Fraud - December 2009
There have been a flurry of discussions recently in
respect of private prosecutions and the potential for bringing them
against those involved in staging road traffic accidents and other
types of fraud. In this article, we give consideration as to
the viability of prosecuting offenders where the police are either
unable or unwilling to become involved.
Common Law provides any individual with the
right to bring a private prosecution. This principle
was established more than a hundred years ago and is set out in
various case law since. The Prosecution of Offenders
Act 1980 formalises this right in statute.
Whilst there are a number of offences which
require the prior specific consent of the DPP or the Attorney
General to prosecute, those which would interest an insurance
company, ie, offences under the Fraud Act or Theft Act, or even
potentially, offences under the Road Traffic Act do not require
specific permission and as such, the procedure is relatively
In respect of a body corporate bringing an
action, the prosecution itself would need to be in the name of one
of their servants or agents. The Criminal Procedure Rules
2005, Part 7.1 states that "an information" would need to be
laid either by an individual authorised on their behalf, ie a
senior manager of the company, or their solicitor or Counsel.
The laying of the “information”, as the procedure is known involves
setting out basic prescribed information, including the name of the
Defendant, his address, the charge, the date of the offence and the
place the offence was committed.
The "information" should then be sent to the
Magistrates Court Clerk (the Clerk to the Justices) and providing
all is in order, a Summons will be issued. Once issued the
Summons will usually be sent to the Defendant at the last known
address by first class post, whereupon it is deemed served. The
Summons will contain a date for the Defendant to attend Court and
should he fail to do so, the prosecutor, may apply for a warrant
for the Defendant’s arrest. This of course has a
benefit over any civil action as the fraudster will have no option
but to attend to face the allegations.
It is usual at this first stage for either a
short adjournment or for the Defendant to indicate his plea.
As fraud offences are triable "either way" that is to say they may
be heard by either the Magistrates Court (summarily) or in the
Crown Court (on indictment) a decision will then be made as to
whether the matter is suitable to be tried at the Magistrates or
Crown Court. Both the prosecution and the Defence have
opportunity to provide representations. If the Court
are willing to try the matter summarily then the final decision
will rest with the Defendant who may elect trial at Crown
Court (before a jury) if he so chooses. There are of course
numerous advantages and pitfalls of the case being heard in either
If a not guilty plea is entered and the
Magistrates Court retain jurisdiction, the matter will be adjourned
for pre trial review and later for trial. If the Crown
Court is deemed appropriate or an election has taken place by the
Defendant the matter will be adjourned for a Committal Hearing,
following which the case will be transferred to the Crown Court for
a Plea and Case Management Hearing.
As with any criminal case, the Prosecution
will need meet the criminal burden of proof. If the Defendant
is convicted (or pleads guilty), sentence will follow. The sentence
will of course depend upon the particular offences taking into
account any mitigation and/or aggravating factors.
Prosecuting the correct offences is also an
important issue. The Fraud Act 2006, which came into force in
January 2007 provides for three potential offences which would
likely form the mainstay of any private prosecutions against
insurance fraudsters. The relevant offences are as
Fraud by false representation.
Fraud by failing to disclose information.
Fraud by abuse of position.
The first of the three is likely to be the
most significant and could be utilised where the Claimant stated
that there was an accident which in fact turns out to be a complete
fallacy or where a bogus passenger makes a claim and the
prosecution can show he was not in the vehicle.
There are other offences which could also be
borne in mind. In particular, perjury, and attempting to pervert
the course of justice. Consideration should also be given to
the relevant Road Traffic Offences such as dangerous driving or
driving without due care and attention. These offences could
be additional counts brought against, for example, a driver who can
be proven to have been behind the wheel in an induced "slam on"
type collision. The former offence carries a guideline
custodial sentence with a maximum of two years
imprisonment. One advantage of bringing a conviction
for dangerous driving would be that a mandatory 12 month
disqualification from driving would follow.
All of the Fraud Act offences are either way
and as such, can be tried by either the Crown Court or the
Magistrates. The maximum sentence that the Magistrates are
able to pass is six months for one offence and a total of twelve
months for two offences.
If the matter is heard at the Crown Court, the
technical maximum sentence for the first of the three offences
referred to above is 10 years imprisonment. The level and extent of
the sentence would again depend upon the aggravating factors, the
value of the fraud and any mitigating factors that the Defence can
Risk and Costs
Potential "would be" private prosecutors are
likely to be concerned as to the risks of being unsuccessful and
the extent to which costs are recoverable from either side.
In the event of the Prosecution being unsuccessful there is a risk
of costs being awarded against a prosecutor, however this is
unlikely to happen where a case is conducted carefully, diligently
and where it can be shown that there is a case to answer by the
Defendant. In these circumstances the Defendant (assuming he is not
legally aided) would be likely to recover his costs from central
funds as opposed to the prosecutor. In the event the
Prosecution is successful the Prosecutor may seek his costs
from the Defendant (where he has the means to pay) or
alternatively, in respect of either way or indictable offences,
from central funds. Reasonable investigation costs may also be
There are, of course, a number of other
considerations that should be borne in mind. Firstly, the public
perception of the Insurance industry may have some bearing
particularly where the case is to be heard before a Jury in the
Crown Court. The Prosecutor would need also ensure that the CPS
guidelines for bringing a case, are complied with, otherwise the
Prosecution could be at risk of being taken over (and even
potentially discontinued) by the Crown Prosecution Service.
As such it would be an advantage to consult both the local police
constabulary and the area's Chief Crown Prosecutor at the earliest
stage to ensure the prosecution would not interfere with any
ongoing investigations or proceedings.
Private prosecutions are a powerful
weapon in the arsenal of Insurers in the fight against insurance
fraud. Whilst any prosecution would have to be considered very
carefully on its own particular facts, and the evidence dealt with
in accordance with the guidelines of the particular court in which
it was to be heard, in the right cases this mechanism allows
Insurers to turn the tables on Fraudsters in a way that few will
have anticipated. Where convictions are obtained the benefit to
insurance companies, the publicity won and the message that it
would convey to fraudsters would likely to be a key ingredient in
the decision making process.
Alex Rostron is a Solicitor in
Weightmans’ Manchester Fraud Team.