TIDMACE
RNS Number : 6515Z
Accident Exchange Group PLC
25 September 2009
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| FOR IMMEDIATE RELEASE | 25 September 2009 |
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Accident Exchange Group Plc
("Accident Exchange" or the "Group")
UPDATE ON LEGAL ISSUES
We are today providing an update to the ongoing investigation into the conduct
of Autofocus Limited ("Autofocus") and the ensuing civil claim against them.
This update should be read in conjunction with the Interim Management
Statement issued on 17 September 2009.
The Group has now produced an initial analysis of the number of open and closed
claims where there may be defective evidence submitted by Autofocus giving rise
to a potential under recovery of hire charges. Their evidence started to be
submitted against an increasing number of claims from as far back as 2007.
Documents identifying the involvement of Autofocus are recorded by the
solicitors who have been acting in these claims and our preliminary analysis has
so far involved gathering around 1.5 million pages of documents and indexing
those documents to allow text searches to reveal the total potential claim
exposure.
Our analysis continues but it is currently suggestive that at least 2,500
settled and open claims with a combined invoice value of GBP22 million may be
affected by Autofocus' involvement in the insurers' defence strategies.
Approximately 500 of these claims have already been closed with the balance
currently being litigated.
The Ongoing Investigation
We first informed the Courts of our concerns over the accuracy and potential
honesty of evidence being offered by defendant insurers in the case of Glossop v
Christian Salvesen Logistics Ltd at Chesterfield County Court on 8 September
2009.That case has now been settled save as to the issue of costs which will be
determined by the Judge in a month or so.
In spite of the assertion by Autofocus in a press release of 9 September 2009 of
an intent to "defend itself and its reputation" we have since learned that the
Autofocus employee who submitted the evidence in that case has very
recently left the employment of Autofocus. As a separate matter, we have
instructed our solicitors to make an application to the Court for permission to
bring an action against that person for Contempt of Court.
Our investigation into the veracity of the evidence offered by Autofocus and
their employees has continued. In the past week the rate of discovery of more
cases where the evidence appears to be incorrect or dishonest has increased
and, on a daily basis, our investigators continue to obtain witness statements
that suggest that Autofocus' evidence is dishonest on further claims.
At present, we are focusing on those cases which are due for trial in the
coming weeks in order to prevent insurers continuing to benefit from the ongoing
submission of what appears to be unreliable evidence.
Since our announcement of 17 September, we have also received assistance from a
number of third parties who themselves have had concerns over evidence produced
by Autofocus. By way of example:
* One of our panel firms of solicitors has received a copy of an e-mail that was
sent by an employee of Autofocus to a prominent firm of defence lawyers acting
for an 'at fault' insurer advising them that a material aspect of the Autofocus
report omitted certain key facts which cast doubt over the veracity of the hire
rate evidence in that report. Regardless of that disclosure, the Autofocus
report was compiled and submitted in that case with the salient facts omitted
from the report.
* We have received a copy of an e-mail exchange between an Autofocus employee and
a firm of solicitors in which the Autofocus employee confirms that where their
investigations reveal hire rates that do not offer any saving over the credit
hire rate claimed, then those higher rates are not included in the their rate
reports effectively ensuring that the Courts are deprived of the full
information on the market spot rate.
In addition to focusing on current cases, we are now also reviewing all cases
where the final judgement handed down by the Court may have awarded less than
the full value of hire charges claimed and can now be shown to be unsafe based
on the existence of evidence from Autofocus which may not have been true.
Our investigations into all of the matters raised above continue.
Claim against Autofocus
A statement of claim has now been served and an application for pre-action
disclosure has been filed in the High Court against Autofocus Limited and
others alleging that they are guilty of the tort of conspiracy to use unlawful
means, interference with the trade or business of Accident Exchange Limited (a
major trading subsidiary of Accident Exchange Group Plc) by unlawful means and
deceit. The application before the High Court seeks disclosure in respect of
telephone records and other materials which we believe will be supportive of the
direct evidence we have already obtained in our investigation and which will
further prove that a large part of the reports and statements given by Autofocus
have been fabricated.
The Insurer and Solicitor reaction generally
We still have 16 investigators engaged in our investigation and we
are uncovering fresh material on a daily basis. When we discover that new
evidence we will serve it on the at fault insurer and seek to introduce it into
the litigation process. The Courts are receptive to the introduction of this
evidence and, we suspect, are rightfully concerned as to the potential scale of
the issues we have unveiled.
Where we are serving this additional evidence in these circumstances, a variety
of responses are emerging. We are seeing some cases settle in full on the day
before the trial. In other cases, we have seen Autofocus evidence withdrawn
completely and the insurers unable to offer any evidence that the Group's hire
charges are outside of the market spot rate. In cases where insurers do not
withdraw the Autofocus evidence we have seen an increasing trend of the
Autofocus witness failing to attend at Court to give that evidence.
It is now clear to us that the use of these Autofocus reports has become an
embedded part of the defence process being deployed by certain UK motor insurers
in their attempts to avoid paying credit hire claims at a market spot rate.
Dialogue with a number of solicitors representing at fault insurers and also
with a number of insurers directly commenced on 9 September as our concerns over
the Autofocus evidence materialised.
By and large, solicitors acting for defendant insurers are attempting to be
pragmatic about the position where it is obvious that the evidence they are
relying on may be unsafe or dishonest. As stated above, this is reflected in an
appetite to settle claims ahead of court hearing dates.
We have now produced an analysis of those insurers who have most exposed
themselves to the strategy of relying on Autofocus rate evidence and we have
written to them detailing our concerns. Conversations are underway with a number
of those insurers who acknowledge that any evidence of fraud in the insurance
cycle - whether that be a staged traffic accident, an exaggerated personal
injury claim or something as serious as dishonest evidence - requires urgent
action to avoid further undermining the rule of law. Some insurers
are, however, slower to react.
Ongoing plan of activity
The key priority for the Group is to improve cash flow. A resolution of these
issues is expected to improve materially the rate of settlement of claims.
Accordingly, our attention is focused on continuing to address these serious
issues of dishonesty, to engage insurers in the issues and to bring to the
attention of the Court, at whatever stage in the proceedings dishonesty is
identified, the results of our investigations in order to ensure that justice
prevails.
We are issuing witness summonses in every case where we have a hearing scheduled
in order to require the attendance of the Autofocus witness at Court on a case
by case basis in order that they can be cross examined on their
evidence. Wherever it becomes clear that the evidence tendered is dishonest we
will seek the leave of the Court to commence an action against that individual
for contempt of court. Since the Glossop case was heard on 8 September, many of
those individuals have failed to attend at Court even when summonsed to attend
and, in a number of cases, we have been informed by solicitors representing the
'at fault' insurer that those individuals have now left the employment of
Autofocus.
We have also provided details of our investigation to our industry peers and we
are facilitating a process of co-operation and exchange between other credit
hire companies who have alerted us that they have been affected by this issue.
Given the weight of evidence we have amassed, we are not surprised at the
hesitation of Autofocus' employees to appear in court to face cross-examination.
We also acknowledge that the UK insurers who have been relying on this line of
defence will take time to react to appreciate the magnitude of the issue with
which they are faced. As they do, however, the Board believes that they will
recognise that the discounts offered within the terms of the GTA are
substantial. Moreover, where insurers have chosen to pursue claims outside of
that protocol on the basis of rate evidence which is clearly false, they will
leave themselves open to materially higher charges and associated legal fees as
a consequence.
Further updates will be provided, as appropriate.
Commenting, David Galloway, Non Executive Chairman, said:
"We were disturbed at the gravity and volume of these issues when we first
became aware of them a week or so ago. We have made good progress internally in
reacting to the issues and in providing evidence to the Courts of where this
dishonesty has occurred.
"At a time when insurers are themselves subject to fraud and deceit on an
increasing scale it is disappointing to find that a number of leading insurers
have so far failed to engage or address this discovery."
ENDS
CONTACTS:
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| Accident Exchange Group Plc | |
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| Steve Evans, Chief Executive | 08703-009 781 |
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| Martin Andrews, Group Finance | 08703-009 781 |
| Director | |
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| | |
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| Singer Capital Markets Limited | 020-3205-7500 |
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| Shaun Dobson, Joint Head of | |
| Corporate Finance | |
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| Bankside | |
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| Steve Liebmann or Simon | 020-7367-8888 |
| Bloomfield | |
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About Accident Exchange
Based in the West Midlands and with regional depots in Glasgow, Belfast,
Warrington and Dartford, Accident Exchange delivers accident management and
other solutions to automotive and insurance related sectors. Fully listed, the
stock code is LSE: ACE.
This information is provided by RNS
The company news service from the London Stock Exchange
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