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Court can deprive woman who lied of costs

15 December 2009

A woman who lied in court during a car insurance fraud trial cannot recover more than a third of her costs, the Court of Appeal has ruled.

Giving judgment in Sulaman v AXA and Direct Line [2009] EWCA Civ 1331, Lord Justice Longmore said that Sulaman had lied twice during a long and expensive civil trial involving five other defendants, at the end of which her costs stood at £450,000.

Longmore LJ said the costs appeal arose from a fraud practised on AXA and other insurers by people who insured genuine cars against third party fire and theft.

“An initial instalment premium was paid and a direct debit system set up but soon after the inception of the insurance, the fraudsters claimed that the car had been involved in an accident for which the owner was to blame,” he said.

“There was therefore an innocent (but usually fictitious) victim who had a claim which was bound to succeed against the driver, who was himself sometimes fictitious and sometimes genuine but unaware that proceedings were to be taken against him.

“Claims for repairs, hire charges and such like would be made by a claims management firm and those claims would be paid by the insurers to the claims management firm or as that firm directed. Considerable sums thus found their way into the pockets of the fraudsters.”

Longmore LJ said that, unlike the others, Sulaman was not found to have participated in a common design to defraud insurers. She had also made a part 36 offer of £7,600 plus costs in 2007, to which the defendants did not reply.

However, he said the judge only awarded her only one third of her costs because “he was satisfied that she had lied to him in two respects in her evidence to the court”.

Longmore LJ went on: “This court is always in a difficult and, indeed, invidious position when an appeal is made on costs after a lengthy trial.”

He said the trial was spread over three months and the judge took two months to consider his judgment.

“In spite of all the help counsel gave us we cannot begin to have the same feel for the case as the judge and before we interfere we must be satisfied that something has gone very seriously wrong,” he said. “That is a high hurdle for any appellant to surmount.

“For my part I am most reluctant to accede to any submission that a decision on costs after a long trial is insufficiently reasoned.”

Longmore LJ said that in the light of the lies, the judge was entitled to deprive Sulaman of some of her costs; the only question was how much.

He said that lies maintained and repeated in complex cases were “insidious”, and it was incontrovertible that they had made the litigation more difficult and the judge’s task more intractable.

Lord Justice Longmore cited Widlake v BAA [2009] EWCA Civ 1256 (see Solicitors Journal 1 December 2009) where, on different facts, a claimant was deprived of all her costs, even though she beat a payment-in.

Lord Justice Aitkens agreed that the appeal should be dismissed.

However, Sedley LJ said he thought it was “disproportionate” to deprive the appellant of two thirds of her costs.

“The reduction was on the face of it considerably greater than was warranted by the two untruths, told under pressure of events, including a confusing mistake made by Axa’s lawyers, and of a misplaced sense of family loyalty (or possibly fear),” Longmore said.

“The judge was entitled to hold these nevertheless against Ms Sulaman. But they had not appreciably prolonged the trial – certainly not to an extent commensurate with the reduction.”

Gurvir Birang, director of West London Law in Boston Manor, acted for Sulaman. “A decision like this restricts access to justice because certainty goes out of the window,” he said.

“If you do all that work and win, and don’t get your costs, it will have a serious impact on whether you do legal aid or conditional fee work.”

Birang added that there was already a shortage of practitioners prepared to do complex civil litigation cases for legal aid rates.

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Financial services & Tax Costs Agricultural Local government