Keoghs Insight

Author

Elaine Ibbotson

Elaine Ibbotson

Partner

T:0247 665 8234

Wide scale issue of fraud is no exaggeration

Client Alerts04/12/2013
Fraud Aware Issue 2

The Law Commission’s consultation closed yesterday on their 12th programme of law reform which included the subject of ‘fraud by victims of personal injury’. This coincided with the successful application for committal for contempt of court in the Homes for Haringey v Fari case. This case involved a huge exaggeration on the part of the claimant, Barbara Fari.

Fari sued Homes for Haringey after she tripped on a paving stone and hurt her knee in 2008. The claim totalled more than £750,000 and included evidence from the claimant’s husband in support of her alleged mobility problems. However, the claim was struck out by his Honour Judge Mitchell after surveillance footage and medical evidence revealed, ”a complete gross exaggeration of symptoms by Mrs Fari, aided and abetted by her husband.” He found that the claimant had suffered a minor injury worth no more than £1,500. Permission was subsequently granted to bring contempt of court proceedings.

Mrs Fari and her husband both now face a potential prison sentence after the High Court Judge found them to be in contempt of court for grossly exaggerating the impact of the accident.

It is pleasing to see cases such as this making the news. The personal injury claims processes have been subjected to a number of reforms in recent months and as well as reigning in the costs involved in such claims, the need to deter fraud should not be forgotten. In Keoghs’ response to the Law Commission’s consultation, we highlighted the need for the court’s powers to strike out fraudulently exaggerated claims to be clarified and enhanced in order to provide a clear deterrent to would be fraudsters.

Whilst the case of Fari demonstrates that the courts can adopt a firm stance in dismissing fraudulent claims for compensation and punishing those who abuse the court processes, there remains too much uncertainty about when the courts will utilise their powers to strike out. Any consideration of the judgments in the earlier cases of Shah v Ul-Haq & others [2009] EWCA 542 and Summers v Fairclough Homes Ltd [2012] UKSC 26 demonstrates that whilst the problem of fraud is widely recognised, the courts’ approaches to cases in which genuine losses have become entangled with exaggeration and fabrication have not been as robust as the insurance industry - and their customers - would expect.

Any form of uncertainty in terms of the approach taken to fraud is unhealthy. Legal practitioners acting on behalf of both claimants and defendants in personal injury claims need to be able to advise their clients regarding the consequences of fraudulent claims being brought before the courts. As things stand, whilst insurers want to fight the fraudulent elements of an otherwise genuine claim, they are expected to do so with no guarantee that their investment in defending the fraud will be worthwhile. Protracted litigation and its associated costs could be avoided if there was a clearer and more level playing field.

With or without further reform, it should be remembered that any publicity around the sanctions applied to those bringing fraudulent claims is one of our greatest weapons in the fight against fraud. Fari highlights the risks associated with misleading the courts; the prospect of a custodial sentence should be at the forefront of the minds of any claimant considering pursuing a fraudulent claim - and those who provide false evidence to support them.

Cases such as Fari give signs of encouragement, however, more needs to be done to clarify the position regarding exaggeration. An issue that we hope will be accepted by the Law Commission as one that needs to be further explored and therefore included in their forthcoming twelfth program of law reform.