When is a dishonest claim not a dishonest claimant?

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Dishonest claimant, or dishonest claim?

The High Court recently dismissed an appeal against a county court ruling, concerning the issue of “fundamental dishonesty”. The case involved a low-level RTA where liability had been admitted, but the defendant alleged that the claims for credit hire, injury and other associated losses by the claimant were fundamentally dishonest.  

The Honourable Mrs Justice Stacey upheld the Recorder’s County Court decision that, while a claim had apparently exaggerated the losses, the claimant himself had been ‘perplexed’ by the damages being sought and was not complicit in the dishonesty. 

The case of Michael v I E & D Hurford Ltd (t/a Rainbow) is interesting and explores in detail the appeal for the claimant being “fundamentally dishonest.” 

The situation

The claimant, Luul Michael, was involved in an RTA while working as an Uber driver, in the process of taking a passenger to their destinationAn employee working for the defendant was driving a Land Rover Defender, provided by the company, which was travelling very close behind the claimant. The driver of the Land Rover Defender then accidentally drove into the back of the claimant's vehicle as it was moving off from traffic lights.  

The initial valuing of the claim

The County Court judgment was handed down in 2020, at Leeds County Court. The judge awarded the sum of £3,624.18 to Luul Michael. The defendant appealed this, arguing that the Judge should have found that the claimant was fundamentally dishonest for the claims for physiotherapy and credit hire. 

The High Court stated that the recorder had concluded that the claim had been put together by solicitors, and the claimant (who did not speak English as a first language), was not entirely familiar with parts of his witness statement. The recorder also stated that the claimant was “confused by the procedure adopted by this court”, while accepting that the claimant gave unhelpful information including that “he had attended only one physiotherapy session rather than the eight claimed for.”  

The appeal and ruling

Appealing to the Queen’s Bench Division, the defendant argued that “the recorder had been wrong not to decide fundamental dishonesty.”  

Mrs Justice Stacey said, regarding the appeal: “It is too bold a submission to assert that an inaccurate pleading or defective disclosure statement is synonymous with the respondent’s fundamental dishonesty…and if the defendant solicitors consider that potential dishonesty lies with a claimant’s solicitor and not their client then surely their attention is better directed at the solicitor firms, rather than the hapless client who has instructed them.” 

Mrs Justice Stacey dismissed the appeal, commenting that it was a “classic” example of when it is best to trust the trial judge, who has had the benefit of listening to the witness first-hand and reaching their own conclusion.    

The High Court stated that the recorder had concluded that the claim had been put together by solicitors, and the claimant (who did not speak English as a first language), was not entirely familiar with parts of his witness statement. The recorder also stated that the claimant was “confused by the procedure adopted by this court”, while accepting that the claimant gave unhelpful information including that “he had attended only one physiotherapy session rather than the eight claimed for.”  

What was the outcome?

The recorder at first instance concluded that the claimant was not dishonest. In fact, he ruled that he had been involved in a genuine accident and had not intentionally sought to exaggerate his injuries. 

This being said, it is important to note here the difficulties that can arise from investigating the credibility of claimants. In this instance, the perplexed nature of the claimant and willingness to give unhelpful information despite the signed list of documents (physiotherapy invoices and others) seemingly disproved the argument of dishonesty. But in other cases, could allegations of dishonesty made by defendants give rise to scrutinising claimants’ legal representatives on a deeper level? 

This case demonstrates that while the solicitors may have been “dishonest” in putting the claim together, it is not necessarily the claimant that is driving the fundamental dishonesty.  

However, what recourse is there for defendants in claims of this nature? Bringing the dishonest solicitors in as an interested party to the action? Reporting the dishonest solicitors to the SRA?  

If you wish to discuss a matter concerning a defendant claim please contact Rav Johal.  

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Ravinder works with both insurers and self-insured companies, defending a range of claims and providing sound legal advice.

Ravinder has over 13 years’ experience of dealing with claims from straight forward RTA’s to multi-million pound fire damage and brain injury claims. Ravinder’s down to earth approach for clients is precise, friendly and commercial.

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Business interruption insurance | our fixed fee support

COVID-19 continues to be a disruptive force across all sectors, with many companies unable to continue with business as usual.

When COVID-19 first impacted, companies turned to their business interruption insurance to claim back the money they had lost and they continue to do so. Companies were then faced with arguments from insurers refusing to provide cover.

Business interruption insurance - do insurers have to pay out for COVID-19-related losses?

To get clarity on whether insurers have to pay out to companies under business interruption policies for COVID-19-related losses, the Financial Conduct Authority (FCA) brought a test case.

The outcome of the FCA test case in the High Court provided a degree of clarity to both businesses and insurers, especially in terms of interpretation.  However, the arguments continued as both the FCA and six of the insurers had been allowed to appeal aspects of the original High Court judgment,  the decision on the appeal (which was heard by the Supreme Court)  was made on 15 January 2021 and has found in favour of policy holders. The decision to dismiss the insurers’ appeals was unanimous.

The decision is good news for policyholders. It is more likely now that insurers will be required to pay out on policies identical to and similar to those tested by the FCA’s case.

The art of interpretation

The aim of the original FCA High Court test case was to provide businesses and insurers with a degree of certainty on how the wording of policies should be interpreted. The Supreme Court’s decision provided more certainty. In some aspects, the Supreme Court went much further than the High Court which strengthens the argument for policyholders.

Potentially worth billions of pounds, the case involved the examination of 17 policy wordings from eight insurers to assess whether COVID-19 generates a pay-out. The Supreme Court’s decision had claims rejected to re-visit their policies and for others who did not claim at the time to have a look at their policies with a view to making a claim.  This decision will also have an impact beyond business interruption insurance and into other areas of insurance. This is because one element of the case was about causation; namely what was the cause of the business interruption?

Challenges to overcome

There are a number of issues that come into play regarding business interruption claims, including:

The intended nature of business interruption policies - many business interruption insurance policies only have basic cover for business interruption resulting from property damage (so actual physical damage to the property). Other business interruption policies (often bought as an add on to a property damage policy) cover business interruption for other causes – for example relating to infectious or notifiable diseases or denial of access or where public authorities enforce closures or impose restrictions. This denial of access (and what caused it) often conflicts with the policyholder’s view, who may feel that they should receive a pay-out regardless of what triggered the business interruption.

Geographical coverage – Some insurance policies include geographical coverage clauses, which cover businesses if there is a “notifiable disease” on the premises in the surrounding area. With COVID-19, it may be difficult to prove that it was present in a certain location (the outcome of the test case has helped here for certain policy wordings). Subject to the wording of the policy, the Supreme Court decision will now assist.

Demonstrating a causal link – COVID-19 will have to be directly linked to the losses incurred for businesses to be covered. This could have been a challenge, as the losses may be due to the Government-mandated closures, rather than the virus itself but the Supreme Court’s decision has provided the clarity needed here too.

Making a claim on your business interruption insurance policy

The three national lockdowns imposed as a consequence of the COVID-19 pandemic inevitably mean businesses which cannot or could not operate (or whose operations are restricted) should consider whether their losses are recoverable under any business interruption insurance policy they hold. It is the case though that after the first national lockdown some insurers re-wrote their policies to tighten up on the extent of any indemnity cover and to put themselves in a stronger position to refuse cover when entering into new policies.

As a result of the Supreme Court decision, insurers with policy wording identical to or similar to those tested should now  settle all valid claims as soon as possible and it is understood that, in many cases, the process of settling claims has already begun.  However, regardless of the outcome, it is important to remember that claims will turn on their particular facts and, most importantly, the wording of the policy.

How we can help with our fixed fee support

It may be that you are thinking of making a claim under a business interruption insurance policy or that you have already made that claim and it has been rejected.

Making a successful claim

It’s vital that if you are thinking of making a claim to your insurer that you have an understanding of whether the policy wording will cover you and a plan to challenge any arguments that an insurer may advance to try to invalidate any claim.

If you do have grounds for a business interruption claim, you must gather the right supporting evidence, including collating original documents that show the lost revenues, as well as the forecasted revenues and any expenses incurred. Instead of treating this as a one-off process, you should keep an ongoing record of the relevant information, just in case you decide to make a claim at a later date.

How we can support you

We will carry out a review of your policy wording and provide you with an opinion on validity (whether we think the policy wording covers you or not). We will also identify potential obstacles to any successful claim resulting from our review of the policy wording. We shall do so applying the decision of the court (following the outcome of the Appeal).

Already made a claim and rejected?

A rejected claim doesn’t mean you have to give up. We will carry out a review of your policy wording, consider the reasoning from the insurer for the rejection of the claim and provide you with an opinion on validity. We will assess this against the findings in the Supreme Court decision, if relevant.

If we consider the insurer has got it wrong, we will summarise your options available, such as:

  • Complaining directly to the insurer if you believe the wrong decision was made.
  • Making a compensation claim against the insurance company for breach of contract.
  • Making a complaint to the Financial Ombudsman Service to seek compensation.
  • Assessing whether you are entitled to compensation from the broker if you believe the advice given wasn’t correct.
Costs

If you have yet to make a claim our fixed fee review is
£450 + VAT per policy

If you have made a claim which has been rejected or had cover refused, our fixed fee review is
£550 + VAT per policy

What are my next steps?

Often, the time and financial costs involved in litigating against a large insurance firm puts businesses off taking a stand. However, with the right legal advice, organisations can find viable funding options that allow them to take the next step towards a fair result.

By following the conclusions of the Supreme Court decision and any guidance created from the case, businesses can increase their chances of making a successful business interruption claim, lessening the long-term financial impact of the pandemic.

Contact us

Whether you’re considering making a claim on your business interruption insurance, or have had a claim rejected, our commercial disputes team can advise you on your options and guide you through the process of what to do next.

Do contact us either leaving your contact details here on our short form or by calling either Tim Speed or Steven Skiba. We look forward to hearing from you.

Our guide to recovery and resilience helps to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

Contact us today to find out more about our fixed fee support
Related services

We've put together some frequently asked questions to help you understand more about business interruption insurance

If you still have questions or any concerns please get in contact with us or call us on 0330 024 0333

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Below we outline a real life example of someone who was badly advised by a solicitor in connection with the settlement of a personal injury claim, and how a claim in negligence can seek to recover some of the consequent shortfall in the compensation received.

The case

In an on-going case, our client “Miss W” had previously instructed a firm of solicitors “Firm X” to assist with a personal injury claim following carbon monoxide poisoning after a faulty flue installation in her council owned flat. The compensation sought included a loss of earnings claim as the poisoning had seriously affected Miss W’s ability to earn a living, and indeed she was absent from work between 2010 and 2015. Firm X had advised Miss W that they believed the payment of compensation of £60,000 would be a reasonable recovery in the claim.

In September 2013 the council made a £20,000 settlement offer to Miss W as they didn’t believe the evidence supported the loss of earnings claim. Unsatisfied with the offer, Firm X advised the council Miss W would accept a £70,000 settlement. It is worth noting at this point that Firm X failed to respond to the points raised regarding the lack of any evidential basis for the loss of earnings claim.

Eight days before the trial Firm X advised Miss W that an improved offer of £35,000 made by the council ought to be accepted. Understandably Miss W was not satisfied with this advice and questioned why her solicitors were advising that if the claim proceeded to trial, it might fail.

Three days before the trial Miss W instructed Firm X to seek advice from a barrister. The barrister advised that the claim was not guaranteed to succeed as the evidence prepared by Firm X was ‘inadequate’. Miss W needed to be able to prove on the balance of probabilities that she had been poisoned by carbon monoxide, that this was due to the negligence of the council, and that the poisoning had caused the symptoms complained of – which was not possible on the evidence prepared by her solicitors..

In addition, the barrister noted that even if liability could be established no schedule of loss had ever been finalised (ie a document setting out how much you want the tribunal to award you if you win your claim). The claim sought damages limited to £50,000. A draft schedule had been prepared which identified loss of earnings up to September 2013 of £60,000 but did not include a claim for future loss of earnings. Having considered the evidence obtained, the barrister took the view that there was a ‘significant’ risk that no loss of earnings would be awarded.

As a result the barrister concluded that on the poor case preparation meant that the Council’s offer ought to be accepted. However the barrister recommended that Miss W ought to obtain independent legal advice as there was ‘reason to believe that Miss W had been negligently advised’.

Independent legal advice

We were asked to provide independent advice to Miss W.. After reviewing the case in detail, we requested a psychiatric assessment for Miss W. The report confirmed that the carbon monoxide exposure between 2006 and 2008 had caused Miss W to decompensate – leading to tiredness, poor motivation and depression and the development of a mixed anxiety and depressive disorder. The report stated that there had been a partial improvement with treatment but not a complete improvement.

The expert recommended a graded return to work but, importantly, concluded that the carbon monoxide exposure had led to a permanent brain injury. The evidence also suggested that Miss W would only be able to work at a level substantially below the level she would have reached but for the brain injury.

The outcome

Had Firm X obtained psychiatric evidence Miss W’s claim for both past and future loss of earnings could have been properly investigated and claimed within the original proceedings. As it was not Miss W’s claim was settled for substantially less than its true value.

Miss W is now bringing a claim against Firm X. If the Court finds Firm X was negligent it will assess the damages she is entitled to recover from her former solicitors on a loss of chance basis. This claim will involve looking at the maximum value of the claim she had in the original proceedings and then applying a percentage discount to reflect the risk that that sum might still not have been recovered. If the negligence claim against Firm X succeeds, Miss W says that properly advised her claim against the Council was worth in the region of £600,000. Even a recovery of 50% of this sum in the present negligence action will represent in a very significant award of compensation which will be much closer to the damages Miss W would have probably recovered in the personal injury claim had she been properly advised.

What does this mean?

It is important that clients make sure that their claims for compensation in personal injury claims are properly thought about and explained to their solicitor and then supported by all necessary factual and expert evidence. Loss of earnings claim in particular need supportive medical reports, and when the illness or injury is not physical this needs to be from a consultant psychiatrist.

If at the end of the case there is any reason to believe that the solicitor has not done his or her job properly, or the compensation recovered is less than you were led to believe, we would be happy to review the case to see if the bad advice is sufficient to give rise to a claim in negligence that it is commercially sensible to pursue.