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Counter Fraud Focus: Contempt of court

New contempt procedure

In October 2012 the court rules relating to contempt of court proceedings were changed and a new CPR Part 81 introduced in an attempt to simplify the procedural process and reduce costs.

Contempt proceedings which follow liability claims are pursued largely on the grounds that the claimant and/or his witnesses have made a false statement of truth. Such claims are now governed by CPR 81.18. Proceedings can be commenced either with the permission of the court or by the Attorney General.

Proceedings by the Attorney General are likely following referral by the court dealing with the original claim. This article will outline the position when a party seeks to pursue proceedings under CPR 81.18 which provides that contempt proceedings may be commenced with the permission of the court "dealing with the proceedings". This is likely to only apply in cases which are heard at the first instance by the High Court by application to the trial judge.

In most other cases an application for permission to commence contempt proceedings must now be made to a single High Court judge (as opposed to the Divisional Court under the old procedure). The application is made under CPR 81.14 by way of a Part 8 claim form. This must give full details of the grounds for bringing the committal application and be supported by an affidavit exhibiting all documents relied upon. This will in essence be the evidence which was produced in the original claim making it essential that the initial claim at the outset is properly and fully investigated.

Unless the court otherwise directs the application must be served personally upon the respondent(s).

The respondent must acknowledge service within 14 days and serve any evidence to be relied upon if he seeks to oppose the application for permission. . He must also give 7 days' notice of his intention to attend the permission hearing. Given the draconian nature of the application the respondent is still likely to be heard, if he attends the application, even if he fails to comply with this requirement.

If permission is granted it is important at this stage to obtain directions from the court in relation to the contempt proceedings themselves. A separate Part 8 claim form with particulars of claim must then be issued and served. It is extremely important that the proceedings are not deficient in any way as this could lead to delay and the possibility of the proceedings being dismissed. Service of the defence will then follow together with any other evidence to be relied upon by the parties.

The committal hearing itself will now also be heard by a single High Court judge.

Contempt proceedings are usually dealt with promptly and concluded by approximately 6 months from issue. The key features of contempt proceedings is the preparation of the original defence and the obtaining of full and detailed case management directions at the permission stage from the outset. The directions should include the service of all evidence to be relied upon by the parties in the proceedings.

How are the courts now dealing with contempt cases?

The 2012 case of Fari v Homes for Haringey arose out of an accident which occurred when the claimant got out of a parked car and tripped on a defect, alleging she had sustained an injury.

Liability for the accident was conceded by the defendant. However, following further investigations the defendant sought to amend its defence to plead fraud and by the time of the hearing exaggeration and fraud were very clearly in issue.

In the accident the claimant allegedly sustained an injury to her right knee and had obtained medical evidence in support of this. She also served a witness statement with a statement of truth confirming a significant level of mobility difficulties with a schedule of loss in the region of £740,000.

The defendant's medical expert was suspicious of the level of the alleged ongoing symptoms and video surveillance was obtained. The footage showed the claimant attending the defendant medical expert's examination where she demonstrated a great deal of mobility problems, using a crutch and being assisted by her husband. The defendant suspected that the claimant (and her husband who supported her claim) had been alerted to the possibility of surveillance evidence.

Further video footage was then obtained showing the claimant in a completely different light and going about her daily affairs without anywhere near the same level of difficulty as demonstrated in the earlier video and as alleged to the medical experts.

His Honour Judge Mitchell in the Central London County Court considered the Supreme Court decision in Summers v Fairclough Homes Limited [2012] UKSC 26. Essentially Summers held that the court has power to strike out a statement of case on the ground that it is an abuse of process at any stage in the proceedings, even after trial, in circumstances where the court had been able to make a proper assessment of liability and quantum. However, that power would be exercised at the end of a trial only in very exceptional circumstances where the court was satisfied that the party's abuse of process was such that he had thereby forfeited the right to have his claim determined.

HHJ Mitchell indicated that the true assessment of the claimant's claim was in the region of £1,500. Accordingly the claimant's claim was struck out with the claimant to pay the defendant's costs. Applying Summers, he said "This is a case of striking out because there has been a complete gross exaggeration of symptoms by Mrs Fari, aided and abetted by her husband".

The defendant decided to pursue committal proceedings and in Homes for Haringey v Fari & Fari [2013] EWHC 757 (QB) the now claimant successfully obtained permission to bring contempt proceedings against Mrs Fari and her husband. Holroyde J in the High Court was satisfied that there was a strong prima facie case against Mrs Fari and her husband that they had grossly exaggerated the extent of the injuries she had sustained and the disability she had suffered.

Comment

  • This is the first case where the court has struck out a claim in its entirety, following Summers.
  • It is very important that at the hearing for permission to bring contempt proceedings, directions are obtained in relation to the contempt proceedings themselves.
  • In Summers the Supreme Court directed that contempt of court proceedings were the appropriate procedure to punish fraudsters. It is difficult to see how Mrs or Mr Fari can expect to avoid a custodial sentence. We will keep you updated.

In Airbus Operations Limited and QBE Insurance Co (UK) Limited v Roberts [2012] EWHC 3631 (Admin) proceedings arose from an accident suffered by Mr Roberts during the course of his employment with Airbus. He allegedly sustained a back injury whilst applying some cabling to the wing of an aircraft. Following investigations Airbus admitted liability.

The claimant then obtained medical evidence in support of his claim that he had significant on-going difficulties. The level of disability alleged by the claimant was also confirmed by a witness statement signed with a statement of truth.

The claim was not fully particularised but a schedule of past losses had been served in the region of £50,000 with the future loss claim remaining unquantified.

The defendant's medical expert was suspicious and surveillance evidence was obtained, showing the claimant carrying out building works at a house and loading rubbish into a skip. He could be seen moving without difficulties, he was not using a crutch or any other walking aid and was clearly shown carrying heavy objects including a wash basin and a lavatory. At one point he was even seen carrying a bath with the help of his mother!

Upon disclosure of the surveillance evidence the claim was compromised by the claimant retaining interim payments already received in the sum of £8,000.

The defendant brought contempt proceedings in the Administrative Court against Mr Roberts. Moore-Bick LJ, giving the lead judgment, noted the comments of Lord Clarke in Summers and said, "applications for committal for contempt are the appropriate means of controlling, punishing and, as far as possible, eliminating dishonesty in the conduct of civil proceedings".

It must be borne in mind that contempt of court is a criminal offence. Accordingly the burden of proving the contempt is to the criminal standard, beyond a reasonable doubt. Here, the court found Mr Roberts to be in contempt of court having been satisfied to the necessary high standard that "he made a number of other statements by words or conduct that were intended to mislead the doctors and others into thinking that his symptoms were far more severe than was really the case, all with a view to bolstering his claim for substantial damages."

Comment

  • This case is another example where the court has demonstrated an appetite to punish claimants who make false or exaggerated claims for damages.
  • It appears that the judiciary have grasped the principles of Summers and are prepared to punish fraudulent claimants by sending them to prison for contempt of court.
  • Whilst there is no report of the sentence given to Mr Roberts it is believed that he was committed to prison for 9 months.

At this point it is also worthwhile highlighting the recent City of London Police Insurance Fraud Enforcement Department (IFED) case of Mark Smith. This was IFED's first crash for cash conviction. Porsche driver, Mr Smith pleaded guilty to two counts of fraud by false representation in that he manufactured a collision in January 2009. He sought damages in the region of £100,000. On the 7 March 2013 at the Old Bailey, Mr Smith was given a 6 month jail term suspended for 2 years in order to complete 140 hours of unpaid work in the community within the next year.

 

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

John Palmer

Director

I specialise in dealing with employers and public liability personal injury claims on behalf of both public and private sector clients.