BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
B e f o r e :
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(1) EPISO 4 PILGRIM HOLDING SARL (2) TRISTAN CAPITAL PARTNERS LLP |
Applicants/ Defendants in Claim |
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– and – |
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TIMOTHY DAVIES |
Respondent |
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– and – |
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TB PROPERTY INVESTMENTS (PLYMOUTH) LIMITED |
Claimants in Claim |
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Adam Porte (instructed by Acuity Law) for the Respondent
Hearing date: 3 November 2023
Draft Judgment Circulated: 3 November 2023
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Crown Copyright ©
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 09 November 2023 at 10:30am.
The Honourable Mr Justice Foxton:
The proceedings
"The defendant has subjected [Mr Davies'] evidence to considerable criticism with which I am, by and large, in agreement ….
Certainly, so far as Mr Davies is concerned, there are substantial assets which were not mentioned and should have been."
"Not only has the claimant not satisfied the burden which I have referred to, but on the face of the evidence before the court it does seem to me that the claimant does have access to sufficient funds or assets which could be realised and which could in fact satisfy an order for security."
i) "I do not own any stocks or shares other than my investment in the Claimant" in Davies 1 ("Statement 1").
ii) "As of 27 March 2023, I had approximately £10,000 of cash available across my various accounts" in Davies 1 ("Statement 2").
iii) "My financial position based on my significant assets, cash, stocks and shares and debt is as follows" in Davies 1 ("Statement 3").
iv) "The assets above …. are all the significant assets I have" in Davies 1 ("Statement 4").
v) Mr Davies' "significant assets", with the exception of £10,000 of liquid assets totalled "a 50% share in approximately £1,136,000 of non-liquid assets" in Davies 1 ("Statement 5").
vi) "I have made loans / invested capital of … £370,000 to the Claimant" in Davies 1 ("Statement 6").
vii) "In terms of bank accounts, I hold two bank accounts at NatWest, neither of which have any overdraft facilities" in Davies 2 ("Statement 7").
viii) "I have provided information about all significant assets. For the avoidance of doubt, this includes all assets over £5,000 and I do not own any further assets over £5,000 other than those mentioned within my first and second witness statements" in Davies 2 ("Statement 8").
ix) "There are no further assets of which I am aware that are held in Gwyneth's [Mrs Davies] name which I have not already mentioned within either my first or second witness statements" in Davies 2 ("Statement 9").
The application for permission
"Proceedings for contempt of court may be brought against a person who makes or causes to be made a false statement in a document, prepared … during proceedings and verified by a statement of truth without an honest belief in its truth."
"(5) Permission to make a contempt application is required where the application is made in relation to—
(a) interference with the due administration of justice, except in relation to existing High Court or county court proceedings;
(b) an allegation of knowingly making a false statement in any affidavit, affirmation or other document verified by a statement of truth or in a disclosure statement."
i) A person who makes a statement verified with a statement of truth or a disclosure statement is only guilty of contempt if the statement is false and the person knew it to be so when they made it.
ii) It must be in the public interest for proceedings to be brought.
iii) In deciding whether it is in the public interest, the following factors are relevant:
(a) the case against the alleged contemnor must be a strong case ("there is an obvious need to guard carefully against the risk of allowing vindictive litigants to use such proceedings to harass persons against whom they have a grievance");
(b) the false statements must have been significant in the proceedings;
(c) the court should ask itself whether the alleged contemnor understood the likely effect of the statement and the use to which it would be put in the proceedings;
(d) "the pursuit of contempt proceedings in ordinary cases may have a significant effect by drawing the attention of the legal profession, and through it that of potential witnesses, to the dangers of making false statements. If the courts are seen to treat serious examples of false evidence as of little importance, they run the risk of encouraging witnesses to regard the statement of truth as a mere formality".
iv) The court must give reasons but be careful to avoid prejudicing the outcome of the substantive proceedings.
v) Only limited weight should be attached to the likely penalty.
vi) A failure to warn the alleged contemnor at the earliest opportunity of the fact that they may have committed a contempt is a matter that the court may take into account.
"Knowingly to give false evidence in a witness statement intended for use in proceedings, particularly proceedings of a kind that are ordinarily determined without evidence, will usually involve an attempt to interfere with the course of justice and such proceedings might therefore be regarded as a matter primarily for the public authorities. However, a private individual, usually a party to the proceedings, may well be directly affected by such action."
"When the court gives a private person permission to pursue proceedings for contempt against a witness who is alleged to have told lies in a witness statement it allows that person to act in a public rather than a private role, not to recover damages for his own benefit, but to pursue the public interest. That is why the court will be concerned to satisfy itself that the case is one in which the public interest requires that the committal proceedings be brought and that the applicant is a proper person to bring them".
"Whenever the court is asked by a private litigant for permission to bring proceedings for contempt based on false statements allegedly made in a witness statement it should remind itself that the proceedings are public in nature and that ultimately the only question is whether it is in the public interest for such proceedings to be brought. However, when answering that question there are many factors that the court will need to consider. Among the foremost are the strength of the evidence tending to show not only that the statement in question was false but that it was known at the time to be false, the circumstances in which it was made, its significance having regard to the nature of the proceedings in which it was made, such evidence as there may be of the maker's state of mind, including his understanding of the likely effect of the statement and the use to which it was actually put in the proceedings. Factors such as these are likely to indicate whether the alleged contempt, if proved, is of sufficient gravity for there to be a public interest in taking proceedings in relation to it. In addition, the court will also wish to have regard to whether the proceedings would be likely to justify the resources that would have to be devoted to them."
"The court should exercise great caution before giving permission to bring proceedings. In my view it should not do so unless there is a strong case both that the statement in question was untrue and that the maker knew that it was untrue at the time he made it."
Have the Applicants shown a strong prima facie case that the statements relied upon were made by Mr Davies knowing that they were untrue?
Is there a strong prima facie case that the statements were untrue?
i) Statement 1 (because Mr Davies owned shares in two companies not mentioned, Citrim Properties Limited ("Citrim") and Highmead Dairies Limited ("Highmead")).
ii) Statement 2 (Mr Davies' accounts having always held significantly more than £10,000, and at the relevant time over £30,000).
iii) Statement 3 (because Mr Davies owned significant assets which were not referred to).
iv) Statement 9 (because Mr Davies accepts the Missing Properties were held in Mrs Davies' name at the time of Davies 1 and Davies 2).
i) Statements 4 and 5: there is a strong prima facie case that Mr Davies had significant assets other than those listed, namely his shares in Citrim and Highmead, his pension and the Missing Properties.
ii) Statement 6: Mr Davies lent £2m to TB Property through a company he owned with Mrs Davies, there being a strong prima facie case that his statement about "loans / capital" advanced by Mr Davies to TB Property, on its natural meaning, included funds advanced by a company he owned.
iii) Statement 7: because there is a strong prima facie case that the NatWest current account has an overdraft facility of £10,000, as this is recorded on a bank statement and was confirmed in the Acuity Letter.
iv) Statement 8: because there is a strong prima facie case that Mr Davies had not provided information about all his significant assets, having failed to refer to the Missing Properties.
Is there a strong prima facie case that Mr Davies knew that the statements were untrue?
i) Davies 1 and 2 were prepared without independent legal advice (viz for Mr Davies personally, as opposed to TB Property) as a result of which Mr Davies wrongly understood that he did not need to include "information in the public domain" or assets which he did not believe would be capable of providing security.
ii) Davies 2 was prepared "urgently".
iii) Mr Davies had forgotten to include some assets.
iv) Some statements were made because they were believed to be true but were in error.
v) It is still maintained that one alleged misstatement was true.
vi) The omission from Davies 1 of the shares in Citrim and Highmead and pension was corrected in Davies 2 and the position relating to the overdraft and cash balance in the Acuity Letter.
i) The witness statements were prepared to address the assets Mr Davies had access to. Both Davies 1 ("I do not own any stocks and shares other than my investment in the Claimant" and "the assets above are all the significant assets I have") and Davies 2 ("I have provided information about all significant assets" and "I do not own any further assets over £5,000") are expressed in all-encompassing terms.
ii) Davies 1 included properties on the Land Registry (and therefore a matter of public record) and illiquid assets which it was asserted could not be used to provide security, the witness statement distinguishing between identified assets which could and could not be used to provide security. Davies 2 also included assets which it was being said could not be a source of security (e.g., properties owned by Citrim and subject to long leases or Mrs Davies' assets).
iii) Davies 2 referred to Mr Davies' pension pot, Citrim and Highmead only after they had been raised by Rebecca Campbell, solicitor for the Applicants, in her second witness statement of 14 April 2023 and the Acuity Letter only produced bank statements (which revealed the overall cash balance and the existence of an overdraft) after the Applicants' skeleton argument had strongly criticised the absence of such documents.
iv) The Missing Properties were not disclosed prior to the security for costs hearing before Mr Beltrami KC, even though the Acuity Letter had addressed the position of Mrs Davies' assets in some detail.
v) The Missing Properties were disclosed in Davies 3 after the Applicants had sent letters making it clear that they were inspecting the Land Registry, and threatening committal.
vi) There were a substantial number of false statements relating to the asset position, or statements where there is a strong prima facie case that they were false, each of which gave a false impression that Mr Davies' assets or funds were less than they were. This is a context in which it would be open to the trier of fact, if sure that there had been a deliberate understatement of assets in one or more respects, to rely upon that fact when considering other statements.
Is there a strong prima facie case that the statements were made with intention of interfering with the due administration of justice?
Should the court grant permission to the Applicants to pursue committal proceedings?
i) Davies 1 and 2 were prepared for and deployed at a security for costs hearing. By the time of that hearing, the only substantial misstatement which remained uncorrected was the existence of the Missing Properties (I leave on one side a misidentification in Davies 2 of the address of two properties owned by Citrim, but not their value, which was subsequently corrected and which I am satisfied may well have been an innocent error).
ii) At the hearing of the security for costs application, the Applicants made significant criticisms of the accuracy and comprehensiveness of Mr Davies' evidence, which the Judge accepted. The contention which Davies 1 and 2 were intended to support – that an order for security would stifle TB Property's claim – was decisively rejected, substantial security in the full amount sought by the Applicants was ordered, and an order for indemnity costs was made.
iii) There were public judicial criticisms of Mr Davies' evidence in the Judge's judgment, and there has been further adverse comment in this judgment.
iv) The proceedings have since been struck out and the costs of the proceedings awarded to the Applicants.
v) The Applicants understandably claim that they "have been put to very substantial cost and wasted time" as a result of the misstatements in Davies 1 and 2. To the extent that Davies 1 and 2 increased the costs incurred by the Applicants, which cannot be recovered from TB Property, it is open to the Applicants to seek an order against Mr Davies under s.51 of the Senior Courts Act 1981. However, I am not persuaded that the Applicants suffered any prejudice beyond costs from the late or non-disclosure of assets by Mr Davies, nor that the costs wasted are at all proportionate to the costs of a committal application.
vi) Committal proceedings do not provide an avenue for redressing any wasted costs – in particular, they cannot properly be pursued with a view to inducing Mr Davies to compensate the Applicants in return for any committal proceedings being discontinued, as Mr Friedman accepted. I do not seek to go behind his assurance that the Applicants are solely motivated by the public interest in bringing this application. It is striking, however, how much more public-spirited litigants in the Commercial Court have become over the last decade, in which committal applications have grown significantly.
vii) The significant misstatement which had yet to be corrected prior to the security for costs hearing – relating to the Missing Properties – was corrected in Davies 3, filed on 5 May 2023 (i.e., within a relatively short period, albeit after Davies 1 and 2 had been deployed in the Commercial Court hearing), albeit I accept this may well have been prompted by the Applicants' correspondence.
viii) An order for substantial security was made in the Deposit Claim, together with an order for indemnity costs of the security application.