“LITIGANTS SHOULD BE TERRIFIED IF THEY LIE TO THE COURT”: THE IMPORTANCE OF THE STATEMENT OF TRUTH

There are many, many cases about committal proceedings in commercial cases.  Some judges have observed that they appear to be used tactically.   Most are confined to their own facts. However in North of England Coachworks Ltd v Khan [2020] EWHC 2596 (QB) Mr Justice Griffiths stressed the importance of  the statement of truth and a defendant narrowly escaped prison.  The case also raises the issue of whether  it is ever wise for a solicitor to sign a statement of truth in a pleading or counter-schedule.  The solicitor signed it here. Fortunately there was no issue that the defendant authorised the signature.

 

 

Perjury and false statements verified by statements of truth are very serious indeed. Litigants and others should be terrified of the consequences if they lie to the court, whether on oath, or backed with the modern solemnity of a statement of truth. So much of the process of justice depends on evaluating contested assertions, or on accepting uncontested assertions, that it is a point of the greatest possible importance that everyone, honest and dishonest alike, should be in no doubt that lying to the court is not an option. For those who are honest and conscientious, it is to be expected as a matter of principle that lies will not be told in the formal context of verification by a statement of truth. But for those who are slapdash or even dishonest, it is right that the consequences of saying, verified by a statement of truth, something untrue – knowingly or recklessly untrue – should be severe enough to demonstrate that it is also against their own interests to do it, and unthinkable, for that reason too, that they should do it. Not only punishment, but also deterrence, comes into play.”

 

THE CASE

The claimant brings an action alleging that the defendant extracted money by fraudulent means when he was employed by the claimant.

THE DEFENDANT’S COUNTER-SCHEDULE

The defendant put in a Defence and a series of Counter-Schedules which attempted to show where the funds alleged to be misused had been placed.   The statement of truth was signed by the Defendant’s solicitor.

THE USE OF SOME OF THE MONEY FOR SEX WORKERS

The committal application was based on money which the defendant stated in the counter-schedule was used for business purposes clearly being used for personal purposes.

THE DEFENDANT’S ADMISSION

The defendant admitted some of the allegations of contempot.

    1. The admissions are contained in the first three paragraphs of the “Basis of Plea”. The final paragraph denies certain other contempt allegations, which NECL does not pursue. Consequently, the contempts which are admitted, and which I have to deal with on NECL’s committal application, are limited to those in paras 1-3 of the Basis of Plea, which describe and admit them in the following terms:-
“1. The Respondent accepts that information that is contained in the document titled “Counter-schedules to defence of first defendant” dated 16/12/2019 (“the counter-schedules”) is misleading.
2. The Respondent accepts that he caused his solicitor to sign the statement of truth verifying the counter-schedules and at the time of doing so he knew that at least some of the information that was contained therein was false. The Respondent acknowledges that the provision of the misleading information has resulted in unnecessary time and expense being incurred by the Applicant and Court and accepts that he is guilty of interfering with the administration of justice.
3. The Respondent accepts that G Massey, S Merrifield, K Summers and J Thomas are prostitutes and that payments to them can properly be regarded as being for his personal benefit.

a. In relation to G Massey, the Defendant accepts that the attribution on the counter-schedules of 50 payments to G Massey totalling £68,319.13 is false. The Respondent accepts that he knowingly falsely attributed such payments as legitimate company expenses when they were in fact for his personal benefit.

b. In relation to his attribution of the payments to S Merrifield, K Summers and J Thomas, the Defendant accepts that the entries were misleading. The Respondent accepts that he recklessly, that is to say not caring whether the attribution was true or false, attributed such payments as legitimate company expenses when they were in fact for his personal benefit.

c. The Respondent accepts that given the amount of money that he spent on prostitutes, he knew that a significant proportion of money drawn from the Claimant’s account for his benefit would not have been immediately apparent and that payments to these individuals would have been contained within the subset of questioned transactions:

i. In relation to S Merrifield, the Respondent accepts that the attribution of the single payment on his counter-schedules for £335 as relating to “M WARREN” is misleading. This was reckless but not a deliberate deception by the Respondent; at the time of producing his counter schedule he did not associate the name “S Merrifield” with the person calling herself “Chloe” but he accepts that attributing the payment to a category other than one which signified that he was not certain of its purpose is misleading.

ii. In relation to K Summers, the Respondent accepts that the attributions on his counter-schedules of the seven payments, totalling £2,090, to K Summers are misleading. This was reckless but not a deliberate deception by the Respondent; he did not associate K Summers and Lucy Summers (which is what the payee called herself to the Defendant) as being one and the same but he accepts that attributing the payments specifically to any category other than one which signified that he was not certain of their purpose would mislead the Applicant.

iii. In relation to J Thomas, the Respondent accepts that the attributions on his counter schedules of the seven payments (totalling £1,850.13) to J Thomas are misleading. He did not recognise the name but speculated they may have related to a former employee whom he believed had the surname of Thomas. He accepts that attributing the payments specifically to any category other than one which signified that he was not certain of their purpose would mislead the Applicant.”

    1. These admissions only relate to the entries on the Counter-Schedules relating to the four individuals I have referred to in para 5 above, namely:
i) “G Massey” (or her company “Massey Enterprise”);
ii) “S Merrifield”;
iii) “K Summers”; and
iv) “J Thomas”.
All the entries in the Counter-Schedules relating to these four individuals (including G Massey’s company “Massey Enterprise”) are covered by the “Basis of Plea” admissions.
  1. Perjury and false statements verified by statements of truth are very serious indeed. Litigants and others should be terrified of the consequences if they lie to the court, whether on oath, or backed with the modern solemnity of a statement of truth. So much of the process of justice depends on evaluating contested assertions, or on accepting uncontested assertions, that it is a point of the greatest possible importance that everyone, honest and dishonest alike, should be in no doubt that lying to the court is not an option. For those who are honest and conscientious, it is to be expected as a matter of principle that lies will not be told in the formal context of verification by a statement of truth. But for those who are slapdash or even dishonest, it is right that the consequences of saying, verified by a statement of truth, something untrue – knowingly or recklessly untrue – should be severe enough to demonstrate that it is also against their own interests to do it, and unthinkable, for that reason too, that they should do it. Not only punishment, but also deterrence, comes into play.

THE JUDGE’S FINDINGS AND THE SENTENCE

Inevitably the judge found the defendant in contempt of court.  Inevitably the judge found that the breaches crossed the custody threshold.  The judge sentenced the defendant to 10 weeks in prison, suspended for one year.

FUTURE CONDUCT OF THE CASE

The judge made some important observations on the future conduct of the case.

  1. Finally, I wish to say a few words about the future conduct of this case.
  2. The committal proceedings have taken time, resources and focus away from the purpose of the action which is to resolve the dispute between the parties.
  3. A substantive response to the Defence is now urgent, to replace the holding Reply and Defence to Counterclaim served in January. Directions to trial should be agreed or applied for, to include disclosure, exchange of witness statements, and setting down for trial.
  4. There have been hints that NECL thinks it might be able to disprove other elements of Mr Khan’s Counter-Schedules, over and above those admitted to be false in the Basis of Plea (see Jennings affidavit of 19 March 2020 at para 7). If that is the case, the first time and place for that to be attempted is at the trial of the action. I do not envisage that there should be further contempt applications until the substantive dispute between the parties has been fully determined in accordance with the overriding objective.
  5. Targeted scrutiny of one side on issues which do not involve the other is good tactics, but it is not always good case management. The overriding objective generally favours determination of as much as possible, as soon as possible, and (so far as possible) on a single occasion. That is why a trial may be a better forum for addressing disputes of fact, including allegations of dishonesty, than a one-sided application. Of course, it is different if the application is truly urgent, or if it may genuinely and fairly be said to be determinative. But it is always something to bear in mind.