AXA Insurance UK PLC v Fatjon Kryeziu & Ors

A fraud claim must plead the primary facts relied on to establish falsity and dishonesty, but need not identify the true underlying events if falsity and dishonesty can be proved by other means. A party may not deliberately withhold non-privileged evidence within standard disclosure merely to test an opponent’s account. Relief from sanctions requires consideration of the seriousness and significance of the breach, why it occurred, and what justice requires. A settlement preventing further action against certain parties does not ordinarily prevent findings relevant to an extant claim against another party, provided fairness is maintained. Case-management decisions attract substantial appellate deference.

The insurer appealed three orders made by HHJ Lethem in proceedings alleging that road-traffic insurance claims were fraudulent. The first order refused amendments and permission to rely on further evidence. The second declared that the insurer was estopped from seeking adverse findings against four respondents who had settled with it. The third struck out the claim, alternatively granting summary judgment.

The insurer challenged the pleading requirements for fraud, its withholding and disclosure of Facebook evidence, the effect of the settlement agreement, and the exercise of case-management discretion.

1. Pleading fraud. The particulars had to state the facts relied on to show that the representations were false and dishonestly made. It was unnecessary to plead the true underlying factual position where the insurer could establish falsity and dishonesty by other evidence. The original pleading, alleging that the accident was not genuine and identifying the supporting facts, was therefore legally sufficient in principle.
2. Disclosure and amendment. The Facebook material was within standard disclosure and had been deliberately withheld in breach of the disclosure order and the rules. The insurer was not entitled to rely on a surveillance analogy or the public interest in detecting fraudulent claims. It required relief from sanctions. Applying Denton v White, the breach was serious and deliberate, but refusing relief would exclude a central part of the fraud case and the respondent could fairly address the evidence. Relief was granted, subject to costs sanctions.
3. Permission to amend was granted in respect of the Facebook evidence, the route evidence, medical anomalies and vehicle positioning. The route pleading was to be recast concisely. Permission to claim exemplary damages was refused, both because the claim should have been pleaded at the outset and as a proportionate sanction for the deliberate breach.
4. Settlement agreement. Construed against its background, the agreement prevented further proceedings or action against the settling respondents, but did not prevent the insurer from pursuing its claim against the first respondent or relying on evidence relevant to that claim. Findings that the accident was not genuine, that the passengers were absent or uninjured, or that their evidence was dishonest were not thereby excluded. Any unfairness arising at trial had to be addressed through ordinary procedural safeguards.
5. Strike-out. The strike-out order was correct on the case as then pleaded and evidenced. Once permission to amend was granted, however, the Facebook and route evidence supplied reasonable grounds and a real prospect of success. The claim was not an abuse of process.
6. All three appeals were allowed. The claim was reinstated, amendments were permitted subject to the stated limitations and sanctions, and the declaration concerning the settling respondents was set aside.

The judgment describes appeals from three orders of HHJ Lethem, with permission granted by Soole J. The High Court allowed all three appeals.