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The Judicial Approach: Exaggerated hire claims and genuine RTAs

27/10/2016

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.


Case 1


Key Facts


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’.

  • The claimant had, in fact, repaired his vehicle for a lower figure than the interim payment and then retained the overpayment.

  • The hire company were not the owners of the hire vehicles, which, they claimed, had been subleased. Furthermore, the hire company could not produce its own insurance given the vehicles were insured on the claimant’s existing insurance policies!

  • The claimant had been involved in making previous RTA claims via the same solicitors for which he underwent physiotherapy, again provided by the same supplier. He was also involved in a subsequent accident in the hire vehicle.


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.


Judicial Approach


The district judge refused to reinstate the claim or grant relief meaning it remained struck out. He found that:

  • The complete and utter failure by the claimant to comply with his disclosure obligations was ‘inexcusable’. This included a 10 month delay in serving a proper disclosure statement which lead to a trial window being lost.

  • The proceedings had been issued without any heed as to whether the claimant could speak any English which raised ‘serious concerns’ as to how his solicitors could have signed the various statements of truths on the claimants behalf given there was little evidence that the claimant could confirm he believed them to be true.

Comment

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…’


Case 2


Key Facts

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.

  • Despite being declared as a total loss, the driver had her vehicle repaired then retained the overpayment made in the interim for the pre-accident value. It also transpired that the claimant insured the hire vehicle on her existing policy.

  • Investigations revealed that the claimant driver had been involved in a previous accident related to a different vehicle in which she used the services of the same hire company. The alternative vehicle was available throughout the hire period, but she maintained her husband was the main user despite the fact she was the insured and registered user.

The physiotherapy records disclosed were hand written and there were concerns over their authenticity.


Judicial Approach

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:

  • The first and second claimant did not come across as truthful and were caught out in cross-examination whilst the fifth claimant was ‘bogus’;

  • The impact was minor and did not cause injury;

  • The repair invoice was questionable and the evidence that the vehicle was ‘undriveable’ and required recovery was untrue. Indeed the vehicle was not recovered at all;

  • The claimants did not need to go to their doctors nor did they require physiotherapy. In fact, such recommendations originated from a conversation between the claimant solicitors and the claimants. The physiotherapy documents also appeared to have been altered and the second claimant was unable to properly describe the exercises he undertook;

  • The claimant could and should have repaired her car swiftly following the accident (if it needed repair) and as she was deemed pecunious she could and should have done this before any purported need to hire a replacement car arose.


Comment

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.

 

Case 3


Key Facts

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.

  • The detailed defence positively pleaded the concerns of gross exaggeration relying on engineering evidence, witness evidence and also challenged the authenticity of the wheel misalignment report.

  • Additionally, technical challenges were made against the large credit hire claim, including whether it was enforceable against the defendant due to defective notices of cancellation pursuant to the Home and Work Place Regulations 2002 and potentially non-compliant credit agreements pursuant to the Consumer Credit Act.


Judicial Approach

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.

  • The judge was very critical of the claimant’s attempt to ambush the defendant at trial by seeking to give evidence via an interpreter without prior notice and was also scathing in his remarks against the claimant’s solicitors;

  • The claim for physiotherapy was abandoned at trial as the claimant admitted that he only attended the treatment because he was told to do so by a person he knew as “Tibby” from Total Claims;

  • The judge referred to Tibby as “some sort of eminence grise in this case, who has put the claimant in touch with an organisation called Total Claims and has advised the claimant throughout about the running of this claim”;

  • The extortionate amount of hire claim (in excess of £126,000) presented out of a minor collision led the judge to consider "this to have been a fundamentally dishonest claim”;

  • The vehicle was not recovered and there was no defect to render it unroadworthy.


Comment

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”.


Overall Conclusion

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.

Author

Hamida Khatun

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