KJM Superbikes Ltd v Hinton [2008] EWCA Civ 1280

[2008] EWCA Civ 1280Case No A3/2008/0017
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Sir Andrew Park
HC05C02657
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 20 November 2008
Before
LORD JUSTICE MUMMERYLADY JUSTICE ARDENLORD JUSTICE MOORE-BICK
Between
KJM SUPERBIKES LIMITEDClaimant/ANTHONY JAMES HINTONDefendant/Respondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr. Iain Purvis Q.C. and Miss Kathryn Pickard (instructed by Robinsons) for appellantMr. David Waters Q.C. and Mr. Dean Armstrong (instructed by Eversheds LLP) for respondentHearing Hearing date : 30 th July 2008
JudgmentLord Justice Moore-Bick :
[1]In August 2005 the well-known manufacturer of motorcycles, Honda Motor Co. Ltd, and its United Kingdom subsidiary, Honda Motor Europe Ltd (to whom I shall together refer simply as “Honda”), brought proceedings in this country against a motorcycle dealer, KJM Superbikes Ltd (“KJM”), the appellant, claiming, among other relief, an account of profits or damages for infringement of its trade marks arising out of the sale in this country of Honda motorcycles imported from abroad in what is known as the ‘parallel market’. As became apparent in due course, the bulk of the motorcycles in question had been supplied to an Australian dealer trading under the name of ‘Lime Exports’ for sale within that country. It was Honda’s case that they had been wrongfully exported by Lime Exports to the United Kingdom where they had been offered for sale by KJM.[2]As is common in these cases, Honda applied for summary judgment under Part 24 of the Civil Procedure Rules. KJM opposed the application, relying on a witness statement made by Mr. Keith Mason in which he described the circumstances under which KJM had obtained motorcycles from Lime Exports, having been put in touch with that dealer by a representative of Honda’s Australian subsidiary, Honda Australia Motorcycle and Power Equipment Pty Ltd (“Honda Australia”), the company within the Honda group through which motorcycles are supplied to local distributors. In reply to Mr. Mason’s evidence Honda filed three further statements, one of which was made by the respondent, Mr. Anthony Hinton, the general manager for motorcycles at Honda Australia. In his statement, which was verified by a statement of truth in the usual way, Mr. Hinton described the role of Honda Australia in general and in particular its relationship with Lime Exports, which, he said, fulfilled a useful role in supplying the Pacific islands. He made it clear that, apart from that limited class of business, neither Lime Exports nor any of Honda’s other distributors in Australia was authorised to sell its products for export. Paragraph 6 of Mr. Hinton’s statement included the following passage:
“From time to time, without having any continuous contact, Honda Australia deals with Lime Exports (“Lime”). Lime fulfils a useful role in servicing the Pacific Islands (e.g. Fiji, New Caledonia and Vanuatu) which Honda Australia does not have the capacity or desire to service. This is the only reason Honda Australia deals with Lime. Honda Australia advises Lime verbally that it is only allowed to sell to the Pacific Islands. By so advising Lime Honda Australia tries to ensure that product supplied to Lime finishes in the Pacific Islands. . . . Honda Australia does not authorise those to whom it sells to export, except to the Pacific Islands as mentioned above.”
[3]The application for summary judgment came before Lewison J. on 24th March 2006. The judge gave judgment for Honda against KJM in relation to certain motorcycles that had been imported from dealers in the United States and Spain, but after some hesitation he dismissed the application in respect of the motorcycles purchased from Lime Exports because he thought that Mr. Mason’s account, backed up as it was by a letter from Honda Australia to Lime which seemed to recognise and sanction its sales to KJM, warranted further investigation. He therefore gave directions for pleadings, disclosure and other preparations for trial. In the event it became clear from documents made available on disclosure that much of what Mr. Hinton had said in his witness statement was completely untrue. In particular, it became clear that there had been almost continuous contact between Honda Australia and Lime Exports over a prolonged period and that to the knowledge of Honda Australia Lime Exports had been supplying motorcycles to dealers in many different countries, both in the Far East, Europe and elsewhere.[4]In November 2006 the solicitors acting for KJM wrote to Mr. Hinton referring to the documents that had emerged on disclosure and pointing out that it is a contempt of court for a person to include in a witness statement verified by a statement of truth a statement that is false and that he does not honestly believe to be true. As a result on 15th December Mr. Hinton made a second statement in which he admitted that he had said several things in his first statement that were to his knowledge at the time untrue. He said that his aim had not been to mislead the court but to protect the reputation of Honda Australia within the Honda group.[5]In due course Mr. Hinton gave evidence in person at the trial of the action before Sir Andrew Park. Immediately after the completion of his evidence counsel for KJM applied for permission to bring proceedings against him for contempt of court in accordance with CPR rule 32.14. The judge accepted that Mr. Hinton’s behaviour amounted to a contempt, but he considered that in the circumstances it would be disproportionate for proceedings to be taken against him and dismissed the application. At the conclusion of the trial the judge dismissed Honda’s claim against KJM in respect of the motorcycles that it had obtained from Lime Exports on the grounds that Honda Australia had authorised Lime Exports to sell its products for export to markets outside Australia, including the European Economic Area.[6]KJM now appeals against the judge’s decision to refuse it permission to bring proceedings for contempt against Mr. Hinton.[7]The judge recognised that KJM’s desire to take proceedings against Mr. Hinton was motivated largely by anger. He did not find that surprising, since it had been successful at the trial after having only narrowly avoided summary judgment being entered against it at a time when it did not have much, if any, material with which to challenge Mr. Hinton’s lies. However, he rightly identified the question he had to decide as being whether it was in the public interest for proceedings to be pursued against him for contempt. In reaching the conclusion that it was not the judge seems to have been influenced in part by the ordeal which Mr. Hinton had undergone in cross-examination, which he described as a “difficult and stressful” time, and in part by his assessment that such proceedings, which might well prove costly to both parties, would not produce a sufficiently worthwhile outcome. Although he regarded the contempt as serious, he did not think that proceedings were likely to result in a severe punishment or that they would do much to promote the integrity of, or respect for, the legal process in the future. Referring to the application in the course of his judgment in the action he summarised his conclusions by saying that he had considered that it would be disproportionate for proceedings for contempt to be brought against Mr. Hinton.[8]Mr. Purvis Q.C. submitted on behalf of KJM that in reaching that conclusion the judge had taken into account, or given undue weight to, matters that should not have featured to any great extent in the exercise of his discretion and had failed to recognise the gravity of the contempt. In the face of the disclosed documents and Mr. Hinton’s subsequent admission that the account he had given in his first statement of the relationship between Honda Australia and Lime Exports was “not accurate” or “not completely accurate” Mr. Waters Q.C., who appeared on his behalf on the appeal, could not really challenge the conclusion that he had committed a contempt of court. His primary submission was that the court should not interfere with the judge’s exercise of discretion, particularly in a matter of this kind, and that in any event the public interest would be better served by referring the matter to the Attorney-General.[9]Although some may find rather distasteful the prospect of a successful litigant’s pursuing proceedings for contempt against a witness who gave evidence against him, that is not a matter that can properly influence the court’s decision. As Sir Richard Scott V.-C. observed in Malgar Ltd v R.E. Leach (Engineering) Ltd [2000] FSR 393, proceedings for contempt of court are public law proceedings and therefore when considering whether to give permission for proceedings to be taken in any particular case the court must have regard to the public interest alone. Knowingly to give false evidence in a witness statement intended for use in proceedings, particularly proceedings of a kind that are ordinarily determined without oral 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 – in this case Mr. Hinton’s evidence was filed for the purpose of challenging Mr. Mason’s evidence concerning Lime Exports’ authority to sell motorcycles for export from Australia and summary judgment was nearly given against KJM – so it is perhaps not surprising that rule 32.14(2)(b) contemplates that proceedings for contempt may in some cases properly be brought by a private person. Nonetheless, because the proceedings are of a public nature “[t]he court from which permission is sought will be concerned to see that the case is one in which the public interest requires the committal proceedings to be brought” (per Sir Richard Scott V.-C.).[10]In a written note provided after the conclusion of the hearing in response to a request from the court for assistance in relation to the scope of the principles of witness immunity Mr. Waters submitted that because proceedings for contempt are civil in nature, the immunity enjoyed by witnesses in respect of statements made in the course of giving evidence applies in a case such as this. It followed that although Mr. Hinton was amenable to proceedings brought against him by the Attorney-General, he was not amenable to proceedings for contempt brought by the appellant, even though the court might have given permission for it to bring them.[11]If Mr. Waters’ argument is correct, it is surprising both that Rule 32.14(2) should provide for proceedings for contempt to be brought with the permission of the court in cases of this kind and that this point should have escaped the attention of the Vice-Chancellor in Malgar v Leach. However, I am satisfied that it is not and that it proceeds on a misunderstanding of the essential nature of the proceedings. The immunity of a witness from proceedings in respect of things said in the course of giving evidence does not extend to immunity from punishment in respect of statements made under oath which are known to be false. A witness who knowingly makes a false statement in the course of giving evidence orally or in an affidavit does not expose himself to an action for damages at the suit of anyone injured as a result, but he does expose himself to the risk of prosecution for perjury and as such is publicly accountable for his attempt to interfere with the course of justice. Since the introduction of the Civil Procedure Rules witness statements made for use in procedural applications, as well as documents of many other kinds, must be supported by a statement of truth. Statements of truth are not made on oath, but the principle that a person who knowingly makes a false statement intended for use in proceedings should be held accountable is equally applicable. No doubt the principles of witness immunity also apply, but in this context the essential distinction to be drawn is not between civil and criminal proceedings but between private and public accountability. Proceedings for contempt of the kind contemplated in this case, albeit civil rather than criminal, are public in nature and by committing an act of a kind which is liable to interfere with the course of justice the witness exposes himself to the risk of punishment by the court. 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. The established principles of witness immunity do not, therefore, assist Mr. Hinton in this case.[12]In Malgar v Leach the Vice-Chancellor declined to give permission for proceedings to be instituted against the alleged contemnors because the falsity of the statements in question could not be clearly established without trespassing on the issues in the trial and because in any event the statements themselves had not been persisted in to the point at which they were likely to affect the outcome of the proceedings. He therefore regarded the committal application as tenuous, having earlier expressed the view that in order to succeed in an application to commit for contempt in making a false statement it is necessary to show that the maker knew that what he was saying was false and that his false statement was likely to interfere with the course of justice.[13]Mr. Purvis submitted with some force that the present case is different from Malgar v Leach in a number of important respects. In particular, when the application was made Mr. Hinton had already admitted that the critical parts of his first witness statement were to his knowledge untrue and although he professed not to understand the nature of an application for summary judgment, the circumstances in which it was made gave rise to a strong argument that he must have been aware that they were likely to be accepted as correct and could thus interfere with the course of justice. Moreover, the statement was not withdrawn until after the application for summary judgment, which it was made to support, had been disposed of and Mr. Hinton had been confronted with the information obtained on disclosure. Mr. Purvis drew our attention to Kabushiki Kaisha Sony Computer Entertainment Inc v Ball [2004] EWHC 1192 (Ch) in which Pumfrey J. gave permission for proceedings to be brought against a litigant who had admitted making false statements in his verified statements of case.[14]It is convenient to consider at this point Mr. Waters’ submission that the court should generally decline to give permission to a private litigant to pursue proceedings for contempt in cases of this kind and should instead direct that the matter be referred to the Attorney-General for her to consider whether proceedings should be instituted. Such a course was said to be more likely to promote consistency of approach and thus greater confidence in the administration of justice.[15]Consistency of approach is, of course, highly desirable, but I do not think that to refer all cases of this kind to the Attorney-General is the only way in which it can be achieved. Cases are bound to differ widely, both in the nature and circumstances of the alleged contempt, and whether the matter is determined by the Attorney-General or the court, each will have to be considered on its own facts. In practice complete consistency is unlikely to be unattainable, but it is possible for the courts through individual decisions to establish and develop a body of principles which will provide guidance to judges who have to deal with applications of this kind and which will by their nature promote the necessary degree of consistency. It should be borne in mind that the question for the court on such an application is not whether a contempt of court has in fact been committed but whether proceedings should be brought to establish whether it has or not. The judgment of Sir Richard Scott V.-C. in Malgar v Leach has provided a firm foundation for the development of such principles and has been applied in subsequent cases: see Sony v Ball, Daltel Europe Ltd v Makki [2005] EWHC 749 (Ch); [2006] EWCA Civ 94, [2006] 1 W.L.R. 2704and more recently Kirk v Walton [2008] EWHC 1780 (QB). Paragraph 28.2 of the Practice Direction supplementing rule 32 directs attention to the different courses open to the court once a possible contempt of this kind has been drawn to its attention. The court is free to take whichever course appears most appropriate in the circumstances and I can see no good reason for saying that the most appropriate course is normally to direct that the matter be referred to the Attorney-General.[16]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.[17]In my view the wider public interest would not be served if courts were to exercise the discretion too freely in favour of allowing proceedings of this kind to be pursued by private persons. 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, whether justified or not, and although the rules do not prescribe the class of persons who may bring proceedings of this kind, the court will normally wish to be satisfied that the applicant was liable to be directly affected by the making of the statement in question before granting permission to bring proceedings in respect of it. Usually the applicant will be a party to the proceedings in which the statement was made, but I would not exclude the possibility that permission might be granted to someone other than a party if he was, or was liable to be, directly affected by it. In my view there is also a danger of reducing the usefulness of proceedings for contempt if they are pursued where the case is weak or the contempt, if proved, trivial. I would therefore echo the observation of Pumfrey J. in paragraph 16 of his judgment in Sony v Ball that 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. All other relevant factors, including those to which I have referred, will then have to be taken into account in making the final decision.[18]Paragraph 28.3 of the Practice Direction supplementing Part 32 directs the applicant to consider whether proceedings for contempt would further the overriding objective and that is a matter which the court itself should plainly have in mind. It is important not to allow satellite litigation of this kind to disrupt the progress of the substantive proceedings and it may not be possible to assess the strength of the complaint until those proceedings have concluded. This danger was well described by David Richards J. in Daltel Europe Ltd v Makki as follows:
“Allegations that statements of case and witness statements contain deliberately false statements are by no means uncommon and, in a fair number of cases, the allegations are well-founded. If parties thought that they could gain an advantage by singling out these statements and making them the subject of a committal application, the usual process of litigation would be seriously disrupted. In general the proper time for determining the truth or falsity of these statements is at trial, when all the relevant issues of fact are before the court and the statements can be considered against the totality of the evidence. Further, the court will then decide all the issues according to the civil standard of proof and will not be applying the criminal standard to isolated issues, as must happen on an application under CPR Part 32.14.”
[19]In some cases, of which this is an example, it may be possible to deal with an application of this kind at a much earlier stage, especially if the alleged contempt relates to a statement made for a limited purpose which has passed and has no continuing relevance to the proceedings. Although we did not hear argument on this point, I think that in general a party who considers that a witness may have committed a contempt of this kind should warn him of that fact at the earliest opportunity (as the appellant did in this case) and that a failure to do so is a matter that the court may take into account if and when it is asked to give permission for proceedings to be brought. However, it is important not to impose any improper pressure on a witness who may later be called to give oral evidence. In particular, if the alleged contemnor is to be called as a witness, an application under rule 32.24 should not be made, and if made should not be entertained by the court, until he has finished giving his evidence.[20]A court dealing with an application of this kind must, of course, give reasons for its decision, but I need hardly emphasise that if the judge decides that permission should be granted he should be careful when doing so to avoid prejudicing the outcome of the substantive proceedings. At the stage of the application for permission the court is not concerned with the substance of the complaint; it is concerned only to satisfy itself that, if established, it is one that the public interest requires should be pursued. If, as in the present case, some aspects of the complaint have been admitted, the judge is free to refer to them, but it will usually be wise to refrain from saying more about the merits of the complaint than is necessary.[21]In the present case by the time the application came before the judge Mr. Hinton had admitted that what he had said in paragraph 6 of his first statement was to his knowledge untrue and in view of the nature of the proceedings it was certainly arguable that he was aware that his description of Honda Australia’s dealings arrangements with Lime Exports might affect the outcome of the case. His statement was made in reply to that of Mr. Mason and in support of Honda’s application for summary judgment. If that application had succeeded in relation to the motorcycles obtained from Lime Exports it is likely that KJM would have been ordered to pay Honda some hundreds of thousands of pounds. Whether Mr. Hinton was fully aware of the potential significance of his evidence is a matter that remains to be established, but the judge was quite right to say that the contempt, if proved, was serious.[22]In my view the judge was wrong to refuse KJM permission to bring proceedings in this case. Although he described the alleged contempt as serious, he did not give it the weight it deserved and he was unduly influenced both by Mr. Hinton’s experience in cross-examination and by his perception that proceedings for contempt would not be likely to result in a significant penalty or significantly affect the administration of justice in the future. Any witness in Mr. Hinton’s position could expect to have a difficult time in cross-examination, but the judge can be expected to ensure that he is not treated unfairly and in my view that is not a factor that should carry much, if any, weight on an application of this kind. In the present case Mr. Hinton did not make things easy for himself by prevaricating and displaying an initial reluctance to face up to what he had done, although it is fair to say that he did eventually do so. Whether the contempt, if proved, would be likely to attract a serious penalty is not something the judge hearing the application can be expected to ignore entirely because it is a reflection of the seriousness of the allegation. Inevitably, therefore, it plays a part in assessing the overall public interest in bringing proceedings. However, it is necessary to bear in mind that any penalty ultimately imposed will reflect not only the true nature and seriousness of the contempt that has been committed but also other factors, including factors personal to the contemnor. Those are not matters that the judge hearing the application for permission is well placed to assess, but having regard to the established approach of the court to attempts to interfere with the administration of justice, I find the judge’s comment surprising. It may be that Mr. Hinton displayed a degree of remorse once he realised the gravity of his conduct, but that is generally something to be taken into account when deciding what penalty should be imposed if the alleged contempt is established.[23]The judge’s conclusion that proceedings for contempt in this case would be unlikely to promote the integrity of the legal process or respect for it in the future is one which I find difficult to accept. It is true that only prominent examples of the kind that are widely reported in the press can be expected to make an impression on the public at large, but that is to ignore the fact that 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. That is not a matter which the judge appears to have taken into consideration. In my view the prosecution of proceedings for contempt in the present case would be likely to have a salutary effect in bringing home to those who are involved in claims of this kind, of which there are many, the importance of honesty in making witness statements and the significance of the statement of truth.[24]Nor do I think that the other factors which influenced the judge’s decision to refuse permission were of any great weight. The fact that Mr. Hinton had come here to give evidence in person at the trial was not in my view a matter that pointed against proceedings for contempt. He gave evidence because Honda needed to call him as a witness and he was their employee and although his credibility was attacked by reference to his earlier statements, those statements had ceased to have much relevance to the issues in the trial. The cost of proceedings, which the judge clearly regarded as a matter of some significance, is no doubt one factor which ought to be considered, but it has to be considered in the context of the seriousness of the alleged contempt and the fact that, subject to any order made at the conclusion of the substantive proceedings, the burden would fall on the applicant. It could not in any event be expected to fall on the public purse.[25]Mr. Hinton currently lives in Australia. He was not a party to the proceedings between Honda and KJM and is not domiciled in this country. He could not be required to come to this country to answer a charge of contempt; indeed, unless he chooses to instruct solicitors to accept service on his behalf, it will not be possible to serve the proceedings on him unless he comes to this country and becomes amenable to personal service. The court has the power to dispense with service of the application for committal, if it thinks it just to do so (see RSC Ord. 52, r.4(3)), but it will not be able to impose any practical sanction on him while he remains outside the jurisdiction. Of course, his presence in this country was one reason for making the application as soon as he had completed his evidence. It is right to say that these factors do not appear to have influenced the judge’s decision, but they inevitably raise the question whether anything is now to be gained by giving KJM permission to bring proceedings against him.[26]I can see that there may be some cases in which considerations of that kind might tip the balance against granting permission, but in general I do not think that they should weigh significantly against doing so. The international business community conducts a large amount of litigation in this country and it is common for statements to be provided by witnesses from abroad for use in procedural hearings. This case is a good example. The integrity of the system as a whole would be undermined if it were thought that foreign witnesses were not subject to the same discipline as witnesses from this country.[27]Viewed overall, I am satisfied that the judge erred in the exercise of his discretion. He himself observed that Mr. Hinton should count himself very fortunate in escaping proceedings, suggesting that in his own mind the decision was a narrow one. In my view he came down clearly on the wrong side of the line. Having quite rightly formed the view that the alleged contempt was serious, he failed to appreciate or to take proper account of its true gravity and allowed himself to be swayed by factors which were irrelevant or whose significance he over-estimated. For these reasons I would allow the appeal. Lady Justice Arden:[28]I agree.

Lord Justice Mummery:

[29]I also agree.

Cited in 65 later judgments

and 41 more of the most senior

Showing the 50 most senior of 65.