So when is it OK to tell a “collateral” lie?

Robin Selley

A collateral lie, what exactly is it? It is an untruth, but one which does not affect the overall validity of the claim made, so said the Supreme Court in a case involved a Dutch cargo ship, which ran into difficulty after its engine room was flooded. The crew falsely said they could not investigate an alarm, because the ship was rolling in heavy seas. However, the accident was caused by bad weather, so this lie was irrelevant, it was ruled.

The judge at first instance found that the lies from the ships crew amounted to a “fraudulent device” and thus invalidated the claim. The Court of Appeal upheld the initial judgement, but that has now been overturned by the Supreme Court who found that it is OK to tell a “collateral” lie on an insurance claim.

In giving Judgment, Lord Mance said: “The critical point is that, in the case of a collateral lie….the insured is trying to obtain no more than the law regards as his entitlement, and the lie is irrelevant to the existence of that entitlement. Such a lie is immaterial to the claim.”

The implications of this ruling could be far reaching, affecting household, travel and motor policy claims.

On the subject of telling “lies” the thorny subject of “fundamental dishonesty” rumbles on. It would seem that Claimant PI practitioners are receiving correspondence from Defendant lawyers on a regular basis where this is raised, even in claims where liability has been conceded. Perhaps Defendants are raising “fundamental dishonesty” as a matter of routine, in the hope of capturing the minority of claims which are deemed to be “fundamental dishonesty”? Cast the net wide in the hope of capturing a dishonest claim. Maybe that approach is justified.

From an ATE insurers’ perspective, Defendants have been reluctant in the past to actively pursue such allegations as they know perfectly well that if such a finding of fraud is made, the Claimant will lose the benefit of ATE cover and the Defendant would be unlikely to recover any costs in any event. Instead, they tend to raise the argument, indirectly.

But disbelieving the Claimant does not mean a claim was fundamentally dishonest. Who says so? His Honour Judge Freedman does!

In the original fast-track trial of Nesham v Sunrich Clothing, the District Judge ruled that on the balance of probabilities the Claimant could not prove that the Defendant had breached the duty of care that was owed to him so the claim failed. QOCS should have applied but the Defendant then sought to accuse the Claimant of being a liar and that he was fundamentally dishonest.

It could be suggested that a losing party in a PI claim must have been lying. Lawyers will often find that parties give varying accounts of how an accident may have occurred. However, HHJ Freedman held on appeal that “merely because an account of an accident has been rejected does not, to my mind, equate to fundamental dishonesty”.

HHJ Freeman added “Up and down the country on a daily basis, judges are being asked to decide whose account of a road traffic accident is more reliable ….And it is the experience of everybody who litigates in this field that drivers involved in an accident will give different and contrary versions of accidents to the extent of not just which lane they were in, but where they came from, the route they had taken and so forth… which may not constitute dishonesty, far less fundamental dishonesty.”

The Defendant was ordered to pay the Claimant’s costs of the appeal! A few more of these sensible decisions and hopefully Defendants will start to pick and choose the cases to run these arguments on with a little more thought. By all means go after those Claimants who grossly falsify and exaggerate their evidence for personal gain, but if a lie has no material effect to the overall validity of the claim made, is it worth pursuing the argument?

Posted in Personal Injury Claims & ATE Insurance

European General Data Protection Regulation (GDPR)

Robin Selley

It seems that big changes to data protection as we know it are on their way to the UK as after several years of preparation and lobbying, the European Parliament has finally adopted the new European General Data Protection Regulation (GDPR) [Directive 95/46/EC].

So what is the GDPR you ask?

Well it will officially replace the basis behind the Data Protection Act 1998 and will become law in all EU member states from May 2018. The GDPR will also affect any businesses who process the personal data of EU citizens, even if they are based outside of the EU.

The document lays out compliance measures that each member state will need to meet before they take over for good in the summer of 2018 but what are the main changes we can expect from the GDPR?

One of the biggest relates to data responsibility as under the GDPR, both Data Controllers and Data Processors will be responsible for protecting their data.

All organisations will be obligated to have a full and firm understanding of what data they acquire, hold and process – and the legal basis for that data. Data protection measures must be integrated into business processes, in order to respect the rights of data subjects.

Most organisations will have to appoint a data protection officer, particularly those which process large amounts of sensitive personal data.

Additionally, the GDPR introduces a new obligation to notify data breaches to the relevant authorities within 72 hours of their first discovery.

At present the Information Commissioner can, in certain circumstances, impose financial penalties of up to £500,000. Under the new rules, non-compliance fines for failures to report breaches will be tiered – with a top tier fine up to a staggering 4 per cent of global annual turnover from late-reporting firms.

Firms may need to increase their privacy, in particular given the cyber-threats that exist at present. Policies and procedures for handling security breaches may need to be reconsidered and updated with all of this completed before the implementation date.

This news comes at a time when a London HIV clinic that leaked data on 781 of its patients has been fined £180,000.

The Information Commissioner’s Office (ICO) said the breach was “likely to have caused substantial distress” to those affected by the leak. Under data protection rules, the breach was deemed as sensitive and the organisation issued such a hefty fine as a result. Under the new regulations, could the fine have been even higher?

Organisations may require a data protection officer if they don’t have one already, and assess how and for what purpose they currently hold and/or process data. It may also be worth starting to review and update existing contracts in respect of parties’ data protection obligations.

Processing personal data is fundamental to the work of a solicitor. The Data Protection Act 1998 (DPA) regulates the processing of information relating to individuals at present. Solicitors should already be well versed with the DPA but the clock is ticking on preparing for the GDPR.

Posted in Personal Injury Claims & ATE Insurance

Hip – Hip – Hypocrisy

Simon Pinner

The budget this week increased IPT from 9.5% to 10%. This latest announcement exposes a deep hypocrisy in government thinking and pronouncements. The best way to spot hypocrisy is normally to ask the right questions, so here are four of them:

  1. The government told us that it was determined to reduce the cost of motor insurance – how does increasing IPT assist this aim?
  1. We are told that this latest 0.5% increase in IPT is to pay for flood prevention. Where therefore has the income gone from the 3.5% increase in IPT which took place only a few months ago? Attempts to link certain taxes to certain expenditure are always popular – of course I wish that all of my tax was spent helping disabled children and that none of it was spent by government quangos. Labelling tax as one thing or the other does not change real spending, it only changes the labels.
  1. We were told that removing the right to claim general damages for whiplash would reduce fraud. It is equally true that abolishing housing benefit would reduce benefit fraud, and that abolishing all types of money would reduce bank robberies but this of course is rather beside the point. Something which is beneficial should only be reduced or removed if the fraud associated with it is at such a level as to cancel out (or at least severely damage) the benefit itself. Are personal injury claims at that level, given that the levels of damages are heavily controlled by the courts and that the number of claims is falling?
  1. We have not heard about “the Compensation Culture” for a while, but this appears to lie at the heart of the government’s antipathy to compensation for personal injuries. The Compensation Culture argument was that legitimate activities (maypole dancing, sports days and charity events etc.) were being inhibited because of a culture of compensation. How will removing the right to claim whiplash in motor accidents fulfil this aim?

Presumably the aim is to allow people the freedom to drive more recklessly?

Posted in Personal Injury Claims & ATE Insurance

Dishonest Deafness Claim Did you Say?

Robin Selley

It has only been a matter of time before an insurer sought to have a deafness claim thrown out on the grounds of  ‘fundamental dishonesty’ and now that has happened.

A claim for hearing loss was made against Diamanttek, a diamond drilling company. The Claimant alleged that they did not enforce the use of PPE before 2013, over a 10 year period of employment.

The Claimant also alleged that no training had been provided about the correct use of hearing protection and that warnings were not given about the dangers of noise exposure.

These are often routine allegations made by Claimant’s in such cases, which are often refuted by way of witness evidence and / or the documents.

The defendant had maintained that the Claimant was supplied with PPE throughout his employment and denied liability.

At the first hearing DDJ Kilbane rejected the claimant’s evidence and dismissed the claim but was not willing to rule the claim was fundamentally dishonest, allowing QOCS to remain in place.

However, the Defendant appealed that decision and on the 8th February Judge Gregory, sitting in Coventry found the claim to have been fundamentally dishonest and granted Allianz permission to recover its costs from the Claimant.

Allianz believe this is a first for a disease claim.

But, will insurers now adopt the same stance when dealing with any employers liability claims where the dispute relates to one of provision of PPE and training in compliance with the various regulations that may apply?

The principles would essentially be the same would they not?

Or is this part of the insurance industries concerted attack on claims for Noise Induced Hearing Loss?

Posted in Personal Injury Claims & ATE Insurance

Blog Post – Part 36 offers and fixed costs?

Robin Selley

The Court of Appeal has given judgment in Broadhurst v Tan and it’s some good news for Claimant’s.

The Issues

The Court heard appeals on two cases (Broadhurst v Tan and Smith v Taylor) as to whether fixed costs should apply when a Claimant beats their own Part 36 offer.

In Broadhurst the judge held that fixed costs continued to apply. Whereas in Smith the judge held that fixed costs were inconsistent and did not apply before awarding the Claimant indemnity costs. So which is the right policy to adopt?

The Result

The Court of Appeal upheld the decision in Smith and allowed the Claimant’s appeal in Broadhurst.


Don’t get too carried away with these decisions.

Essentially, where a claimant makes a successful Part 36 offer in a section IIIA case, fixed costs will be awarded to the last staging point provided by rule 45.29C and Table 6B. The Claimant will then be entitled to costs to be assessed on the indemnity basis in addition from the date that the offer became effective.

The onus remains on the Claimant to make their Part 36 offer as attractive and as early as possible, preferably before proceedings have been issued in order to gain the full benefit of indemnity costs.

Defendants will need to be alive to the fact that the fixed costs will cease to apply if a Claimant beats their own offer. The upshot is that Claimants could obtain a generous result in terms of costs if their Part 36 offers are pitched correctly.

Posted in Personal Injury Claims & ATE Insurance, The Jackson Report & ATE Insurance

Hearts and Minds

Simon Pinner

In 1966, U.S. President Lyndon Johnson instituted a “Hearts and Minds” campaign in Vietnam to try to win the Vietnam war by getting the support of the local population. This was in essence heavy-handed propaganda, and I mention it because the motor insurers of today appear to be taking their lessons directly from that strategy.

It is worth looking at an article on page 4 of The Times last Saturday (13/02/2016). Average motor premiums rose by £100 in the last 4 months of 2015 (a 17% increase equivalent to 68% a year) and the insurers were being asked for an explanation! The ABI was well able to explain:

  1. there had been an IPT increase. Fair enough but of course they forgot to mention that this was only a 3.5% increase, so to plug the gap they said:
  2. the rise was due to “a fresh campaign by unscrupulous companies trying to encourage dishonest whiplash claims”.

The explanation is of course so ludicrous that it beggars belief, and under normal circumstances would give rise to howls of derision. Claimant solicitors had put through such a sudden and massive barrage of fraudulent claims over a four-month period that it had radically skewed the nation’s motor insurance premiums. The heavy-handed Hearts and Minds campaign which the ABI has carried out however has meant that they can be reasonably confident of getting away with giving any explanation however impossible it may be.

Solicitors and other pressure groups in the personal injury industry really need to give widespread publication to these sort of comments, and the fact that they are routinely published even in papers like The Times shows how effective the motor insurers’ strategy has been to date.

It is also an indictment of the government that it has allowed and encouraged such a one-sided debate to continue.

Posted in After The Event Insurance, CFAs & ATE Insurance, Claimant Solicitors & ATE Cover, General Posts about ATE Insurance, Personal Injury Claims & ATE Insurance, RTAs & After The Event Insurance, The Jackson Report & ATE Insurance

Proposed Change to the Small Claim Limit Foiled? Probably not yet

Jon Gouldsmith

The Forum of Insurance Lawyers this week announced that they will be opposing the Government’s planned increase to the small claims limit to £5,000 and to remove general damages for minor soft tissue injuries.

They announced that they are ‘regrettably’ unable to support the AIB on this issue, saying ‘It is unfortunate that there has not been a willingness on the part of the government to wait until the effects of recent reforms have come to fruition before proposing further change’.

Very sensible I hear you say, but wait there was more….

‘What’s needed is a well thought through package of measures to bring about the government’s objectives’.

Those measures, as suggested by FOIL members, include:

  • Online access to justice for claimants (through the portal or by way of a new online process), which should make allowances for people with limited access to technology
  • Better regulation of Case Management Companies
  • A process allowing claimants to value their own claims

So although a small cheer may have been raised by claimant representatives reading the headlines this week, I suspect they were soon silenced when looking more closely at the detail.

FOIL’s suggested approach is clearly an attempt to cut out claimant solicitors from the process of making a personal injury claim, who they no doubt feel get in the way of reaching a quick settlement with the average injured victim.

Making a personal injury claim is a technical process and will preclude the average person from bringing a claim themselves even if the small claims limit is increased. A medical report must be sourced from an appropriate expert and the damages, both special and general, must then be assessed on the basis of the report. This is a specialised skill even in a claim for minor injuries/damage.

This is, in my opinion, why it is in fact quite unlikely that there will be the huge rise of litigants in person forecast by some commentators.

But there is an easy solution suggest FOIL. Why not create a simple online claims process (no doubt funded by the AIB) where medical experts (no doubt funded by the AIB) can be found and reports arranged, with a snazzy little online valuation calculator that can then tell you how much your claim is worth. In fact most defendant insurers have such a system, Colossus, why not use that?

I will not insult your intelligence by suggesting what this would do to the average level of compensation that victims would be paid, without the assistance of an expert with experience of negotiating settlements with defendant insurers and with the appropriate knowledge of the actual, not threatened, risks of rejecting an offer.

FOIL do make a valid point about using the small claims limit to reduce perceived high levels of fraudulent claims, which they think will do nothing. That must be correct. What will the average fraudster care if their case is now a small claim, indeed would they not prefer that the court has less resources to hear live evidence under cross examination? This could simply be playing into the fraudsters hands.

But I think claimant lawyers must treat FOIL’s entrance into the debate with some care, it looks like it might be a double edged sword.

Posted in After The Event Insurance, Personal Injury Claims & ATE Insurance

Court Fees Rise

Robin Selley

It is the time of year when we recall a story first written many hundred years ago. No, not that one but 800 years on from the Magna Carta it is worth once again reciting the words of Clause 40, best known for the following quote;

To no one will we sell, to no one will we deny, or delay right or justice.’

Move forward to the present day and we find that the right of access to justice is once again being eroded by the government as they plan to press ahead with a 10% increase in court fees across the range of civil proceedings.

Although the government has accepted that it was “too soon” to understand the full impact of the first round of fee increases from March 2015, the MoJ has said that it did not accept the argument that the 10% general uplift was unjustified and unnecessary, given the stated £1bn funding gap in the justice system.

The justice minister Shailesh Vara has said that fees will rise across a range of civil proceedings, including enforcement proceedings, determination of costs proceedings and civil business in magistrates’ courts, claiming to have “sought to protect the vulnerable at every stage” whilst asking “for a greater contribution from court users who can afford to pay more”, such as the sick and injured, or those who have unfairly lost their jobs.

So are we in danger of having a two tier justice system as the Law Society suggest or are these fees necessary to reduce the burden of the courts and tribunals on the taxpayer?

Access to Justice remains vulnerable to continuing onslaughts by those who detest and fear it, but survive it does.

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Our ATE Insurance has one of the lowest single, fixed ATE Insurance premiums on offer, combined with a generous indemnity limit which ensures full cover of risk including court fees and the security of knowing that the ATE Insurance premium is good value for your client.

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Posted in ATE Insurance Practice & Procedure

CMCs, Claimants and Insurers

Robin Selley

The Government had planned to undertake ‘a fundamental review of the regulation of claims management companies (CMCs)’ starting early in 2016. The review will include proposals for the introduction of a cap on the charges that CMCs can apply to their customers, and will consult on how this will work in practice. What impact could the review have on CMC’s, claimants and insurers? It is yet to be seen if this review will indeed go ahead given more recent developments.

Regulation of claims management companies has continued to evolve since the introduction of the Compensation Act 2006. Now the Legal Ombudsman’s remit enables it to consider complaints from customers about the services provided by regulated CMCs, leaving the Claims Management Regulation Unit (CMR Unit) at the MoJ to deal with regulation of the industry.

This increased level of regulation has very recently shown its teeth with the first penalty issued under new powers allowing regulators to fine a CMC specialising in finding NIHL cases £220,000 after hundreds of complaints were made about speculative calling. The Regulator had also fined a CMC almost £570,000 for high-pressure tactics to get customers to make PPI claims. Just this week the Regulator has fined another CMC specialising in finding NIHL cases £850,000 for making nearly 6m nuisance calls in only seven months.

Now, we do not seek to defend those who make these nuisance calls in any way but since when have “nuisance calls” been worth more than taking someone’s life? Compare the fines above with some reported fines in October 2015 for breaches of Health & Safety rules which resulted in loss of life.

  • Rettenmaier UK Manufacturing Limited were fined £200,000 with costs for an employee’s death.
  • Two global companies were fined £275,000 and £375,000 respectively with costs in addition, after a worker was killed and another seriously injured.

There is a real drive from some to stamp out CMC’s altogether. Many smaller firms rely upon them for work. They do not have the large budgets of the bigger firms, but to saturate daytime TV with adverts, does this not also add to the perceived compensation culture?

Insurance companies complained bitterly about referral fees at the same time as being the biggest recipients of them.

Law firms will continue to pay for marketing services. Many of them are simply not geared up to do this for themselves and certainly since the introduction of CMC’s. But what choice do they have?

If fees are capped, will this limit the amount some law firms can spend on marketing? Will more CMC’s then be brought “in house” and operate directly under a law firm, as many do now in any event? Perhaps this will be even more acute if the Small Claims limit does go up, as has now been stated by the Chancellor, but that is another enormous story in itself.

There are huge blurred lines between what are nuisance or cold calls and Non Opt in / TPS data/calls. As per usual the few ruin it for the many. Not all CMCs are the same. The reality is that law firms and CMC’s will adapt, as they did following the ban on referral fees. Some will thrive whilst others will fall by the way side. But will anything actually change for Claimants?

Posted in After The Event Insurance, Personal Injury Claims & ATE Insurance

Shock Small Claims Limit Increase

Simon Pinner

The government has today made a surprise attack on personal injury claims as part of George Osborne’s spending review. The Small Claims Limit for personal injury claims is to be increased from £1,000 to £5,000, and compensation for whiplash claims will be curtailed.

The increase in the small claims limit flies in the face of the government’s relatively recent decision not to do so. In 2013 there was wide scale consultation on various personal injury issues, the upshot of which was that the transport select committee and the Ministry Of Justice recommended that the small claims limit should remain unchanged at £1,000. Since then, there has been no real warning that this issue was to be revisited and that there might be an imminent announcement on the subject. If the Small Claims Limit was to be increased then an increase to £5,000 was previously regarded as being at the extreme end of the scale.

This change would of course see claimants unable to recover their solicitors’ costs in an area where it is extremely unlikely that litigants in person would be able to pursue their own claims, with the result that after deduction of their solicitor’s costs, claimants will end up receiving a much lower percentage of their damages.

Still worse, the government has said that it intends to introduce measures to end the right to general damages for minor whiplash injuries, and will consult on the detail in the new year. It is believed to favour reimbursement of expenses and the cost of rehabilitation but to limit claims for general damages possibly by barring claimants who have not obtained medical treatment within say 14 days of the accident.

It appears that the government has taken advantage of a distant general election and an extremely weak opposition to push through most of the items on every motor insurer’s wish list. Christmas has come early for them, but sadly not for people who are injured through no fault of their own.

Posted in After The Event Insurance
Welcome to the After The Event Insurance Blog
This blog is produced by Box Legal Limited, providers of After The Event Insurance to the legal profession. Our aim is to provide news, advice and guidance on all issues around ATE Insurance and making personal injury claims. We welcome your comments and questions both on the blog and by contacting us direct on 0870 766 9997 or by emailing