In the case of Goldsmith Williams v Travelers Insurance Company Limited  EWHC 26, Mr Justice Wyn Williams considered the question of whether a company had acted fraudulently. Goldsmith Williams brought a claim against Travelers Insurance Company Limited using the Third Parties (Rights against Insurers) Act 1930 (the 1930 Act). Under the 1930 Act, a person who has an ascertained claim against an insured but insolvent person may bring that claim directly against the insurers on risk. In this case, Goldsmith Williams had obtained judgment against the insured but, when claiming under the 1930 Act, Travelers defended itself by claiming that the claim was excluded from the policy.
Joshua & Usman Legal Services Limited (JULS) was a company involved in the giving of legal advice. Its two directors were Mr Atkapakpa and Ms Usman both of whom were solicitors. It was agreed between the parties to the current case that Mr Atkapakpa had committed several acts of mortgage fraud in which he not only obtained mortgages through fraudulent statements but then also stole the money. The question before the court was whether JULS itself had acted fraudulently or dishonestly as the Travelers policy excluded liability for such acts. Extensive evidence was put before the court that Ms Usman, the only other director of the company, was aware that Mr Atkapakpa had engaged in mortgage fraud previously. The court found that she had committed a fraudulent act by witnessing Mr Atikpakpa's signature and certifying a copy of his passport which allowed him to commit the mortgage fraud in question. In relation to another later theft of mortgage funds by Mr Atkapakpa, it was found that he could not have committed the crime without Ms Usman condoning the course of conduct. As a result of these findings, Mr Justice Wyn Williams found that Travelers was not liable under the 1930 Act as the loss was excluded from the policy in question.
This case usefully leads one through a proper application of the 1930 Act. It also acts as a stark reminder that, with the requisite background knowledge, small acts such as witnessing a signature or certifying a document could amount to aiding and abetting a crime. In addition, any claim brought against a company or partnership as a result of those acts may be excluded from the company's insurance cover.