Lasting Powers of Attorney: recent key developments
The Courts are cracking down on those who fail to abide by, or act in complete disregard of, court orders and procedures. Individuals and companies alike should be aware that their actions, even before proceedings are issued, can come under the remit of the Court , their actions can be found to be in contempt of court and significant sanctions can be imposed.
We have previously written about what contempt of court means and the potential sanctions that can be imposed. In short, there are two forms of contempt: criminal and civil, the latter of which is the focus of this blog. Broadly, civil contempt of court is the act of deliberately failing to obey or respect the authority of a court of law or legislative body. That act does not need to be criminal. Both civil and criminal contempt may be punishable by imprisonment and both must be proved to the criminal standard of proof (beyond reasonable doubt). If a company is found to have flouted a court order, then pursuant to CPR 81.4(3) a committal order for contempt can be made against ‘any director or other officer of that company or corporation’, albeit that person must have known of, and been responsible for, any court order that has been breached.
The Court of Appeal has recently held in the case of Jet 2 Holidays Ltd v Hughes and another  EWCA Civ 1858 (the ‘Jet 2 case’) that individuals who made false statements in witness statements verified by statements of truth, in purported compliance with a pre-action protocol before proceedings were issued could face an application for committal for contempt of court. Pre-action protocols are a set of procedural guidelines which aim to ensure that, before issuing proceedings, the potential parties to proceedings have exchanged information and sought to narrow and/or resolve the issues in dispute at an early stage.
In the Jet 2 case, two holiday-makers, Mr and Mrs Hughes, made witness statements in which they stated that they had fallen ill from food poisoning whilst on a Jet 2 holiday and instructed their solicitor to send a letter before claim to Jet 2, in accordance with the Pre-action Protocol for Personal Injury Claims, threatening a claim for damages. Jet 2 obtained evidence from Mr and Mrs Hughes’ social media profiles that their allegations were untrue, including photographic evidence of them and their children looking physically well and enjoying their holiday.
Mr and Mrs Hughes decided not to bring proceedings, however Jet 2 still sought an order that they be held in contempt of court and committed for contempt. The lower court judge held that it did not have jurisdiction to commit them for contempt as the witness statements were not served during the course of proceedings as envisaged in CPR 32.14 and Part 22. Jet 2 appealed this decision. The Court of Appeal unanimously held that the court has an inherent power to find and commit for contempt irrespective of the CPR. A dishonest witness statement purportedly in compliance with a pre-action protocol was capable of interfering with the administration of justice and could be within the court’s jurisdiction to commit for contempt, even if the proceedings were never commenced.
It is noteworthy that the fact that Mr and Mrs Hughes made the witness statements at such an early stage was clearly intended to give Jet 2 the impression that they were serious about their case. This decision demonstrates clearly that the Court is alive to prospect of parties using tactics to secure an unfair advantage. The Pre-action Conduct Practice Direction explicitly prohibits the use of a Pre-action Protocol or Practice Direction being used as a tactical device to secure an unfair advantage.
It is important to be aware that applications for committal can be brought in respect of a wide range of non-compliance, not just the making of false statements. For example, in a recent decision of the High Court the sole director and shareholder (Mr Scott) of a company was found to be in contempt of court and was sentenced to six months in prison for failing to comply with court orders requiring disclosure of information ((1) Domestic & General Group Ltd (2) Domestic & General Insurance Plc (3) Domestic & General Services Ltd v (1) Domestic Assist Ltd (2) Matthew Scott (2019)) (the ‘D&G case’).
This case concerned an application for committal after proceedings had been issued. Mr Scott had refused to provide disclosure of certain recordings because he said that they had been held by a third party provider who had ‘deleted’ the recordings. An unless order (a court order which states that unless a party complies with a procedural order by a particular date, their claim/defence (as applicable) is liable to be struck out without the need for a further order) was made against Mr Scott and the First Defendant company requiring them to provide disclosure, with which they failed to comply. The Claimants issued a successful third-party disclosure application against the third party provider who then disclosed a large number of the requested recordings. Mr Scott thereafter accepted that he was in breach of the unless order and in contempt of court.
It was recognised that in commercial cases a sentence for committal has two functions: 1) to punish for past contempt and 2) to secure compliance. The court was not satisfied beyond reasonable doubt that the breach of the unless order was deliberate, but it was reckless. Mr Scott was sentenced to 6 months in prison but his sentence was suspended for 12 months for personal reasons.
These decisions highlight that the Court has wide-ranging power to hold parties (and prospective parties) in contempt of court. The Court of Appeal in the Jet 2 case stressed that Pre-action protocols are “now an integral and highly important part of litigation architecture" and therefore must be respected. Parties need to appreciate that their conduct before proceedings commence is just as important, and subject to scrutiny, as their conduct once proceedings have been issued. This serves as a warning to those thinking of fabricating or embellishing facts to support letters before claim, in the hope of obtaining an early settlement without having to issue proceedings. Likewise, the D&G case shows compliance with court orders is taken extremely seriously after proceedings are issued.
If you are in the unfortunate position of being on the receiving end of an application for a finding of/committal for contempt of court then you should seek advice at an early stage to give yourself the best chance of being able to challenge the application or, at least, minimise the sanctions likely to be imposed by the court.
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