UK Insurance Ltd v Gentry

In a civil claim alleging fraud, the claimant bears the burden of proof on the balance of probabilities. Where the allegation is inherently improbable, particularly cogent evidence may be required, producing a very high level of confidence and excluding any substantial, rather than fanciful or remote, possibility that the allegation is false. Fraud may be established by circumstantial evidence. The court should assess the evidence as a whole and stand back from individual items. Lies may support an inference of fraud where they are more consistent with masking guilt than fortifying innocence. Adverse inferences from a party’s failure to give evidence require an evidential foundation and may strengthen the opposing case, subject to any credible explanation for the absence.

The claimant insurer sought damages for deceit from the defendant, alleging that he had fraudulently represented that his Range Rover had been involved in a genuine collision with a Peugeot insured by the claimant. The defendant had obtained a default judgment and damages in earlier proceedings, but the Court of Appeal reinstated that judgment subject to a stay of execution on terms that the claimant commenced a deceit claim: [2016] EWCA Civ 141.

At trial, the defendant maintained that the collision was genuine but did not give evidence. The issues were whether the collision had been staged, whether the defendant had dishonestly represented otherwise, and the damages caused by the alleged deceit.

1. Claim succeeded. The claimant proved that the collision had been staged and was entitled to judgment for £19,179, together with interest and costs. Orders requiring the claimant to pay sums in the earlier proceedings remained stayed.

2. The claimant bore the burden of proving deceit on the balance of probabilities. Because fraudulent conduct was inherently unlikely, particularly cogent evidence was required. The court required a very high level of confidence and had to exclude any substantial, as opposed to fanciful or remote, possibility that the collision was genuine.

3. The court considered the evidence cumulatively. The contemporaneous documents were consistent with a collision but also with a staged collision. The decisive circumstantial evidence included the pre-existing friendship between the two drivers, their failure to disclose it, the defendant’s detailed and demonstrably false account that the friendship began after the collision, and the passenger’s implausible denial that he knew of the friendship.

4. The defendant’s lie was capable of supporting the fraud allegation because, in the context of the other evidence, it was more likely to have been intended to mask guilt than to fortify innocence. The absence of a claim under the defendant’s own insurance policy also supported the claimant’s case when considered with the other circumstances, although several other matters relied on by the claimant added little or no weight.

5. Adverse inferences could be drawn from the defendant’s failure to give evidence because the claimant had already established a case to answer. His absence strengthened the claimant’s case, although the possible explanation arising from his status as a litigant in person reduced, but did not eliminate, that effect. Limited additional support could be drawn from the failure to call the other driver. No adverse inference was drawn from the failure to call the recovery and repair witnesses.

Court of Appeal: The earlier default judgment in favour of the defendant was reinstated on 25 February 2016, subject to a stay of execution on terms requiring the claimant to bring a deceit claim: [2016] EWCA Civ 141.

High Court (Queen's Bench Division): The deceit claim succeeded. Judgment was entered for £19,179, with interest and costs.