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Cite as: [2017] EWHC 1530 (Admin)

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Neutral Citation Number: [2017] EWHC 1530 (Admin)
Case No. CO/12739/2011

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

Royal Courts of Justice
Strand
London WC2A 2LL
16 June 2017

B e f o r e :

MR JUSTICE SUPPERSTONE
Between:

____________________

Between:
THE QUEEN ON THE APPLICATION OF ACCIDENT EXCHANGE LIMITED
Claimant
v

NATHAN JOHN GEORGE BROOM
ELAINE CARLTON WALKER
ANDREW WATTS
DAVID JAMES
LAURENCE GRAY
KEEL BROOM
DUNCAN CARL SADLER






Defendants

____________________

Computer-Aided Transcript of the Stenograph Notes of
WordWave International Limited Trading as DTI
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(Official Shorthand Writers to the Court)

____________________

Mr John Charles Rees QC and Mr Guy Vickers (instructed by DLA Piper) appeared on behalf of the Claimant
Mr Craig Barlow (instructed by Norton Peskett) appeared on behalf of the First Defendant Miss Alison Padfield (instructed by Fleet Solicitors) appeared on behalf of the Second Defendant
Mr David Flood (instructed by Canter, Levin & Berg) appeared on behalf of the Third Defendant
Mr Peter Gilmour (instructed by Platt Halpern Solicitors, Manchester) appeared on behalf of the Fourth Defendant
Mr Michael Coley (instructed by Knights Solicitors, Oxford) appeared on behalf of the Fifth Defendant
Mr David Giles (instructed by Norton Peskett) appeared on behalf of the Sixth Defendant Miss Gemma Witherington (instructed by Burton & Co) appeared on behalf of the Seventh Defendant

____________________

HTML VERSION OF JUDGMENT (APPROVED)
____________________

Crown Copyright ©

  1. MR JUSTICE SUPPERSTONE: The court is concerned today with the sentencing of seven Defendants who have been found to be in contempt of court. The facts of the case are set out in detail in the judgment that I handed down on 24 May 2017 ([2017] EWHC 1096 (Admin)) following an eight-week trial. In summary, Accident Exchange Limited (whom I shall refer to as "AE") applied to commit the Defendants on the grounds that each of them engaged in conduct which interfered with the due administration of justice, and they were thereby in contempt of court.
  2. The main business of AE was the hire of cars to victims of road traffic accidents. The Defendants were employed by a company known as Autofocus Limited (whom I shall refer to as "AF"). AF gave evidence as experts on behalf of defendant insurers seeking to reduce claims for the hire of replacement cars. AE claimed that the dishonest evidence of AF has resulted in thousands of cases across the entirety of the UK being contaminated, and countless first instance courts being routinely deceived as to the honesty of the evidence deployed. Overall, there may have been in the region of 30,000 cases tried and settled. Granting permission, the Divisional Court observed that, if these allegations were made out, this would be perjury on an industrial scale.
  3. I concluded that the evidence that AF 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. I accepted that the cases listed in the schedule to the claim form represent only an indicative sample of the cases in which the Defendants have committed contempt of court and/or perjured themselves.
  4. The dishonest actions of AF and the Defendants had serious implications, not only for the value of the shares of AE, owned both by individuals and institutional investors such as pension companies, which led to the loss of very substantial sums, but also for 300 employees of AE who were made redundant.
  5. Before turning to consider the role of the individual Defendants, it is to be noted that, with the exception of Elaine Walker (the Second Defendant), the individuals who on AE's case were the main perpetrators of this very serious perversion of the course of justice are not before this court. Mr John Rees QC, on behalf of the Claimant, submitted in his closing submissions that the main perpetrators were Colin McLean, Suzy Forrest, Elaine Walker and Paul Wilcox, Chairman, Managing Director and directors of AF respectively, together with Stuart McLean, training officer and brother of Colin McLean.
  6. There are currently proceedings in the Commercial Court brought by AE against Colin McLean, Suzy Forrest and other Defendants, including three firms of solicitors, for a sum in excess of 126 million, alleging that on dates between 2005 and July 2010 the Defendants conspired together with the intention to injure or cause financial loss to those businesses operating in the credit car hire industry, including AE, by "creating producing and deploying false and misleading expert and/or witness evidence against AE (and other members of that industry) at trial and/or for the purpose of settlement negotiations". Although (with the exception of Ms Walker) it was not these Defendants who ran and controlled AF and who were mainly responsible for the dishonest actions of AF, they as team leaders and rates surveyors were willing participants therein.
  7. The roles of the Defendants in these proceedings were as follows. Ms Walker, the Second Defendant, commenced employment with AF in November 2005 as a rates surveyor. She was made a director on 1 November 2006. She resigned her directorship and employment on 20 September 2009. She and Mr Wilcox were the two Operational Directors. It is clear from the evidence that she was heavily involved in the day-to-day business of AF. She produced the CSR manual which instructed rates surveyors to compile their witness statements in a way that made those statements dishonest if adhered to. She conducted mock trials with Stuart McLean in which rates surveyors were instructed to lie and were improperly coached as to what to say in court; and the evidence shows that she played a major role in changing in significant ways witness statements of rates surveyors and expert reports based upon spot hire surveys of rates surveyors.
  8. Shortly before the commencement of the trial, the Second Defendant admitted the allegations made against her, that in two cases she verified documents for use by signing them with statements of truth when they were false to her knowledge or she did not believe them to be true. I ruled that she would be sentenced on the basis of the factual matrix as the court found it to be. The findings I have made in her case are set out at paragraphs 74 to 85 of the judgment.
  9. Nathan Broom, the First Defendant, and Duncan Sadler, the Seventh Defendant, were team leaders. Mr Broom commenced employment with AF on 14 March 2005. He resigned on 17 September 2009. He was employed as a team leader and rates surveyor. The Third, Fourth and Sixth Defendants were in his team. He played a major role in (1) changing in significant ways witness statements of rates surveyors in his team (and others), and expert reports based upon their spot hire surveys; and (2) allowing witness statements of rates surveyors in his team (and others), and expert reports based upon their spot hire surveys, to be changed before being issued for service upon the court and the Claimant in the proceedings.
  10. During the course of the hearing, after the conclusion of the evidence of Mr Stephen Evans (the Claimant's Chief Executive), the First Defendant admitted allegations that in one case he made a false witness statement and gave false evidence at trial. The facts of that case are set out at paragraphs 63 to 71 of the judgment.
  11. Mr Sadler started work for AF in August 2007 as a consultant, becoming a full-time employee in about July 2008. He was employed as a team leader and rates surveyor. He referred to himself as Field Operations Manager. He was involved in the recruitment and dismissal of staff. Further, he took a leading role in the development of DRS reports, which were introduced for a short while following the undermining of CSR reports in September 2009. The DRS reports were also false (see paragraph 58 of the judgment). I found that all the allegations made against Mr Sadler had been proved. They consist of the making of false statements in eight cases, and the giving of false evidence at trial in one of those cases. The findings I made in relation to those cases are set out at paragraphs 284 to 321 of the judgment.
  12. The remaining Defendants were rates surveyors. Andrew Watts, the Third Defendant, commenced his employment with AF on 7 April 2008. He was a rates surveyor in the First Defendant's team. Although not a team leader himself, by 2009 he was sufficiently well thought of to be given the task of checking and changing in significant ways other rates surveyors' reports, in which he was heavily involved. He resigned on 17 September 2009. Mr Watts gave evidence. He denied that he was guilty of contempt. However, during the course of his cross-examination he decided to admit that he was in contempt of court. He admitted all the allegations made against him. There were ten cases of making false statements and in one of those cases he gave false evidence at trial.
  13. David James, the Fourth Defendant, commenced his employment on 27 May 2006. He was employed as a rates surveyor in the First Defendant's team. Laurence Gray, the Fifth Defendant, commenced his employment with AF in November 2008. He was employed as a rates surveyor in the Seventh Defendant's team. Keel Broom, the Sixth Defendant, commenced his employment as a rates surveyor on 1 November 2008. His probationary period ended in March 2009. He was a member of the First Defendant's team. The First Defendant is his brother. He resigned on 17 September 2009.
  14. I found all the allegations made against the Fourth, Fifth and Sixth Defendants to have been proved. In the Fourth Defendant's case, they consisted of false statements in five cases and the giving of false evidence at trial in one of those cases (see paragraphs 111 to 143 of the judgment); in the Fifth Defendant's case, false statements in eight cases and the giving of false evidence at trial in one of those cases (see paragraphs 189 to 212 of the judgment); in the Sixth Defendant's case, the making of false statements in seven cases (see paragraphs 227 to 279 of the judgment).
  15. In South Wales Fire and Rescue Service v Smith [2011] EWHC 1749 (Admin), the Divisional Court noted that for many years the courts have sought to underline how serious false and lying claims are to the administration of justice. Moses LJ said at paragraph 5:
  16. "Those who make such false claims if caught should expect to go to prison. There is no other way to underline the gravity of the conduct. There is no other way to deter those who may be tempted to make such claims, and there is no other way to improve the administration of justice."

    In Fairclough Homes Ltd v Summers [2012] UKSC 26, the Supreme Court approved the statements made by Moses LJ at paragraphs 2 to 7 of his judgment, with which Dobbs J agreed, as the correct approach in cases of contempt involving fraudulent claims.

  17. Another relevant case of fraud in the area of motor insurance is Liverpool Victoria Insurance Company v Bashir [2012] EWHC 895 (Admin), where, despite the fact that the Defendants might be described as "foot soldiers", and the sums involved were not that large, nevertheless the court took the view that their conduct was one of great seriousness which must be deterred because it strikes at the very heart of our system of justice. That being so, Sir John Thomas, PQBD (as he then was) and Silber J considered there was no alternative to a substantial custodial sentence. The President made the point at paragraph 11 that detection of such fraud is very difficult. Although as that case illustrates this type of fraud involves relatively small sums of money in each claim, together such claims give rise to the very large figures to which the court was referred.
  18. The general principles and general approach adopted in those cases to which I have referred apply equally in the present case. As Mr Evans observed in his second affidavit dated 16 September 2016 at paragraph 5, since September 2009 the AF fraud has resulted in a large volume of appellate litigation that was necessary in order to expose the deceit and to resolve the number of cases determined on a false premise at first instance. Each case involved a relatively small sum in terms of thousands of pounds, but cumulatively the loss to AE is calculated to be well in excess of 100 million. It has only been through the truly remarkable efforts and perseverance of Mr Evans that the dishonest working practices of AF have been exposed.
  19. There is no alternative to the imposition of a custodial sentence for each of the Defendants, and counsel for the Defendants did not suggest to the contrary.
  20. I turn next to consider length of sentence. In approaching this exercise, I have well in mind that I should sentence for the shortest term of imprisonment that I can properly impose. The maximum sentence of imprisonment that I can impose for each Defendant by virtue of section 14(1) of the Contempt of Court Act 1981 is 2 years. Having regard to the role of the individual Defendants and the findings that I have made as to what they did, I consider (subject to personal mitigation and the issue of passage of time) the appropriate custodial sentence in each case to be as follows.
  21. Ms Walker was one of the prime movers in AF, albeit that she only had a small shareholding and no doubt, as she says, operated under the ultimate direction of Colin McLean. Nevertheless, her involvement in this very serious conduct which interfered with the due administration of justice is such that the starting point in her case must be at or very close to the maximum of 2 years. I will take for her a starting point of 23 months and reduce that sentence by reason of her admission of contempt two weeks before the commencement of the trial, and some limited admissions she made in her affirmation dated 11 July 2016, to a sentence of 20 months.
  22. Mr Sadler, the Seventh Defendant, was employed as a team leader. However, as I have said, he described himself as Field Operations Manager and appears to have had a more significant managerial role. I consider the appropriate sentence in his case to be one of 18 months.
  23. Mr Nathan Broom, the First Defendant, was employed as and performed the role of team leader which I have described. The appropriate sentence in his case is one of 17 months, to be reduced to 15 months by reason of his late admissions and having regard to the point made by Mr Barlow that he did not give untruthful evidence to this court.
  24. Mr Watts, Mr James, Mr Gray and Mr Keel Broom were the foot soldiers. Without their willing participation, the dishonest systems operating at AF would not have had the impact that they did. However, the findings that I made at paragraph 90 of the judgment in relation to Mr Watts it seems to me apply equally to the cases of James Gray and Keel Broom. In particular, I note the following:
  25. (i) they were all persons of good character;
    (ii) before they joined AF it was already operating dishonest systems and engaged in systemic dishonesty;
    (iii) at the time they joined AF it had the outward appearance of being a successful 'bona fide' business being operated by respected and successful individuals;
    (iv) they were trained by Stuart McLean who, unknown to them, had devised and/or was operating a dishonest system;
    (v) the CSR manual written by the Second Defendant was given to them to compile their statements in a way that, as I have said, made their statements dishonest if adhered to; and
    (vi) the mock trials provided a 'script' of stock answers for those who attended court to repeat upon their court appearance. Those stock answers were untruthful in significant respects.

  26. Mr Giles made a powerful submission that Mr Keel Broom must have been corrupted to have behaved so out of character. I consider it highly likely that he and the other rates surveyors were corrupted by the dishonest practices of AF under its dishonest senior management. However, I have no doubt that they knew what they were being asked to do was dishonest and wrong. Instead of walking away, they decided to stay in their employment, made false witness statements and, in the cases of Watts, James and Gray, gave false evidence in court. I do not accept Mr Flood's submission that the fact they did not receive any training emphasising the solemnity and importance of signing a statement or the legal process in which the statement was to be used provides any mitigation.
  27. Watts, Gray and Keel Broom were each employed for a shorter period of time than James. Keel Broom was employed for the shortest time. Further, there was no finding of perjury against him. James did not make material changes to the evidence of other rates surveyors, whereas Watts did. I consider the appropriate sentences in the cases of the rates surveyors to be as follows: Watts, 12 months, which, giving allowance for his late admissions, is reduced to 11 1/2 months; James, 12 months; Gray, 10 months; Keel Broom, 9 months.
  28. I now turn to consider whether the passage of time since these contempts were committed is such that in all the circumstances the immediate custodial sentences that I otherwise would have imposed should be suspended. Counsel for the Defendants submitted that the passage of time between institution of committal proceedings and their conclusion, and the impact of passage of time on a Defendant, may require as a matter of fairness that a custodial sentence be suspended. In this connection, they rely in particular on two authorities: first, the South Wales Fire and Rescue case, to which I have already referred. In a claim brought in respect of an accident at work, the defendant, a fireman, on his own admission made a false claim that since his accident he had been unable to work. The alleged accident took place on 18 October 2005. He made four false statements of truth in support of his claim between 6 April and 10 December 2007. In May 2009, he admitted to the district judge that his claim was false. The Fire Service brought proceedings for contempt in February 2010. The permission hearing took place on 23 July 2010. The application for committal was heard on 10 May 2011. In his judgment at paragraph 23, Moses LJ said:
  29. "In those circumstances, it seems to us impossible to say that this 37-year-old should go to prison now. He has not disputed the contempt, but it seems to us that the passage of time, whilst not constituting inexcusable delay, inhibits this court from saying that he must be punished now by going straight away to prison."

  30. The second case is the recent one of HM Solicitor General v Stoddart [2017] EWHC 1361 (QB), of 4 May 2017. This concerned an application for committal of a juror who conducted internet research into the case he was trying. There was a gap of just under three years between the act of contempt and the hearing of the application before the Divisional Court, two years having elapsed since he was identified by the Criminal Cases Review Commission. The President of the Queen's Bench Division, sitting with Lewis J, stated, having regard to all the circumstances, that although an effective custodial sentence is virtually inevitable in such a case, the period which had elapsed in this case caused them to conclude that it would be unfair to take that course here. In the circumstances, the sentence of the court was one of 4 months' imprisonment suspended for 12 months, that sentence making allowance for the guilty plea offered.
  31. The personal mitigation that has been advanced by counsel on behalf of the Defendants has, as one would expect, differed from case to case. There has, however, been a common thread. It relates to the impact of the lengthy period of time that has passed since they were served with the application for permission to commit them to prison in November 2011.
  32. When granting permission on 1 February 2012, the Divisional Court referred the papers to the Attorney General, who, in turn, referred the matter to the CPS, who referred it to the City of London Police. On 3 July 2012, Stanley Burnton J granted AE's application to stay the proceedings pending the police investigation.
  33. In August 2014, the City of London Police decided not to commence a criminal prosecution. Following that decision, the stay was lifted.
  34. In May 2015, the First, Second, Fourth and Sixth Defendants issued applications to strike out the proceedings. The applications were dismissed in a judgment given on 30 July 2015. Following case management hearings and a pre-trial review, the trial commenced on 6 February 2017. Accordingly, there has been a delay of over five-and-a-half years for which Watts, Gray and Sadler are not, it is said, responsible, and five years in the case of the other Defendants who were a party to the strike out application. It is about eight years since the last act of contempt.
  35. All Defendants have referred to the case 'hanging over them like a cloud' for a number of years. Their counsel in their ably presented mitigation on their behalf have emphasised the particular impact the delay has had on them and their families. It is, however, not only the impact of the passage of time that has formed the basis of the mitigation. Each counsel submitted that the court should suspend any custodial sentence that was imposed in the light of all the mitigating factors to which they referred. Common features of counsel's submissions included reference to their previous good character, their remorse, the impact of any custodial sentence on their family and current employment, that they had already suffered the humiliation of a well-publicised judgment, and sending them to prison will serve no useful purpose.
  36. There were in addition specific matters highlighted by individual counsel. Mr Barlow said that Mr Nathan Broom's employment at AF was his first full-time job. A custodial sentence, he said, would be devastating, not merely to him but also to his wife and young daughter who have tried to make a new life following the wreckage of AF.
  37. Ms Padfield referred to Ms Walker's standing in the community being irretrievably damaged, and Ms Padfield referred me in particular to the character references which spoke of the great impact of what Ms Walker has described as five-and-a-half extremely distressing years on her.
  38. Mr Flood referred to a statement made by Mr Watts for the purposes of this hearing, in which at paragraph 19 he expresses his unreserved apologies for his wrongdoing. Mr Flood said that Mr Watts wanted to make this open apology for the record, appreciating it was not mitigation.
  39. Mr Gilmour referred to the character references that are before the court for Mr James which demonstrate that he is not only a man of previous good character, but also a much-loved family man and a trusted, respected and supportive friend, neighbor and colleague. Mr James is now 63 years old and suffers from ill-health. He experiences ongoing pain in his left knee due to arthritis and is due to have an operation on 7 July. It appears that he has already deferred the operation once before and his consultant orthopaedic surgeon says in a medical report that if he defers his operation once again then he will be taken off the NHS waiting list and there will be further delay after a custodial sentence has been completed.
  40. Mr Coley describes Mr Gray, now aged 57, as a man of positive good character, as evidenced by the character references to which I have been referred which speak of many years of community involvement and charity work. He has a long history of employment and has never, Mr Coley says, before or since been involved in conduct that fell below the expected standards of professional diligence or attracted regulatory intervention. He has a family which depends upon him both practically and financially to a great extent. A statement from Mr Gray's wife sets out how the family would suffer if he is sent to prison.
  41. Mr Giles describes Mr Keel Broom as having led a virtuous and blameless life, apart from the short time he worked for AF. Since then he has rebuilt his life, provides for his family and contributes positively to the wider society. I have read the testimonials and character references that support this submission.
  42. Ms Witherington, relying on Mr Sadler's affidavit sworn for this hearing, submits that if a custodial sentence is imposed upon him then it is probable that the vehicle hire business that he set up in 2013 will not survive. That will have an impact on his family. He has a son aged 30 and a daughter aged 28. His wife has suffered recently from ill-health.
  43. I accept that the passage of time is one of the relevant factors that I must take into account when considering the fairness of imposing an immediate custodial sentence. However, plainly it is not the only factor. The nature, seriousness and period of the contempt, and the role played by each of the participants are all factors that must be weighed in the balance when considering whether a custodial sentence can be suspended. Other relevant factors are whether Defendants have made admissions and whether they show real and genuine remorse. The most relevant countervailing factor in the present case to the passage of time is the seriousness of the offences.
  44. Each case is fact specific. The South Wales Fire and Rescue case concerned a single false claim and four false statements in support of the claim over a period of months, and before proceedings for contempt were brought the Defendant admitted that his claim was false. Stoddart similarly concerned a single act of contempt in respect of which the Defendant pleaded guilty.
  45. By contrast, each of the Defendants in the present case has participated in the fabrication of evidence and interference with the due administration of justice over a period of many months or, in the case of some Defendants, years. The Second Defendant did not admit contempt until shortly before the trial, and the First and Third Defendants only did so during the course of the trial. The other Defendants did not, unlike the Defendants in the South Wales Fire and Rescue and Stoddart cases admit their contempt. They were fully entitled not to do so, but cannot now complain about the delay that has occurred because of the trial.
  46. There has been no delay by the Claimant in the conduct of these proceedings. There was voluminous material on the Mirror Disk that had to be sorted and considered. The simple fact is, as Mr Rees observes, that the Defendants could have admitted the allegations when they were first made. If they had done so, they would have been dealt with in 2012. Alternatively, they could have admitted them at any time after the stay was lifted and they would have been dealt with then.
  47. A discrete submission made by Ms Padfield for the Second Defendant and Ms Witherington for the Seventh Defendant is that the costs order that is likely to be made in this case against each Defendant should be taken into account when considering whether a custodial sentence should be imposed. I have not been referred to any authority that in my view supports this contention, and I do not accept it.
  48. Further, I am not persuaded that the personal mitigation put forward on behalf of the Defendants enables me properly to impose a sentence in the case of any of the Defendants other than an immediate custodial sentence, or to reduce the length of those sentences.
  49. Nevertheless, I recognise that the considerable time that has elapsed since the committal proceedings commenced (through no fault of the Claimant) has had an impact on the Defendants and their families. Having regard in particular to the two-year period during which these proceedings were stayed whilst the police investigation was being conducted, I consider that, as a matter of fairness, the sentences that I would otherwise have imposed should be reduced. In all the circumstances, I consider that the sentences that I would otherwise have imposed should be reduced by one-third.
  50. Accordingly, I impose the following sentences of imprisonment upon the Defendants: Nathan Broom, 10 months; Elaine Walker, 13 months and 1 week; Andrew Watts, 7 months; David James, 8 months; Laurence Gray, 6 months and 3 weeks; Keel Broom, 6 months; Duncan Sadler 12 months.
  51. One further matter. I propose to refer the papers in this case to the DPP. On 1 February 2012 when granting permission, the Divisional Court directed that the Attorney General be served with a copy of the application bundle and within three months indicate whether he also wished to pursue committal applications or take other steps in the public interest. Subsequently, the Attorney General sought the involvement of the CPS, and the City of London Police were asked to investigate this matter. In August 2014, a decision was taken not to institute any prosecution.
  52. Mr Evans sets out at paragraphs 47 to 56 of his first affidavit, sworn on 6 January 2016, what he says he was told by senior police officers conducting the investigation at meetings on 19 July 2012 and 28 August 2014. What is particularly disturbing is that he says he was told on both occasions that the police did not want to receive the Mirror Disk as part of the investigation because they did not have the resources to analyse it.
  53. I direct that the judgment I have delivered in this case and these sentencing remarks be passed to the DPP, together with all the papers in this case. In the light of the history of this matter, I request that the DPP personally consider what, if any, action should be taken, in particular against those persons who were controlling and managing AF at all material times.
  54. Counsel for the Defendants will please explain to the Defendants that they will only serve half of their sentence.
  55. I will rise now to give counsel and the Defendants time to speak. We will then deal with costs. I would ask the tipstaff to give the Defendants a few minutes to talk to their family before they have to be taken into custody. That would be appreciated by the court. If the Defendants wish to remain in court for the costs hearing, then of course they are entitled to do so, but I will rise now.


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URL: http://www.bailii.org/ew/cases/EWHC/Admin/2017/1530.html