MEHNAZ V SABRE INSURANCE CO LTD

Court of Appeal, Lord Justice Ward, Lord Justice Moore-Bick and Lord Justice Toulson, 3 December 2007

Insurance (motor) – Allegation of fraud by insurers – Fraud disproved – Appropriate order as to costs

The claimant submitted a claim for a vehicle which she claimed had been stolen. The insurers denied liability on the ground that the claim was fraudulent. At the trial the defence of fraud was dismissed, but the court reduced the claimant’s costs by 40% to reflect the expenditure of the insurers on investigating the alleged fraud. The Court of Appeal held that the deduction was misconceived: the claimant had won her case and there had been no basis for the allegation of fraud to be made.