more modest

sum of damages than that claimed to compensate her for a 12-month period. T contended that

the judge had applied the wrong test, and that the failure of all medical enquiries to throw up a

cause of the pain meant that on the balance of probabilities the pain had resulted from the

accident. The Court of Appeal held that it was clear from the judge's conclusion that he had

meant that no link between the accident and the pain suffered by T had been proved. It had

been beyond the experts' professional competence to assert positively that there was an

ongoing causative link. In those circumstances, the judge had been entitled to come to the

decision that he had.

3.17 In this case Mrs. Thorp was found to be a truthful witness though prone to

exaggeration. If the judge had found the opposite, the result may well have

been the same but her representatives may not have advised the trip to the

Court of Appeal. In this respect Mrs. Thorp’s case fell at the same hurdle as

Mr. Cassie. Another case where issues of exaggeration and causation were

crucially lined was Darg (3.13 above) in which even though there was a

finding of exaggeration causation was established.

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Exaggeration and the Claimant’s credibility

3.18 Ultimately evidence of exaggeration is but one aspect of the Claimant’s

credibility. Where there is evidence of exaggeration in relation to one aspect

of the claim it will very often lead to the claimant’s evidence not being

preferred when there are disputes between witnesses about the facts or, as we

have already seen, an absence of ‘scientific’ explanation for continuing pain

and loss of amenity.

Newman v Laver [2006] EWCA Civ 1135 CA

N's car had been struck from behind by L's car and N had struck his head quite hard on the

headrest. As a result of the accident N suffered from whiplash and from post concussional

syndrome, blurred vision, dizziness, headaches, nausea, tinnitus and lack of concentration, and

had been unable to work. N also claimed that as a result of the accident he was suffering from

a rare form of double vision in both eyes known as bilateral monocular diplopia. The judge

found that N had failed to prove that he was suffering from bilateral monocular diplopia. The

difficulty with N's case on bilateral monocular diplopia was that it had been advanced on the

basis that it had organic origins, for which there was no evidence. Everything depended on N's

credibility. There had been considerable inconsistencies in N's account and it had been

undermined by some of the evidence. The judge had also found that N was liable to

exaggerate the account of his symptoms and that to some extent the exaggeration was

conscious though there had been no general case that N had fabricated his symptoms.

Where exaggeration and lack or credibility meets dishonesty

3.19 This survey of the case law (perhaps through somewhat sympathetic eyes)

suggests that it is only in extreme cases that exaggeration will reach a scale

that dishonesty will be found and the entirety of the claim will fail. At the

outset we considered Mr. Lawrie’s spectacular failure to convince Dan

Brennan QC of his bona fides. The remarkable aspect of his claim was the

sheer extent to which he provided an almost copybook example of where the

combination of the facts of the accident, want of evidence, lack of credibility,

and performance in the witness box pointed inevitably to a finding of

dishonesty in the face of what at one stage had been a genuine claim.

25

Collier v Bryden (2007) CC (Leeds) (Judge Peter Langan QC) 8/3/2007

C had been struck by a bus and had sustained orthopaedic and, on her case, psychiatric and

other injuries. C claimed damages in excess of £140,000 whilst B admitted damages of

£6,000. C suffered from urinary incontinence. C dated the onset of her urinary problems from

the accident, whereas B's case had been that those problems had arisen several weeks later. C

also claimed damages for pain in her low back/left hip region with consequential disability,

although surgeons had been unable to explain it on any musculoskeletal basis, and for post-

traumatic stress disorder and co-morbid depression. B contended that the bulk of C's case was

dishonest, and that she had misled the doctors, her own lawyers and, both in the presentation

of her claim before trial and in oral evidence, the court. B disputed whether the pain and

disability alleged by C were genuine, and contended that the correct current diagnosis of C's

psychiatric condition was that of depression substantially attributable to her urinary

incontinence, for which they were not responsible. The judge found that C had not been an

impressive witness and parts of her evidence had not been truthful. There had been an

exaggeration in the presentation of her claim to a degree where the boundary between "scaling

up" and blatant dishonesty had been crossed. The proposition that the incontinence from

which C suffered had in any way been caused by the accident had to be rejected. Further, on

the totality of the evidence, C's allegation of pain in the low back/left hip area was an

invention, and had therefore to be excluded from consideration in assessing the damages

recoverable by C. In respect of C's psychiatric condition, any finding was almost wholly

dependent on her veracity. In the light of C's lack of credibility, it had to be found that for a

year or so C would suffer a mild degree of stress in consequence of the accident, but anything

beyond that, whether in time or intensity, was more probably than not attributable to the

urinary incontinence, which was not something for which B had to bear responsibility.

Afzal v Chubb Guarding Services Ltd (2002) QBD (Judge Bowsher QC)

This was a preliminary trial to determine whether or not the claimant ('C') was a patient. C

worked for the defendant protecting a disused site. On 3 September 1997 he was taken by

ambulance to hospital. C spoke little English and his wife attended the hospital and interpreted

for him. C told his wife that intruders had thrown petrol over him, had tied his feet with a wire

and attacked him with a knife. Nothing was taken from the site. Thereafter, C presented with

inappropriate behaviour; he had become childlike and had to be taught how to look after

himself. The expert neurologists concluded that there was no evidence of any organic brain

damage and the defendant's psychiatrist could not find any evidence of psychiatric illness. The

defendant produced video evidence that showed C conducting himself normally. The judge

found that C was not under a disability and that C and his wife were engaged in deception of

others. The most likely explanation for C's behaviour under examination was a deliberate

fabrication of symptoms. C, with his wife, was engaged in malingering and deception,

probably for personal gain and financial reward.

The consequences of finding exaggeration

(1) Limitation and other discretionary remedies

3.20 A finding of exaggeration can taint all aspects of the claim. It is very common

for a claim be presented where certain aspects of the claim may have been

exaggerated but elements of the case are well-evidenced and genuine.

Evidence of exaggeration may be taken into account in relation to case

management decisions and other procedural matters where the court has

26

discretion to take into account all the circumstances of the case. In Parsonage

v Fastway Steel Ltd [2001] EWCA Civ 1796 (CA) the claim was brought out

of time. At first instance the deputy high court judge extended time under

section 33. The defendant’s appealed in part because of the evidence that the

Claimant had consciously exaggerated his injuries. The Court of Appeal held

that P's conscious exaggeration could be a relevant factor which the judge was

entitled to take into account when exercising his discretion. However, the

weight of its importance varied in each particular case. In the instant case the

extensive medical evidence had not been affected by the exaggerations.

(2) Contaminating the rest of the claim

3.21 In Isik v Clegg [2007] EWHC 2552 (QB) Tugendhat J. struck out the claim

where the claimant had deliberately made false statements in order to

exaggerate his claim for damages following a road traffic accident but the

medical expert did believe that C had suffered injuries to his back. Having

regard to the report and to the expert's answers to questions, C's evidence

about his back injury was not dishonest. However, in the light of the untruthful

statements made in relation to other aspects of the claim there was doubt as to

the truth of what he stated about his injury to his back. It followed that C had

not discharged the burden of proof. When considering whether C had

deliberately deceived the doctors it was appropriate to consider two matters.

Firstly, the burden of proving on a balance of probabilities that C suffered the

damage he claimed as a result of D's negligence. Secondly, it was always open

to a court to conclude that whether C had suffered the damage he claimed,

even on a balance of probabilities, remained in doubt, with the consequence

that C had failed to discharge the burden of proof.

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(3) Costs

3.22 The costs consequences of exaggeration have been indicated above and are

also considered in section 6 below but see:

Booth v Britannia Hotels Ltd [2002] EWCA Civ 579 CA

Painting v University of Oxford [2005] EWCA Civ 161 CA

Molloy v Shell UK Ltd (2001) EWCA Civ 1272, (2002) PIQR P7

Widlake V BAA Ltd [2009] EWCA Civ 1256 CA

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4 Fraud

4.1 Insurers are becoming increasingly concerned and agitated about fraudulent

claims; not just the large scale frauds that have been perpetrated over the

years, usually relating to road traffic accidents, but also about the “smaller”

frauds discussed in this seminar perpetrated by individuals deliberately

exaggerating their claims. The increase in surveillance of claimants is one

way in which the concern can be seen; applications made after the end of

litigation where it is alleged that there has been some deception on the part of

claimants is another. In the last year applications have been made to set aside

awards of damages and to commit claimants for contempt of court based on

exaggeration of their claims. Even more frequently applications are made to

displace the usual order as to costs.

4.2 Claimant lawyers have to be able to deal with these issues and obtain the best

possible outcome for their clients, whilst acting within their professional

duties. Obviously, dishonest claimants should not be rewarded for their

dishonesty, and should be discouraged. It would make claimant lawyers lives

much easier and more profitable if all claimants were honest. But not all of

the allegations of dishonesty have merit, and there is a danger that if the issues

are not dealt with properly, enough mud can be slung to tarnish a claimant

who has not deliberately sought to inflate their claim.

4.3 In preparing for this seminar, we had to consider the question of where the line

falls between exaggeration and fraud lies. It is not a bright line but a matter of

degree. That fact gives rise to certain difficulties in how allegations of fraud

29

should be dealt with procedurally. A recent example of how it should not be

dealt with is the Defendant’s conduct in Clarke v Maltby [2010] EWHC 1201

(QB) and [2010] EWHC 1856 (QB).

4.4 The claimant, a solicitor then at Blake Lapthorne, suffered serious, life

threatening injuries in a road traffic accident. She made a good recovery from

the physical injuries but suffered a subtle brain injury that meant she was

unable to continue working as a solicitor in private practice. The Defendant

did not dispute that the accident had occurred and that injury had been caused,

but in the counter schedule called into question the genuineness of the

claimant’s ongoing symptoms. It asserted that she had suffered a minor brain

injury at most and that she did not have any significant lasting organic brain

dysfunction. The implication was that she was deliberately exaggerating her

symptoms. The counter schedule contained an assertion that a decision taken

some 3 years after the accident to reduce her working hours to 3 days a week

“seems to have been taken only after the claimant changed her lawyers and re-

vamped her case”. The claimant’s legal team, perhaps unsurprisingly took the

view that this was an allegation that the decision had been influenced by her

solicitors encouragement in order to inflate the value of the claim. They said

as much in written opening. The claimant and other witnesses were cross

examined on the basis that she had deliberately exaggerated her symptoms.

4.5 The assertion that the claimant had either consciously or unconsciously

exaggerated her symptoms was not pleaded. The Defendant’s medical experts

accepted in cross examination (not having said anything to the contrary

30

earlier) that there was no exaggeration of symptoms on the claimant’s part. In

closing the case was put on the basis that the “reality of the symptoms is often

less than how she described them”. The Judge found her symptoms were as

she claimed.

4.6 The claimant applied for her costs on the indemnity basis due to the

Defendant’s conduct of the case. She was successful; the defendant’s conduct

was outside the norm and there was no evidence on which the allegations

could properly have been made.

4.7 So that is how a Defendant shouldn’t deal with it. It is clear that when there is

no evidence to support an allegation of deliberate exaggeration, which can

only be an allegation of dishonest or fraud; the allegation cannot properly be

made.

Pleading fraud/deliberate exaggeration

4.8 If a Defendant is alleging dishonesty, does fraud have to be pleaded? Any

allegation of fraud must be pleaded. The reason for this is so that the claimant

is entitled to know the full extent and nature of the defence he or she has to

meet. Confronted with an industry-standard highway tripping defence in

Digby v Essex CC [1994] PIQR P53 (CA). Lord Bingham MR considered it:

“extremely unsatisfactory in defining the issues, since although the plaintiff will be left

knowing that he has to prove his case in order to succeed, it will give him no indication at all

of the precise grounds on which the defence is to be mounted”.

31

4.9 The rule not only means that the defendant must plead fraud but must have

evidence upon which to bases such a plea. If the defendant does not have such

evidence there will be potentially serious consequences as in Clarke v Maltby.

4.10 But if a Defendant is alleging that an injury has not occurred, they do not

always have to plead fraud. In Kearsly v Klarfeld [2005] EWCA Civ 1510 the

issue arose in the context of a low velocity impact claim – for those who don’t

do road traffic claims, the argument ran that where the accident is a rear end

shunt at very low speed, the forces created are not sufficient to give rise to

injury. There was therefore an issue as to whether fraud must be pleaded, as

the implication of the Defendant’s argument was the claimant must be making

up their injury. The practice had been that the defence had to plead fraud,

probably following a decision of Belinda Bucknall QC siting as a deputy high

court judge in the Admiralty Court in Cooper v P & O Stena Line Ltd [1999] 1

Lloyds Rep 734. In that case the defendant argued that although the claimant

had hurt his back on the day in question, it was not in the accident he alleged;

there had been no accident at all. The Defendant’s medical expert said in

addition that from 3 months after the incident, the claimant was fabricating his

symptoms and disability. This was pleaded in the defendant’s reply to the

original schedule. The deputy judge said that there was an allegation

amounting to fraud and it should therefore be pleaded in the body of the

defence.

4.11 In Kearsley, the Court of Appeal held that it was not necessary to plead, or

indeed to prove fraud where the Defendant was putting forward a case based

32

on expert evidence that it was unlikely that injuries were caused in the

accident. The reasoning was that as the case was being put based on a theory

held by an expert, the defendant does not have to put forward a substantive

case of fraud in order to succeed. The defendant need only set out the facts

from which they would be inviting the judge to draw the inference that the

claimant had not in fact suffered the injuries he asserted. In other words the

Defendant can rely on expert evidence and invite the judge to find that the

claimant has not proved his case.

4.12 This seems to be, in part, a reaction to a concern on the part of judges that they

had to find that claimants were lying8. On the reasoning of the Court of

Appeal they did not have to do so to find in the defendant’s favour; the judge

could simply find that the claimant had not proved his case.

4.13 The distinctions being drawn are difficult. Essentially what appears to be said

is that you don’t have to plead fraud if you are not going to positively assert

fraud; the Defendant can simply invite the judge to find that the claimant has

not proved their case. That however means that the Defendant lawyer has to

be very careful at trial, or in any formal document, not to put anything to the

claimant that suggests they are lying as that would be an allegation of

dishonesty that should have been pleaded. They could, however, in the low

velocity impact case put that the collision did not cause any injury; how is that,

in reality, any different to saying that the claimant is lying and has fabricated

symptoms?

8 See para 49 of Kearsley

33

4.14 The difficulty is shown in the example given by the Court of Appeal that “if

the defendants medical examiner has examined the claimant and concluded on

the basis of …thorough interview and clinical examination… that there are

substantive reasons for disbelieving his account, those reasons also need to be

positively asserted.”9 If it is being positively asserted that the claimant’s

account should not be believed, when it comes to a subjective matter such as

symptoms following an injury, how is that not tantamount to an allegation of

lying? It would have to be put to the claimant that he was not to be believed,

which may not technically be an allegation of dishonesty, but would surely be

taken as such by almost all witnesses.

4.15 So what should the claimant lawyer do? It is important to make sure that the

defendant is made to elect early on as to whether they are pleading a positive

case of fraud, that is whether they are pleading a positive case that the

claimant has been dishonest or whether they are simply going to ask the judge

to find that the claimant has not proved their case without directly alleging

dishonesty. The latter is an easier position for the defendant to take, but more

difficult to defend at trial. If the election has been made not to plead

dishonesty, any attempt to resile from that without proper reason or notice (as

appears to have happened during the cross examination that the claimant was

lying in Maltby) can be resisted much more effectively if the Defendant has

been put on notice that they have to clarify what their case is.

9 At para 48

34

4.16 Additionally if a Defendant has chosen not to allege fraud, it is likely to be

very difficult for them to argue about costs on the basis of deliberate

exaggeration if they lose their main argument.10

Surveillance evidence

(1)During the case

4.17 Some insurers now obtain surveillance evidence as a matter of course for

certain types of claim. Claimant lawyers need to know how to deal with the

increasing use of such evidence.

4.18 The first thing to understand is the status of surveillance evidence. It is a

document and therefore subject to the normal rules of disclosure.11

Documents which have to be disclosed are documents which (i) adversely

affect a party’s case; (ii) adversely affect another party’s case; or (iii) support

another party’s case.

4.19 Therefore, (at least in theory) any surveillance evidence which does any of

those things should be listed on a disclosure list or disclosed as soon as it

comes to a party’s notice in accordance with CPR 31.11.

4.20 Surveillance evidence is often not disclosed promptly and not often, if ever,

when it supports the claimant’s case. It is often used by Defendants as a kind

of trap, so that anything said to an expert or in a witness statement which is

inconsistent is used as proof that the claimant is deliberately exaggerating,

10

See further below re costs 11

Rall v Hume [2001] EWCA Civ 146

35

even in a genuine “good days and bad days” case. The normal practice

appears to be not to disclose it until after the experts have all already produced

reports, on the basis that they want the experts to see the claimant “un-tainted”

by the surveillance evidence. In other words, to catch the claimant out.

4.21 That may be a legitimate approach in certain circumstances. For example,

there will be times where until expert evidence and/or witness statements are

seen it will not be clear whether the surveillance footage is “relevant” for the

purpose of disclosure, but as soon as it is, the duty is to disclose it.

4.22 In Uttley v Uttley [2002] PIQR P123, the defendant’s solicitor delayed

disclosing surveillance evidence because he was shortly due to receive a

witness statement from the claimant (within a month of receipt of the

surveillance evidence) and a report from a jointly instructed expert. The most

recent evidence from the claimant of his injuries was dated a year before the

surveillance, and the defendant solicitor said he wanted to see what the

claimant was saying at a time contemporaneous to the surveillance otherwise

the claimant may be able to explain it away. It was held to be reasonable for

the solicitor to have delayed in the circumstances of the case. This could

equally be analysed as a case where until there was some contemporaneous

evidence, the Defendant could not decide whether the surveillance was

relevant as he did not know what the claimant would say his symptoms were a

year after the last statement.

36

4.23 The leading case on admissibility when there is late disclosure is Rall v Hume

[2001] 3 All ER 248. Although stating that surveillance evidence is subject to

the rules of disclosure Potter LJ went on to say that where video evidence is

available which, according to the Defendants, undermines the case of the

claimant to an extent which would substantially reduce the award of damages

to which she is entitled, it will usually be in the overall interests of justice to

require that the defendant should be permitted to cross-examine the claimant

and her medical advisers upon it, so long as this does not amount to trial by

ambush.

4.24 Of course, it is an unattractive argument that Defendant should not be allowed

to rely on late disclosure if in fact the claimant has been caught out. There is

authority for the proposition, at least at a costs assessment, that it lies ill in the

mouth of the claimant to complain that late disclosure unreasonably increased

legal costs when they have in fact been so caught out.12

4.25 Claimant lawyers should therefore advise their clients in any case of

significant value, and in any case where the issue of malingering, exaggeration

or fraud is likely to come up, that they will probably be videoed. They should

be told that if they are shown doing things they say they cannot that not only

will their claim for damages be affected, they may become liable for costs and

that in some cases (for which see below) insurers have pursued an application

for contempt of court against a lying claimant and for the award of damages to

12

Booth v Britannia Hotels Ltd [2002] EWCA Civ 579

37

be set aside on the grounds of fraud. They have also done the latter in respect

of video evidence post-dating the trial.

4.26 It should be made clear to defendants, either by way of letter, or by specific

reference in an order for disclosure13

, that any relevant (as per the definition in

31.6) surveillance evidence should be disclosed as soon as possible.

Defendants should be required, including in quantum only cases, to provide a

list of disclosure, expressly to cover this point.

4.27 If a claimant spots that they are the subject of surveillance, a specific request

for specific disclosure should be made, followed up by an application if

necessary.

4.28 There are a number of reasons for taking this approach. If, in the worst case

scenario, the surveillance shows your claimant getting up out of the

wheelchair, climbing a ladder and fixing his roof, it is better that you know

about it sooner rather than later. In the best case, the surveillance footage may

support the claimant’s case, showing a real difficulty in day to day life. The

majority of surveillance evidence is likely to be somewhere in the middle, but

at least the claimant and their lawyers can decide how to deal with it whilst not

being on the back foot.

4.29 In addition, if the defendant does not disclose the footage at the right time and

tries to do so later, there is a much better argument that it should not be

13

As was done in O’Leary v Tunnelcraft Ltd [2009] EWHC 3438 (QB)

38

allowed to rely on the evidence as it is an ambush. In O’Leary v Tunnelcraft

Ltd & Ors [2009] EWHC 3438 (QB), an order had been made by Master

Fontaine that any application by the Defendants to rely on the evidence of

private enquiry agents or video evidence at trial should be made no later than

1st July 08. Further directions were given by Master Fontaine on 21st

November 2007 and 13th October 2008 and no direction was given varying

the previous order.

4.30 The claimant’s solicitors served the claimants witness evidence under cover of

a letter dated 14th July 2008 which stated they were sent in reliance on the

defendant immediately exchanging witness statement of fact including any

private enquiry agent reports and video evidence upon which the defendant

wished to rely at trial.

4.31 The Defendant instructed enquiry agents from at least the beginning of 2009.

The Defendant solicitor decided not to use material sent to him in March 2009.

Further surveillance began in August 2009. The Defendant solicitor was

aware of the surveillance being undertaken. He did not request a copy of the

film or surveillance logs. He instructed them to continue their surveillance.

Further surveillance took place in September and October 2009. A JSM was

fixed for the 27th October at 4.30pm.

4.32 At 12.30pm on the 27th October the Defendant’s solicitors told the claimant’s

solicitors that they had, the previous day, received video surveillance footage

with witness statements from the operatives. The statements were severed that

39

afternoon and related to surveillance in August, September and October 2009.

The witness statements appeared to show that the claimant had been working,

driving, attending the gym and heavy lifting. In fact it was not the claimant,

and the operatives knew that when they made their statements, and the

possibly of an error had originally been pointed out to them by the

Defendant’s solicitor. The errors were not pointed out the to the claimant’s

solicitors. The witness statements referred to the unedited video footage but

only the edited footage was served. The defendant said there was a further

dvd not yet received by them. They said that would be served in about a

week.

4.33 The claimant unsurprisingly made various request to the defendant for the

unedited footage and for confirmation of whether there was any other footage

and when they were made aware of the misleading nature of the witness

statements, complained about that.

4.34 On 3rd November 2009 the defendant made an application to rely to the video

surveillance. They still had not disclosed the unedited versions. By the time

the application was heard (10th November 2009) trial was due to commence in

24 working days. Mrs Justice Swift found that it was an ambush and

disallowed the evidence. Whilst obviously were a number of problems with

the Defendant’s approach, it is clearly relevant that, in looking at the prejudice

to the defendant in disallowing the application the judge found that the

responsibility for the difficulties lay with the Defendant. The problem in the

case was the defendant’s delay in obtaining and disclosing the evidence. They

could have obtained evidence earlier than they did and could have made a

40

decision to rely on it earlier than they did. It was found that they delayed,

preferring to do so in the hope that more useful surveillance would take place

and that they would then be permitted to rely on it.

4.35 O’Leary was clearly a case which falls outside the norm, but does show a

willingness on the court’s part, even in respect of the directions made about

surveillance evidence, to deal with this as a matter of disclosure and to look at

the Defendant’s conduct. By raising the issue at an early stage it puts the focus

on the Defendant and their conduct. Hopefully they will disclose the

surveillance at the proper time and if not the argument as to prejudice and

ambush will be more likely to succeed.

(2) Post trial surveillance

4.36 In Owens v Noble [2010] EWCA Civ 224; [2010] EWCA Civ 284, the

claimant received damages of £3,397,766.49 for injuries sustained in a road

traffic accident following a contested trial in March 2008. Field J at first

instance14

found that Mr Noble suffered weakness of grip in the left hand,

limited movement in the right wrist, weakness of grip in the right hand, the

ability to walk only 75 to 80 feet with crutches otherwise wheelchair

dependant, all of which was likely to be permanent and that he suffered from

post traumatic stress disorder which was also likely to persist in the long term.

4.37 In autumn 2008, the Defendants insurer received information that Mr Noble

was not as seriously disabled as he claimed. They arranged for surveillance.

It is reported that he is seen walking abut in a yard on his premises without

14

[2008] EWHC 359 (QB)

41

crutches, sawing wood, moving items and driving a dumper truck. The

insurers took the view this was so different to the picture presented at trial that

the inference must be that he had misled the court. They made an application,

without notice to Mr Noble, to Field J for an injunction restraining Mr Noble

from dissipating the remainder of his damages. The injunction was granted

and the Defendant made an application to the Court of Appeal to set aside the

award of damages out of time relying on the surveillance as fresh evidence,

and as prima facie evidence of fraud, justifying the setting aside of damages

without more.

4.38 The Court of Appeal, following argument on whether the video evidence was

in itself enough to set aside the award of damages, and what the best

procedural course was, decided that there had to be a hearing on the issue of

fraud which should be referred back to the trial judge. If the judge rejects the

allegation of fraud the original award stands and if the fraud is proved, he

would then have to make a re-assessment of damages.

Contempt of Court

4.39 Defendant insurers have also recently made applications to bring actions for

contempt of court against claimants. In A Barnes t/a Pool Motors v Seabrook

[2010] EWHC 1849 (Admin), three cases were heard by the divisional court

where permission was sought to commence proceedings for the punishment of

claimants in personal injury claims for contempt of court for having made

false statements in documents verified by a statement of truth.

42

4.40 In order to bring a private claim for contempt of court the applicant must show

that it is in the public interest to do so. In Barnes, it was held that in order to

be in the public interest, the following factors are relevant:

(i) there must be a strong case against the alleged contemnor;

(ii) the false statements must have been significant in proceedings;

(iii) the court should ask itself whether the alleged contemnor understood

the likely effect of the statement and the use to which it would be put

in the proceedings and;

(iv) that the pursuit of contempt proceedings in ordinary cases may have a

significant effect by drawing the attention of the legal profession and

through it that of potential witnesses to the dangers of making false

statements.15

4.41 In the three cases considered, two were allowed to proceed. In the other one

there had been delay in bringing the proceedings, which was held to be a

significant factor which the court should take into account.

4.42 If evidence comes to the defendant’s attention during the course of the

litigation, the Defendant should warn the claimant that contempt proceedings

will be taken, whilst at the same time not putting improper pressure on a

witness who may later be called to be a witness. That balance is struck by not

making the actual contempt application until the alleged contemnor has

finished giving his evidence16

.

15

Para 41 16

Para 47

43

4.43 There are two cases where personal injury claimants have been found in

contempt. In Walton v Kirk [2009] EWHC 703 (QB) (Manchester) Mr. Justice

Coulson set out the relevant principles as to what would found a contempt:

1. CPR r.32.14 allowed for the possibility of a person to be prosecuted for

contempt if he or she made or caused to be made a false statement, in a

document which was verified by a statement of truth, without an honest

belief in its truth.

2. The applicant had to prove each of the three elements of the contempt

beyond reasonable doubt, (knowledge of order/duty, ability to comply,

and failure to comply.

3. Given the quasi-criminal nature of contempt proceedings, any genuine

doubt had to be resolved in the respondent's favour.

4. Discrepancies between a statement verified by a statement of truth, on

the one hand, and video evidence on the other, would not automatically

give rise to a contempt of court.

5. What mattered was the degree of exaggeration or the circumstances in

which any exaggeration was made or both. gross exaggeration and

dishonesty would not be tolerated.

6. It was in the public interest that personal injury claimants pursued

honest claims before the courts and did not significantly exaggerate

those claims for financial gain.

4.44 The claimant in Kirk claimed to have serious injuries such that on bad days

she was bedridden. The claim was valued in the region of £1m. Surveillance

44

evidence was disclosed showing her on long shopping trips with no problems.

That in itself was held not enough to be a contempt; but she had made

incapacity for work and blue badge applications which she subsequently

verified by a statement of truth in the litigation which she must have known to

be false, and that, it was held, did amount to contempt. She was fined and

had to pay £200,000 or so in costs – which as she owned her own home,

presumably came from that.

4.45 In Caerphilly County Borough Council v Hughes17

the claimant had claimed

that he suffered injury when losing his footing in a pot hole when in fact he

had injured himself playing football. He was sentenced to 14 days

imprisonment and it was said that it would have been longer but for his

mitigation.

CFAs

4.46 If the claimant has been fraudulent, the law society model conditional fee

agreement provides that the agreement can be terminated and that the solicitor

can decide either to require payment of basic fees from the claimant on request

or payment of the basic charges and disbursements and success fee if the

claimant goes on to win.

17

Silber J 6th

December 2005 (unreported)

45

So how do you win a case when it is alleged your claimant is fraudulent?

• If there is no evidence on which the Defendant can base the allegation

ask for it to be withdrawn, and if it is not, ask for indemnity costs when

your claimant succeeds

• If fraud/deliberate exaggeration is not pleaded, object to any

allegations of dishonesty being raised.

• Tell the claimant what the risks are in deliberately exaggerating a

claim.

• Draft the claimant’s witness statement carefully

• Ask the Defendant to disclose surveillance evidence in accordance with

disclosure rules.

• Take a realistic view on any surveillance evidence, not only as to the

specific issues it is said to go to, but on the overall impression created

by the claimant.

• If your client has been bringing a fraudulent claim; you can terminate

your retainer and cfa; and redefine “win”!

46

5 Quantum

5.1 Many cases discussed above involve considerations of what damages can be

recovered when aspects of the claim or the claim itself is tainted with illegality

or exaggeration. Several short points can be made.

Past Loss of Earnings

5.2 In cases where the Claimant’s employment history prior to the accident was

“patchy” – whatever the reason – the court will be in some difficulty in

calculating actionable loss. In many cases Claimants will admit to past tax

evasion, but such “confessions” are less forthcoming when there has been

benefit fraud or illegal earnings. Although such conduct is no bar to a claim –

as we have seen – it can damage the Claimant’s credibility, particularly if such

past conduct is associated with a want of candour.

5.3 In these cases the court will use its best endeavours to make an award on the

evidence it has, perhaps by making a discount from the loss of earnings claim

to account for time that would have not been worked or for the resulting

uncertainty, cf. Clenshaw v Tanner [2002] EWHC 184 (QB) (Silber J.), and

Brown v Berry (unreported 14 October 1997, QB Robert Seabrook QC).

Future Loss of Earnings

5.4 The problems of calculating future loss of earnings in cases where revenue

records and accounts do not accurately record actual earnings was considered

above in Newman v Folkes.

47

5.5 A related problem, however, is when as a result of the accident the Claimant

may develop drug or alcohol dependency. These will cause problems of both

causation and quantification. In the absence of expert evidence proving the

causal link between such behaviour and the accident: a chain or spiral of

causation that can be difficult to prove.

5.6 The difficulty is compounded by the possibility of a pre-existing

predisposition to such behaviour or multiple causal factors that may explain

such a reaction.

5.7 How far should an underlying predisposition of drug or alcohol abuse or a

history of a controlled dependency impact on the calculation be taken into

account in calculating future loss of earnings? To what extent can they be

incorporated within an Ogden 6 calculation?

5.8 The most useful guide is perhaps Garth v Grant and MIB (L/T 17.7.2007).

The Claimant was morbidly obese. The defendant argued that this condition

would justify a higher discount to her future loss of earnings claim. The judge

accepted that the Claimant had had a long and tortuous fight against obesity.

However her weight never affected her ability to work and she gave evidence

of playing tennis and aquaerobics prior to the accident.

48

5.9 Is a client who lives by illegal earnings employed or not employed at the time

of the accident? If there is no reason why the Claimant is not employed there

is authority for the proposition that he should be treated as employed for

Ogden 6 purposes: Hunter v MOD [2007] NIQB 43. However, in Huntley v

Simmonds [2009] EWHC 405 (QB) where the Claimant was unemployed at

the time of the accident and there was evidence of drug and alcohol misuse

and occasional criminality, Underhill J. agreed with the defendant that he

should be treated as ‘unemployed’ at the time of the accident.

6. COSTS

6.1 The usual order for costs is that the successful party should pay the

unsuccessful party’s costs. The court has a discretion to make a different

order taking into account the conduct of the parties, and “conduct” specifically

includes whether a claimant who has succeeded in his claim, in whole or in

part, exaggerated his claim18

. So when there are allegations of malingering,

exaggeration or fraud, what is a court likely to do?

6.2 There have been numerous court of appeal cases considering a variety of

conduct. Wildlake v BAA Limited [2009] EWCA Civ 1256 provides a useful

summary of the previous cases and the principles to be derived. In Widlake,

the Claimant claimed for injuries to her lower back after falling down some

stairs at work. Initially the claimant claimed in the region of £150,000. By

trial the dispute between the parties was that whether there had been a 5 year

acceleration (C’s case) or an aggravation of about 12 months (D’s case) and

18

CPR 44.3 (5)(d)

49

what the extent of the pain suffered was. Miss Widlake said that she had to

take painkillers on a daily basis and suffered permanent feelings of cramp and

stabbing pains every few minutes which considerably interfered with her daily

life. There was surveillance evidence which did not show evidence of overt

disability. Miss Widlake was found to have lied with the intention of inflating

her claim by deliberately withholding from her experts her previous history of

low back pain and that her explanations as to why she was able to act normally

in the surveillance evidence were implausible. Despite beating the

Defendant’s part 36 payment in, at first instance she was ordered to pay the

defendant’s costs. The Court of appeal overturned that decision and made no

order as to costs.

6.3 In doing so they set out the relevant principles to be applied in a case of this

sort. They are as follows:

(i) Every case will depend on its own facts and a close analysis of

facts of decided cases may not be very enlightening but points

of principle may emerge. (para 21)

(ii) In deciding which is the unsuccessful party, the most important

thing is to identify the party who is to pay money to the other

(para 36).

(iii) Exaggeration is an "allegation" relevant to "the issue" of

quantum for the purpose of 44.3(5)(b). (para 37). So viewed,

there may be no need to determine who has been the winner of

a particular issue, it is a question of whether it was

50

unreasonable of the claimant to pursue her allegations as to the

extent of her injury (para 38).

(iv) The way in which the court is to have regard to that conduct is

principally to enquire into its causative effect: to what extent

did any lies or gross exaggeration cause the incurring or

wasting of costs? (para 39).

(v) In addition to looking at it in terms of costs consequences, the

court is entitled in an appropriate case to say that the

misconduct is so egregious that a penalty should be imposed on

the offending party. One can therefore deprive a party of costs

by way of punitive sanction. Lies are told in litigation every

day up and down the country and quite rightly do not lead to a

penalty being imposed in respect of them. There is a

considerable difference between a concocted claim and an

exaggerated claim and judges must be astute to measure how

reprehensible the conduct is. (para 41)

(vi) Defendants have the means of protecting themselves from false

or exaggerated claims; Part 36. The basic rule is that the

claimant gets his (or her) costs if the defendant fails to make a

good enough Part 36 offer. (para 42)

(vii) Part 36 also affects a claimant. Whilst not obliged to make an

offer, claimants who do not do so run the risk that their refusal

will impact upon the costs they may otherwise be entitled to

recover. (para 43)

51

6.4 Despite the first principle of Widlake, other cases can give a feel for the type

of conduct which might lead to a punitive costs order. In Painting v

University of Oxford [2005] EWCA Civ 161, the claimant put forward a claim

of £500,000 but recovered only £32,000 (on 100% basis; there was an

agreement on liability that she would recover 80%). The Defendant had paid

£184,000 into court but on seeing surveillance evidence withdrew all but

£10,000. The claimant therefore beat the part 36. However the hearing had

been taken up determining the issue of exaggeration (and the judge found she

had exaggerated her claim) and Mrs Painting had never made an offer herself.

At first instance the claimant recovered her costs. On appeal, the claimant was

awarded her costs to the date of the first payment in but had to pay the

Defendant’s cost thereafter.

6.5 In Molloy v Shell UK Ltd [2001] EWCA Civ 1272, the claimant claimed

£68,000 for past loss of earnings and £232,000 for future loss of earnings.

What he failed to mention was that he had returned to work 3 years previously.

He was ordered to pay the defendant’s costs.

6.6 At the other end of the scale, in Morton v Portal Ltd [2010] EWHC 1804

(QB), where a claim for past and future loss of earnings was originally pleaded

at £1.72 million and eventually settled at £385,000, Walker J held that the fact

a claimant accepts that part of acclaim is worth very much less than had

originally been contended is not in itself show there what been exaggeration

for the purposes of CPR 44.3(2)(b). Such exaggeration must “indicate

conduct meriting criticism”. It was held that overestimating a genuine claim

52

was not such conduct. That was despite the reasons for the claim being

overestimated included the fact that the claimant admitted that he had misled

his accountant and the inland revenue such that his books could not be

believed. The deceptions had been made to minimise tax liabilities rather than

for the purpose of inflating a claim. That judgment echoes the decision in Hall

& ors v Stone [2007] EWCA Civ 1354, a case where the defendant had argued

not only exaggeration but also fabrication of injuries. The claimants were

acquitted of dishonest fabrication and of conscious exaggeration. Smith LJ

said “if the claimant’s exaggeration was no more than to pout his case rather

high, it does not seem to me that a Defendant who has not made an effective

and admissible offer can be regarded as the victor.”19

Martyn McLeish & Lisa Sullivan

Cloisters

20.9.2010

19

Para 73 (this is set out in full in para 28 of Widlake)