Mr Kelly had been involved in a road traffic accident with a driver who was insured by Churchill Car insurance. Liability was admitted and Churchill paid £1,500 to repair Mr Kelly’s vehicle.

The Claimant ambitiously claimed various additional losses including claims for the deterioration in value of his vehicle, loss of use, the cost of a replacement vehicle, loss of earnings, general damages and miscellaneous out of pocket expenses. He eventually recovered just a small fraction of what he had sought namely £1,000 for general damages, £800 for inconvenience and £1,000 for lost earnings because he provided a letter which said that he had lost his job as a result of the accident.

Following the judgement, the insurers carried out further investigations. It transpired that, rather than losing his job as a result of the accident, Mr Kelly had actually been dismissed for the theft of a tax disc. The letter presented by Mr Kelly at the assessment of damages hearing had been a forgery.

In the light of this new evidence Churchill appealed the judgement. Relying on obiter comments in Molloy v Shell UK Limited, Churchill argued that the fraud and forgery involved were on such a scale that Mr Kelly should be entitled to nothing.

The Judge was not prepared to depart from the basic principle that the Claimant should be entitled to recover those heads of loss that were indisputably made out. Whilst he set aside the award for lost earnings and the claims for general damages and inconvenience (which were based solely on the Claimant’s own reporting of those symptoms), the Judge was not prepared to disallow the costs of repair. Whilst the Claimant’s conduct had been reprehensible, the repair costs arose directly from the negligence of the other driver and were recoverable.

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Comment

Whilst the approach suggested by the Defendant insurers seems attractive as it would act as a strong disincentive to fraudulent claims, it failed because the Judge felt that in practice it would cause many difficulties. In particular one can foresee difficulties drawing the line between heads of loss that are contended for but which are ultimately not made out and those that are considered to have been made fraudulently. For further information about exaggerated and fraudulent claims, click here to link to “Phoney Baloney” by Hélène Russell (Claims Online – August 2007).

Provisional Damages – Risk of a poor outcome from surgery did not amount to a serious deterioration in condition

In Garth v Lloyd Grant and the Motor Insurers’ Bureau the Claimant was a passenger in a taxi which was involved in a collision with an uninsured driver. She suffered multiple injuries including a severe fracture of her pelvis. She was left with considerable disability and could only walk for short distances using a crutch.

It was open for the Claimant to have a hip operation that would lengthen her leg and improve her ability to walk. However there were risks associated with surgery. In particular there was a risk of sciatic nerve palsy which would cause her to develop a dropped foot and a risk of infection around the site of the prosthesis.

Overall there was about a 20% chance following surgery that the Claimant would be in the same position as she was now, if not worse. However there was an 80% chance that she would enjoy much better mobility and that her quality of life would be significantly improved.

To receive a provisional award the requirements of Section 32A of the Supreme Court Act had to be made out and the Claimant had to show that she would either: -

		develop a serious disease; or
		suffer a serious deterioration in her condition.

The Claimant argued that in view of the risks associated with surgery, she should be entitled to a provisional award of damages. She argued that if she either developed a palsy or suffered an infection, she would be functionally worse off which would amount to a serious deterioration in her condition entitling her to a provisional award.

The Judge considered that to award provisional damages in these circumstances would be a step too far. On the particular facts, should either risk occur the overall effect on the Claimant would amount to a failure to improve her condition in the way hoped for rather than a serious deterioration.

Comment

Those advising Defendants seem to face an increasing number of claims in which provisional damages are sought which can cause reserving difficulties. Some Claimants’ advisors even raise provisional damages for tactical reasons, as a bargaining tool to assist in negotiations.

In Garth the Judge was keen to stress that provisional awards remained the exception rather than the rule. He considered that the principle of finality overrode the fact that there was likely to be some over and under-compensation dependent upon whether or not risks materialised.

This is a useful case to help rebut claims for provisional awards arising from the risks of future surgery, although there are no “hard and fast” rules. Whilst in this case the Judge felt that if the risks from surgery occurred they would not amount to a serious deterioration, any other decision would turn on the particular facts.