It is a strange world. The perception was, and remains, that legal costs in fast-track road traffic claims are disproportionate to damages. The solution was to ask a senior judge, Lord Justice Jackson, with minimal practical experience of personal injury litigation, to review and report.

He concluded that ‘the reforms ­proposed in (my final report) will also incentivise the bringing of strong claims but at proportionate costs and in an environment where the claimant has an interest in controlling costs’.

Lord Young, in his curtailed visit to this topic, called for ‘fair and proportionate compensation to genuine claimants’.

The direction of the proposals of both authors was aimed at depositing the bulk of responsibility for the current state of affairs firmly at the door of claimant lawyers, who make ‘disproportionate profits’ through sinister mechanisms such as advertising in the media to promote a ‘compensation culture’. A ‘culture’ whereby a person who is injured through the fault of someone else, which ultimately may be adjudicated by a court, receives recompense.

While all this judicial and ministerial tub-thumping has been deafening to the receptive ears of certain elements of the media, two things have continued to happen. First, many experienced and effective claimant lawyers and insurance company representatives have continued to sensibly resolve fast-track personal injury cases for a reasonable sum in damages and costs. This is a practice which existed long before the Jackson report and depended on sensible and considered practitioners on both sides who, while maintaining a proper distance, settled cases with little fuss or expression of monstrous indignation at the supposed failings of the system.

There remains little evidence that there is either a system which rewards the greedy and overpaid, or a commercial imperative that overshadows any sense of what is right and proportionate. Costs do not trump damages, or the restoration of the claimant to their pre-accident position.

Second, and lost in the many words of the Jackson report, is the well-recognised practice of insurance companies selling their insureds’ personal injury claims, by auction or otherwise, to the highest bidder, while at the same time bleating plangently about the high costs of PI litigation. It is noteworthy that the recent threat to the survival of referral fees affected the share price of at least one insurer.

Two cases have exposed both sides of the RTA divide. On the one hand, there was a claimant who exaggerated his case, while on the other an insurer created a scam to fraudulently make money from fellow insurers. I set out the details of both cases below and you will, at the conclusion, note the contrasting penalties which attach to their deceptions.

Nield v Loveday [2011] EWHC 2324 (Admin)

Practitioners may be relaxed about the need for clients to verify documents in personal injury cases which require statements of truth, namely the particulars of claim, the schedule of loss and the witness statement. On the assumption that we believe our clients, and with time precious, the temptation to sign the documentation oneself is real. This case underscores the importance of the verification of these important documents within a PI claim. If one can ignore the serious consequences to the claimant and his wife from actions which amounted to a contempt of court, the case has its comedic elements which at times verge on the farcical.

Mr Loveday was driving his Land Rover Discovery when he was in a collision with a car driven by Mr Nield who emerged from a forecourt of a petrol station into his path. The judgment does not identify the nature of Mr Nield’s car, but the Land Rover Discovery must be one of the largest motor vehicles driven on the British road network. Despite this, the claimant claimed damages ‘likely to exceed £50,000’, in part stating that he was ‘often reliant on a wheelchair for travel outside the home as he is unable to walk more than a very short distance’.

His wife also produced a statement supporting the claimant’s evidence, but subsequently, admitted contempt of court in signing a statement of truth verifying contents which she knew to be untrue. It is important to note that one is found in contempt not solely for knowing that what one is saying is false, but that in doing so it is likely to interfere with the course of justice (see Sir Richard Scott, vice-chancellor (as he then was) in Malgar Limited v RE Leach Engineering Ltd [2000] C. and P. Rep. 39). The standard of proof on those bringing proceedings for contempt is that of the criminal courts.

Mr Loveday’s witness statement not only referred to his need for the wheelchair but also that he relied on his wife to help him getting indoors and outside, that he needed help with stairs at home, and that his wife effectively became his full-time carer. In addition, he had developed an almost phobic anxiety about travelling and the prospect of having to go in a motorcar filled him with dread.

He stated that ‘I would just like to stay in my house, and never have to go outside’. He also lost his job which, coincidentally, he was just about to restart on the day following his accident. If there is a silver lining to the very bleak cloud Mr Loveday was attempting to portray, it is that because of his injuries he could no longer go caravanning. Despite his difficulty in leaving the house, he and his wife managed to pluck up the courage to visit Lake Garda. In his witness statement, he describes in detail the assistance he had at the airport, taking the wheelchair on and off the aeroplane, and how, because of his condition, he was the first one on and the last one off the plane.

The insurance company was disbelieving of the extent of his injuries. They instructed private investigators and the evidence that the court heard, and which ultimately was found proven, suggested a claim that was one of spectacular dishonesty. Notably, Mr Loveday, on having been presented with the DVD of the private investigator’s evidence, accepted the defendant’s offer of £1,850 in full and final settlement of his claim for damages.

In looking at the evidence, Mr Justice Keith pointed out that the only proof that Loveday had that he ever worked for the company Keith Evans Logistics, to whom he was due to return on the day after the accident, was a letter supposedly written by the owner of the business in which he spelt his own forename, Keith, as K-i-e-t-h. His Lordship said, no doubt with a hint of amusement, ‘I know of no one with the name Keith who spells his name K-i-e-t-h, and I should know’.

The rest of the evidence simply unravelled and is best exemplified by the trip to Lake Garda, images of which were placed on Facebook, showing Mrs Loveday standing by a Land Rover Discovery vehicle with a caravan attached to it. What are the chances of that happening? It seemed that, in fact, rather than having a fear of travelling by motorcar, and back injuries necessitating the use of a wheelchair, Mr Loveday and his wife managed to travel overland from the UK to northern Italy in the same type of motor vehicle that was involved in the collision, while pulling a caravan.

The court then examined whether Mr Loveday knew of the falsity of his statement. He had said that, in fact, he did not read the statement - he simply signed it. While many claimants may well do this, the court found that the evidence pointed to Mr Loveday having carefully considered the statement as he annotated it with amendments to 43 of the 151 paragraphs.

In conclusion, therefore, the court found that the claimant had dramatically misled the court.

In sentencing, Sir Anthony May found that Loveday had told deliberate lies in court proceedings which ‘undermines the fabric of justice, which itself is part of the fabric of society’. Following the direction of Lord Justice Moses in South Wales Fire and Rescue v Smith [2011] EWHC 1749 (Admin), that ‘those who make false claims, if caught, should expect to go to prison’, Loveday was imprisoned for a period of nine months. His wife, who had admitted her guilt, was given a suspended sentence.

As practitioners, therefore, we should be careful to ensure that our clients understand both the importance of the statement of truth and that contempt of court proceedings may be brought if a false statement is made. While, of course, we would never sign a witness statement, this judgment should make us more considered in signing either the claim form or the particulars of claim.

Fallows v Harkers Transport (a firm), Romford County Court, 2 September 2011

The Fallows case involved a road traffic accident in which liability was not in issue. The claimant was insured by RSA which organised the repair to his vehicle and sought to recover the costs from the defendant’s insurers, Equity Red Star.

The judge detailed the historical system which the insurance industry operates, whereby the claimant’s insurers will obtain a quote, the defendant’s insurers will review it, they will usually accept it, and then the claimants’ insurers organise the repair and pay for it before making a subrogated claim against the defendants’ insurers for the amount of the invoice.

In this instance, RSA set up a separate company, RSA ARL, to undertake all repairs of vehicles insured by them. At times, they would use contractors, as they did in this case. RSA ARL paid the contractor but the invoice they submitted to RSA was for a higher amount. It was the higher invoice which was then submitted to Equity Red Star. There was no detail of the ‘extra charges’, save that they fell into the descriptions of ‘sundry allowances’ and ‘collection/recovery costs’. It appears that they were a fiction.

The judge found that RSA controlled RSA ARL and its business records. By using the above system, he found that the cost of repairing the vehicle increased by approximately 25%. These costs which resulted from simply inserting RSA ARL as an intermediary inflated the ultimate costs, by increasing the hourly rate and adding extra charges, one of which he disallowed as a fabrication and the other was not reasonably incurred. The effects of the extra charges were ‘simply to boost RSA group’s profits beyond the actual costs of repair by the margins inserted by RSA ARL’.

RSA’s lawyers adopted ‘ingenious’ arguments to avoid disclosure of documentation which would have shed light on the background to the final invoice. There was no justification established for claiming for an amount above the subcontractor’s invoice.

This case demonstrates that Jackson LJ’s view of the personal injury process is too facile. There are opportunities to make money out of personal injury litigation as claims management companies, sign-up agencies and medical agencies can all attest. Not all are a carbuncle on the process.

But while criticising claimant lawyers his lordship should consider the true nature of the RSA scam. This was not a tacky advert by a claimant lawyer in a local rag advertising ‘no pain, no gain’, but a deliberate and heavily resourced plan to make hundreds of thousands of pounds by deceiving other insurers. A separate company was formed; the administration was set up to handle hundreds of cases. One suspects highly paid tax lawyers would have provided guidance in relation to revenue aspects of the arrangement, and accounting processes implemented to handle the revenue stream. Very few organisations would have had the facility to set up this profit-making venture.

Life is rarely, as Jackson LJ appears to see it, in high definition. The edges are mostly blurred. The worst elements of both sides of the litigation experience should be extracted and disposed of. Mr Loveday’s actions were petty in the scheme of things and based on a foundation of crass naivety. He was imprisoned for his deception. RSA, on the other hand, committed a deliberate and substantial fraud on a grand scale. Their MD was not summonsed to attend court to account for their actions.

There has, save for the embarrassment through radio coverage, been little consequence.

The PI world has miscreants on both sides, but irrespective of what happens to claimants and their lawyers post-Jackson, one can be sure the insurers will continue to make significant sums of money. However, as the Fallows case demonstrates to his Lordship and others, when the mask of the insurance industry slips the face behind is rarely attractive.

Simon Allen is joint head of the national personal injury department at Russell Jones & Walker and managing partner of the Sheffield office