Insurer wants costs after ‘false’ PI claim by solicitors

Republic of Ireland-based insurer Quinn Insurance is claiming costs totalling almost £72,000 from a solicitors’ firm that it claims made false representations when applying for a professional indemnity insurance policy.

In a claim submitted to the High Court last month, Quinn Insurance claims SFM Legal Services Limited, a firm based in Newcastle, and Malcolm Stewart Graham, a director of the company, failed to disclose that it was subject to an on-going investigation by the Solicitors Regulation Authority (SRA) when it took out a policy for the year beginning 1 October 2007.

However, in January 2008, SFM Legal Services informed Quinn of claims threatened against them by a number of banks. Quinn’s lawyers then investigated the claims to decide if SFM Legal Services or Graham should receive an indemnity. Quinn said that it declined to pay out following an extensive investigation because of “fraudulent misrepresentations” made by the firm in its proposal form, and was therefore entitled to be reimbursed.

Quinn said it incurred £66,800 in legal costs when investigating the claims and is claiming almost £4,500 in interest and other fees.

Quinn Insurance declined to comment. SFM Legal Services could not be reached for comment. No defence has yet been filed.