Oriakhel v Vickers – conspirator in fraudulent insurance claim

[2008] EWCA Civ 748

Mr Khan was involved in setting up a fraudulent road accident claim by the claimant against the first defendant, Mr Vickers, and gave evidence to support the claimant at trial. Mr Vickers, also alleged to be involved in the fraud, failed to attend. The second defendant, Mr Vickers’ insurer, contended that the claim was bogus and applied to be joined to the action so as to allege a conspiracy to defraud, counterclaiming back sums it had paid to the claimant and the costs of the investigation. It did not join Mr Khan as a defendant to the proceedings and did not give him notice before the close of the evidence at trial that it would be claiming costs against him. The judge below refused to make a non-party costs order under s51 Supreme Court Act 1980 because Mr Khan had not funded or controlled the litigation.

The Court of Appeal, whilst holding that there was jurisdiction to make such an order, dismissed the appeal. The insurer could have joined Mr Khan as a party to the action which would have given him the protection conferred by the rules and enabled him to take legal advice about his position. At the least, the insurer should have warned Mr Khan at an earlier stage that costs might be sought against him which would have given him an opportunity to apply to be joined as a party.

Comment: the outcome in this case is not surprising given that the insurer is still free to sue Mr Khan for his part in the dishonest conspiracy and recover damages and costs via that route if it chooses to do so. The case is of interest because it confirms the fact it is not a requirement of a s51 order that the non-party funded or controlled the litigation. It also raises the question of witness immunity. Would an award of costs against a non-party witness on the basis of what he said in evidence infringe the principle that a witness cannot be sued in respect of a cause of action derived from his evidence? Arden LJ found that it would but left the precise ambit of the witness immunity rule in this context open for consideration in another case

She went on to consider the limits of this principle. It would not prevent a witness from being liable for damages if he had been a party to a conspiracy to defraud another person by some means outside the scope of the immunity. So, for example, if the witness had fabricated evidence by creating a false invoice to support a claim under an insurance policy, the witness immunity rule would not apply to preclude such a claim. In the present case, the ambit of the alleged conspiracy had not yet been pleaded since Mr Khan was not a party to the action and there was a lack of clarity about the precise conduct by Mr Khan relied upon by the insurer. Separate proceedings were necessary to deal properly with these issues.