ACE.L Regulatory News (ACE)

Accident Exchange Group Plc

("the Company")

UPDATE ON AUTOFOCUS LEGAL ACTION

Court of Appeal judgment handed down

As previously reported, the Company commenced an action in the High Court against Autofocus Limited ("Autofocus") in October 2009 following the discovery that a number of their employees had presented evidence of daily hire rates which we believed were false and which had resulted in a material under recovery of our hire charges. The action brought alleges conspiracy to use unlawful means, interference to our business by unlawful means and deceit.

We have previously reported that Autofocus made an application to the High Court to have our action struck out with Autofocus arguing that it was able to rely on protection from prosecution by reference to witness immunity. As was also previously reported, that application was rejected by His Honour Judge Mackie QC (sitting as a judge of the High Court) on 16 December 2009 but permission was requested by, and was given to, Autofocus to appeal the decision.

That appeal was heard by The Court of Appeal on 9 June 2010 and judgment was handed down this morning by Lord Justice Maurice Kay, Vice President of the Court of Appeal (Civil Division). We are pleased to report that the appeal by Autofocus has been dismissed.

In addressing the issues for trial, Lord Justice Kay said of the Autofocus evidence that:

"...it will be necessary to consider precisely what each rates surveyor and his superiors did or omitted to do and what their state of mind was at the time. It may be necessary to consider the chronology of the events from phone calls (if made) to the spreadsheets, to the creation of the witness statements. I am bound to say that, if it is established that a particular surveyor dishonestly fabricated evidence, in my view, applying Darker, he would be unlikely to avail himself of the immunity..."

Following the appeal judgment, the Company will now make an application to the High Court to amend the original proceedings in this case to include all of the Autofocus employees against whom we believe we have further evidence of dishonesty.

The case against Autofocus therefore continues.

Update on other Autofocus related matters

As well as the substantive action brought against Autofocus, and as previously reported, the Company has identified approximately 2,500 cases where the decision of a Court may have been unsound based on the evidence given by employees of Autofocus and where we believe that the hire charges recovered were below the level that should have been awarded.

In the case of Archer v Skanska Corporation, which is the case where our suspicions regarding the conduct of Autofocus rate surveyors were first identified, leave to appeal the original judgment has now been granted by the Court of Appeal. A form of order has been agreed with the defendant which provides, inter alia, that a retrial will take place solely on the issue of the quantum of hire charges. The agreed draft order is before the Court of Appeal awaiting approval. The defendant has conceded that the original evidence of Autofocus is unreliable and this evidence has now been abandoned.

In the case of Stewart v Rees, which involved evidence from the same Autofocus rate surveyor as in the above case, leave to appeal the original decision has also now been granted following the submission of evidence by the Company which shows that the comparator vehicle details and rate evidence of the Autofocus rate surveyor, on which the Judge based the initial award for damages, were fictitious. In granting permission to appeal, HHJ Walton said:

"Mr. Roger [the Defendant's barrister] candidly accepts the evidence of Elaine Spence contained in her witness statement raises an important issue in relation to the evidence of Mr. George Broom [the Autofocus rate surveyor]. Frankly speaking, on an ordinary reading it contradicts it and I think I cannot ignore the fact that there are other cases in which the same gentleman has been involved which are currently, no doubt in relation to much higher amounts, proceeding in the Court of Appeal. Bearing that in mind, it seems to me that it is not as it were something which can be regarded as without substance. It is an important and significant issue in relation to the evidence which he gave, and it would appear on the face of it to indicate that the District Judge in reaching the decision he did selected a figure which was fictitious.

That being so, it seems to me it is a matter which the court cannot ignore. One has to balance the use of the resources of the court and the rights of the parties. I am bound to say when I first looked at the papers it did seem to me that this was such a small amount of money that giving permission to appeal was inadvisable. But you also have to put into the scales that if I took that course, whether it is a financial giant or an ordinary person, they are being required to accept a loss on the basis of a figure which the evidence suggests is fictitious. That seems not a situation which the court should accept where there is a reasonable possibility of rectifying it."

Summary

As a result of the Company's investigations, we believe that all three active team leaders at Autofocus acted with systematic dishonesty during the period under investigation and that we now have sufficient evidence to include the third team leader as a Defendant in our primary damages action against Autofocus. Furthermore, we believe that we have evidence that also implicates two former directors who left Autofocus soon after our initial findings of dishonesty were announced in September 2009.

In the case of Archer, instructions have been given to our legal team to make an application to have the Autofocus rate surveyor in question made personally liable for the costs of the appeal and the retrial and also to consider an application for permission to apply to commit him to prison for contempt of court.

Steve Evans, Chief Executive said: "We are delighted with the judgment from the Court of Appeal because it now allows for the hearing of the substantive issues of our claim in open court to be resumed after a delay of six months. We are also encouraged with the judgment in Stewart where, for the first time in one of these cases, we have a Judge confirming that the Autofocus evidence given in that case led to the trial Judge accepting a fictitious spot rate figure as the basis for making his judgment. "Whilst this delay to the substantive litigation has been ongoing, we have prepared further cases from the population of approximately 2,500 which we now intend to seek leave to appeal. In addition, and following today's judgment in the Court of Appeal, we have decided to bring into the main action against Autofocus, as co-defendants, the majority of those 13 employees of Autofocus who left the business hurriedly in September 2009 and against whom we have evidence of improper behaviour in order that they can fully account for the investigations that they say they conducted on gathering hire rates, the veracity of the evidence they gave and the reasons for their rapid departure from Autofocus when our suspicions were aroused."

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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.