CONTEMPT OF COURT - ENGLAND

 [2020] EWHC 2596 (QB) 

 

 

North of England Coachworks Ltd v. Khan

Smart Summary (Beta) 

Factual and Procedural Background

This opinion concerns an application by Company A to commit the Respondent to prison for contempt of court based on false statements of truth made in a statement of case titled "Counter-Schedules to defence of first defendant" dated 16 December 2019. The Respondent’s solicitor signed the statement of truth certifying belief in the truth of the content, which Company A alleges contained false entries. The contempt allegations focus on entries relating to four individuals whose payments were falsely attributed as legitimate company expenses but were in fact for the Respondent’s personal benefit.

 

The underlying action involves allegations by Company A that the Respondent perpetrated substantial fraud during his employment from 2010 until July 2019, by misappropriating funds through cheques, credit card transactions, electronic money transfers, and cash payments. The Respondent and two others are defendants in the action, with the Respondent filing a joint defence and counterclaim denying the fraud allegations and asserting that many payments were authorised and part of unorthodox remuneration arrangements.

 

The Counter-Schedules were served after the close of pleadings but before disclosure or witness statements. Company A challenged certain entries in the Counter-Schedules as false, leading to the committal application. The Respondent admitted specific contempts relating to four individuals, acknowledging that payments to them were for his personal benefit and that the statements of truth were knowingly or recklessly false.

 

Legal Issues Presented

Whether the Respondent made false statements of truth in the Counter-Schedules that amount to contempt of court under CPR 81.18(1)(a).

Whether the false statements interfered with the course of justice.

Whether the Respondent had no honest belief in the truth of the statements and knew of their likely interference with justice.

The appropriate sentence for the admitted contempts of court.

Arguments of the Parties

Applicant's Arguments (Company A)

The Respondent knowingly or recklessly made false statements in the Counter-Schedules verified by a statement of truth.

The false entries related to payments to four individuals who were prostitutes, misrepresented as legitimate company expenses.

The falsehoods caused unnecessary time and expense and interfered with the administration of justice.

The contempts were serious enough to justify committal to prison.

Respondent's Arguments

Initially resisted the committal application on grounds of timing and appropriateness, arguing it would cause delay and drain resources.

Denied deliberate or knowing falsity, asserting inaccuracies were not knowingly false but defended as honest mistakes.

Later admitted the contempts in a Basis of Plea, accepting the misleading nature of the entries and their verification by a false statement of truth.

Argued that the false entries were motivated by shame and embarrassment rather than gain.

Counsel submitted the Respondent’s conduct crossed the custody threshold but urged for a suspended sentence.

The Respondent will no longer pursue his counterclaim, mitigating the impact of the false entries on the substantive case.

Table of Precedents Cited

Precedent       Rule or Principle Cited For       Application by the Court

JSC BTA Bank v Ereshchenko [2013] EWCA Civ 829  Right of a party to use committal applications to advance their interests in litigation. Confirmed Company A’s right to bring the committal application and proceed with it.

AXA Insurance UK plc v Rossiter [2013] EWHC 3805 (QB) Elements required to prove contempt by false statement of truth: falsity, interference with justice, and lack of honest belief.     Guided the court’s assessment of whether contempt was established beyond reasonable doubt.

Liverpool Victoria Insurance Co Ltd v Khan and Zafar [2019] EWCA Civ 392     Guidance on sentencing for civil contempt involving false statements verified by statement of truth, including factors increasing seriousness and mitigation.      Provided framework for determining sentence severity, reduction for admission, and suspension considerations.

International Sports Tours Limited (trading as Inspire Sports) v Shorey [2015] EWHC 2040 (QB)       Principle that a contemnor is entitled to raise a proper defence and is not obliged to capitulate to allegations of contempt.       Supported the Respondent’s entitlement to resist the committal application initially.

Neil v Henderson [2018] EWHC 90 (Ch)       Interference with the course of justice need only be likely, not actual, for contempt to be established.       Informed the court’s analysis of the interference element of contempt.

Court's Reasoning and Analysis

The court analysed the application by focusing strictly on the admitted contempts of court as set out in the Respondent’s Basis of Plea, avoiding any prejudgment of the underlying substantive dispute. The court applied the established legal principles requiring proof beyond reasonable doubt that the statements were false, interfered or were likely to interfere with the course of justice, and were made without honest belief.

 

The court found that the false statements related specifically to payments to four individuals, admitted to be prostitutes, which were falsely attributed as company expenses. The Respondent knowingly falsely attributed payments to one individual and recklessly made misleading attributions regarding the others.

 

The court acknowledged that Company A was aware of the essential truth of these entries before or soon after receiving the Counter-Schedules, limiting the actual interference with justice to the unnecessary time and expense incurred in pursuing the committal application, which the Respondent admitted.

 

In assessing seriousness, the court noted the inherent gravity of false statements verified by statements of truth, the monetary value involved, and the Respondent’s admission. It also considered mitigating factors including the Respondent’s remorse, mental health issues, previous good character, and the impact on his family and dependents.

 

The court applied sentencing guidance from Liverpool Victoria Insurance Co Ltd v Khan and Zafar, concluding that the conduct crossed the custody threshold but that suspension of the sentence was appropriate given the mitigation and personal circumstances.

 

Holding and Implications

DISPOSED OF

 

The court sentenced the Respondent to a term of 10 weeks' imprisonment for the admitted contempts of court, suspended for one year. This reflects the seriousness of making false statements verified by a statement of truth, balanced against significant mitigation including early admission and personal circumstances.

 

The direct consequence is that the Respondent faces a suspended custodial sentence for contempt, emphasizing the court’s intolerance of dishonesty in litigation. No broader precedent was established beyond the application of existing principles to the facts of this case.

 

The court urged the parties to focus on progressing the substantive action expeditiously, discouraging further contempt applications until the trial of the substantive disputes, in line with the overriding objective of case management.