Home / Insight / Keoghs help enforce eight year bankruptcy for fraudster after tort of deceit action

Keoghs help enforce eight year bankruptcy for fraudster after tort of deceit action

09/03/2017

Following a case in which Keoghs and Churchill Insurance successfully pursued a finding of fraud against two claimants, a tort of deceit action was run which led to the court awarding the insurer further costs and exemplary damages, leading to a total liability of £51,870.

Subsequently the Keoghs enforcement team pursued the claimants to recover the amount owed and, after they failed to make an interim payment, Keoghs successfully petitioned for both claimants to be made bankrupt. In February 2017, the Insolvency Service decided to extend the bankruptcy period of one of the claimants, Mr Shajahan, to eight years.

The original incident involved a collision whereby Churchill’s insured allegedly hit the rear of the claimants’ vehicle, which was said to be driven by Mr Shajahan with the second claimant, Mr Moynul, a passenger.

The initial trial took place in July 2014, with the judge finding the claims to be fraudulent and both claimants having been dishonest in their evidence.

Both were ordered to pay Churchill’s costs on an indemnity basis, including interim payments on account of costs. When these interim payments failed to materialise, the costs orders were passed to Keoghs’ enforcement team who put a charging order on one of the claimant’s properties whilst further action was taken.

Given the additional expenses and payments Churchill had incurred prior to the fraud being discovered, the insurer decided to run a tort of deceit case, led by Keoghs Associate Solicitor Hamida Khatun, to send out a clear message. In November 2014, a claim was issued against both claimants for recovery of the payments that had been made along with exemplary damages.

At the second trial, both claimants (who were defendants in the tort of deceit action), failed to serve any defence or witness evidence and did not attend court.

Not only did the judge find that the deceit had been proven and awarded the compensatory losses as claimed in the sum of £7,192, the judge decided to show the displeasure of the court at their conduct and awarded exemplary damages in the sum of £7,500 - over 100% of the insurers actual loss. Additionally, costs were awarded in the sum of £16,000 against both claimants.

The judgments were also sent to the Keoghs enforcement team and, given a continued failure to pay, the claimants were made bankrupt on 13th January 2016.

In February of this year, the official receiver decided to enforce an extension of Mr Shajahan’s bankruptcy to eight years, a significant sign of intent given the standard length of a bankruptcy order is one year.

Keoghs Associate Solicitor, Hamida Khatun, commented;

“This is an important reminder to fraudsters that fraud is taken seriously and, having put an insurer to significant expense in investigating and defending a fraudulent claim, they should not expect to ‘walk away’ without any sanction or penalty. The unique feature of this case was that, in extending the claimant’s bankruptcy order to eight years, the official receiver took into account the court’s finding of fraudulent conduct in the action that led to the original debt.”


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