Claimants win damages after abusing court process

Historically, the courts have tented to award a claimant their genuine damages even if the conduct of the claimant has been dishonest in nature. The Court of Appeal recently revisited the discretionary powers held by the court under Civil Procedure Riles r3.4(2) and considered whether the court was able to strike out a claim on the grounds that the claimant was involved in the fraud of another claim and had, therefore, abused the court process.

The facts of the case were simple. In a road traffic accident in May 2006, Mrs Shah drove into the rear of Mr Ul-Haqs vehicle, which was stationary at traffic lights. It was alleged that Mr Ul-Haq, his wife and his mother-in-law were all present in his vehicle at the time of the collision and that all three had suffered injury and loss as a consequence. At trial, the judge determined that Mr Ul-Haq and his wife were present in the vehicle at the time of collision but the mother-in-law was not present.

The court was invited to strike out the claims of Mr Ul-Haq and his wife as an abuse of process of the court, as they had supported and assisted in the advancement of the fictitious claim to trial. The judge dismissed the bogus claim and ordered indemnity costs, but held that Mr Ul-Haq and his wife had genuinely suffered injuries and awarded damages to them both. In accepting he had a discretion, the judge declined to exercise it, ordering Mr Ul-Haq and his wife to pay two thirds of the defendants costs. The net effect was a modest deficit payable by the claimants.

This issue was considered on appeal. It was not the case here that there was no possibility of a fair trial which may allow a judge to strike out a statement of case. The fraud would have to be so serious that the parties were not on an equal footing and the court cannot give effect to the overriding objectives, which would give rise to a substantial risk of injustice.

Where an action proceeds with the inclusion of a false claim and where a fair trial is possible, it is unlikely that CPR r3.4(2) would apply. As the recorder had found that there were genuine claims, he had no power to deprive them of their legal right to damages, but did have a power to impose sanctions (in costs). Appeal dismissed.

The Court of Appeal has re-emphasised that the genuine claimant may well succeed in damages, even if he has allied himself to a fraudulent claim, however unpalatable this appears as a matter of public policy. Insurers should consider using other tactical tools under the CPR in an attempt to avoid the full costs of trial. However, if we are to heed the words of the Court of Appeal then we should collectively be pressing parliament to change the law and thereby, assist the judiciary in combating the escalating cost of personal injury fraud.