To be involved in a road traffic accident (RTA) with a stranger once is unfortunate, to be involved in two accidents with the same person is remarkable, but to be involved in three such accidents with the same person over the space of a few months suggests fraud.
In Francis v Wells  EWCA Civ 1350, Mr Tyrone Reeves alleged that he had been one of three passengers in a vehicle being driven by a Miss Wells in Manchester when she drove out from a minor road into the path of a Peugeot being driven by Mr Senghore. Wells's motor insurers discovered that over a period of only a few months Reeves had been involved in two other RTAs involving Senghore.
This prompted the insurers to apply to withdraw an admission made on behalf of Wells and to allege that the claims brought by the passengers claiming to have been in Wells's car were fraudulent, arising out of a conspiracy between them and Senghore.
At trial, notwithstanding a number of inconsistencies in the evidence of the three claimants, the judge found that the allegations of fraud and conspiracy had not been made out and he gave judgment for the claimants.
The Court of Appeal held that even if the judge was correct to have dismissed the allegations of fraud and conspiracy, he had not considered that the claimants still bore the burden of proving in each case that each claimant had been injured by Wells's negligence. The trial judge ought not to have moved straight from the proposition that fraud had not been established to concluding that the claimants' cases were proved. Instead, the various inconsistencies in the accounts and the shortcomings of the claimants' evidence were sufficient for him to have considered if their cases had been proved, even in the absence of fraud. The case was remitted for a re-trial.
In cases where the circumstances surrounding an accident give rise to suspicion of fraud, motor insurers are often faced with a dilemma over whether it is appropriate to allege fraud or whether the circumstances merely give rise to concern.
Allegations of fraud should not be made except where there is a proper evidential basis. The very gravity of the allegation suggests that caution should be exercised, but there are also significant cost considerations associated with pleading fraud. An allegation of fraud may often transform a low-value fast-track case into a more expensive multi-track claim, with a risk of indemnity costs being awarded against a party who has alleged fraud but has subsequently failed to prove the allegation.
In possible fraud cases, in order to comply with the code of conduct, counsel must first be specifically instructed to plead fraud and must be satisfied that there is credible material on the face of which a case for fraud is established before pleading fraud. The very circumstances of the case may be sufficient for such an inference to be drawn so as to justify pleading fraud.
Just because a party has been dishonest in relation to peripheral issues associated with the litigation does not mean that they have been dishonest in relation to a central issue. In Zurich Insurance v Kay  EWHC 2734 (QB), the insurers of a defendant sought to commit the claimant and his witnesses to prison for contempt in respect of an allegedly fraudulent personal injury claim. Mr Justice Turner found that although Mr Kay had been guilty of 'peripheral mendacity', Zurich had not proved to the criminal standard that Kay had lied about where the accident had occurred. >>
Fraud by insinuation
There are many cases, however, where the evidence is insufficient to justify pleading fraud, but the relevant motor insurers still have sufficient concern as to the circumstances of the case to consider that the claim may not be genuine. In such cases it is not permissible to plead fraud by insinuation.
In Hussain v Amin  EWCA Civ 1456, the defence to an RTA claim was conducted on the basis that the accident had been staged in order to generate a claim. Fraud had not been specifically pleaded.
The case came before the Court of Appeal on a costs point. Lord Justice Davies commented: 'It is a case pleaded on insinuation not allegation. If the second defendant considered that it had sufficient material to justify a plea that the claim was based on a collision which was a sham or a fraud, it behoved it properly and in ample time before trial so to plead in clear and unequivocal terms and with proper particulars.'
But if the case falls short of one where fraud can be properly pleaded, what is the concerned defendant to do? There is an alternative. In cases involving impacts between motor vehicles at very low velocity, it is often argued by the negligent party that the other motorist cannot have been injured because the momentum transferred between the vehicles would have been insufficient to cause injury to the occupant of the other vehicle.
Such low-velocity impact cases are still common. Giving guidance, the Court of Appeal in Kearsley v Klarfeld  EWCA Civ 1510 indicated that in such a case it is not necessary to plead fraud; it is sufficient to set out the facts relied upon to prove that the claimant could not have been injured. Such facts might include: the low velocity at impact, the minimal damage to the respective vehicles, the lack of complaint of injury in the aftermath of the accident, and any significant delay in the claimant presenting for medical treatment.
In Ahmed v Lalik  EWHC 651 (QB), Mr Justice Cranston heard an appeal in a case arising out of an alleged RTA. The first defendant's motor insurers had been joined as a party to the proceedings. The evidence was insufficient to justify pleading fraud but instead the facts giving rise to concern about the claim were sufficiently pleaded. The trial judge had dismissed the claimant's case on the grounds that the claimant had failed to prove his case.
On appeal, the claimant relied upon Hussain to suggest that fraud ought to have been alleged, but Cranston J refused to criticise the trial judge because the motor insurer defendant had acted properly in setting out the factual basis which undermined the claimant's case, and the trial judge was entitled to draw inferences from those facts that the claimant had not established the essence of his claim.
Ahmed, it would seem, was a case where the spectre of fraud was lurking in the background, and there is a fine distinction between setting out the facts said fundamentally to undermine a case on the one hand and pleading fraud on the other hand.
Recently, a deputy district judge struck out parts of a defence filed in an RTA case on the grounds that he found there to have been a pleading of fraud by insinuation (see Yasin v Karim, 17 April 2015, Kingston-upon-Hull County Court). On appeal, Judge Richardson QC drew upon Cranston J's judgment in Ahmed and allowed an appeal.
The defence filed on behalf of the relevant motor insurers had specifically stated that fraud was not alleged but raised a series of facts alleged to undermine the claimant's case. These included: the fact that the other party to the accident had vanished; the relevant policy of insurance had been taken out only 11 days before the accident; and the allegedly guilty motorist had been involved in many accidents. He was described by Judge Richardson as 'a gentleman who has a life crowded with incident and mishap'.
Judge Richardson summarised the state of the law as follows: 'If there is clear evidence of fraud, as Davies LJ made it clear, it must be clearly and unequivocally pleaded. Seeking to assert fraud by insinuation is not permitted… If there are detailed facts from which the court would be invited to draw an inference that the claimant has not in fact suffered the injuries or damage alleged, that may be pleaded. In other words, the defence have ammunition which is to be targeted at the claimant to undermine his case, such that he will be unable to prove the accident happened either at all or in the way that it is asserted. If that is the situation that may be pleaded.'
The assertion that the policy of insurance had only been taken out a short time before the accident can only be relevant to the issue of fraud. Either it was an unfortunate coincidence, or the policy was taken out with a view to committing fraud on the policy. If such a fact is set up to undermine the case, then surely the necessary consequence is that fraud should be alleged? Again, the spectre of fraud seems to have hung in the background.
In cases such as those considered above, the drafting of the defence should be carried out with considerable skill, thought, and care. A carefully pleaded defence will lay the foundation for a successful attack on a doubtful claim; a loosely pleaded defence could be struck out with painful costs consequences.