England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		Wednesday, 21st August 2013

1. MR JUSTICE KEITH: A new insurance scam has emerged in the last few years. It involves false insurance claims being made following what purport to be genuine road traffic accidents. But to call them "accidents" is to violate the English language. Road traffic accidents are collisions which are caused accidentally, and there is nothing accidental about the collisions to which this scam relates. They are not genuine accidents at all. They have been "staged" in one way or another. Sometimes collisions have been deliberately caused, for example, by a car braking suddenly, causing an innocent person's car to collide with it. Sometimes there has not been a collision at all, and cars are damaged in such a way as to make it look as if they have collided with each other.
2. The present appeal arises out of such a "crash for cash" claim. The appellant is Nikki McKenzie. He was convicted of an offence of fraud at Newcastle-upon-Tyne Crown Court after a trial which lasted many weeks. He had pleaded not guilty. On 16th May he was sentenced by Judge Thorn QC to 15 months' imprisonment, and ordered to pay £3,242 towards the costs of the prosecution. He now appeals against his sentence and the order for costs with the leave of the single judge. We trust that we will be forgiven for referring to him, and to those of his co-defendants who it will be necessary for us to mention, by their surnames for convenience from now on.
3. The offence which McKenzie committed was a single offence of fraud, in the context of a much wider conspiracy in County Durham to defraud insurance companies in which Paul Wright was the leading light. His company was at the heart of 25 fraudulent insurance claims involving car crashes which were bogus because they had either never taken place or been deliberately caused. About 70 people were prosecuted in all. The bogus claims related to the costs of recovering the vehicles supposedly involved in the collisions, of storing them and of hiring replacement vehicles, as well as to bogus claims for personal injuries including claims for loss of earnings and legal fees. Sums totalling £483,000 were paid out by the insurance companies who believed that the claims were genuine. Claims totalling a further £49,000 were not accepted by the insurance companies, but the fraudulent claims which were submitted were well in excess of £500,000 for that reason. Wright was convicted of conspiring to defraud and was sentenced to 7 years' imprisonment. That was the context in which the particular fraud which McKenzie participated in has to be seen.
4. His fraud related to a road traffic "accident" which was supposed to have taken place on 21st January 2009. McKenzie claimed to have been a passenger in a Volvo being driven by Michael Doak which collided with a Range Rover being driven by Alison Redman. The collision had never taken place. The vehicles had been doctored to make it look as if it they had collided with each other. Claims totalling almost £33,000 were submitted and paid out by the insurance companies concerned. Those claims included claims for whiplash injuries which McKenzie and Redman claimed to have sustained in the collision, and both McKenzie and Redman were examined by doctors in support of those claims. Wright's company claimed the costs of recovering the vehicles supposedly involved in the collision and of hiring replacement vehicles, but the making of all these claims to the insurance companies concerned was handled by Doak, who worked for a company which handled insurance claims. McKenzie had been recruited into this particular fraud by Doak. He knew Doak because he worked for a company which supplied Doak's company with taxi meters and they had become friends.
5. Any idea that "crash for cash" frauds are a victimless crime has to be rebuffed immediately. When sentencing Wright, Judge Thorn noted that the Association of British Insurers had reported that in 2011 false motor claims of £441 million had been made, and it was estimated that at least a further billion pounds worth of bogus claims had gone undetected. Such claims had added £50 a year or thereabouts nationally to the premiums which drivers had to pay for motor insurance. The problem was compounded by the numerous claims for whiplash injuries which "crash for cash" frauds invariably include. Such claims are easy to assert and difficult to disprove. If scepticism about the genuineness of whiplash injuries becomes widespread as a result of cases like the present one, then it will become more difficult for those who have genuine whiplash injuries to have their injuries accepted. As Judge Thorn said when he sentenced Wright:

"...the latest evidence suggests that honest drivers are subsiding a £2 billion bill for all whiplash claims estimated on its own at £90 a year for each driver's insurance policy. Whiplash claims have risen by a third in the past three years to about 550,000 claims per annum but that is despite the fact that the rate of road traffic accidents has fallen over the same period, the number of licensed vehicles on the road has increased and that safety measures have increased, both by motor engineering advances and highway safety measures with a legal sanction."

Judge Thorn added that a Home Office Minister had been reported as saying that while road traffic accidents have reduced by 23%, whiplash claims were up by 75%, that the UK had the highest number of whiplash claims in Europe, and that while whiplash injuries represented 75% of all motor claims in the UK, they represented only 3% of all such claims in France. Judge Thorn rightly described "crash for cash" claims as a blight across the UK.

6. McKenzie is now 34 years old. He is relatively lightly convicted. Apart from an offence of driving a motor vehicle when the proportion of alcohol in his blood exceeded the prescribed limit, he had been convicted of shoplifting when 17 and going equipped for burglary when he was 18. He had never been to prison before, and he was treated by the judge as having been rehabilitated. He had been working for the same electronics company for 12 years, and was regarded by them as an exemplary, hard working and honest employee. He had joined the company as a trainee fitter and had risen to run the company's workshop, which was regarded as a position of trust. One of the directors of the company described him as "very much a family man, devoted to his wife and three sons". His wife has been diagnosed as suffering from bipolar affective disorder, and the judge acknowledged the devastating impact which McKenzie's time in prison would have on her.
7. The judge noted in addition that it had taken an exceptionally long time for the case to come to court, due in part at least to the complexity of the investigation, the number of people involved and the number of trials which took place. The reason why McKenzie's trial took the time it did was because the indictment on which he was tried included the count of conspiracy which Wright and many other faced, as well as a particular fraud on the Co-op. The one count in the indictment which McKenzie faced was the count relating to the bogus accident on 29th January 2009, and on that count his co-defendants were Doak and Redman. If that count had been tried alone, which had been the original intention, it is unlikely to have lasted for very long. The judge saw no reason to distinguish McKenzie's case from that of Redman, and he sentenced her to 15 months' imprisonment as well. He regarded Doak as the co-ordinator and the key figure in this particular fraud, and he sentenced him to 2 years' imprisonment. Like McKenzie, both Redman and Doak had pleaded not guilty.
8. Those, then, were the facts, and we turn to whether the sentence of 15 months' imprisonment which the judge passed on McKenzie was too long. The starting point has to be the definitive guideline on sentencing for offences of fraud issued by the Sentencing Guidelines Council. This was an insurance fraud in which the amount obtained was between £20,000 and £100,000. It was fraudulent from the outset, and it was carried out over a significant period of time. We say that because of the number of times (three in all) between March 2009 and November 2010 when McKenzie was examined by doctors about his claim to have sustained a whiplash injury. The guideline suggests a starting point of 15 months' imprisonment, with a sentencing range of 18 weeks' to 30 months' imprisonment. That is based on an amount of £60,000 having been obtained, and those terms had to be discounted to reflect that in this case it was almost £33,000 which had been obtained. That was how the judge classified this offence.
9. We note the contention made by Mr James Walker for McKenzie that the offence should have been classified as a single fraudulent transaction, albeit fraudulent from the outset, for which the guideline suggests a starting point of 26 weeks' imprisonment, with a sentencing range of 6 weeks' to 12 months' imprisonment. This was a single fraudulent transaction, but it was carried out over a significant period of time, and it is therefore questionable whether Mr Walker's classification of the offence is correct. But it is important to remember that whatever the appropriate classification was, and it may be difficult to shoehorn this case into one category rather than another, the judge thought that deterrent sentences were called for in view of the prevalence of this type of offending and the need to show that it will not be tolerated. No doubt he had in mind section 142(1) of the Criminal Justice Act 2003, which required the court to have regard, amongst other things, to the fact that one purpose of sentencing is the reduction of crime, including its reduction by deterrence. We do not believe that the judge's approach in this respect can be faulted. It mirrors the approach of the Court of Appeal in R v M [2013] EWCA 206 (Crim), another "crash for cash" fraud In our judgment, the judge was justified in taking as his starting point a term in excess of 15 months' imprisonment, and discounting it to reflect McKenzie's personal mitigation and the lapse of time in bringing him to justice. In the circumstances, we do not think that the ultimate sentence of 15 months' imprisonment was too long.
10. In coming to that conclusion, we have not overlooked the reliance placed by Mr Walker in his advice on appeal on the case of R v Liddle [2013] EWCA 603 (Crim). That was another "crash for cash" fraud, though unlike the present case where there had been no collision at all, the defendant in that case had been the passenger in a car which was involved in a "staged" collision with another car. She had pleaded not guilty to an offence of fraud, but had been convicted and sentenced to 8 months' imprisonment. The Court of Appeal substituted a sentence of 10 weeks' imprisonment, which resulted in her immediate release from prison, although each member of the court would have been inclined to pass a suspended sentence on her had they been sentencing her at first instance themselves. However, we regard that case as very different indeed from the present one. The defendant in that case was only 18 years old at the time of the offence. She had been led on by her partner, who had been the instigator of the offence. She was the sole carer of her young child. She had mental and other health issues, and she had no previous convictions. Her personal circumstances differed so markedly from those of McKenzie that the sentence passed on her could not be said to be a reliable guide at all about the length of sentence to be passed on McKenzie. Indeed, in Liddle, the court endorsed the proposition that the prevalence of this kind of fraud justified the sentencing judge starting significantly above the starting point suggested by the guideline.
11. We turn finally to the order for costs. The prosecution applied for confiscation orders under the Proceeds of Crime Act 2002 to be made against Doak and Redman. It did not apply for such an order against McKenzie because it acknowledged that he had no available assets at the time. The judge, though, took the view that there was no reason why McKenzie should not contribute to the massive costs of the prosecution, and he ordered McKenzie, as we have said, to pay the sum of £3,242 towards the costs of the prosecution which he said had to be paid within 12 months. Since McKenzie had been in custody for 63 days prior to sentence, he would have been entitled to be released five-and-a-half months after being sentenced. That would have given him an additional six-and-a-half months to find the £3,242, though we were told today that he was in fact released from prison on home detention curfew on 8th July, and so, as it turned out, he had a little over 10 months from his release to find the £3,242 which the judge ordered him to pay.
12. We are unimpressed by the suggestion that this was not an appropriate case for an order for costs to be made. McKenzie may not have been to blame for the massive costs which were in fact incurred, but the investigation into the one fraud in which he was involved would have been costly on its own. On the other hand, an order that a defendant should contribute towards the costs of the prosecution should only be made if the defendant has the ability and the means to pay it. It does not look to us as if the judge was provided with McKenzie's means as should have been done. He did not know, for example, whether McKenzie's employers were prepared to keep his job open for him. What the judge said was that McKenzie had a good work record, and that he had every reason to believe that McKenzie would obtain employment as soon as he was released. In fact, we have been told today, admittedly after the court had pressed Mr Walker for information about it, that McKenzie's job had been kept open for him, though there is said to be a real question mark over how long he will be able to retain it in the light of a significant downturn in the volume of his employers' work as a result of McKenzie's involvement in this fraud.
13. The sum which the judge ordered McKenzie to pay by way of a contribution towards the costs of the prosecution was, in our view, quite a large sum for a man of his means, especially as his family had been deprived of his income while he was in prison. But this was classically a case for someone to be ordered to pay to make a contribution towards the costs of the prosecution if they had the means to do so. Looking at the case in the round and in the light of such information as we have, we have concluded that he has the means to pay something towards the costs of the prosecution, though not as much as £3,242, without placing undue financial strain on his family. In the circumstances, we propose to substitute for the sum which the judge ordered him to pay towards the costs of the prosecution the sum of £1,500.
14. For these reasons, the appeal against the sentence of 15 months' imprisonment must be dismissed, but we allow the appeal against the order for costs, and we substitute for the order which the judge made an order that McKenzie pays £1,500 towards the costs of the prosecution.
15. LORD JUSTICE DAVIS: Mr Walker, next time there is any challenge to an order as to costs, can the court be provided with proper updated information as to means? It makes it easier for everyone concerned.
16. MR WALKER: Of course.
17. LORD JUSTICE DAVIS: Thank you.