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David Boyle successfully resists Insurer’s appeal against finding that First Defendant was negligent, not fraudulent.

The Court of Appeal has handed down its judgment in the case of Hamid v Khalid & Co-Operative Insurance Society General Insurance Limited [2017] EWCA Civ 201. (Lewison, Henderson LJJ) 31/03/2017.

The Claimant’s case was that, back in January 2013, he had been driving at 20 to 25mph along a narrow road in a snowstorm when the First Defendant emerged from a side road to his left and his car on the nearside, pushing him towards the centre of the road. He called the police to report the accident and was asked as to the accident location. He named one of the two roads correctly, gave the name of an adjoining road and then corrected that to the true accident location.  The Second Defendant, who insured the First Defendant, caused a forensic engineer to opine on the consistency of the damage to the vehicles, and he duly prepared a report concluding that, there being no horizontal marks of note on the Claimant’s vehicle, the Claimant could not have been moving at 20 to 25mph, and would, in fact, have had to have been stationary at the point of impact.  The Second Defendant duly asserted that the case was fraudulent and refused indemnity on the basis that the First Defendant must have colluded with the Claimant to cause damage to his vehicle. The First Defendant claimed against the Second Defendant for a declaration of indemnity pursuant to his policy.

The Claimant, who was claiming significant credit hire charges for a replacement vehicle, obtained an engineer’s report which suggested that there were, in fact, horizontal marks presence on the side of the Claimant’s vehicle, albeit relatively modest ones. The First Defendant, having had indemnity refused, had no funds to secure his own engineering evidence.  The Second Defendant did not disclose any evidence to suggest that the Claimant and the First Defendant (who lived a significant distance apart) had any link in common, but attacked the credibility of both the Claimant and the First Defendant over the course of a 3 day trial. At the end of trial, the judge, Mrs Recorder Howells, considered and, in February 2015, delivered a judgment which roundly rejected the Second Defendant’s contentions that this was a fraudulent accident, and concluded that it was actually a genuine accident where the Claimant and the First Defendant had proved their cases. The First Defendant obtained a declaration that the Second Defendant was liable to indemnify him.

The Second Defendant appealed, asserting that the Judge had got it wrong and had reached a conclusion which no reasonable judge could have reached.  The matter came before the Court of Appeal on 2 March 2017.

In its judgment, handed down on 31 March 2017, the Court of Appeal reiteration the guidance on overturning findings of fact, particularly when an allegation of fraud had been dismissed at first instance and Held that: (1) The judge was not “plainly wrong” (McGraddie v McGraddie [2013] UKSC 58 applied); (2) An acquittal of fraud should only be displaced on the clearest of grounds (Akerhielm v De Mare [1959] AC 789 applied) and this case fell well short; (3) Judge was entitled to reject the Expert evidence (noting that, contrary to the Second Defendant’s assertion in its Skeleton in support of the Appeal, the two experts were not ad idem that no accident could have occurred) in favour of the evidence of the Claimant and First Defendant (Armstrong v First York Limited [2005] EWCA Civ 277 applied); (4) There was an issue of proportionality in play – to allow the appeal would be to order a retrial and another 3 day trial in a claim of modest value. The appeal was dismissed.

Comment:

Motor Fraud litigation has reached industrial levels, and there is now a perception that a strongly worded engineer’s report which denies the possibility of an accident having occurred will defeat the claim.  Judges decide cases, not experts, and there is a real risk that where an engineer formulates robust, uncompromising views without setting out the full range of opinion, not only is his evidence vulnerable, but one can lose sight of the fact that a good report is only ever a tool in litigation, not a determinative factor. The lack of links between the parties was an important point, because it was inconceivable that the Second Defendant had not made those enquiries, and one was left with the evidence of two laymen, both speaking their second language, trying to recall the events of seconds in a snowstorm over 2 years before. The Second Defendant’s position regarding the telephone call was that it was not a genuine call, and had simply been made to record the happening of the alleged ‘accident’ to support the contention that an accident had actually occurred.  The Claimant and the First Defendant, however, suggested that the phone call was clearly genuine – a scripted call would have identified the roads correctly, and certainly would not have corrected the road names as was, in fact, the case.  Ultimately, whilst the Second Defendant relied upon every perceived inconsistency as being evidence of fraud, rather than human error in recall, the Court found that the Claimant and First Defendant were genuine, and assessed damages appropriately.

The Second Defendant appealed, but, as the Court of Appeal made clear, they could only succeed if the judge was “plainly wrong” and that simply was not the case here. Various authorities on the point were quoted, but McGraddie in the Supreme Court is the most recent.  That was particularly true when an allegation of fraud had been made, had failed, and it was the dismissal of the allegation which was being appealed.  Akerhielm is a useful authority on this point.  The third point raised was the Armstrong point. The Second Defendant had conceded this at trial, but asserted that the Court was wrong to dismiss their expert’s opinion. In fact, as the Court of Appeal found, the experts were not as agreed as one might have thought upon reading the Second Defendant’s Skeleton in support of permission to appeal, so that this was not, in fact, an Armstrong case at all – it was a case of the Court preferring one expert to the other. If and only if the experts had been agreed would this have become an Armstrong case, but even if it had, the judge would still have been entitled to find that the accident was genuine.

Interestingly, the Court also made reference to the issue of proportionality.  Had the appeal succeeded, that would have required a retrial rather than a substituted finding, and the Court of Appeal made specific reference to whether it was proportionate to give up another 3 days of Court time to rehearing this appeal.  That is an interesting point, because, on the face of the judgment, the suggestion would appear to be that in deciding whether to allow an appeal, the Court would have regard to the proportionality of the situation. Whether that would prove fatal to an otherwise meritorious appeal remains to be seen.

Note:

The engineers in this case gave evidence concurrently (‘hot-tubbing’).  This was a fair and reasonable approach to the situation because the First Defendant did not have an engineer.  Accordingly, the First Defendant had a chance to address questions to both engineers at the same time so that they could each be asked to explain not only why they thought themselves right, but why they disagreed with the other’s approach.  The effect was the engineer who appeared measured and who made concessions looked far more reasonable than his more rigid opposite number.  

This experience and others are reflected in the relevant chapter of DSB’s first book, On Experts, available from www.lawbriefpublishing.com/onexperts or on Amazon at https://www.amazon.co.uk/Experts-CPR35-Lawyers/dp/1911035118/ref=la_B06XS15561_1_1?s=books&ie=UTF8&qid=1491240880&sr=1-1.


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