Insurer not entitled to hold back evidence of potential PI fraud

Facebook: Insurer should have disclosed evidence

An insurer was not entitled to hold back evidence that a claimant was a friend of the owner of the vehicle he collided with, hoping the claimant would lie about it in his witness statement, the High Court has held.

Mr Justice Johnson said that, when pleading fraud, a party must “set out the facts on which it relies, including the facts which show that the representation was false”.

Johnson J said AXA Insurance UK intended “from the outset” to rely on evidence that the owner of the claimant’s car and the defendant’s van were Facebook friends.

The “only reason for withholding the evidence until after the exchange of witness statements” was in the hope that the claimant, Fatjohn Kryeziu, would be caught out in a lie in his statement.”

Johnson J said AXA accepted that “it should have been disclosed and does not suggest it was covered by privilege”; it had made a “deliberate decision to act in breach of a court order and the rules”.

The High Court heard that Mr Kryeziu alleged that in October 2018 Louis Fraser drove a white van from a side road into his car in Ilford, East London. He made a personal injury claim, as did the four passengers in the, car and AXA paid out damages of £44,214.

The insurer subsequently decided there had been no genuine accident and the claims were fraudulent, and brought proceedings in deceit and conspiracy.

After the respondents had committed themselves to an account in their witness statements. AXA sought permission to amend its case.

AXA settled its claim against the four passengers in Mr Kryeziu’s car in November 2022. They agreed to make payments to AXA, but without any admission of liability.

His Honour Judge Lethem refused AXA permission to amend, declared that the insurer was estopped from seeking adverse findings against passengers, and struck out the claim. AXA appealed against each of these orders.

Johnson J said that, when a party alleged fraud, it must “set out the facts on which it relies, including the facts which show that the representation was false” – it did not need to know the “true underlying factual position”.

Here, AXA could show that Mr Kryeziu and Mr Fraser were Facebook friends. This document fell within the ambit of standard disclosure, which AXA had been ordered by a judge to provide.

The insurer accepted that by not disclosing it, it had “knowingly and deliberately breached the court’s order” but gave three justifications, each of which Johnson J rejected, including an argument that the courts permitted late disclosure of surveillance evidence, which AXA argued was “analogous”.

Johnson J said this did not necessarily mean that AXA had to disclose its evidence before Mr Kryeziu committed himself to an account of events.

The insurer could have asked him for information on whether he knew Mr Fraser without setting out the evidence on which it relied, or asked the court to order a different form of disclosure.

However, Johnson J found flaws in the underlying assumptions on which HHJ Lethem exercised his discretion to refuse the amendments and granted AXA permission to amend its claim.

This included allowing the Facebook evidence – “it is difficult to see why that will cause any significant evidential prejudice” – but marking disapproval of AXA’s conduct by refusing it permission to claim exemplary damages and forecasting “significant costs sanctions”.

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