A little over a year ago the Criminal Justice and Courts Act 2015 came into force. Section 57 of that statute provided insurers and their solicitors with a further weapon in their armoury and that is to make applications to court to have the entirety of injury claims struck after on the grounds of fundamental dishonesty.
In a blog at the time, I questioned at the time the extent to which insurers would use this legislation and whether it would fuel the view that many lawyers who represent injured victims already have; that insurers view all claims that come their way with suspicion. At that time, a leading insurance solicitor denied that was the case. He assured a room full of predominantly claimant lawyers that the legislation would not be used lightly. I wrote at the time that this led to a vast number of raised eyebrows in the audience.
We are a year on, so to what extent has the insurance industry used this provision and has it really taken a hold? Have insurers and their solicitors taken a sensible view of the legislation or have the battle lines been drawn? It is universally accepted that fundamentally dishonest claims should not succeed, but are plans afoot in the insurance industry for more widespread use of the statutory provision? Is there a risk that in doing so genuinely injured people could lose out? The first reported case and commentary on it suggests a more widespread use of the legislation is coming.
Hughes, Kindon and Jones v KGM was heard on appeal on 1 April 2016 at Taunton County Court and is believed to be the first reported case in which Section 57 has been relied upon by an insurer. The three claimants contended they had all suffered from injuries for a period of 12 months as a consequence of an accident. At first instance, the Deputy District Judge dismissed one claim for lack of evidence and found for the remaining two claimants that it was more likely that they had suffered from injuries for approximately 2 weeks only. He awarded them each £750 damages. The insurers were advised to appeal calling on arguments of fundamental dishonesty under Section 57, alleging that the claimants had deliberately misled a medical expert at assessments six weeks after the accident when they had said that their symptoms continued. On appeal, the Court struck out the claims on the grounds of fundamental dishonesty and ordered the claimants to pay costs. On the facts, this was the right decision but it appears to have been followed closely by the insurance industry, possibly as a test case for the wider use of Section 57.
The post case commentary gives some indication of the possible future approach of insurers Some defendant solicitors have hailed it as a ”landmark” case and Ronan McCann a partner at Horwich Farrelly (the firm instructed by the defending insurer) wrote on the firm’s website:-
“… As well as being an excellent outcome for our client, KGM, and our London office, this is a very important result for the insurance industry as a whole. We were able to successfully utilise section 57 CJCA 2015 to our advantage to have the claims struck out and come away with an enforceable costs order. Whilst we’re expecting to see the “substantial injustice” clause of CJCA 2015 tested in the coming months, this result sends a clear message that we will use the full range of tools at our disposal to tackle dishonest claims."
Mr McCann is right in stating that dishonest claims should not succeed but how far will insurers take this? Will insurers use this case as a precedent and seek to widen the principle through an increasing number of Section 57 applications? The implication from Mr McCann and other commentators is that this may happen. Those representing genuinely injured victims must be alive to this.
Whilst the provisions of Section 57 have their place and it is right that fundamentally dishonest claims should be defeated, it is important that those representing injured people are aware of the risk of an increasing number of applications and are not afraid to vigorously defend any application which has been spuriously made. It is hoped that notwithstanding this case, the insurance industry as a whole will heed the view taken by one of their appointed solicitors and not use the legislation lightly. In the meantime, the eyebrows remain raised. Only time will tell.