BREACH OF A COURT ORDER ABOUT DISCLOSURE: THE STATEMENT OF TRUTH AND GOING TO PRISON (FOR QUITE A WHILE)

The judgment in Centek Holdings Ltd & Anor v Giles [2020] EWHC 1682 (Ch) is another example of why parties should take the statement of truth, and compliance with a court order, seriously.

THE CLAIM

The claimant brought proceedings against the defendant, a former employee, following the taking of confidential and proprietary material when he left their employment. The defendant made five affidavits in response to court orders.  A large amount of the contents of those affidavits was false in material respects.

THE APPLICATION FOR CONTEMPT OF COURT

The claimant brought proceedings for contempt of court.  The defendant admitted all of the contempts alleged.

THE SENTENCE

Mr Justice Marcus Smith considered the points raised in mitigation.

15. The breach of any court order is serious; breach of one with a penal notice, to which the contempt jurisdiction attaches, particularly so. Here, Centek emphasised the extent to which Mr Giles’ failure to comply with the Order had damaged Centek. Essentially, it was Centek’s evidence that in the competitive market in which it (Centek) operated, Centek’s business had been materially damaged by Mr Giles’ conduct.
    1. I do not consider that this is a factor that should augment the seriousness of Mr Giles’ infringements. I have no reason to doubt Centek’s evidence and – to be clear – Mr Giles did not seek to challenge this evidence: but it cannot be said, save in a generalised sense, that Mr Giles would have known precisely what harm would befall Centek in terms of lost business opportunities in Malysia. Of course, in general terms he would have appreciated that breaching the order in the manner he did had the potential of seriously damaging Centek.
    2. But it seems to me that courts are to be presumed to make orders for good reason. Where such an order is breached, the harm lies in the material and deliberate breach of the order. The harm lies in the damage to the authority of the court and the rule of law. Thus, just as a defendant’s evidence that a court order “did not matter” would, rightly, be discounted, so too ought a claimant’s evidence that the order in this case was – by reason of facts specific to the claimant – particularly important. If I may take a hypothetical example: the destruction of documents protected by a search and preservation of evidence order would be no less egregious if it could be shown that the documents destroyed were in fact of minimal or no relevance.
    3. I turn to Mr Giles’ mitigation. There are, I consider, three aspects to this:
(1) First, there is the fact that Mr Giles has admitted all of the contempts alleged against him, and so has saved the time and expense that would have been involved in proving these. He has done so without qualification. Although it was clear some time before Giles 6 that Mr Giles was not going to dispute the allegations against him, it was really only in Giles 6 that that intention was clearly and unequivocally articulated. It follows that Mr Giles’ admissions have come fairly late in the day. The Order, as I have described, was made on 30 August 2019, and Mr Giles’ breaches of the Order took place over a considerable period of time thereafter. On the other hand, Giles 6 was sworn on 26 May 2020, some time after the application to commit was made on 7 April 2020. In short, whilst I accept that Mr Giles is entitled to a significant discount in his sentence by reason of his “guilty plea”, I have to recognise that that plea came relatively late in the day, well-after the case against him had been articulated.
(2) Secondly, there is Mr Giles’ apology for breaching the Order, which he made in person from the witness box and in Giles 6. Whilst I accept that Mr Giles is sorry, I am afraid that I regard his apology as amounting to no more than an acknowledgment that he has breached the Order and has been caught doing so, rather than as a genuine reflection of remorse. I have considered the terms of Giles 6 very carefully, and listened most carefully to Mr Giles’ evidence in the witness box. Even now, Mr Giles fails to acknowledge the true significance of his breach of the Order. By way of example, Mr Giles has yet to accept that his conduct in breaching the Order was done in furtherance of a scheme to use the Centek Material against Centek by benefiting Centek’s competitors. There is no other way to regard Mr Giles’ conduct, yet he maintained his denial that he was not assisting Centek’s competitor. Thus, paragraph 12 of Giles 6 states:

“I had worked for Centek for so many years and had a particular way of designing and using data and I did not want to start from scratch but use what I already knew. I never had any intentions of using the data against them and did not believe we would be in competition with them as my understanding was at the time they would not have been eligible for the VDP contracts as they are not a Malaysian company.”

I am afraid I regard this as incredible. It is one thing to deploy abstract skills one has learned with one employer to the benefit of another, subsequent, employer. It is quite another to take the former employer’s information, and use that information to further another’s business. I consider that this essential failure on the part of Mr Giles to acknowledge the true nature of his conduct explains that regrettable lack of detail – amounting in some cases to serious omissions – in his account of his Malaysian dealings. I am afraid that Mr Giles has been neither full nor frank with the court in his evidence, and that is a factor that affects his plea in mitigation. I say this, fully recognising two factors that will have affected the drafting of Giles 6:

(a) First, Mr Giles was very frank that he so did not want to remind himself of his past conduct, that he simply could not bear to look at the detail of the documents that he had “in the back of his car”. I can sympathise with this denial, but this does not obscure the partial nature of Mr Giles’ mitigation.

(b) Secondly, although Mr Giles was, if I may say so, outstandingly well-served by his counsel, Mr Wise, and those instructing Mr Wise, there was an inequality of arms between the time and expense lavished on Centek’s evidence (all of which was helpful) and the fact that the budget for legal assistance does not run to a similar attention to Mr Giles’ evidence. I have no doubt that if money were no object, Giles 6 might have become (subject to Mr Giles’ willingness) a more detailed account of his Malaysian misdoings.

Even recognising these two factors, I consider that there is a deliberate lack of frankness in Giles 6, which serves to undercut the apology and regret that Mr Giles seeks to convey.

(3) Thirdly, and finally, there is the more general mitigation that is contained in Giles 7. Giles 7 seeks to articulate the devastating effect that imprisonment would have on Mr Giles’ family – his wife, his children, his mother, the community around him. I accept this evidence, and there is no doubt in my mind that it is genuine and true. I accept that Mr Giles is of good, unblemished character; I take account of his character references, which I accept; I take particular account of the evidence from his family, as to the suffering they are presently undergoing because of Mr Giles’ conduct and to what would happen were Mr Giles to be imprisoned. Mr Giles is not only an important emotional support for his family, he is also the only breadwinner. I also accept that these proceedings – from the date of the Order to date – have been remarkably unpleasant for Mr Giles and that he is suffering – including medically – as a result.
    1. I turn then, to the sentence that is appropriate in all these circumstances. Given the inter-connected nature of the various contempts alleged against and admitted by Mr Giles, it is impossible to seek to allocate specific sentences for each contempt. Instead, I shall seek to arrive at a single sentence for all contempts. As to this:
(1) The nature of Mr Giles’ contempts is such that the custody threshold is met. This was quite rightly recognised by Mr Wise on Mr Giles’ behalf.
(2) I consider that the starting point for contempts of the gravity of Mr Giles must be 20 months imprisonment. That is towards the maximum of 24 months. Whilst I would not go so far as to say that this was the “very worst sort of contempt”, it does not (in terms of the extent of Mr Giles’ breaches, the significance of the Order, and Mr Giles’ protracted and deliberate flouting of the rules) fall far short. Recognising, as I do, that my sentence must reflect the minimum necessary, 20 months seems to me the appropriate starting point. I note what the Court of Appeal said at [40] of McKendrick:

“…because the maximum term is comparatively short, we do not think that the maximum can be reserved for the very worst sort of contempt which can be imagined. Rather, there will be a comparatively broad range of conduct which can fairly be regarded as falling within the most serious category and as therefore justifying a sentence at or near the maximum.”

(3) Turning, then, to the question of mitigation, I consider that the first and third factors warrant a significant deduction in sentence, and I propose to reduce my 20 month starting point to a period of 14 months.
(4) In McKendrick, the Court of Appeal made clear that, in an appropriate case, it was important, when sentencing, to differentiate between the punitive/deterrent and coercive aspects of the sentence. This is undoubtedly the case here. I consider that, in this case, there are significant elements of both in play. The punitive/deterrent element of the 14-month period is 8 months; and the coercive element 6 months. There is a significant coercive element because – for the reasons I have articulated – I do not consider that Giles 6 comes anywhere near to purging Mr Giles’ contempt, nor do I accept Mr Giles’ assertion that his contempt cannot be purged. Of course, there are things done by Mr Giles that cannot be undone. But that makes Mr Giles’ obligation – if he is to purge his contempt – to make a full and candid disclosure of his wrongdoing all the more important.
    1. That brings me to the question of whether the sentence I am minded to impose can be suspended. Naturally, the effect of an unsuspended prison sentence on Mr Giles and his family has weighed heavily on me, but I do not consider – giving due weight to this effect – that I can appropriately suspend the sentence for the following reasons:
(1) The Order is an important one, and it is essential that breaches of such orders are properly butressed by sanctions that are and are seen to be appropriately serious.
(2) In this case, Mr Giles has not merely breached the Order, he has flouted it over a period of time and with a deliberation that, in my judgment, must be marked by an unsuspended sentence.
(3) Moreover, Mr Giles has had the opportunity of being very frank in seeking to purge his contempt. He has not availed himself of that opportunity, and I do not consider that suspending his sentence, on condition that he now be full and frank, is in any way appropriate. Rather, Mr Giles must serve his punishment and – if he does choose to purge his contempt in the manner I have suggested – the coercive element of my sentence (6 months) can be remitted.
  1. Mr Giles is sentenced to 14 months imprisonment, unsuspended, and I order that Mr Giles be committed to prison for this period. Mr Giles will be entitled to unconditional release after serving half his sentence, by virtue of section 258 of the Criminal Justice Act 2003.