- June 27, 2018
- Posted by: Josiah Hincks Solicitors
- Category: News
Claims handling companies are expected to act with integrity and those that fail to do so can be hit with exemplary damages awards following a landmark Court of Appeal decision in a so-called ‘crash for cash’ case.
The case concerned a claims handling company that had pursued damages claims totalling about £85,000 on behalf of clients who said they had been injured in two road traffic accidents. The fraudulent claims were defeated after a motor insurer discovered that no such accidents had occurred.
After the insurer launched proceedings, a judge ordered the company and its two principals to pay almost £25,000 in compensatory damages, reflecting the costs incurred by the insurer in unravelling the fraud and instructing lawyers. The judge, however, refused to make a punitive award of exemplary damages.
In upholding the insurer’s challenge to the latter ruling, the Court noted that the case had revealed a sophisticated and sustained fraud, involving deceit from the outset, which would have succeeded had it not been for the insurer’s vigilance. The accidents were faked, false documentation had been put forward and the company had sought to cynically manipulate the legal process.
The company, whose premises were discovered to be shuttered and unoccupied, had advertised itself using a scales of justice logo and had throughout falsely presented itself as if it were a firm of solicitors authorised to conduct the proceedings. That, the Court noted, was a criminal offence under Section 14 of the Legal Services Act 2007. In the circumstances it was a paradigm case in which an award of exemplary damages was appropriate. The company and its principals were each ordered to pay exemplary damages of £20,000 in addition to the award for compensatory damages.