Judge criticises private investigation methods

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The Independent Online
THE BENEFITS of using civil law to prosecute fraud - and the need for care in choosing a private investigator - were highlighted in January in a successful but little noticed case brought by Norwich Union. The insurance company won an interim award of pounds 575,000 against a firm of car breakers, Metro Breakers, and its boss, Anthony Cleary.

Mr Justice Rivlin was highly critical of a firm of private investigators employed by Norwich, Magnum International, which harassed potential suspects and witnesses, leaving some employees 'deeply distressed'. The judge said employees' evidence should be copied and sent to the chairman and board 'so that they can see for themselves what is alleged to have taken place in their name'.

He added: 'They might also be deeply concerned to learn that at the behest of the investigators Norwich Union paid no less than pounds 60,000 to a man who, I have learnt, has a criminal record 'to assist them in their inquiries' '. The judge thought the same results could have been achieved with an internal inquiry and outside accountants.

Norwich senior management and the firm's counsel disassociated themselves in open court from Magnum's actions and the judge said he was pleased to hear the company would urgently consider paying compensation. Norwich said: 'We took the judge's remarks extremely seriously.'

The criticisms did not prevent Norwich winning the case hands down. Claims of fraud were accepted by the judge, who took pains to explain that he was setting himself a high standard of proof because of the seriousness of the allegations.

Metro Breakers, now in liquidation, was a firm dealing in written-off cars bought from Norwich Union, which insured the vehicles. Some of the salvaged cars, including Rolls- Royces and Mercedes, were still worth pounds 20,000 or more. Mr Cleary and his companies were accused of dishonestly colluding with Rita Fiddy, a Norwich employee, in buying salvaged cars without paying for them.

The judge said Mr Cleary must have 'marvelled at the plaintiffs' stupidity in not exercising any real control over Mrs Fiddy. He must have thought that his luck was well and truly in'.

He added: 'This small, but no doubt effective, network of companies was used as and did become a tool of Mr Cleary in a dishonest enterprise to dispose of assets purchased from the plaintiff.'

Mr Cleary and his companies were found liable for between pounds 450,0000 and pounds 575,000 of the pounds 841,000 worth of vehicles Metro Breakers received and did not pay for.

The case against Mrs Fiddy was dropped, but she appeared as a witness in the case against Mr Cleary and his companies. The judge accepted she was more sinned against than sinning.

He described her as 'well and truly in Mr Cleary's pocket', and said she was in breach of her fiduciary duty by continuing to supply high value salvage cars to Metro Breakers.

Proceedings are under way to recover the money. Norwich was also awarded costs.