Nine individuals have received prison sentences after being found guilty of contempt of court for making false and dishonest statements as part of their motor insurance claims. Liverpool Victoria Insurance Company Ltd v Yavuz centred around so-called “cash for crash” scams, set-ups in which fraudsters manufacture or fabricate collisions between cars so as to benefit from the sham insurance claims. Such scams are estimated to cost insurance companies £500 million per year. With this decision the courts are making it clear that perpetrators of this type of fraud can expect serious repercussions if they are caught.
The relevant insurance claims related to three alleged crashes which all took place relatively close to each other in North London. Liverpool Victoria Insurance (LVI), which would have been faced with a costs bill of £170,000 had the claims succeeded, applied for orders committing each of the defendants to prison for contempt of court. It was alleged that each of the nine individuals told lies in witness statements, schedules of loss, claim forms and particulars of loss, all of which were verified by statements of truth. Some of these verifications were made by the defendants themselves and others by a solicitor. Permission for contempt proceedings was granted on the basis that it was in the public interest to do so. By this point the majority of the relevant claims were discontinued (often leaving the claimant with a large costs liability), with some remaining unresolved.
In the contempt proceedings LVI was not required to prove all the details of the alleged conspiracy, but it did have to prove that each of the nine defendants individually made a deliberately false statement or caused a false statement to be made. Contempt of court being a quasi-criminal matter, the standard of proof was the criminal standard, i.e. the judge had to be sure beyond reasonable doubt that the defendant was guilty as charged. Even though LVI’s case rested entirely on circumstantial evidence, the judge was persuaded by their arguments. LVI’s evidence included confirmed links between the nominal insureds in whose names the policies of insurance had been taken out, evidence that no premiums were ever paid on those policies and various geographical anomalies that arose from the facts. There were also familial ties between two of the groups of defendants, and the judge took into consideration three other alleged crashes which were similar on the facts and which were brought by the same accident management company in Wood Green. Taken all together, Mr Justice Warby stated that he had “no doubt that the defendants told deliberate lies from the outset and throughout the proceedings in the county court and this court”.
The sentences received by the three drivers in the accidents were 16 months, 12 months and 9 months respectively. Each passenger received a four-month prison sentence with all, bar one, suspended for one year due to mitigating factors. With recent estimates placing the cost of insurance fraud in the UK between £1.3bn and £2bn per year, Yavuz is a positive decision for insurers whose battle against the ever-growing tide of insurance scams can often feel like a losing one.