Hussain v Hussain & Anor

This is an appeal, brought by permission granted by Dame Janet Smith, against an order of HHJ Shaun Spencer QC, sitting in the Bradford County Court, dated 16^th November 2011. By that order he dismissed the claim of the claimant, Mr Basharat Hussain (“the claimant”) and ordered him to pay the costs of the second defendant, Aviva UK Insurance Limited (“Aviva”) on an indemnity basis.

The claim itself had been for damages arising out of a road traffic incident occurring on 7^th January 2009 when the car of the first defendant, Mr Adil Hussain (no relation to the claimant and who did not appear in the proceedings) collided with the car of the claimant. The claimant alleged negligence on the part of the first defendant. The damages claimed were in a relatively modest amount: some £5,000 for repair, car hire and miscellaneous expenses and damages for soft tissue injury to the neck. The first defendant had a contract of insurance with Aviva, which duly participated at the trial. Aviva’s defence was to the effect that the claim was fraudulent. Aviva put the claimant to proof that the collision had occurred at all and that the first defendant even existed. It was, however, averred as the principal defence that the purported accident was a “staged” collision, designed to set up a dishonest insurance claim; and that the claimant had knowingly been complicit in that. It is well-known that staged collisions have in recent times been a problem for the insurance industry.

The trial judge, after hearing the evidence over a 3 day trial, accepted that defence. He found that it was established that there had been an attempted fraud to which the claimant was party. He did not accept the evidence of the claimant to the contrary.

The appeal thus in essence, subject perhaps to one point, is against the judge’s factual conclusions. That immediately raises the question of what the approach of the Court of Appeal should be. We were addressed at some length on this, both in writing and orally, by Mr Redfern QC (who had not appeared below) and Mr Ahmed on behalf of the appellant claimant and by Mr Kennedy QC (who had not appeared below) and Mr Lemmy on behalf of Aviva: with ample citation of familiar authority.

The task of the Court of Appeal in a case of this kind is to consider whether the judgment of the judge below was “wrong”: see CPR 52.11(3)(a). The appeal will not be allowed unless it is to be so concluded. This case is of a kind which depended entirely on the judge’s assessment and evaluation of the relevant evidence (which was primarily, though by no means solely, oral) and the conclusion to be drawn from the facts as found. For this purpose it is well-established that an appeal court simply does not have the advantages of the trial judge, who will have observed the witnesses give evidence, will have been able to assess their demeanour and, generally, will have the “feel” of the case. Since the Court of Appeal does not have these advantages, the trial judge’s assessment of the witnesses will naturally carry significant weight. The rationale is summarised by Viscount Sankey LC in Powell v Streatham Manor Nursing Home [1935] AC 243 at pp 249-251, which familiar passage does not need to be set out here. Further, the appellate court is not required to be convinced that the trial judge was right: rather, it has to be satisfied that he was wrong. That was so stated by Lord Blanesburgh in Powell’s case at p.251; and although he was speaking over 60 years before the introduction of the Civil Procedure Rules his observations remain valid.

We were also referred, among other authorities, to the observations of Ward LJ in delivering his dissenting judgment in the case of Assicurazioni Generali Spa v Arab Insurance Group [2003] 1 WLR 577 at paragraphs 196-197. In particular at paragraph 197 he said this:

The question thus is whether the judge’s conclusion on the evidence was wrong. For that purpose the background and the judge’s relevant findings need to be set out.

It is the case – much emphasised at trial and on this appeal – that the claimant was a man, at the age of 29 at the time of the incident, of positive previous good character. He has no previous convictions. The evidence was that he has two law degrees from Bradford University. At the time of the collision and claim he was working in the Charges Department of HBOS, albeit he has subsequently taken voluntary redundancy. He says that he hopes to go back into the legal profession in the future: the finding of fraud thus has particular implications for him. He had at the time of the collision held a full driving licence for over 12 years. His car was insured, with the insurance fully paid up. He owns his own house and is married with two children.

The site of the alleged collision was a roundabout on the A647 between Leeds and Bradford. The claimant said that on the morning of 7^th January 2009 he was proceeding in his car round the roundabout, having come on to it from a road to the south called Galloway Lane. His sister and two nieces were in the car also. Whilst his car was on the roundabout, the first defendant in his car (with other passengers in it) entered the roundabout from a road to the west – in circumstances where the claimant would have had precedence – and collided with the front near-side of his car. The impact was later described as “minor” by a vehicle inspector.

The claimant’s car was a 9 year old Ford Focus Ghia, with a value of around £2,500 and which he had owned for two years. The first defendant’s car was a Daewoo, some 11 years old with a value of some £500: the impact to the Daewoo (also “minor”) had been assessed as being primarily to the front offside.

It transpired that a man giving the name of the first defendant had taken out a policy of insurance for the Daewoo car just two days earlier, on 5^th January 2009. The insurer was Aviva. At that time Aviva had an arrangement relating to persons wanting Hire Purchase Information (“HPI”) with regard to buying a used car. Such a person would wish to know that the vehicle was not subject to a hire purchase agreement: he would also want immediate insurance if he decided to acquire the car. Aviva’s arrangement was that a person seeking an HPI check (usually paying for it by way of a credit card) would be offered seven days’ free insurance with Aviva if he then acquired the car. Doubtless Aviva hoped thereby to secure thereafter the insurance for the following year.

The man with the first defendant’s name availed himself of that offer in buying the Daewoo. He had given an address (at which he subsequently could not be located) and telephone number and used a credit card ending with the numbers 60259 for the HPI check. Then two days later the collision occurred.

The suspicions of Aviva were aroused. There had been a significant number of collisions – some involving use of the same car-recovery, car-hire and repair firms on more than one occasion – allegedly occurring within the free seven-day insurance period under the HPI scheme. Details of over 30 such cases were scheduled to the pleaded defence. (We were told that Aviva repudiated liability in all these cases.) In particular, five other collisions were identified where the same credit card had been used as in the present case. One involved a collision on 30^th November 2008 (three days after the inception of the insurance cover on 27^th November 2008); the second on 14^th December 2008 (inception of cover 12^th December 2008); the third on 24^th December 2008 (inception of cover 19^th December 2008); the fourth on 7^th January 2009 (inception of cover 5^th January 2009); and the fifth on 5^th February 2009 (inception of cover 2^nd February 2009). So this particular collision took place during that period. The judge’s finding, in characteristic language, was that it was “as plain as a pikestaff that there was dishonest mischief afoot”. He went on to say that he had no doubt that the man giving the name of the first defendant who took out the insurance for the Daewoo was involved in a “crash for cash” type fraud. There is no appeal against those findings, which were plainly justified. It was, of course, the claimant’s case that because others were dishonest it did not follow that the same conclusion applied to him.

The judge recounted at some length the various accounts which the claimant had given of the accident and how it occurred. It was noted that there had been some inconsistencies in what he had said; and an expert motor engineer was retained by Aviva to report (by way of a “desk-top” report). The judge expressly found, however, that it would not be right to draw any conclusion adverse to the claimant on the basis of the motor engineering evidence.

The judge then went on to deal with the medical evidence. No ambulance had been needed or called at the time. But in due course the claimant consulted a doctor, Dr Edwards, on the recommendation of his solicitors: it seems for the purpose of assisting in the proposed claim. The examination was on 21^st April 2009. The prognosis and recommendation in Dr Edwards’ report was “neck and shoulder pain”, assessed to be likely to resolve within four months. Under the heading “Later Treatment” this is stated:

The claimant’s medical notes as disclosed in the course of the proceedings reveal quite an extensive and well-documented history of medical appointments over the years. As the judge said: “the claimant is not a man who on the face of it appears to be averse to seeing his GP.” There is, however, no record of any visit to a doctor in January or February 2009. An entry for 4^th March 2009 (the doctor being Dr Hawker) has 8 lines of report. That records complaints of “central chest pain”, anxiety and stress. Co-codamol is recorded as having been prescribed. There is no mention in the entry of the claimant having been in any road traffic collision. On 9^th March 2009 a further entry records the claimant being prescribed with Tramadol (quite a strong pain killer).

The judge, after reviewing the medical notes, said this:

The judge then referred to the evidence of the sister and one of the nieces. They insisted that there had been a collision and described what they saw as to how the collision occurred. Whilst not in terms saying he accepted their evidence, the judge did not say that he rejected it either.

The core reasoning of the judge in coming to his overall conclusion that the claimant was party to an attempted fraud is contained in, and confined to, paragraph 21 (which is the final paragraph) of his judgment. To explain the respective submissions of counsel before us, it is necessary to set it out in full:

Mr Redfern raised an initial complaint. Having stated that there were “very powerful inferences”, the judge, he said, was quite wrong to go on to say that the question was whether they could be displaced by the claimant. This, says Mr Redfern, wrongly inverts the burden of proof. In my view, however, there is nothing in that. Having so stated, the judge immediately went on to state that the burden of proof on the fraud allegation rested on Aviva and that the gravity of the allegation had to be taken into account. He then made his reference to the well-known case of Hornal v Neuberger Products Ltd [1957] 1 QB 247. His overall conclusion was that “it has been established that [the claimant] was party to the attempted fraud”. So there was no error in law in the way in which he stated the burden and the standard of proof.

Aviva’s defence connoted, of course, that the claimant, of previous positive good character and with no identified financial problems, had pursued to trial a claim worth no more than around £6,000 or £7,000 knowing it (on Aviva’s case) to be fraudulent. That of course is the kind of scenario contemplated by Morris LJ in Hornal as explaining the need for a cautious approach to be adopted in assessing an allegation of fraud and underpins the need for appropriately cogent evidence if a finding of fraud is to be made. Mr Redfern submitted that, applying the appropriate standard of proof, the ultimate conclusion of the judge simply was not justified and was against the weight of evidence. If fraud is alleged the evidence, he correctly submitted, needed to be commensurately strong if the allegation of fraud is to be proved. And, he went on to submit, that simply was not so here. Not only was the claimant a man of excellent character, as he re-emphasised, and with no apparent financial pressures such as to motivate this claim, but also there were the following considerations:

The claimant had no involvement in the other five incidents which apparently involved the first defendant or indeed in any of the many other incidents referred to by Aviva in its defence as being comparable.

The claimant’s car – as had the first defendant’s car – had been removed from the scene by a firm called SOS Recovery Limited. His car had been repaired by a company called TF Smith Limited. A courtesy car and other assistance had been provided by a company then called Call 24/7 Limited. Although the names of those companies variously appear in some of the other allegedly suspicious incidents relied on by Aviva in its defence, they are national companies, still trading; and it was confirmed by Aviva that no allegation of dishonesty was made against them in this trial concerning this incident.

Aviva’s only live witness at trial (a Miss Koleniak, an “Intelligence Analyst”) had accepted that she had not been requested to make, and had not made, enquiries about the owner of the card 60259 or the telephone number given by its user. She confirmed that she was aware of nothing to link the claimant to that card or number. She also accepted that she had no evidence to show that the claimant himself had ever obtained HPI cover or that the claimant could be linked to any of the other suspect collisions on which claims had been made as referred to in the defence or to any of the individuals or companies involved, one way or another, in those other claims.

There was no other evidence of any kind whatsoever linking the claimant to the first defendant, apart from the fact of this index incident.

No claims were issued by the sister and two nieces.

Mr Redfern went on to submit that, in reality, Aviva was inviting the judge to make a finding of fraud on the part of the claimant by reference to what he said were “speculative inferences”. He said that the judge had entirely failed to refer to the various important factors, as conceded by Miss Koleniak in her evidence (summarised above); had failed to give appropriate weight to the claimant’s excellent character and qualifications; and had impermissibly speculated that any “crash for cash” scam always required the two drivers to be in concert.

As to the judge’s reliance on the medical records, Mr Redfern complained that the judge had failed to consider that the absence in those records of earlier appointments or mention of the claimant having been – as he had said – prescribed painkillers and then referred to x-ray, could have been due to omission by the doctor rather than indicating deliberately false accounts given by the claimant to Dr Edwards and then in his evidence at trial. In any event that did not give rise to an inference that the accident had been fraudulently staged in a way in which the claimant was complicit or that his entire evidence was to be rejected as not credible on the point.

Mr Kennedy, for Aviva, emphasised that this experienced judge had had the benefit of seeing the claimant give evidence in the witness box for well over a day: a very considerable advantage. Further, he said that the claimant’s case involved a striking degree of coincidence: in that the first defendant (found to be in engaged in a fraudulent campaign of insurance claims) collided with the claimant’s car in the period of this campaign and shortly after he had obtained (for free) the HPI insurance for the Daewoo. Mr Kennedy submitted that the judge was entitled to infer that the first defendant was complicit with the claimant; and that the judge’s assessment of the credibility of the claimant was justified by reference to his conclusions on the doctor’s notes.

He further relied, as matters supporting the judge’s conclusion and advanced by way of Respondent’s Notice, on the discrepancies between the claimant’s various accounts, as noted by the judge; and on the circumstance of the claimant – on his own evidence – agreeing to the first defendant’s proposal at the scene of the collision that he could summon a recovery vehicle for him. As the claimant himself had said in his witness statement: “I was amazed at how quick the two recovery trucks had turned up”. This, moreover, notwithstanding that his car was drivable and that his sister’s home was only some 200 yards away.

One can readily see how Aviva’s suspicions were initially aroused. But in my view the judge was wrong to draw the inference that the claimant had been party to the attempted fraud in the way that he did.

The judge made no findings or observations as to the manner or demeanour in which the claimant gave his evidence or as to any other weaknesses in it. It was common ground before us that the expressed basis for the judge’s conclusion is as set out in paragraph 21 of his judgment. He gave no other reasons for the finding of fraud.

Mr Kennedy did rather faintly say that the judge had not even found that the collision had occurred. That is not a tenable proposition. Not only did the judge not reject (even if not explicitly accepting) the evidence of the claimant, sister and nieces about the fact of the collision but his reasoning in paragraph 21 is only comprehensible on the footing that there had indeed been such a collision.

There are therefore three possibilities:

That the first defendant – whilst in the middle of a campaign of fraudulent insurance claims – happened by chance to have a “genuine” accident with the claimant’s car.

That the first defendant fraudulently and for his own purposes deliberately ran into the car of the claimant, who was an innocent victim.

That the entire collision was fraudulently staged and the claimant was complicit in the fraud.

In the light of the judge’s findings, the first possibility is to be excluded.

The judge’s reasoning, in concluding that the claimant had been party to attempted fraud, as expressed in paragraph 21 of his judgment itself rested on two propositions:

There is a rule “follow the money” which is to be applied: and economic sense is only made if the two drivers are complicit.

The claimant’s credibility was “seriously damaged” by the absence of reference in the medical records to the collision and by what he had told Dr Edwards in April 2009 about his visits to his GP.

I have difficulties with both propositions.

First, I am not quite sure just what “follow the money”, as a so-called rule to be applied, connotes. What does it mean? And why is it a “rule”? The judge asserts that a fraudster is scarcely going to engage in a collision with an innocent stranger on the speculation that the innocent stranger will agree a division of the spoils. But an innocent stranger may not be concerned with a division of any “spoils” – he may only be concerned with the loss he has himself indeed truly suffered. Moreover in such a scenario the fraudster can have potential gain. For example, any complicit passenger he has in his own car can claim for alleged personal injury (albeit in the present case, it seems that is not what happened): or perhaps – and I am not necessarily talking about the present case – he could try to claim from his own insurance company for loss incurred, to the financial advantage of complicit aid or repair companies with whom the fraudster has an “arrangement”. I agree with Mr Redfern’s submission that the judge’s bald statement “It only makes economic sense if the two are in concert” goes altogether too far: indeed Mr Kennedy very fairly and rightly accepted as much. Clearly, however, the judge attached significant weight to these matters, describing them as giving rise to “powerful inferences”. In my view, and while the question of likely or unlikely coincidence is properly to be considered, this altogether overstates the position: and, if taken as a starting-point, is suspect. Moreover, this flawed starting-point may well have caused the judge not duly to appraise the various matters conceded by Miss Koleniak in her evidence. These were potentially important points in favour of the claimant. I think that there was considerable force in Mr Redfern’s submission that the judge had not duly balanced the various points telling against the claimant being fraudulent. Certainly he made no reference at all to them.

Secondly, I do not think the point about the medical records can have the effectively conclusive weight that the judge ascribed to it in support of a finding of, in effect, total adverse credibility and a conclusion of fraud on the part of the claimant.

It is to be noted that the absence of reference to the collision in the medical notes was not relied upon by the judge as a lie or omission supporting a conclusion that there had been no such collision as alleged at all (on which such a lie or omission would have been directly relevant evidence): on the contrary the judge, by inference, had accepted that there was such a collision. Further, the absence of reference to the collision in the notes was not relied on as indicating a subsequently dishonestly invented or exaggerated claim by the claimant of personal injury occasioned by the collision. If anything, indeed, if there really was a fraudulently staged collision in which the claimant was complicit, then one perhaps might have thought that he would be careful to say to his doctor that he had been hurt in a road traffic collision, in order to enhance his claims.

The judge, having reviewed the medical notes of the claimant, emphasised that they presented a full history elsewhere but that nowhere in early 2009 (and notwithstanding attendances in March 2009) do those notes refer to the claimant reporting that he had been involved in a collision. The judge found that it would have been recorded had the claimant mentioned it. In my view, however, that was too slender a basis for concluding that the claimant’s entire evidence relating to his non-complicity in the alleged fraud was not credible.

Mr Redfern submitted that the judge unduly discounted the possibility that the notes had not completely recorded what the doctor had been told or that the claimant had muddled the dates of the visits. He further sought to put in (without any prior application for the admission of fresh evidence) a further letter from the doctor’s surgery dated 8^th October 2012. That letter is not signed by Dr Hawker and in any event purports to be a summary of what the medical records show. I would refuse to have regard to what it says. However, Mr Kennedy fairly accepted that at all events the contemporaneous surgery computer printouts which were appended to that letter could be accepted as authentic. Such printouts expressly refer to the Tramadol being prescribed as the co-codamol previously prescribed for “shoulder pain” was not working. If so, the actual medical notes themselves had indeed in some respects not been an entirely complete record.

Mr Kennedy’s submission was that the claimant had, on 21 April 2009, told Dr Edwards – as noted elsewhere in Dr Edwards’ report – that the neck pain and stiffness had become “worse initially” and had spread to the shoulder, “over a week or two after the accident”. As noted above, he had also told Dr Edwards that he had consulted his GP about this “10 days after the accident” (i.e. before the end of January 2009) and received prescriptions and had also subsequently been referred for an x-ray on the shoulder without having (as at 21^st April 2009) received an appointment. As the judge recorded, and as Mr Kennedy emphasised, none of this appears in the medical notes.

This is so. But in my view it is going altogether too far to say this provided a sufficient basis for holding that the claimant’s evidence was not credible in all material respects or for justifying the drawing of an inference that he had been knowingly party to an attempted fraud by way of a staged collision. Indeed, there is no obvious reason why – to further the alleged fraud – the claimant would have deliberately lied on these matters to Dr Edwards. The point in fact seems to me more obviously to relate to the reliability of his recollection of events and dates: which is a rather different thing. Moreover, on any view the claimant had indeed been prescribed painkillers on 4^th and 9^th March 2009 (with the contemporaneous printouts also making reference to his experiencing shoulder pain). In any event, even if the claimant for some reason had lied to Dr Edwards about his visits to the doctor, such a lie is not in itself logically probative of there having been a staged collision in which he was complicit. So the lie (if there was one) could at most bear only on the credibility and reliability of his evidence. But the judge identified no other matters to indicate that the claimant’s entire evidence as to his innocent involvement in the collision was to be rejected.

As to that, and as to the points relied on by Mr Kennedy in his Respondent’s Notice as supporting the judge’s conclusions, it seems reasonably clear from the judgment that the judge attached no particular weight to the alleged discrepancies in the claimant’s version of events as to how the collision occurred. As to the claimant’s conduct immediately after the collision – that is, in accepting the first defendant’s offer to arrange for a recovery vehicle for the claimant – I agree that on one view that can indeed be regarded as potentially suspicious (one other possible view is that the first defendant may have unilaterally made the proposal with a view to garnering in due course a commission for himself). But we do not have a transcript of the cross-examination on this point, the judge made no findings on the point and in terms of his judgment he seems to have placed no reliance on the point at all. I do not think that this court can for present purposes attach any great weight to it.

I do of course remind myself of the advantages that a trial judge has and remind myself that it is not enough for an appellate court to feel unease at a trial judge’s factual findings and conclusions. But in my view the two matters identified in paragraph 21 of the judgment – being the sole identified bases for the finding of fraudulent involvement on the part of the claimant – were not sufficiently cogent to justify an inference of fraudulent complicity on the part of the claimant in a staged collision.

I would, for my part, allow the appeal. Unless the parties can agree what the outcome should be (and one would hope that they can) it will be necessary to receive further submissions as to the consequences.

I agree.

I also agree.