Following his previous article on pursuing contempt of court proceedings in complex injury cases, Julian Dexter revisits the case of Zurich v AB almost a year on to examine sentencing factors and sanctions.
Due to a combination of unfortunate events the judgment in the case against Defendant AB was only recently published, despite being handed down last July. However, despite that gap, it is certainly worth revisiting the case when considering sentencing factors and sanctions in complex injury contempt of court cases. Further details of the submissions on sentencing at the final hearing can be found here.
For context, when the court resumed for the handing down of judgment, the prison overcrowding crisis remained very much in the public consciousness, with plans being implemented for the emergency release of prisoners who met certain criteria.
In his judgment, HHJ Lickley KC summarised the relevant history and AB’s admissions, making particular reference to the fact that the alleged fabrication of the accident itself was not pursued as a ground of contempt. He nevertheless characterised AB’s contempt as “deliberate dishonest exaggeration and manipulation of the court process to further a claim for damages”.
The judge was mindful of AB’s age and previous good character, and he took account of the evidence served in support of his mitigation arguments. It should be noted that a properly sworn version of AB’s affidavit had been filed after the hearing, which contained a form of “apology”.
The judge determined that AB had made his admissions at the earliest opportunity and should therefore be entitled to maximum credit, namely a one-third reduction in the sentence. He made no reference to the contradictory position adopted by AB in his civil appeal.
In summary, the judge’s decision was as follows:
Which left simply the duration of the sentence and the question of suspension, in relation to which the judge found:
HHJ Lickley KC then addressed the fact that the prison population may be a factor when considering the suspension of prison sentences, commenting that the short sentence likely in this case, and the effect of the current prison conditions on a man of AB’s age, operated significantly in his favour. This appears to have been the key factor in the judge’s approach (see paragraphs 40-41 of the sanctions judgment).
He duly imposed a sentence of 12 months’ imprisonment, reduced to eight months for the admissions, and suspended for two years.
The judgment can be downloaded here.
In an ideal world (at least from an insurer’s perspective) all those found guilty of contempt of court as a result of a fraudulent insurance claim would find themselves spending some time in custody which would, in theory at least, act as a significant deterrent to those contemplating chancing their arm with such a claim. However, as the AB case illustrates, when determining the appropriate sanction in such a case, the court has to balance numerous factors, some of which may militate in favour of an immediate custodial sentence and some against. In this case HHJ Lickley KC evidently felt that the key mitigating factors, namely AB’s age and personal circumstances and the fact that he was not being sentenced on the basis that he had admitted or been found to have staged the accident, all against the backdrop of a prison overcrowding crisis, outweighed the high level of culpability and harm, such that suspension of the sentence was appropriate.
It will never be known whether the outcome would have been different had AB been younger or if the prison population had been at a more optimal capacity. A possible inference to be drawn from the Judgment, however, is that the fabrication or staging of an accident would be a significant aggravating factor which in other cases may well be decisive in terms of warranting an immediate rather than a suspended custodial sentence.
In the case of AB, Zurich had been prepared to proceed to a full hearing to prove the allegations of contempt, including that the accident itself was staged. However, AB’s legal team identified that his best chance of avoiding prison was by making some fairly frank admissions, which made pursuing the remaining allegations more complex both in time and cost, having already pursued an FD trial. For their part, Zurich were presented with a potential compromise which ensured that they would succeed in securing the contempt finding that they were seeking, without the need for a full hearing or the associated risk that the court might find that the threshold for contempt was not crossed, despite the damning findings of HHJ Parker in the civil case and given the admissions it was likely that the custody threshold would be crossed (which was eventually accepted by all). It is important to acknowledge that ultimately AB received a prison sentence, ordered by the court, albeit suspended for two years.
For insurers contemplating pursuing contempt of court proceedings, therefore, it has to be kept in mind that an FD finding in a civil claim does not necessarily mean that contempt is a slam dunk. This largely comes back to the different standard of proof – a finding that a claimant has been fundamentally dishonesty on the balance of probabilities may not mean automatic success in proving this beyond a reasonable doubt. Indeed, some contempt proceedings may not even get past the permission stage despite an earlier FD finding. Nevertheless, the pursuit of contempt proceedings in the right case remains an important tool in the insurer’s armoury of deterrence.
Zurich v AB was just one of a succession of cases which came before the High Court in 2024 in which committals for contempt of court were sought following civil findings of FD, such that there is now a wealth of caselaw to inform those contemplating bringing such actions in the future. In addition the cases cited above, and in part 1 of this article, insurers and legal advisors would be well advised to look carefully at cases such as Aviva v Nadeem and Sidiqi [2024] EWHC 3445 (KB), Robinson v Murphy [2024] EWHC 798 (KB) and Advantage Insurance Co Ltd v Harris [2024] EWHC 626 (KB), in which the outcomes may not have been as hoped for by those who brought the contempt proceedings. That said, the cases of Wye Valley NHS Trust v Murphy [2024] EWHC 1912 (KB) and Tesco Stores Limited v Mouradi [2024] EWHC 1466 (KB) show that sometimes s/he who dares does indeed win, providing encouragement to insurers that it can be worthwhile bringing contempt of court proceedings in deserving cases. This promotes the message that insurance fraud will not be tolerated and deters would-be fraudsters on the basis that a criminal conviction and a prison term could be a very realistic consequence.
Julian Dexter was instructed by the large loss injury team at Zurich Insurance in the case of Zurich v AB. Counsel was Matthew Snarr of Nine Chambers, Manchester.
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