ISSUE 54 EWJ web - Journal - Page 78
“Cards on the Table” for Claimants
Who Suspect Fraud – No Exceptions
by Nikolas Ireland, Partner and Madeleine Brown, Senior Knowledge Lawyer at
Macfarlanes LLP
When a claimant pleads fraud, particular rules are
applicable to make sure they clearly set out their case.
The court has recently considered how those rules
apply where a claimant tactically holds back a piece of
evidence in the early stages in the hope of catching
out a defendant when he commits to an untrue account in his witness evidence. The court confirmed
that there is no exception to the requirement fully to
set out the allegations and evidence relied on, even
where the other side is suspected of fraud.
1. comply with the general requirement in the Civil
Procedure Rules that particulars of claim must include
a concise statement of the facts on which they rely;
2. where they allege dishonesty, concisely set out the
facts on which they rely to substantiate that allegation;
3. comply with the requirements for pleading fraud
in in the King’s Bench Guide, Commercial Court
Guide or Chancery Guide as applicable. Each is
broadly similar and in general terms requires that allegations of fraud must be particularised, meaning the
relevant allegations must be set out, and which may
mean listing the facts from which the court is asked to
infer dishonesty.
What happened?
In AXA Insurance UK PLC v Kryeziu and others[1], the
claimant insurer held back evidence that two parties to
a road traffic accident were “friends” on Facebook.
The claimant had come to believe that in fact there
had been no genuine accident and the evidence suggesting there was a prior connection between the defendants was to form part of the insurer’s case in
deceit and conspiracy to recover insurance monies it
had paid out.
Johnson J said that the claimant ought to have set out
the alleged Facebook friendship between the individuals involved in the accident because their prior connection was a key part of the evidence from which it
asked the court to infer that the road traffic accident
was not genuine.
The claimant waited until the defendants had
committed themselves to a particular version of events
in their witness statements which denied a prior connection to each other. It then sought permission after
the exchange of evidence to amend its case to plead
the additional evidence as to the connection between
the defendants. Initially, permission was refused, and
the claim was struck out as the facts relied on leading
to a suspicion of fraud had not been properly pleaded.
The claimant appealed.
The judge noted that the claimant accepted that the
document demonstrating the Facebook friendship
was disclosable under the court’s order for standard
disclosure and that not disclosing it (and waiting instead for evidence to be exchanged on the point) was
a knowing and deliberate breach of the court’s disclosure order. The overarching message from the Court
is that a claimant who believes they have been defrauded cannot decide to keep their cards close to
their chest for such reasons and proceed through
pleadings, disclosure and evidence without properly
setting out the facts on which they rely. The judge said
the claimant could have sought to press its point in
other ways. For example, it could have used pre-action correspondence to ask whether the defendant
knew or had had any dealings with the other people
involved in the accident.
What did the appeal decide?
On appeal to the High Court, Johnson J allowed the
amendment and reinstated the claim, but criticised
the claimant for holding back the evidence.
The judge issued a reminder that if a party pleads
fraud, they are required to plead the facts on which
they will rely to make out their case. They must:
EXPERT WITNESS JOURNAL
76
APRIL 2024