Nield and Acromas Insurance Company Ltd v Loveday and Loveday 13.07.11

Claimant exaggerated his claim and signed statements of truth on documents containing false information. On 1 April 2006, the First Defendant, Mr Loveday was injured in a road traffic accident. He brought county court proceedings against the First Claimant, Mr Nield, who was the driver of the other car. Following surveillance evidence, the claim was settled for £1,850 plus costs, although these sums were ordered to be set off against Mr Loveday’s liability for costs, his having rejected an earlier offer.

It was alleged that Mr Loveday had inflated his claim by grossly exaggerating the extent of his injuries. His particulars of claim, a schedule of loss and his witness statement contained statements of truth verifying his injuries, and it was claimed that he did not have an honest belief in their truth. For example, he claimed that he had travelled to Italy with huge physical difficulties by air from the UK, when in fact he drove a Land Rover and caravan by road all the way to Lake Garda. Mr Loveday’s case was that he did not know what he was purporting to verify, as he verified the documents either without reading them or without reading them sufficiently. His wife, the Second Defendant, was said to have assisted him by making an untruthful statement of her own. Prior to the hearing she admitted contempt of court.

Held

The case was heard by Sir Anthony May and Mr Justice Keith sitting in the Divisional Court. Keith J confirmed that to succeed in a claim for contempt, it is necessary to show that, in addition to knowing that what you were saying was false, you knew that it was likely to interfere with the course of justice. The standard of proof is proof beyond reasonable doubt. He carried out a detailed review of the evidence, including psychiatric evidence in relation to Mr Loveday’s state of mind.

Keith J concluded that, when Mr Loveday signed the statements of truth, he did not have an honest belief in the truth of a number of false assertions. It must follow that he knew that, by doing so, he was likely to interfere with the course of justice. He was therefore guilty of contempt of court. Sir Anthony May imposed a sentence on Mr Loveday of nine months imprisonment and on Mrs Loveday of six months imprisonment, suspended for 18 months. Costs orders were made against Mr and Mrs Loveday.

Comment

In a case heard earlier this year by the Divisional Court, South Wales Fire and Rescue v Smith [10.05.11], Lord Justice Moses stated:

"Those who make such false claims if caught should expect to go to prison. There is no other way to underline the gravity of the conduct. There is no other way to deter those who may be tempted to make such claims, and there is no other way to improve the administration of justice."

In that case, there was a period of four years between the contempt and the hearing, and the Court did not consider that an immediate prison sentence could, in those circumstances, be imposed. Moses LJ emphasised that it is vital that these cases are dealt with urgency and speed, so that the all-important message of deterrence can be underlined.

More recently in Lane v Shah [05.10.11], the dishonest Claimant (Mrs Shah) and her family were sentenced by the Divisional Court to prison for contempt of court in proceedings, which also concerned injuries suffered in a motor accident.

If properly publicised these decisions should be a formidable deterrent to those who might be tempted to tell lies in the course of court proceedings. The decisions highlight the need for insurers and their advisors to scrutinise carefully all material in relation to suspicious claims. Insurers should take comfort from the judiciary's apparently sympathetic stance, and recognition that the dishonest pursuit of litigation impacts detrimentally on society.