Fighting fraud

News | Tue 19th Jul, 2016

Judgment in the case of Da Costa v Sargaco [2016] EWCA Civ 764 was handed down last week and represents the latest round of the struggle between claimants bringing claims for injury or damage arising out of road traffic accidents and defendant insurers alleging that claims are fraudulent. The case deals with the cogency of evidence required to establish an allegation of fraud, with the inferences which can be drawn from evidence and with the exclusion of a claimant from court whilst the other is giving evidence.

The facts of the case conform to a familiar pattern: a claim for losses arising out of damage to mopeds brought by members of a certain community in London. The claimants’ case was that their parked mopeds were struck by a vehicle, the driver of which had apparently disappeared or at least had not participated in proceedings*. One of the claimants had had three other accidents despite having only arrived in the country in 2010. One of the claimant’s mopeds was involved in another accident etc…

The judge ordered each claimant be excluded from court whilst the other gave evidence. She subsequently found that the claimants had not proved their case, she went further and made a finding of fraud and she found they had failed to establish their claim for damages.

The judge’s decision was challenged on the ground that the case of Hussain v Hussain and Aviva [2012] EWCA Civ 1367 established “the parameters of appropriate inferences that can be drawn in a case where fraud is alleged, but there is no direct evidence connecting parties alleged to be in a fraudulent conspiracy.” Black L.J. found that “what inferences are appropriate depends entirely on the particular facts of the particular case” and dismissed this ground of appeal.

The Court of Appeal was not willing to interfere with the judge’s finding that the claimant’s cases were not proven illustrating the mountain appellants have to climb to overturn a judgment on this basis. Black L.J. spelt out that a finding of fraud does not inevitably follow from a rejection of an accident claim as not proved. She went on to find that the judge did not make sufficient findings or provide sufficient reasoning to substantiate the fraud finding she made against the claimants – that finding was set aside.

The judge’s decision was also challenged on the basis that one of the claimants had been excluded whilst the other gave evidence. The Court of Appeal held that there was not an absolute requirement that claimants had the opportunity to be present personally throughout the entirety of the hearing. It gave the example of a litigant who disrupts the hearing by unruly behaviour and may have to be excluded to allow progress to be made. The starting point is that claimants are entitled to be present throughout trial. Black L.J. said that she found it extremely difficult to contemplate there being any sufficient reason for taking excluding one claimant from hearing the evidence of the other in a case such as that of Da Costa. However she did not find that the claimant’s exclusion was automatically fatal to the whole trial. Both claimants were represented by the same counsel, no application was made at the end of cross examination to take instructions from the absent claimant and counsel for the claimant was unable to point to any part of the transcript where things would or might have been different had the claimant been in court during the second claimant’s evidence. The court therefore found that the trial had not been rendered unfair and therefore this ground of appeal failed.

The normal incentive to seek a finding of fraud is that it leads into a finding of fundamental dishonesty and the disapplication of qualified one-way costs shifting. This case did not include a claim for personal injury and therefore QOCS did not apply. The defendant did not therefore need a finding of fraud to win or fundamental dishonesty to get its costs. Defendants may therefore want to discourage a judge from going further than he or she needs to in order to dismiss a case.

Claimants will want to impress on a judge the requirement for “sufficient findings” and “sufficient reasoning to substantiate” any fraud finding. The cogency of the evidence required makes it difficult for defendants who harbour plenty of understandable suspicions but lack the hard evidence to get a finding of fraud or fundamental dishonesty.

As to the finding about excluding claimants from hearing evidence of other claimants, the position is now clear in cases of this sort. What is not so clear is what stance a court can take about the exclusion of witnesses who are not claimants – that is a point which still needs to be argued.

*Black L.J. says that the driver was “untraced” but he was named as the First Defendant and one of the allegations was that he used the same address as the claimants. I assume therefore she was not using the word in its technical sense and meant that noone knew of his whereabouts. I am grateful to Steven Templeton for pointing out that it was not the case that Mr Sargaco was “untraced”.