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Is fraud worth the price of admission? Court orders rescission of RTA portal agreement

  • 19 September 2019 19 September 2019
  • UK & Europe

  • Insurance & Reinsurance

Is fraud worth the price of admission? Court orders rescission of RTA portal agreement

Clyde & Co's fraud team have recently concluded a successful application to rescind a contract agreed following the Claimant's acceptance of the insurer's MOJ portal offer. This Application was made after concerns were raised that the claim resulted from a staged accident.

The Court agreed that it was in the interests of justice to allow our insurer client to withdraw the pre-action admission of liability also made in the portal.


The collision allegedly occurred on 24 January 2016. Liability was admitted in the Portal on 29 March 2016 with the Claimant accepting a Portal offer on 7 September 2016.

Later investigations by the insurer suggested the accident was staged. The insurer informed the Claimant that further enquiries would be undertaken and the accident circumstances needed to be verified.  

Surprisingly, the Claimant did not make any attempt to enforce the compromise but did not issue proceedings until just before limitation. Proceedings were issued against both the alleged driver of the Defendant vehicle and the Defendant insurer. Given indemnity had been withdrawn from the driver we were instructed to act on behalf of the insurer only.

The Particulars of Claim did not seek to rely upon the existing compromise agreement, instead pleading the action in negligence. We filed a defence denying liability that outlined the following issues:

  • Concerns with the accident circumstances
  • Inconsistent and unreliable accounts of the accident and the aftermath
  • Inconsistencies in the Claim Notification Form (CNF) and medical expert's report
  • Evidence suggesting that the insured driver and the Claimant (who were related) had substantial shared business interests in accident management companies.


Shortly after the Defence we obtained instructions to issue an application to rescind the agreement reached in the Portal and to withdraw the liability admission.

The Claimant only sought to recognise and rely upon the existence of the compromise agreement when filing their response to the application.


The judge described the insurer's allegations of fraud as not "just smoke and mirrors" and found there was a reasonable prospect fraud may be established.

In considering the factors under Practice Direction 14 7.2 where a Court may permit the withdrawal of an admission, the judge noted:                                                              

(a) Conduct of parties

The claim in the CNF was put forward on a potentially erroneous basis given the medical report contradicted it. This was not correct conduct.

(b) Prejudice  

The judge had doubts over the Claimant's reply to the Defence as reliance on the compromise agreement and admission was not pleaded in the Particulars. Given the failure to correctly plead their case to rely upon these issues and instead proceed on the basis of a claim in negligence, it was decided there was no prejudice to the Claimant who had not received payment. But there would be prejudice to the insurer if the Claimant was allowed to rely on its reply which would have effectively introduced a debt claim into the proceedings. The Judge found that this ought to have been included in the Particulars of Claim.

(c) Stage of proceedings

The application was made early, meaning there was time for issues to be dealt with.

(d) Prospect of success

The insurer had reasonable prospects of success regarding the allegation of fraud.

(e) Interests of justice

It was in the interests of justice that the insurer be permitted to resile.

Referring to the decision in Adriana Chimel v Chibwana and Williams (2016), the Judge concluded it is "in the interests of justice for this issue to be tested. For those reasons set out I would allow [the insurer] to resile from the admission."

The Judge further stated "it follows that because I have allowed [the insurer] to resile from the admission it follows that settlement should be set aside because it is based on the admission."

What can we learn?

  • The Judge noted that the decision in Hayward v Zurich Insurance, whilst not entirely aligned with the index circumstances, is authority for a general proposition that 'fraud unravels all'. This was held as authority that a settlement can be rescinded on the basis that there are reasonable prospects of the defendant demonstrating fraud.
  • The judge also distinguished between this case and Fitton v Ageas (2018), which affirmed that the doctrine of mistake does not apply to the portal for low value personal injury claims. Our success here indicates that the courts are likely to be more willing to permit insurers to resile even where new evidence of possible fraud arises after an admission has been made within the low value portal.

The article was authored by Damian Rourke (Partner) and Peter Smithson (Associate).


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