Following Fraser McAndry’s article on exaggerated heads of loss, Keoghs Associate, Hamida Khatun, puts principle into practice by examining the judicial approach to three of her recent cases. Hamida also looks at the steps insurers can take to protect themselves when faced with similar cases.
*All cases feature the same hire company, engineers, recovery and storage companies, plus the same solicitors.
Our first claim is a low speed accident in a car park where the claimant alleged that he sustained personal injury and damage to his private hire vehicle. Recovery and storage, credit hire and private physiotherapy were also claimed, totalling just under £60,000. The defendant’s insured driver, meanwhile, described the collision as ‘glancing’.
All the points above were used to attack the claim in general, in addition to raising the usual credit hire points on need, reasonableness, rate, mitigation and enforceability. The claim was struck out but this was then contested by the claimant’s solicitors.
The district judge refused to reinstate the claim or grant relief meaning it remained struck out. He found that:
The judge could not find ‘any redeeming features’ in the case to grant relief, as the case was ‘beleaguered by ineptitude and inefficiency coupled with inactivity and stagnation…’
Our second case was a three vehicle shunt in a line of slow moving traffic with the insured at the rear. This resulted in five claims for injury from the foremost vehicle, plus additional claims for physiotherapy, vehicle damage, recovery, storage and hire.
The rear and middle drivers provided evidence on behalf of the defendant in relation to LSI and bogus passenger concerns and fraud was pleaded.
The physiotherapy records disclosed were hand written and there were concerns over their authenticity.
Following a three day trial the judge awarded the defendant costs and disapplied QOCS on the basis of fundamental dishonesty and also that the claim was made for the financial benefit of another. All five claims were dismissed, with the single largest aspect, again, being credit and storage charges in excess of £35,000.
The circuit judge reached the following conclusions:
Inspection of the original hire agreements at trial revealed that they were completely different to the ones disclosed during the proceedings. However, the claim for hire failed on the grounds of need and mitigation, before enforceability needed to be considered by the judge.
In future cases we would advise insurers to require production of the original hire agreements and enforceability issues to be scrutinised in detail.
In our third example, the accident concerned another low speed impact in a car park.
Breach of duty was admitted, however the claims for injury, vehicle damage, recovery, storage, credit hire and physiotherapy were hotly contested. The claimant sought to recover in excess of £140,000 made up largely of credit hire charges.
At trial the judge dismissed the claimant’s claim for injury on the basis that this was a minor collision in a car park and injury was not and could not have been sustained by the claimant. He also dismissed the claims for credit hire, recovery, storage and physiotherapy (which was withdrawn at the trial) and ordered the claimant to pay the defendant’s costs of the action.
Whilst the judge did not need to consider the enforceability of the hire agreements, strong challenges were mounted by the defence and, again, the original hire agreements were required to be produced at the trial.
When coming to his conclusions, the judge stated “I say at once that, in my judgment, the claimant has singularly failed to prove the majority of this claim… and it is clear to me that at its heart this claim is not genuine. I consider it to be a claim that, put as charitably as I may, seeks to utilise the legal system to make money at the expense of the insurance industry rather than seek compensation for genuine losses”.
The outcome of all three cases illustrates that, whenever an insurer is presented with disproportionate / exaggerated hire and storage claims from otherwise genuine accidents, careful scrutiny must be undertaken of each and every item claimed.
It can be easy and tempting when faced with a large hire claim you intend to dispute, to make payments for smaller heads of loss such as physiotherapy. However in our three cases the questions over treatment helped to undermine the credibility of the claims. Indeed, it is often the smaller heads of losses that catch out a claimant.
These cases also show that low speed impacts can be effective defences in defeating the majority, if not the entirety, of exaggerated hire and storage claims and judges will not hesitate to apply costs sanctions.
In each case, apart from the vehicle damage, no other elements of the claims were successful. A combination of fraud and technical credit hire points were used in a two pronged attack which led to the dismissal / failure of all three claims, resulting in savings of over £300,000 against the combined damages and costs reserves.
Hamida Khatun
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