Perjury on an industrial scale: contempt of court update

This article was originally published for the Practical Law Dispute Resolution Blog.

“This is perjury on an industrial scale”, held Supperstone LJ in July 2017, when he sentenced seven defendant expert witnesses to prison for contempt of court for fabricating evidence, in Accident Exchange Limited v Broom. The case is one of the most complex and longest running contempt trialsin history. So, what was the case about and is there anything we can learn from it?

The facts

The seven expert witnesses all worked for a company called Autofocus, which purported to survey hire rates for vehicles where a person had suffered a road traffic accident. Often where a driver is involved in a road traffic accident, they hire a replacement vehicle, from providers such as Accident Exchange Limited, while their vehicle is repaired. The costs of that hire fall to be recovered from the at fault driver’s insurance company at trial. Those hire charges have to be reasonable to be recovered.

The paying party insurers would often seek permission from the court for an expert’s report, from an entity like Autofocus, to look at the local car hire rates in the accident location so as to ensure the charges claimed were reasonable and at the market rates. Those car hire reports often suggested that the claimant, non-fault driver, could have obtained a hire car locally at a significantly reduced cost, rather than at the rates claimed. If the court accepted that evidence, then the credit hire company would fail to recover its full fees and be out of pocket.

Accident Exchange became suspicious about the credit hire reports produced by Autofocus; as amongst other things, the same names and data appeared to be used in many reports and the rates seemed artificially low. It therefore set about investigating the underlying data in the reports and found it to be false. It then brought contempt of court proceedings against the individual experts who had provided the reports to the court with statements of truth attached to them.

Many leading insurers and well-known law firms used the evidence of Autofocus. A separate civil claim in the Commercial Court has been listed for trial in October 2018. The claim is for damages against the law firms and directors of Autofocus, who are alleged to have caused Accident Exchange significant financial loss.

At trial, it was estimated that the Autofocus experts had saved insurance companies millions of pounds by creating the false reports. Furthermore, 30,000 county court cases were seemingly affected by the defendants signing false statements of truth. The dishonest actions of Autofocus and the defendants hit the share price of Accident Exchange, leading to 300 redundancies and losses in excess of £100 million.

The judgment

The judge found that the employed experts perjured themselves when they gave evidence under oath at court. The judge described some of the defendants as foot soldiers for the Autofocus directors, but they were still accountable for their own actions. It was held that:

“The evidence that [Autofocus] was involved in the systematic, endemic fabrication of evidence in which the defendants and each of them knowingly and actively participated throughout the material time is overwhelming.”

The expert witnesses had taken part in what were described as “mock trials”. They were also given a manual from the directors of Autofocus about how to give evidence at court and what answers to give to certain questions in court. They were also warned to be careful about what they said to counsel before a hearing. The judge relied upon that as evidence of widespread fraud with the intention to deceive; he found that the defendants should have known what was going on and that they should have left the employment of Autofocus.

All of the defendants were committed to prison for varying periods of time.

Lessons to be learned

The judgment highlights the importance of CPR 32.14(1), which provides:

“Proceedings for contempt of court may be brought against a person if he makes, or causes to be made, a false statement in a document verified in a statement of truth without an honest belief in its truth.”

The standard of proof in civil contempt of court proceedings is to the criminal standard. It is essential that the grounds are set out clearly and fairly so that the defendant knows the case they have to meet.

The claimant must prove:

• The falsity of the statement in question.
• That the statement has, or if persisted in would be likely to have, interfered with the course of justice in some material respects.
• That, at the time it was made, the maker of the statement had no honest belief in the truth of the statement and knew of its likelihood to interfere with the course of justice.

The penalties include fines and custodial sentences of up to two years. This case demonstrates that the courts are not inclined to suspend or impose lighter sentences on defendants who have misled the court. It serves as a precedent that signing a false statement of truth can lead to a significant period of time in custody.

In a contempt case, it is essential that there is early disclosure of relevant documents and a view is taken early on as to whether there is a defence. If a party in the face of serious evidence of contempt pleads guilty early on, they are likely to receive a lesser sentence. In this case, those who pleaded guilty received a reduction to their sentences.

Be aware that, unlike in criminal cases, there are no sentencing guidelines for civil contempt of court and no pre-sentence reports. The court has wide discretion when sentencing.

The court applied a reduction to the sentences of all of the defendants on the basis of the delay between the contempt and the sentencing. The contempt had been committed in around 2009 and the sentencing took place in 2017. If a defendant has re-built their life, remedied their ways and showed remorse, then a period of delay in seeking committal is highly relevant. This is an important factor to consider when bringing or defending a contempt case.

However, the court held that the factor of delay was not determinative; there is nothing to stop applications for contempt many years after it has occurred. Defendants are still at risk of custodial sentences if found guilty.

This case demonstrates the significance courts place upon issues of fraud, fabrication of evidence and lying. In recent years, there has been a real trend in courts taking a firm line on dishonest conduct. The number of relevant reported decisions is on the rise.

This case also shows that courts are not deterred by complex and lengthy matters; this case took over eight weeks, involving multiple parties and over two million documents.

The case focused on how important a statement of truth is when giving reports or witness statements to the court. It serves as a reminder that contempt of court is one possible outcome for signing a false statement of truth. How many practitioners ask a client to sign a document with a statement of truth without explaining fully its implications? The CPR rule for contempt (CPR 81) also covers causing others to sign a false statement of truth.

There are many areas of law that now involve expert evidence, sometimes on more obscure topics. This case highlights the need for practitioners to:

• Check the credentials of experts.
• Ensure that the instructions to experts set out their obligations under CPR 35.
• As best they can, ensure that the reports are independent and objective.

Be wary of seeing experts refer to “mock trials” and manuals for giving evidence. Consider how they will later appear in court before a judge.

Conclusion

It remains to be seen whether the high-profile law firms who used these reports will be ordered to pay significant damages to Accident Exchange or if the individual solicitors involved will be prosecuted. The case has been referred, on the judge’s ruling, to the Director of Public Prosecutions (DPP) to consider criminal prosecutions. One thing is certain: the aftershock of this contempt of court case is far from over.