SIGNING THE STATEMENT OF TRUTH IN PRE-ACTION DOCUMENTS: WILL THE SOLICITOR GO TO JAIL OR NOT?

There has already been some discussion in the Gazette about the judgment in Liverpool Victoria Insurance Company Ltd v Yavuz & Ors [2017] EWHC 3088 (QB). In particular the observations in relation to signature of documents by the legal representative. This has caused me to re-visit earlier posts and cases on this topic.

THE CASE

The claimant insurance company were successful in bringing an action for contempt of court against nine defendants. The judge found that the defendants had signed false witness statements, particulars of claim and schedules of damage (in addition to staging faked accidents).

PRE-ACTION DOCUMENTATION

At the end of the judgment Mr Justice Warby considered the issue of those documents signed prior to proceedings.

 

    1. In my judgment, proof that these defendants knowingly made false statements in their claim forms, particulars of claim, and in the schedules of loss and witness statements in the County Court proceedings establishes that each of them is guilty of contempt of court. I am therefore satisfied that Mr Yavuz is guilty of the fourth, fifth and sixth contempts alleged against him; that Mrs Yavuz is guilty of the third and fourth contempts alleged against her; that Mr Sel is likewise guilty of the third and fourth contempts alleged; that Mrs Sel committed the second and third contempts alleged against her. I find that Mr Salman Gulbudak is guilty of the third, fourth and fifth contempts alleged against him, and Mr Mato Gulbudak of the second and third alleged against him. I find Mr Kaya guilty of the second and third contempts alleged against him. Ayten Kaya and Gunes Kaya both committed contempt in the two respects alleged against them.

    2. In preparing this judgment, although no issue was taken about it at the hearing, I have been left wondering whether the same is true of the January 2012 Statements, or the other witness statements made before proceedings were issued. It is not obvious that witness statements of this kind are documents falling within the scope of CPR 32.14, or the doctrine of contempt of court. Not only were there no current proceedings, I have not been shown any rule or Practice Direction that requires such a statement to be made or, if made, to be verified by a statement of truth. It seems to me at present that CPR 22 is directed at witness statements within the meaning of CPR 32, namely those which are to stand as a party’s evidence in legal proceedings.

    3. I have similar reservations about the initial, pre-action schedules of loss. It is clear that the CPR require verification of such schedules when they are attached to the Particulars of Claim pursuant to PD16 4.2, but it is less clear that this is so as regards a pre-action schedule.

    4. I do not think it desirable to express a conclusion on these issues in this judgment, having heard no argument about them from either side. I am willing to hear such argument. But I do not think I necessarily need to resolve the issues, because I do not believe that any doubt over these questions is likely to affect sentence. Lies told before the actions began can be treated as aggravating features of the contempts that were later committed, as part of a course of conduct.

Footnote

  1. There is a related question which, again, does not affect sentence. It is not a part of LVI’s case, but it is a necessary implication of that case, that false statements which these defendants did not believe to be true were made on their behalf in another class of documents verified by a statement of truth, namely the CNFs filed for them through the online portal. The statements of truth on those documents were made by their solicitors. I do not propose to make any findings about this. I mention the matter only because some evidence was led about these CNFs, which led to me query whether contempt proceedings could be brought in respect of such a statement. I express no view on whether this is desirable, but note that it must be the case that many RTA claims are resolved without proceedings, on the basis of CNFs in Form RTA1.

  2. I received some submissions from Mr Laughland on these issues. He drew attention to the Practice Direction on Pre-Action Conduct of April 2010 (“the General PAP”), and to the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents of the same date (“the PI Protocol”). These were both in force at the relevant times. The PI PAP set out a process for claims of this kind, requiring a claimant to use a CNF in form RTA1: see para 1.3(1). Para 6.1 of the PI PAP set out the requirements for completion of the CNF. These included, at para 6.6, a requirement that the statement of truth in form RTA1 be “signed by the claimant or the claimant’s legal representative.”

  3. The PI PAP contained nothing about the consequences of false verification. But, Mr Laughland points out, the General PAP stated (at para 4.2) that “The court will expect the parties to have complied with this Practice Direction or any relevant pre-action protocol.” It may be arguable therefore that a false and dishonest statement in a CNF in Form RTA1 could found an application to commit for contempt, but it cannot be said that the matter is free from doubt. To say that the court “will expect” compliance with a PAP is not necessarily equivalent to saying that parties must comply. The General PAP states that parties who do not comply may be asked for an explanation, and warns of costs consequences, but not of the prospect of contempt proceedings. This is a topic that may be worthy of consideration by those responsible for these PAPs, and perhaps the Civil Procedure Rules Committee.”

 

WHEN  A SOLICITOR SIGNS A STATEMENT OF TRUTH ON BEHALF OF A CLIENT

Practice Direction 51S – The County Court Online Pilot. This makes it mandatory for the legal representative to sign the statement of truth on issue, with a stark reminder that the signatory can be committed to prison if they do not hold an honest belief.

“If the legal representative signs a statement of truth in a document without an honest belief in the truth of what is contained in the document, proceedings for contempt of court may be brought against that person.”

WORDS THAT SHOULD BE ON THE WALL OF EVERY LITIGATION SOLICITOR’S OFFICE

That is this section from Practice Direction 22 – Statements of Truth.

“3.7  Where a party is legally represented, the legal representative may sign the statement of truth on his behalf. The statement signed by the legal representative will refer to the client’s belief, not his own. In signing he must state the capacity in which he signs and the name of his firm where appropriate.

3.8  Where a legal representative has signed a statement of truth, his signature will be taken by the court as his statement:

(1) that the client on whose behalf he has signed had authorised him to do so,

(2) that before signing he had explained to the client that in signing the statement of truth he would be confirming the client’s belief that the facts stated in the document were true, and

(3) that before signing he had informed the client of the possible consequences to the client if it should subsequently appear that the client did not have an honest belief in the truth of those facts (see rule 32.14).”

A DANGEROUS STEP

In signing a statement of truth on behalf of a client, therefore, the solicitor is making expressly, a statement that

  • They are authorised to sign the document.
  • That the solicitor has told the client that they would be confirming on the client’s behalf that the document was true.
  • That the client had been told of the consequences if the statement is untrue (which include the fact that the client could go to jail).

Added to that the Online Pilot Practice direction imposes a specific duty that the person signing the statement should have an honest belief that the statement is true.

AN “HONEST BELIEF”

How a solicitor proves an “honest belief” is far from clear.  There is no guidance as to what steps the solicitor must take in order to come to that belief.

  • A failure to comply with Practice Direction 22 could support an assertion that there was a lack of honest belief.
  • A failure to obtain proper authority to issue could well amount to a lack of an honest belief, see  Bao Xiang International Garment Centre -v- British Airways PLC [2015] EWC 3071 (Ch).

There are examples of statements being signed in circumstances where judges have held that the solicitors could not have had the requisite knowledge.

In GB Holdings -v- Short [2015] EWHC 1378 (TCC) where Mr Justice Coulson observed

“I find it surprising that, in modern litigation, a firm of solicitors can still take a statement of truth so lightly”

Similarly in YXB -v- TNO [2015] EWHC 826 (QB) Mr Justice Warby observed that a solicitor had signed a witness statement in support of an injunction application

The first paragraph of the statement said that its contents were within her own knowledge unless otherwise stated. Very little of it could however have been within her own knowledge.”

 

HEADING FOR TROUBLE

If there is a dispute about the truth of a document a solicitor/client relationship is fraught with problems.

  • If the solicitor states that these steps were complied with then the client could be in serious trouble.
  • If the client states that these steps were not complied with then the solicitor (and potentially the client) could be in serious trouble.
  • If there is dispute about what information and advice the solicitor gave to the client then there could be a whole lot of trouble.

At the very least the advice and information given should be recorded in writing.

GUIDANCE ONLINE

 

RELATED POSTS ON SIGNING THE STATEMENT OF TRUTH