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Personal Injury Update: Fraud

Background

Under the current law, a personal injury claimant who fraudulently exaggerates their loss may still recover the legitimate part of the claim. Fraudulent exaggeration may amount to abuse of process, but the Supreme Court held in Summers v Fairclough Homes Ltd that the power to strike out claims at a late stage of the proceedings should be exercised only in “very exceptional circumstances”.

This position has been criticised by both academics and practitioners for failing to do enough to deter fraudsters. In Summers, the court pointed to other measures of deterrence, including adverse finding on costs, possible committal for contempt of court and a risk of criminal proceedings. However, these may not be as effective as forfeiture of the whole claim.

The approach taken in Summers differs from that taken when a policyholder makes a claim under their own insurance policy. Here even a slight exaggeration can lead to forfeiture of the whole claim. It also differs from the law in other jurisdictions: for example, in 2004 the Irish Parliament introduced an express provision (section 26(1) of the Civil Liability and Courts Act 2004) which directs the courts to dismiss fraudulently exaggerated claims, unless “the dismissal of the action would result in injustice being done”.

The Law Commission has invited views on whether it should examine this area, or whether it can be left to the courts. Responses are required by 31 October 2013.

The Law Commission consultation 

For further information please contact Marcus Davies, Professional Support Executive on 0161 603 5146

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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.

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