Ul-Haq and others v Shah [2009] EWCA Civ 542, [2009] All ER (D)
71 (Jun)
Court of Appeal, Civil Division, 9 Jun 2009, Smith, Moses and Toulson LJJ
It is established that a claimant will not be deprived of damages to which he is entitled because he had fraudulently attempted to obtain more than his entitlement; similarly, there is no logical justification for suggesting that the claimant who lies about another person’s claim should be treated more severely than the claimant who lies about his own. Further, CPR 3.4(2) does not provide a power to strike out a claim made in such circumstances at the end of a hearing where there is no suggestion that it has not been possible to hold a fair hearing.
The claimants did not appear and were not represented. Ralph Lewis QC &
Alasdair Brough (instructed by Morris Orman Hearle) for the defendant.
The defendant was involved in a road traffic accident. She admitted negligently driving her car into the first claimant’s vehicle. He claimed to suffer whiplash as a result and that his wife (the third claimant) and his mother (the second claimant) had also been in the car and suffered injuries. The defendant admitted that the wife had been in the car, and conceded liability in the case of the husband and wife, but disputed that the mother had been a passenger at the time.
The defendant submitted that the claimants had lied about the presence of the mother and all the claims should therefore be rejected other than for damage to the car. Alternatively, she submitted that even if the first claimant and his wife had suffered genuine injuries, their claims should be struck out under CPR 3.4(2) on account of their part in the attempted fraud. CPR 3.4(2) provided that the court might strike out a statement of case if it was an abuse of the process of the court. The recorder found that the mother had not been in the car, and that the first claimant and his wife had conspired to advance the mother’s fraudulent claim. He dismissed the mother’s claim with indemnity costs, but found that the first claimant and his wife had suffered genuine injuries. He doubted that he had a discretion under CPR 3.4(2), but in any event held that he would not exercise it. He awarded damages to the claimants but directed that each pay two thirds of the defendant’s costs, which left a net result that the claimants paid a sum to the defendant.
On the defendant’s appeal the judge held that, while there was a discretion under CPR 3.4(2) to strike out a genuine claim even at the end of a hearing, the instant case was not of the most serious kind. He dismissed the appeal and the defendant appealed to the Court of Appeal.
Smith LJ:
Her ladyship considered, inter alia, Axa General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445 and Molloy v Shell UK Ltd [2001] All ER (D) 79 (Jul), and held that there was no general rule of law that the dishonest exaggeration of a genuine claim would result in the dismissal of the whole claim. The invariable rule was that, in those circumstances, the judge would award the limited damages which were appropriate to his findings. Of course, a claimant’s credibility might be so damaged that he failed to prove any part of his loss, but if he proved some loss, he would recover that even though he had fraudulently attempted to recover far more.
Her ladyship further considered Churchill Car Insurance v Kelly [2006] EWHC 18 (QB). It was well established that a claimant would not be deprived of damages to which he was entitled because he had fraudulently attempted to obtain more than his entitlement. There was no logical justification for suggesting that the claimant who lied about another person’s claim should be treated more severely than the claimant who lied about his own claim. Both behaved disgracefully; both committed the criminal offences of attempting to pervert the course of justice and attempting to obtain property by deception or attempting to obtain a pecuniary advantage by deception. Yet the policy of the law had not been to shut them out from justice altogether—save where the claim related to an insurance contract.
It might be that that policy was wrong and the law should be changed. However, such a change would not necessarily solve the problems of insurance companies; their real problem with phantom passengers and staged accidents was detecting the frauds in the first place. But in any event, the law was so well-established that it would not be right to change it by judicial intervention. Such a change would have to be a matter for Parliament.
In the light of that conclusion, CPR3.4(2) became a side issue. Her ladyship considered, however, Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167, and held that the case did not support the proposition that, where the trial had taken place and the recorder had been able to reach reliable findings, it was open to him to strike a genuine claim out. In those circumstances, the judge had to give effect to his findings. He could mark his disapproval of the way in which the court’s time and the parties’ money had been wasted by an order for costs. But he could not mark his disapproval by depriving the claimant of that which the claimant had proved to be his entitlement.
Further, the expression “strike out” had a time-honoured use and was not apt to describe the decision that a judge made at the end of the trial. At that stage, the judge either upheld the claim or dismissed it. He did not strike it out. CPR 3.4(2) focused on the statement of case. The main objective was to allow the court to deal summarily with a bad claim or defence before the expense of a trial was incurred.
The appeal would therefore be dismissed.
Moses and Toulson LJJ agreed.
