Zurich Insurance Plc v Kay & Ors

The Claimant, Zurich Insurance Plc (“the Zurich”) applies to commit the three defendants to prison for contempt of court pursuant to permission granted by HHJ Wood QC on 1 November 2013.

In summary, it alleges that the First Defendant (“Mr Kay”) sustained injuries in a fall while on holiday abroad. Later, he brought a claim for damages falsely contending that the accident happened in a car park in St Helens as a result of a slipping hazard which was the responsibility of Westgrove Cleaning Services (“Westgrove”). Westgrove was insured by the Zurich in respect of its potential liability. Mr Kay’s account of the accident had been supported in witness statements provided by the Second and Third Defendants who are his wife and stepson respectively.

Mr Kay valued his claim to be in the region of £750,000. The Zurich contends that his case was based on an audacious lie and that Mr Kay and his family have attempted fraudulently to repackage a vacation mishap as a very valuable claim for compensation. If the Zurich is right then Mr Kay and his family are guilty of a very serious contempt but to succeed in this application it must prove the alleged deception to the criminal standard.

Despite the strongly disputed central issue concerning the location of the accident, there is substantial agreement between the parties as to many of the facts in the case so some of the background circumstances can be set out in a narrative which is likely to be largely uncontroversial.

At the time of the accident, Mr Kay was employed as a Contracts Manager at Charles Evans Shopfitters Limited (“CES”). His holiday entitlement was 21 days per year. In the summer of 2008, he booked himself out of work from 17 July to 4 August. Mr Kay had already taken a holiday earlier in the year which meant that, by taking this further time off, he would exceed his annual allowance. However, on this occasion, CES agreed that he could take the excess as unpaid leave.

On 5 August Mr Kay returned to work having suffered injury whilst he had been away. On the same day at 4.50pm he attended the Accident and Emergency Department of Whiston Hospital where a triage note records: “fell down concrete steps on Saturday, landed on back.” At 7.41pm, the doctor records: “fell off a flight of 6 stairs landed on buttock.”

Mr Kay continued at work for one week and, on 6 and 7 August, managed, despite his injuries, to drive 522 miles to Yeovil and back. He commenced sick leave on 11 August having attended Accident and Emergency, once again, on the previous day. A ward round of this date records the site of the accident to have been in the stairwell of a car park.

Mr Kay was off work until 29 September 2008. Five months later, he and another contracts manager were made redundant.

Mr Kay brought an unfair dismissal claim against CES in the Employment Tribunal. He was successful. In particular, disclosure had revealed that CES had recruited one Kevin Smith to be Senior Site Foreman under a contract of employment signed within days of Mr Kay’s departure. The liability hearing took place on 4 November 2009 and the remedies hearing on 28 January 2010. The award was in the sum of £13,790.36 which was considerably less than the figure of £107,437 which Mr Kay had claimed.

In addition to his claim for unfair dismissal, Mr Kay sought compensation in respect of his injuries in the Liverpool County Court. Mr Kay notified the Hardshaw Shopping Centre, St Helens of his claim in December 2008, over four months after the accident. Proceedings were commenced thereafter. He pleaded that he had sustained his injuries as a result of slipping on a pool of liquid on steps at the shopping centre car park. Hardshaw alleged that there was no record of any slipping incident on 1 August 2008 and no record of any spillage or of any trace of blood at the scene. Liability for the accident was denied. Mr. Kay was put to proof that there was a slipping accident as he had alleged. Furthermore, Hardshaw pointed to its cleaning contractors, Westgrove, as the party responsible for cleaning the stairs. Consequently, Mr Kay joined Westgrove as a second defendant in the proceedings. The Zurich had conduct of its defence as public liability insurers.

In February and March 2012, Mr Kay’s solicitors served witness statements from his wife and stepson which corroborated his version of events. Daniel Kay provided eye witness testimony of the alleged slip in the shopping centre. Mrs. Kay confirmed her husband’s account of the aftermath of the incident from the late afternoon of 1 August 2008. His legal team unsuccessfully and repeatedly applied to the court for there to be a split trial on liability.

In the summer of 2012, Mr Kay advanced a provisional calculation of his claim in a sum of over £700,000 which included a lost earning capacity of £35,702 per annum net as a contract manager at CES. The schedule asserted that: ‘by reason of his injuries, the claimant was unable to continue to discharge his responsibilities with Charles Evans and is unemployed’. Mr Kay alluded in the schedule to the fact that he had recovered £4,792.97 net of legal costs from bringing an unfair dismissal claim against CES. In his witness statement dated 13 June 2012 which accompanied the schedule, Mr Kay stated: ‘Charles Evans terminated my employment. They claimed that this was by reason of redundancy, but I felt the truth was that they were getting rid of me because of my injuries’.

Upon receipt of that claim, the Zurich understandably made efforts to obtain disclosure of Mr Kay’s personnel file with CES to test his assertion that his redundancy was, in reality, brought about by his injuries. After securing a non-party disclosure order in October 2012 the file was eventually disclosed in November 2012. Within it were the Employment Tribunal documents.

In these documents, Mr Kay made no mention of his injuries or of their alleged impact on his ability to discharge his role as a contract manager for CES. He had claimed the same lost earning capacity for the period between March 2009 and January 2011 in the Employment Tribunal and the County Court respectively. In the ET proceedings, he made no reference to the contention that he had suffered an injury impacting on his ability to work. In the personal injury proceedings, in contrast, he blamed his injuries entirely for his loss of earnings. These two contentions were irreconcilable and, even making due allowance for the physical and mental consequences of his injuries and the stress of litigation, there can be no doubt that Mr Kay was deliberately advancing inconsistent cases to maximise his compensation and was trimming his sails accordingly.

Also within the file was a letter dated 7 December 2009 written by Mr Thompson of CES to Mr Kay’s solicitors stating: ‘…your client advised us that he had injured his back whilst on holiday when he fell down some steps leading up from a beach while carrying various items …’.

There is no beach in St Helens.

Thus, the Zurich approached the letter’s author and asked whether he would be prepared to give a statement setting out his understanding as to how Mr Kay came to injure his back. Mr Thompson agreed. So did CES’ Managing Director, Mr McGregor. Their statements asserting that Mr Kay had told them that the accident had happened abroad were served on Mr Kay in January 2013.

Mr Kay discontinued his claim on counsel’s advice in May 2013. His legal expenses insurers between them absorbed their own costs and paid the Zurich’s accrued costs in the sum of £120,000.

In July 2013, the Zurich started these committal proceedings against all three Defendants for contempt of court.

In September 2013 Mr Kay served an affidavit responding to the contempt proceedings in which he accused both Mr McGregor and Mr Thompson of having lied under oath at the Employment Tribunal hearing on 4 November 2009. He further alleged that Mr McGregor had threatened him during the course of those proceedings with words to the effect of: ‘It may take me a while but I will get you for this’. He case was that their evidence concerning the location of the accident was fabricated as an act of vengeance.

Mr McGregor and Mr Thompson stood by their accounts and invited the Zurich to speak to other employees and ex-employees at CES to whom Mr Kay had allegedly spoken upon his return to work about where he had sustained his injuries. Subsequently, the Zurich served a further six affidavits from witnesses who gave evidence on this application and one further affidavit from a witness who did not.

The Zurich, thereafter, sought and obtained permission to commit Mr Kay and his wife and stepson to prison for contempt of court pursuant to CPR. 32.14 and CPR 81.17.

It is not my intention to identify every point in issue between the parties or to record every secondary inference I have been invited to draw from the evidence in the case. For reasons of proportionality, I have confined myself to an analysis of those points which have appeared to me to be the most salient so that this judgment is not unnecessarily lengthened by the inclusion of a superabundance of detail. This is not to say, however, that I have not considered all of the helpful oral and written submissions made by counsel for the parties in this case. I have.

As appears from my summary of the background to this application, upon Mr Kay’s return to work at CES on 5 August 2014, and over the following days, the Zurich allege that he had conversations with a number of his colleagues in which he said that he had sustained his injuries on holiday abroad. Some of these colleagues gave evidence on this application. Their evidence has been helpfully summarised in the Zurich’s written closing submissions which I gratefully adopt. I gave permission for each witness in the case to give oral evidence in chief although their witness statements were also to be receivable in evidence.

Ian Jones, Workshop Manager, said:

“He said he was wearing flip-flops and fell down some wet steps when he was on holiday in Portugal. We had a conversation in the Contracts Managers area of Charles Evans. During the conversation he pulled up his shirt and showed me his bruising.”

Moira Ferguson, Office Manager, said:

“I asked: ‘Did you have a nice holiday in Spain?’ He said, ‘Yes but look’, and lifted his shirt and showed me his bruising. Not that it was funny but I joked, ‘too much red wine.’ He said, ‘I wish. It was in the daytime when I was with my son’.”

Darren Hardy, Contract Manager, said:

“He fell down steps on holiday.”

Darren Fenwick, Quantity Surveyor, said:

“He was walking down the beach in Portugal slipped down some steps and hurt his back”

Danny Massey, Health & Safety Officer, said:

“He said he fell on steps on holiday walking down.”

Paul McGregor, Managing Director, said:

“In a conversation in my office, he told me he travelled to the Algarve, to Quarteira. While there he told me he hurt his back slipping down some stone steps leading to beach and knocked himself unconscious. He told me he was carrying lots of beach equipment and was eating an ice-cream. … I go to Portugal a lot. It is not a holiday destination. It is a bit of a service town. That is the main reason I remember because of the location, not the injury or the accident. … He had no reason to tell me that he went to Portugal and if he had told me any other part of Portugal then I would not have remembered it but he did say it and to the extent that he says he didn't say it he is not telling the truth … I can only tell you what he told me which is that he hurt his back coming up some beach steps in Quarteria whilst carrying some beach items and knocked himself out. … The only thing I remember is that all along Mark told me that he went to Quarteira. If he had said Villa Maria or Albufeira then possibly it would not have stuck in my mind. Quarteira is not a good place to go. A mile up the road is a fantastic marina and some 5 star hotels.”

Graham Thompson, Finance Director, could no longer recall any conversation directly with Mr. Kay. However, from his memory of talk around the office, he said:

“My recollection is that his accident happened walking up stone steps. From my recollection that was in Portugal. It was a general discussion within the office.”

Mr Kay’s initial response in writing (in his affidavit) was that he did not speak to Mr McGregor or Mr Thompson about how he came to sustain his injury at all and that their evidence was the product of fabrication. In oral evidence, he conceded that: ‘I said I fell whilst I was on holiday’.

His point was that his accident had occurred whilst on holiday from work but not when he was on holiday abroad.

Self-evidently, if I were to be sure that Mr Kay’s accident happened when he was abroad then their formal assertions to the contrary in his claim for personal injuries would put him, his wife and stepson in contempt of court.

The Zurich contends:

I propose to deal with these points in turn.

The evidence which is most nearly contemporaneous with Mr Kay’s return to work takes the form of a note written by Mr Thompson: “Mark returned from holiday 5 August and then started sick leave on Monday 11^th – injury sustained on holiday.”

There is, unsurprisingly, no mention of where Mr Kay was at the time of the injury and this entry is therefore of limited significance. From the point of view of CES, the important matter at the time was that the injuries had not been sustained at work.

The first mention of a beach is in the letter of 7 December 2009 from Mr Thompson to Mr Kay’s solicitors. It is to be noted that this letter was written one year and four months after the events to which it relates and that its author was no longer able to recall a material conversation with Mr Kay to this effect when he gave oral evidence in support of this application. In his witness statement of January 2013 he recalled a conversation in which Mr Kay had told him that the accident happened in Portugal on the beach.

The most detailed account of any conversation with Mr Kay about his accident comes from Mr McGregor who, in his witness statement of January 2013, stated that Mr Kay told him that he had his accident in Quarteira (which he referred to throughout as “Quateria”).

However, this evidence is contradicted by the witness statement of Darren Hardy in which he said: “He definitely told me that the accident happened in Spain. He told me that his accident occurred by a lake in a town which had the letters E, S and P in its name…It definitely had the letters E, S and P in it.”

In her witness statement, Moira Ferguson said: “I remember the First Respondent telling me that he had had an accident abroad on holiday at his place in Spain.”

Mr Kay’s “place in Spain” is a villa near Fuengirola. It is about 450 km from Quarteira and my attention has not been drawn to any nearby location next to a lake and the name of which contains the letters E, S and P.

Mr Jones and Mr Fenwick both said that Mr Kay had told them that the accident had happened in Portugal.

Taken together, the evidence from these witnesses provides prima facie evidence of contempt. Nevertheless, I must also bear in mind that:

Mr Kay’s employers did not distinguish themselves in their conduct of the ET proceedings. Neither did Mr Kay in his. Furthermore, I find that both CES management and Mr Kaye have subsequently attempted tendentiously to portray the claim and its aftermath in a way which is unduly favourable to their respective stances.

I have reached the view that the following criticisms can legitimately be made of the CES management:

For his part, Mr Kay was guilty of downplaying any impact his injuries may have had on his future ability to do his work in the context of his unfair dismissal claim. He admitted in cross examination that he was motivated by the fact that he did not want CES to get away with his unfair dismissal on the grounds that he could not do his job.

Indeed, generally, I formed the view that Mr Kay was only too willing to introduce casual embellishments to his evidence if he thought that it would fortify his case. By way of example, he said of Mr. McGregor under cross-examination: ‘Graham Thompson said don’t upset him, he is very vindictive and that is the conversation I had with Mr Thompson when I started’. If this had been said then there is no credible explanation as to why Mr Kay would not have included this in his witness statement and why Mr Thompson would not have been cross-examined on it. Mr Kay’s counsel did not rise to accept that he had been aware of this piece of evidence as he doubtless would have done if the error had been on his part. I must conclude, therefore, that what he heard was as much news to him as it was to everyone else in court.

I am also satisfied that Mr McGregor, although his distaste for Mr Kay was greater than he was prepared to concede, did not as Mr Kay alleges, threaten to take revenge on him at a later date. Mr Kay’s first account was that he was threatened following the first tribunal hearing on 4 November 2009. When it was pointed out if that had been the case then it would undoubtedly have been raised by Mr Kay at the subsequent remedies hearing on 28 January 2010, Mr Kay changed his evidence to say that the threat had been made after the second hearing.

Looking at the evidence in the round, I find that the CES management have attempted to minimise their dissatisfaction with Mr Kay’s performance and their adverse reaction to his decision to pursue a claim against them in the Employment Tribunal but that Mr Kay, in turn, has exaggerated the level of their resentment. The truth, as it so often does, lies somewhere in between.

It follows that although I do not believe that Mr McGregor descended into outright dishonesty in the evidence that he gave in the context of the personal injury claim and in this application I am, at least, satisfied that he was not inclined to give Mr Kay the benefit of any doubt. This applies in particular to any risk that his recollection of the conversation with Mr Kay about his injury may not have been as firm as he asserted it to be.

In a number of further respects, Mr Kay’s credibility as a whole was damaged by the evidence.

He was all too ready to make bold assertions in the witness box on peripheral matters which, on closer analysis, were shown to be wrong. He contended, for example, that he had not been sent the advice of counsel which had led to the discontinuance of his claim. His legal team, very properly, then disclosed the correspondence file showing that it had, indeed, been sent to him.

I am also satisfied that Mr Kay deliberately presented a misleading picture to Professor Wilkinson, a consultant psychiatrist reporting in the personal injury claim. I take two examples by way of illustration only. He told the professor that he had had no depression in the past when the contrary was revealed to be the case in contemporaneous medical notes. Further, he attributed the loss of his job squarely to his injuries in a way which was wholly irreconcilable with the presentation of his claim in the Employment Tribunal.

The evidence relating to Mr Kay’s general credibility therefore reinforces the conclusion I have drawn from his approach to the Employment Tribunal claim that he has little or no compunction about telling peripheral lies to serve his ends when it is convenient to him so to do.

Mr Kay’s evidence is that, not having brought any present back from holiday for his stepson, Daniel, he decided to drive him to St Helens to buy a pair of trainers at JD Sports. They parked in the Millennium car park which Mr Kay says is cheaper and usually has more spaces than the Hardshaw Centre car park. They crossed the road to a spiral staircase known as the Millennium Needle which gives access to the Hardshaw Centre car park. Having crossed this floor they reached the lift to the ground floor. It seemed to be taking a long time and so Mr Kay decided to take the stairs upon which he subsequently slipped and injured himself. As a result of his injuries, the trip to buy trainers was aborted and they returned home.

In part relying upon DVD evidence and a witness statement from Mr Mitchell, the manager of the Hardshaw Centre, the Zurich make the following points:

In response, Mr Kay says that it was natural for him to drive his stepson into St Helens to get the trainers and that, in any event, he would probably have done some other shopping whilst he was there. He chose the route they took because it was one which avoided the busy roads and cut across to JD Sports. He did not report the accident. Daniel went to try to find a security guard near the lifts on the ground floor where they were usually stationed but none was there. When he returned, Mr Kay just wanted to go home. He did not go to the walk in centre but did not like seeking medical treatment as is illustrated by the fact that he did not go to Accident and Emergency until after he had already returned to work on the following Tuesday.

I conclude that although there is some force in the points made by the Zurich they would not be sufficient, without more, to prove that the account of the circumstances of the alleged accident in the car park could safely be rejected out of hand.

Both Mrs Kay and Daniel gave evidence in support of Mr Kay’s account. Mrs Kay stated categorically that her husband had been injured on the day after they had returned from holiday in Spain. She arrived home from work and found him lying in pain on the couch. She tried her hardest to persuade him to seek medical attention, particularly because he had told her that he had lost consciousness for a short period, but he would not hear of it. She was a far better witness than either her husband or Daniel. Her background as a long serving nurse in a senior position enhanced her credibility further.

Daniel was far less persuasive and I did not believe his assertion that he had not previously discussed the evidence he was giving in the case. Indeed the advice of counsel of 22 January 2013 records that Daniel came to a lengthy conference with Mr and Mrs Kay during the course of which they are bound to have given their respective accounts.

I find that Daniel did indeed give the impression that his evidence had been rehearsed. The question remains, however, whether his motive was to make his fundamentally true account artificially more polished and persuasive or to cover up for the complete fabrication of an accident that he never actually witnessed.

At this stage in the judgment I will summarise my findings so far:

Against this background, I must determine whether I am sure that Mr Kay and his wife and stepson deliberately lied about the circumstances in which his accident took place.

One issue which falls to be resolved is as to whether Mr Kay returned to this country very shortly before returning to work or whether he had flown back some days beforehand. The Zurich contends that he was not in England on 1 August which is the day on which he alleges he sustained his injuries.

The Zurich makes the following points:

In response, Mr Kay contends:

On balance, I am satisfied that Mr Kay returned to England when he said he did. I am, however, unimpressed by the statement from his tenant who was not able to turn up to court because he is in prison. His recollection of signing the lease on a particular day seems on the face of it to be implausibly accurate and the Zurich did not have the opportunity to cross-examine him on the point. On the other hand, I am persuaded that the work schedule of Mrs Kay is genuine and supports her account of being in work on the day in question. There is no evidence that this document was or could have been forged and no compelling reason why Mr Kay should return from his holidays later than his family. This does not answer the question as to where the injury took place but it does mean that the Zurich cannot exclude Mr Kay’s account of the accident location simply on the basis that the court can be sure that he was still abroad on 1 August.

The central question which remains unanswered by this finding is whether Mr Kay sustained his injury before or after he arrived back into this country.

After a lengthy and detailed consideration of the evidence in this case and with the advantage of having been able to assess the demeanour of the witnesses who gave evidence I find that I cannot be satisfied so that I am sure that Mr Kay, his wife and stepson have lied about where the accident happened.

It would have been tempting to conclude that because I have found that Mr Kay had told deliberate lies on some issues that I ought to find that he lied about where the accident happened too. I have resisted this temptation for the following reasons:

In conclusion, despite the adverse views I have formed in respect of the conduct and honesty of Mr Kay in many respects, I am unable to be sure that he lied about where his accident occurred. It follows that these applications to commit the defendants for contempt must fail.