Despite the efforts of many in the Claimant lobby, the Civil Liability Act was the headline act last year in the fight against fraud. The Bill advances the Government’s reform package in respect of whiplash claims following road traffic accidents, which is expected to be concluded by early 2020.
Star billing was given to a new definition of 'whiplash injury’ allowing for the introduction of a tariff system for those injuries. The tariff system will significantly reduce damages awarded for those injuries.
The supporting cast of the reform package includes the creation of a new portal to handle expected increased numbers of litigants-in-person and changes to the small claims track limits for RTA personal injury claims to £5,000 and EL / PL claims to £2,000. The change to the small claims track is expected to result in the aforementioned increased numbers of litigants-in-person, as solicitors no longer find it profitable to handle these claims with only small claims costs payable.
The impact on access to justice formed part of the criticism from the Justice Committee on the reforms. However, during debates within the House of Commons, the Government made clear that the reforms are squarely aimed at those claims, which had left England and Wales typecast "as a haven of unnecessary whiplash claims."
Strong performances have also been seen in the dismissal of claims for fundamental dishonesty - by utilising the section 57 procedure under the Criminal Justice and Courts Act, which fights a form of fraud which has gone relatively unpunished in the past; the exaggerated increase of a valid claim in order to obtain additional damages.
The decision in LOCOG v Sinfield  EWHC 51 (QB) provided significant guidance for what conduct constitutes fundamental dishonesty under section 57. Mr Justice Knowles found that provided the head of loss exaggerated is substantial, or substantially effects the presentation of the claim, then the dishonesty is fundamental and the whole claim will be dismissed. In LOCOG, the false gardening claim represented 28% of the overall pleaded value or 42% of special damages.
Our fraud team have enjoyed significant success over the past year in dealing with fundamentally dishonest claims of this nature. The matter of Kona v Servast was a landmark decision, the first time a claim had been dismissed pursuant to Section 57 before a final hearing and without oral evidence from the Claimant.
Clyde & Co also obtained the single highest reported award of exemplary damages against third parties in a motor fraud case. Whilst financial punishment is damaging, a custodial sentence is the greatest deterrent to fraud, and we have had recent success in applying for committal for contempt of court of claimants who have staged accidents.
In Scotland, whilst similar provisions to those in section 57 did not make their way into the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act despite extensive discussions, the Scottish Courts have also considered the issue of fundamental dishonesty in the matter of Grubb v Finlay.
The Lord Ordinary confirmed that fundamental dishonesty on the part of the pursuer can result in the summary dismissal of a claim in Scotland, yet the Court of Session did not define what actions constitute such fundamental dishonesty. In the absence of an authoritative judgment on what constitutes fundamental dishonesty, we remain of the view that the Scottish Government will need to consider the implementation of legislation similar to that of section 57.
From a legislative perspective in Scotland, the introduction of some measures within the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act did cause concern about unintended consequences.
The introduction of damages based agreements into Scotland were felt to have the potential to create a compensation culture in Scotland, similar to that the Civil Liability Act aims to curb in England and Wales.
Similarly the introduction of QOCS also raised questions about fraudulent claims and adequate safeguards against them. Some of those safeguards were already contained in the Act in the form of exceptions such as fraud, unreasonable behaviour and abuses of process.
Additional measures were also advanced to create further balance, including a ban on referral fees and a reduction of claimant costs in low-value claims. These measures may be discussed as part of an ongoing legal services review in Scotland.
As raised within the discussions in Scotland, and often the villain of the piece when fraud is addressed, claims management companies will now find themselves under the critical gaze of the Financial Conduct Authority.
The regulation of CMCs across the UK was transferred to the FCA by the Financial Guidance and Claims Act. The move was broadly welcomed as part of efforts to minimise the role of unscrupulous operators. These operators will be of concern in light of the whiplash reforms, where they may look to fill the gaps left by solicitors. It is hoped FCA oversight will force unscrupulous CMCs from the market, alongside the increased restrictions on cold calling.
Whilst the show will go on until 2020, the curtain is likely to soon fall on whiplash claims in their guise, along with the profitability which many have benefited from.