£23,000 costs order secured against now defunct law firm after alleging dishonesty

Nelson-based claimant firm with family links to physiotherapy provider were ordered to pay £23,000 after making unsupported allegations of dishonesty against defendant law firm Horwich Farrelly and Zurich Insurance’s customer.

Horwich Farrelly has secured a costs order of over £23,000 against a claimant law firm who alleged they, together with their insurer client’s (Zurich Insurance) customer, had misled the court and forged evidence following a road traffic accident seven years ago.

The allegations stem from an alleged accident on Poplar High Street in April 2014 when the claimant issued proceedings against Zurich’s customer after stating one of their vehicles had collided with his own. Represented by Adnan Hanif Solicitors (AHS) in Nelson, Lancashire, the claim was for an eight-month whiplash, physiotherapy and vehicle repairs.

Although claims for an orthopaedic pillow, TENs machine, heat/ice packs and exercise sheets were abandoned pre-litigation, the claim for physiotherapy – which was to be provided by Ecco Medical – remained. Early investigations by Horwich Farrelly found the director of Ecco was the brother of a solicitor at AHS.

Zurich’s defence was that their customer had no involvement; tachograph data showed the vehicle purported to be involved was some way from the alleged accident scene.

Despite such evidence, the case progressed. At witness exchange, Horwich Farrelly served evidence which; (1) disclosed the tachograph data showing the vehicle to be elsewhere; (2) their unsuccessful attempts to interview an independent witness, and; (3) their findings that Ecco and AHS were linked.

After exchange of witness evidence however, and to our amazement, AHS issued an application to the court on 26 February 2018 to strike out Zurich’s defence on the basis that:

• Horwich Farrelly had misled and been involved in deceptive conduct towards the court when requesting extensions on case management directions during the course of litigation.
• That investigations conducted by Horwich Farrelly’s intelligence analyst had been obtained illegally.
• The claimant’s right to a fair trial had been breached as the driver of the vehicle insured by Zurich could not be traced.
• That Zurich’s customer/Horwich Farrelly had presented potentially forged, doctored or constructed evidence in relation to the tachograph data.
• That Horwich Farrelly had failed to address, “serious conduct/regulatory issues.”

To even more astonishment, a further application was made on 26 March 2018 for:

• The lawyer at Horwich Farrelly and her line manager to attend trial for cross-examination.
• The intelligence analyst at Horwich Farrelly to attend trial with all of her equipment to demonstrate the searches.
• Horwich Farrelly to provide full details of all instructions between them and Zurich’s customer, to be certified by a Partner.

The applications were heard in May 2018 but ultimately both were dismissed, receiving heavy criticism from the judge about the manner in which they had been pursued. The trial was relisted for December 2018.

At trial, it became apparent that the claimant had a poor grasp of English and only understood part of his witness statement. Therefore, it was clear to the judge that the claimant was unable to understand his own pleadings (written in English) and there had been a failure to have his statement translated. As a result his claim was duly struck out and his QOCs protection waived. He was ordered to pay costs of £15,000.

In addition, and as a huge amount of time had been spent defending Horwich Farrelly and Zurich’s customer from allegations of dishonesty – as well as AHS’ failure to appreciate the claimant’s poor grasp of English – a wasted costs application was issued by Horwich Farrelly against AHS for them to show cause as to why they should not pay Zurich’s legal costs.

For a law firm to pay the costs of a case and not the claimant, two stages are required. Due to the pandemic and the subsequent impact on the legal system and court timings, the first hearing did not take place until February 2021 in Central London. Here, the court had to be satisfied it had evidence which would likely lead to a wasted costs order being made and that it was justified and proportionate to make that order.

In the judgment handed down, DJ Avent found AHS’ solicitor had not acted with the competence reasonably expected of a solicitor in his unfounded accusations of dishonesty. Further, he was in significant breach of his professional duties by making such allegations; they were vexatious and not in-keeping with the overriding objective.

Turning to the language barrier, DJ Avent found it inconceivable that, in the 20 months before trial, AHS had not discovered the claimant’s inability to properly comprehend English. It is incumbent upon, and the responsibility of, a solicitor to ensure a party can give their evidence properly.

Accordingly, it was found the conduct of AHS’ solicitor was improper, unreasonable and negligent.

Despite the seriousness of these findings, AHS failed to serve a statement in response nor were they in attendance at the second hearing to defend their actions. They therefore failed to show cause why they should not pay the costs incurred by Zurich. A wasted costs order against AHS of £23,130.96 was subsequently made and paid within a matter of days.

Speaking on the outcome of the matter, Jared Mallinson, Head of Counter Fraud, said: “Although, thankfully an extremely rare occurrence, we take a robust approach to any allegations of dishonesty against us or our clients, particularly where there is a risk of professional/reputational damage. When we, our clients or their customer face allegations which bring reputations into disrepute we will defend these with integrity.

“Not just content with the original claim being dismissed, we go the extra mile for clients to ensure that, where allegations are made which are unsubstantiated, wrongdoers are penalised and justice is served.”

Scott Clayton, Head of Claims Fraud at Zurich, said: “At first this seemed like a straightforward case of Zurich, with Horwich Farrelly’s assistance, investigating a claim we thought suspicious due to both the links between the claimant’s solicitor and the physiotherapists, and the evidence showing our customer’s vehicle at another location at the supposed time of the accident. What we didn’t expect however, was for our combined investigative efforts to be deemed dishonest by AHS.

“In light of the outcome, Horwich Farrelly showed great determination to pursue both the claimant and his solicitors for costs and the result is a vindication of our approach, not to mention a stark message to others that wasting the court’s time on egregious matters like this will not to be tolerated.”