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Successful contempt proceedings in exaggerated £2 million claim

Surface Systems Ltd v Danny Wykes
Contempt proceedings
High Court
10 February 2014

DWF and its client RSA have successfully brought contempt proceedings against a claimant who exaggerated the nature and extent of the injuries he suffered in an accident at work and who attempted to falsely increase the value of his claim. Tonya Baxter, Director in the Catastrophic Injury & Large Loss team, acted for RSA on what is thought to be one of the highest value personal injury claims to result in such a prosecution and which led to the claimant being sentenced to prison for six months.

Background

Danny Wykes brought civil proceedings against his employer (the applicant), claiming damages for personal injuries and loss suffered as a result of an accident at work in 2009. Liability was admitted but the extent of the claim was contested. Mr Wykes claimed to have sustained an injury to his right arm and that he had gone on to develop severe complex regional pain syndrome (CRPS). He alleged that the CRPS was spreading into his shoulder, would ultimately spread to his other arm and that amputation of the right arm could not be ruled out in the future. The Schedule of Loss was pleaded at over £1.9 million on the basis that he would never work again and would need care for the rest of his life.

Prior to the issue of proceedings, Mr Wykes had been placed under surveillance and footage had been obtained showing him using his right arm normally. He was seen working, carrying double glazing units and a table.  The applicant also obtained medical evidence from a pain management expert and a psychiatrist.  It was alleged that Mr Wykes had grossly exaggerated and misrepresented the extent of his injuries and that the entire claim was contaminated by his dishonesty and should be struck out as an abuse of process. Shortly thereafter his solicitors came off record and the proceedings were discontinued. By this point he had received over £20,000 in interim payments.

The applicant was granted leave to commence contempt proceedings on 25 separate grounds of contempt. Mr Wykes’ response was that his mental capacity was such that he should have had a litigation friend appointed to him during the course of the civil proceedings to consider and sign any documents on his behalf.  Whilst he accepted that he had signed the various statements of truth on the Particulars of Claim, the Schedule of Loss and the witness statement, he claimed that he was unaware of their full content having not read/understood them either properly, or at all, given his mental state at the time and as such he had not appreciated the level of claim that he was putting forward. The court reluctantly granted Mr Wykes leave to obtain a report from a psychiatrist to consider whether he had capacity at the time.  The psychiatrist was of the view that whilst he did have capacity, he should have been accompanied by a litigation friend to all medical examinations.  In the event, he was accompanied on all medical appointments by his mother or his partner.

Contempt proceedings: outcome

On the morning of the contempt trial, Mr Wykes issued a statement confirming that he was not contesting nine of the grounds of contempt. He asserted that he did develop CRPS following his accident and had been entirely truthful when told his expert in September 2010 that he had little or no use of his right hand. However, he conceded that by 2011 he had begun to recover but that he did not tell everyone involved, having erroneously formed the view that he needed to present his condition at its worst. He accepted that his statements were false and that he knew that they were likely to interfere with the course of justice. He alleged that he was suffering from psychiatric problems at the time and he had not been thinking clearly as a result.

The court viewed the surveillance footage and heard submissions from both parties before giving judgment. Sentencing Mr Wykes to an immediate custodial sentence of six months HHJ Robinson made the following comments:

  • As recently as January 2014 Mr Wykes had signed a statement in which he sought to blame events on his mental health and which concluded “I strongly believe that I have done nothing wrong and feel sadly let down by the whole process”. The surveillance evidence had been his undoing.  In his witness statement he acknowledged that he knew that he was being followed and had felt very angry by this. Whilst it was understandable for genuine claimants to feel aggrieved at being placed under surveillance his anger was misplaced and his protestations were ill judged. It was because of people like Mr Wykes that insurers were forced to deploy surveillance operatives.

  • His pleas that he had not read the documents were also misplaced. There were various paragraphs in the witness statement where errors had been corrected, suggesting that he had indeed read it.

  • He had attempted to rely on his psychiatric state as a defence.  In this respect, regard was paid to a passage from a medical report by Dr Neal, consultant psychiatrist, prepared on behalf of the applicant in the civil claim after having reviewed the surveillance footage: 
    In the surveillance he is seen using his right hand normally… this cannot be explained by psychiatric factors…”

  • Any mental health issues were only relevant to sentence and not to the commission of the contempt.

  • The aggravating factors were:

    • He sought to claim nearly £2 million. Whilst his counsel argued that the Schedule of Loss was optimistically drafted and upon calculations and figures that were not put together by him, they were predicated upon the false basis that his right arm was useless.

    • The deception had been extensive: he had sought to deceive seven experts and had made false statements in all documents as reflected in the grounds of committal.

  • There was some genuine mitigation, namely his age, personal circumstances and his previous good character.  A genuine psychiatric issue had developed and it was accepted that he had not initially set out to perpetrate fraud; in the words of his counsel “…he saw an opportunity and he took it”. 

  • When considering sentence, little was to be gained by considering previously decided cases, as each was fact dependant, but consideration was given to the comments of Moses LJ in his High Court judgment in South Wales Fire and Rescue Service v Smith [2011] in imposing an immediate custodial sentence of 6 months. Whilst a suspended sentence had been advocated, an immediate prison sentence was the only appropriate course. This was a deliberate decision to defraud an insurance company and Mr Wykes did not immediately admit his guilt, but those factors were also weighed against the mitigation advanced on his behalf. 

The potential financial consequences of this case were also significant; Mr Wykes was not only liable for the costs of the civil proceedings but he was also ordered to pay the costs of the contempt proceedings on an indemnity basis.

Comment

This case follows a number of well publicised committal cases where immediate custodial sentences have been passed. This was possibly the highest value personal injury contempt case to date, and the sentence reflected the seriousness of the offence, whilst also having regard to the mitigation advanced on behalf of Mr Wykes. 

Those guilty of contempt would be well advised to admit their guilt at an early stage. Whilst Mr Wykes’ counsel had sought credit for the fact that he had admitted his guilt before the trial actually commenced, the judge was not prepared to give any credit beyond the 10% that is standard in criminal proceedings for pleading guilty before the trial begins. Mr Wykes had earlier offered to plead guilty to a limited contempt on the basis that the documents were signed “recklessly”, rather than with actual intent, it was not accepted that he had merely acted recklessly.

This case represents another victory for the insurance industry in the fight against fraud and further demonstrates that a prison sentence is the usual outcome in these cases, regardless of personal circumstances.

We welcome the recent MOJ announcement of a forthcoming change in the law so that where a claim is found to be “fundamentally dishonest”, it will be dismissed in its entirety, rather than dismissing only the dishonest elements of the claim. Although we pleaded in the defence that the claimant’s claim should be struck out for abuse of process, the issue was not tested in court as he discontinued his claim. We were conscious though of the limited opportunity for success following the 2012 Supreme Court decision in Summers v Fairclough Homes Limited.  We are therefore optimistic that claims similar to this one will in future be dismissed once the law is changed.

Contact

For further information, please contact Tonya Baxter Director on 0161 603 5042.

By Tonya Baxter

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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