Ul-Haq & Ors v Shah

Participation in a fraudulent claim does not automatically require the participant’s genuine claim to be struck out. Under Civil Procedure Rules 1998, rule 3.4(2), the court must first assess the claimant’s breach of the overriding objective and then decide whether striking out is justified as a matter of case-specific discretion.

Relevant factors include the seriousness of the dishonesty, its effect on the fairness of the trial, the expense and court resources consumed, the value and genuineness of the claim, and whether lesser sanctions, particularly indemnity costs, adequately reflect the misconduct. Outside the special context of fraudulent insurance claims, there is no general rule requiring genuine tort claims to be forfeited because the claimant supported another fraudulent claim.

The defendant admitted liability for a road collision but disputed whether one claimant had been present in the vehicle. The county court found that this claimant’s case was fraudulent and that two other claimants had colluded in advancing it. The two colluding claimants nevertheless had genuine injury claims.

The county court declined to strike out those claims under CPR 3.4(2), awarded damages, and imposed substantial indemnity costs. The defendant appealed, contending that the collusion, the public interest in deterring fraudulent motor claims, and the misuse of court resources required the genuine claims to be struck out.

1. Appeal dismissed. The county court’s order was upheld, although the appellate court reached the conclusion by a different route.
2. The judge below was wrong to treat CPR 3.4(2) as principally concerned with cases in which a fair trial would be impossible. The approach in Arrow Nominees Inc v Blackledge [2001] BCC 591, including the observations of Ward LJ with whom Roch LJ agreed, requires the court to consider the overriding objective and all relevant case-specific factors.
3. The proper analysis involves two questions: first, the extent to which the claimant’s conduct breached the overriding objective; and secondly, whether, in light of that assessment, the discretion to strike out should be exercised. Participation in a fraudulent attempt to mislead the court was a serious breach because it increased costs and caused a trial that the genuine claims would probably otherwise have avoided.
4. Factors favouring strike-out included the seriousness of the misconduct and the modest value of the claims. Factors against it included that the dishonesty concerned another claimant’s claim, the genuine claims had been fairly tried, and the dishonesty had not made a fair determination of those claims impossible. The conduct was serious but did not involve forgery or persistence in dishonesty after discovery, features that had materially contributed to the result in Arrow Nominees Inc v Blackledge.
5. The court declined to adopt the broader approach in Khan & Ors v Hussain & Ors. Public concern about phantom-passenger claims did not justify creating a special category outside fraudulent insurance claims. Indemnity costs were capable of depriving the claimants of any practical benefit and sufficiently reflected their misconduct.
6. The findings that the two claimants suffered genuine minor injuries were not shown to be erroneous. Their participation in the fraud required careful scrutiny but did not prevent the court from accepting their own claims.

• High Court (Queen’s Bench Division): appeal from the Birmingham County Court dismissed.
• Birmingham County Court: Mr Recorder Parkes QC found one claim fraudulent, accepted the two other claimants’ genuine injury claims, awarded damages, and imposed indemnity costs. The court declined to strike out those genuine claims under CPR 3.4(2).