Da Costa & Anor v Sargaco & Anor

Failure to prove that a defendant negligently caused an accident and loss does not, without more, establish that the claim was fraudulently manufactured. A fraud finding requires clear findings on the matters relied upon and reasoning connecting those findings to the alleged fraud. General unreliability, inconsistencies, hearsay or a history of other accidents cannot alone carry that conclusion.

A party’s presence throughout a civil trial is the starting point, but it is not an absolute rule. Any exclusion must be justified, and fairness is assessed by examining the proceedings as a whole. An erroneous exclusion does not automatically invalidate the trial where no material unfairness is shown.

The claimants alleged that a car negligently damaged their parked motorcycles and claimed damages for their value and alternative transport. The insurer alleged that the claims were fraudulent.

HHJ Baucher found the claimants’ accounts implausible, held that they had not proved their claims, found the claims manufactured or fraudulent, dismissed them and ordered indemnity costs. On appeal, the claimants challenged the fraud findings, the judge’s procedural handling, and the exclusion of one claimant while the other gave evidence. The central issues were whether failure to prove the accident supported a fraud finding, whether the reasoning was adequate, and whether the exclusion rendered the trial unfair.

1. Disposition. The appeal was allowed in relation to the findings that the claims were manufactured or fraudulent, but was otherwise dismissed. The dismissal of the substantive claims remained in force. The costs order was varied from indemnity costs to costs on the standard basis, and paragraph 5 of the order was set aside.
2. The judge was entitled to reject the claims as unproved. She had heard the claimants’ oral evidence and identified substantial inconsistencies which provided a tenable basis for concluding that the claimants had not established the accident and their losses.
3. A finding that a claim is unproved does not inevitably lead to a finding of fraud. The two conclusions are legally and logically distinct. The judge had not made sufficient findings or provided sufficient reasoning to establish that the claims were fraudulently manufactured. In particular, limited findings about addresses, alleged distancing from the first defendant, hearsay evidence and other accidents did not substantiate a finding of conspiracy or fraud.
4. The inferences available in a fraud case depend on the facts of the particular case. Hussain v Hussain and Aviva [2012] EWCA Civ 1367 illustrated an approach to such allegations but did not establish fixed parameters for permissible inferences.
5. Under the common law and European Convention on Human Rights, the starting point is that a party is entitled to be present throughout a civil trial. That entitlement is not absolute, and fairness must be assessed by examining the proceedings as a whole. The exclusion order was wrong because the judge had not given proper weight to the starting point and had provided sparse reasoning. Nevertheless, the limited exclusion did not make this trial unfair: both claimants had the same counsel, witness statements had been served, and no material prejudice was identified.
6. The judge’s citation of authorities without inviting submissions did not constitute a material error where no misstatement of law was identified. The complaints about the handling of closing submissions and alleged pre-determination also failed.

1. Court of Appeal (Civil Division) — In [2016] EWCA Civ 764, the appeal was allowed as to the fraud findings and otherwise dismissed. The indemnity costs order was varied to the standard basis and paragraph 5 was set aside.
2. Central London County Court — HHJ Baucher dismissed the claims after finding them unproved and manufactured or fraudulent, and ordered indemnity costs.