Fundamentally dishonest claim leads to award of exemplary damages in the tort of deceit

Claim struck out at Manchester County Court late last year leads to finding of fundamental dishonesty, recovery of costs and an award of exemplary damages.

Background

Leading defendant law firm, Keoghs, were instructed to represent Zurich and their customer, Salford Van Hire, following an alleged road traffic accident on 2 February 2015.

The second defendant, LG,  hired a Vauxhall Corsa from Salford Van Hire on 31 January 2015 and claimed he was taking his brother, CG, and friends J and B ” for breakfast”, when he pulled out onto Netherwood Road in Manchester and into collision with a passing Ford Focus.

Zurich received personal injury claims from all passengers in the Corsa as well as all four occupants of the Ford Focus and a credit hire claim from the driver of the Focus. Zurich’s potential exposure was in excess of £80,000.

Evidence

After proceedings were issued, a defence was filed pleading that the accident was staged and that the claims were “fundamentally dishonest”. Zurich also counterclaimed against the claimants and the hirer for an award for ‘exemplary’ damages.

The hirer signed a witness statement that he “didn’t recognise the other driver or passengers”. Keoghs exposed this as a lie, establishing the following links between the relevant parties:

• A holiday photo showing CG posing with three passengers in the third party Ford Focus
• CG was in a relationship with one of the passengers in the third party Ford Focus
• The said passenger in the Ford Focus resided at the same address as CG and LG
• CG and B were ‘Facebook friends’ with all passengers in the Focus
• The remaining passenger in the hired Vauxhall Corsa was also a ‘Facebook friend’ with the driver of the Ford Focus
  
  

Result

The claimants discontinued their claims soon after service of the defence and their solicitors also came off court record. Following an Application to the court, Zurich obtained an order to the effect that:

1. The claims were “fundamentally dishonest”
2. Claimants J, B and CG were to pay Zurich’s costs of defending the claims in excess of £11,000, with the claimants and the hirer LG to pay the counterclaim costs in the sum of over £5,000 and exemplary damages of £5,000
   
   

Keoghs’ Enforcement Team are now dealing with the recovery on behalf of Zurich and its customer.

Toby Evans, Partner at Keoghs LLP, instructed by Richard Harvey of Zurich Insurance Plc said of the claim;

“Whilst this was not the most sophisticated of frauds, it does show that the robust counter-fraud measures adopted by Zurich, good old-fashioned intelligence analysis, and a strong collaborative approach between Zurich, Salford Van Hire, their brokers and Keoghs, led to the early detection of the fraud and allowed us to be entirely on the front-foot in taking the fight to fraudulent claimants, who now find themselves in the unenviable position of each having a five figure judgment against them.”

Scott Clayton, Claims Fraud and Investigation Manager stated;

“Cases such as these demonstrate that fraud remains a very significant issue for insurers. What is reassuring however is that a collaborative and robust approach between our claims handlers and legal partners can bring exceptional results as demonstrated in this case. The claimants, who presumably never thought they would be caught, will most certainly now be paying for it!”

Rob Higgins of Lucas Fettes and Partners, Insurance Brokers for Salford Van Hire said;

“This case is a fairly typical example of the dishonest claims our client and their Insurer Zurich have faced for many years. Collectively between Salford Van Hire, Zurich and ourselves we have always taken a robust approach towards fraud and claims made against our client’s Insurance policy are subject to close scrutiny. It is pleasing to see when these collective efforts pay off and on this occasion thanks to some excellent work by Zurich and Keoghs an exceptional result was achieved.  We hope this reinforces the message that dishonest claims won’t be tolerated and highlights the financial penalties that dishonest claimants could face.”