Contempt of court is a serious offence and if someone is found guilty of it, the penalties can be heavy. With the compensation culture gathering speed, insurers and defendant solicitors are increasingly aware of fraudulent and exaggerated claims. The recent case of Kirk v Walton [2008] is a good example of such a claim, and one where the defendant has won the first round. It is an important precedent for both defendants and insurers alike, not least because it shows that the courts are losing patience with dishonest claimants.

Background facts

On 10 August 2004, Joanne Kirk (who was 41 at the time of the accident) was involved in a minor road traffic accident with Carol Walton’s vehicle. It was accepted that Ms Walton had been driving negligently and liability was therefore not disputed. Mrs Kirk sustained injuries from what she described as a “rear end shunt”, which resulted in neck and back pain. Her symptoms were reported to be severe, deteriorating to a point where, in October 2002, she could no longer continue working as an administrator.

In January 2005, Mrs Kirk’s solicitors served their schedule of special damages. The total compensation sought exceeded £800,000, with substantial sums being claimed for past and future loss of earnings and care and assistance. In response, Ms Walton’s representatives made a payment into court in February 2005 of £25,000 and offered to repay the CRU approximately £9,000. This offer was not accepted by the claimant and directions to trial were given.

The medical evidence

Both parties instructed experts in the fields of orthopaedics and rheumatology. Reports were exchanged. Dr McKenna, a consultant physician and rheumatologist, wrote a report on behalf of Mrs Kirk, which concluded that she had developed fibromyalgia and was significantly disabled. The disorder is classified as a chronic, widespread musculoskeletal pain which, although not directly life-threatening, can result in cognitive dysfunction and severely curtail social and recreational activities.

In her witness statement, Mrs Kirk said that she found it difficult to climb stairs; had weaknesses in the hands, wrists, arms, knees, shoulders and elbows, requiring a wheelchair and/or elbow crutches; was unable to drive a manual car; and could not go shopping unaided. She went on to say that “walking around the house is sometimes not possible but other days I can walk around the house at my slower pace.” However, both the consultant physician and the neurologist acting for Ms Walton concluded that the claimant did not suffer from fibromyalgia, and that Mrs Kirk had exaggerated her injuries.

Video surveillance

In an attempt to resolve the discrepancies between the medical reports from the two sides, Ms Walton’s team arranged for video surveillance of Mrs Kirk. The film footage revealed Mrs Kirk continuing in her everyday life without any apparent difficulties. In the light of this evidence, the defendant alleged that various statements made by Mrs Kirk (verified by statements of truth), which dealt with the nature and effect of her injuries and disabilities, were false.

Mrs Kirk failed to respond to that allegation. Consequently, the defendant served Part 18 questions on her, relating to the statements she had made and the contents of the surveillance evidence. Several months later, Mrs Kirk did reply, by which time the defendant’s medical experts had commented on the contents of the surveillance and also provided further reports.

Settlement

In the light of the surveillance evidence, negotiations between the parties began and, in December 2006, Ms Walton offered to settle on the basis that Mrs Kirk accept the payment into court out of time and pay 22 months of the defence costs as from 21 days after payment-in. Mrs Kirk eventually accepted settlement on these terms.

High Court application

In November 2007, approximately five months after the claimant’s action was settled, Ms Walton’s solicitors applied to the High Court for permission to bring proceedings against Mrs Kirk for contempt of court by making false statements without an honest belief in their truth.

The law

The defendant’s application was heard by Mrs Justice Cox. She began by looking at rule 32.14 of the Civil Procedure Rules. This allows proceedings to be brought against someone for contempt of court if they make (or cause to be made) a false statement in a document which is verified by a statement of truth, providing that the statement was made without an honest belief in its truth.

Mrs Justice Cox then went on to consider two previous judgments. The first was Malgar Ltd v Leach [1999], which involved a similar application to the one being made by Ms Walton and was the first of its kind to be made after the Civil Procedure Rules had come into force. Although the application was dismissed on the grounds that it was disproportionate, the court in Malgar ruled that private individuals could bring proceedings where permission was granted by the court.

The second case was Sony Computer Entertainment v Ball [2004], where the court applied the reasoning in Malgar and allowed the application. However, the judge in Sony warned that discretion to permit applications must be exercised by the courts with “extreme caution”.

Court ruling

In Kirk, Mrs Justice Cox explained that she was approaching the application with great caution, adding that for the application to be successful, there had to be a strong prima facie case against Mrs Kirk. After reviewing the evidence – particularly, the results of the video surveillance – Mrs Justice Cox concluded that it was sufficiently contemporaneous, representative and consistent to merit a full investigation. It was also within the public interest to bring such proceedings and Ms Walton’s team had presented enough material to require an answer from the claimant in contempt proceedings. Importantly, Mrs Justice Cox said that the defendant and her insurers would have risked criticism if they had made this contempt of court application before the substantive claim had been concluded. Therefore, there had not been an unreasonable delay in making the application, which was granted.

After Kirk v Walton

Conviction for contempt of court can result in a custodial sentence for both the perpetrator and those who support them. In the case of Caerphilly County Council v Hughes, the claimant was convicted of contempt and sentenced to 14 days in prison, with a costs order against him of £15,000. Interestingly, the witnesses in Hughes were also each fined £1,500, having signed deliberately false statements. Insurers and defendants were further cheered by the fact that, following this claim, personal injury tripping claims in South Wales fell by 25%.

Sometimes, the punishment is less draconian. In the Sony Computer case discussed above, for example, the claimant was fined £2,000 after a custodial sentence was felt inappropriate. However, Mr Justice Blackburne made it clear that a custodial sentence was nevertheless an option in such cases.

Although the High Court in Kirk v Walton has granted the defendant’s application, it remains to be seen where Ms Walton and her insurers go from here, and whether they will ultimately be successful in their action against Mrs Kirk for contempt of court. It is certainly a case that insurance companies and defendant solicitors will follow with great interest. The underlying hope is that such cases will act as a strong deterrent to claimants who are tempted to exaggerate the extent of their disabilities or the factual circumstances of their claims.

For further information on the decision in Kirk v Walton, the full judgment can be found at: www.lawtel.com/content/display.asp?ID= AC0118049&HL=Y&BK=Y&ResultID=23442218