Insurers continue the fight back against fraud

Range Rover
In UK Insurance Limited v Gentry, an insurer who had paid out sums in relation to a road traffic accident has successfully claimed its money back after suing the claimant for fraudulent misrepresentation.

The insurer claimed that Mr Gentry had fraudulently represented that his Range Rover had been in a collision with a Peugeot driven by the insured, Mr Miller. The alleged accident had taken place in March 2013, following which the insurer had paid out sums in respect of the value of both vehicles. (In the case of Mr Miller’s vehicle, the pay-out was just £225, which is presumably why the insurers were not concerned with seeking reimbursement from him).

Mr Gentry had also sued Mr Miller for damages, in the amount of £75,089, and obtained judgment in default following Mr Miller’s failure to file an Acknowledgement of Service. However, a stay of execution was ordered on the payment of these damages because the insurer had commenced an action against Mr Gentry seeking damages for deceit. At the centre of the insurer’s action was evidence obtained from Facebook which indicated that Mr Miller and Mr Gentry were known to each other before the alleged accident.

Judgment was given by Mr Justice Teare, who made clear that because the allegation against Mr Gentry was of criminal behaviour, it was appropriate to apply a standard of proof that was not far short of the criminal standard. This meant that cogent evidence of fraud was required: the claimant insurer had to exclude any substantial possibility that the collision was genuine.

Teare J acknowledged that there is rarely direct evidence in fraud cases and so the court instead had to have regard to all of the circumstances, looking at the evidence as a whole. In the case of Mr Gentry, the judge concluded that he was sufficiently satisfied that the collision was staged. The two drivers were friends at the time of the collision (they ran cross country together, including participation in a race just the day before the ‘crash’), they failed to inform the insurer of this fact, and then when the insurer discovered the friendship, Mr Gentry denied it and concocted an elaborate story about how they had become friends after the incident. The judge did not accept Mr Gentry’s later submission that he had concealed the friendship for fear of slowing down the genuine claim.

The insurer’s claim was made in the sum of £226,458. Most of this figure comprised of sums which it had been ordered to pay to Mr Gentry but had not done so because the orders had been stayed. Teare J ruled that these orders should remain stayed and that the £19,179 already paid out to Mr Gentry be awarded to the insurer, together with interest and costs estimated to be in the region of £150,000. In addition, Mr Gentry was sentenced to nine months in prison suspended for two years for contempt of court.

This case is another example of insurers successfully pursuing fraudulent claimants to recover monies already paid notwithstanding the increased evidential burden in such cases. It also illustrates the courts’ willingness to look at indirect evidence of deceit and of the continuing crack down by the courts on fraudulent claimants who put themselves in contempt.

John McGowan
Clare Birchenhough