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Exaggerated Claims In Motor Accident

It is a usual phenomenon for claimants in motor accident claims to claim for ‘a little something extra’ following a genuine loss. This practice stems from the perception that there is nothing to lose in making an inflated or exaggerated claim. This perception has now been verified judicially.  In a recent case decided by the Cyprus Supreme Court on 31 October 2012 (Civil Appeal 268/2009), the Court held that there was to be no consequence for a claimant who had, on some occasions, lied to the Court regarding the extent of his damages, if he had nonetheless suffered a genuine loss which was of lesser importance than that he opted to present to the Court. In this case, the Supreme Court of Cyprus, relying on the judgment of the UK Court of Appeal in Ul-Hag and others v. Shah (2010) 1 All E.R. 73, ruled that there is no general rule of law, pursuant to which the dishonest exacerbation of a genuine claim could result in the rejection of the claim in full.  Rather, the Supreme Court of Cyprus was of the view that it is a well established principle that the claimant should not be deprived from damages in which he is entitled, just because he attempted, even dishonestly, to achieve more than that he was entitled to. 

The Supreme Curt of Cyprus took the view that the English law principle, as arising from the above precedent, should be taken to mean that where the claim is comprised of a mixture of genuine and dishonest claims, the inclusion of a dishonest claim could not, itself, convert the genuine part of the claim to an abuse of process. It is regrettable that the parties in the above judgment did not urge the attention of the Court to the recent judgment of the UK Supreme Court in Summers v. Fairclough, which considered the same question, i.e. whether a genuine claim which had been fraudulently exaggerated should be struck out as having been tainted by fraud and abuse of process.

The background facts of the case are typical of many personal injury claims; the claimant had sustained an injury at work and consequently pursued damages. However, following significant surveillance evidence, the trial judge was satisfied that the claimant had grossly exaggerated the extent of his injuries. Although he had committed sufficient fraud to satisfy the criminal standard, he was still awarded substantial amounts in damages to reflect the honest element of his claim. The Defendant appealed to the Court of Appeal, asking it to strike out the entirety of the claim as an abuse of process. The appeal was dismissed as the Court of Appeal thought it correct to follow the previous Court of Appeal decisions of Ul Haq v Shah and Widlake v BAA Ltd (both of 2009) which held that a person could not be deprived of a judgment for damages to which he was otherwise entitled on the ground of an abuse of process.

At the Supreme Court, it was found that the actions of Mr Summers did in fact amount to an abuse of process and in doing so, overturned the Court of Appeal decisions in Ul Haq and Widlake, determining that, under the Civil Procedure Rules, the court does have the power to strike out a claim for abuse of process at any stage. However, the court made it clear that it would be reluctant to exercise that power in a situation where the claimant had suffered a legitimate injury, as a claim should only be struck out in very exceptional circumstances where it is just and proportionate. Therefore, although the legal principles may have been successfully challenged, the court in this case declined to exercise their power; the claimant did actually suffer significant injury and it would not have been proportionate or just to strike the claim out.

The court in Summers v Fairclough also highlighted other ways to deter the bringing of dishonest claims, including making orders for indemnity costs for the dishonest part of the claim, reducing awards of interest and the possibility of criminal proceedings. These options are not customary in Cyprus legal practice and it is unlikely that they will serve as real threats on those seeking to abuse the system. The importance of Summers v Fairclough has not been considered by the Cyprus Supreme Court, however it is expected that this will happen soon and its impact on general attitudes will be clarified. But it appears that the court’s power to strike out a claim in its entirety for fraudulent exaggeration will always be a last resort, particularly where to do so would be to deprive a claimant of a substantive right which the court had held the claimant was entitled to after a fair trial.

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