GB Minerals Holdings Ltd v Short [2015] EWHC 1387 (TCC)

Case No HT-14-237[2015] EWHC 1387 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Rolls Building, Fetter LaneDate 22 May 2015
London, EC4A 1NL
Before
THE HON MR JUSTICE COULSON
Between
GB MINERALS HOLDINGS LTDApplicant
Mr Thomas Plewman (instructed by Farrer & Co LLP) for Applicant/DefendantMr Samuel Townend (instructed by Christopher Wright & Co LLP) for RespondentHearing Hearing Date: 14 May 2015
JudgmentThe Hon. Mr Justice Coulson:
[1]INTRODUCTION In the underlying proceedings (claim no. HT-14-237), the claimant, GBM Minerals Engineering Consultants Ltd (“GBMMEC”) claims around £500,000, said to be due under a contract made in January 2010, pursuant to which the defendant/applicant, GB Minerals Holdings Ltd (“the applicant”) engaged them to carry out consultancy services in connection with a project in Africa. The applicant counterclaims about £4 million on the basis that GBMMEC have been significantly overpaid for the work carried out and are liable to pay damages for failure to perform all the work. There are extensive and wide-ranging allegations not only in respect of the work done and its proper value, but also relating to the binding nature and true construction of various agreements, including settlement agreements, between the parties.[2]There are a variety of allegations involving GBMMEC’s representative, Mr Michael Short, and his then counterpart at the applicant, Mr Glenn Laing, who no longer works for the applicant and has his own dispute with them. The applicant says that recent disclosure has shown that Mr Short created, after the event, a series of documents that purported to justify the interim payments to and invoices from GBMMEC. The sums involved were, on any view, substantial: whilst, pursuant to the underlying contract, the estimated value of the services to be provided by GBMMEC was £1.9 million, they have so far invoiced in excess of £10 million.[3]On the face of their pleadings, GBMMEC’s principal support for this large increase in costs rested on the 17 Variation Orders alleged to have been agreed between and signed by Mr Laing and Mr Short between January 2010 and December 2012. The applicant had no copies of these Variation Orders and chased McClure Naismith, GBMMEC’s solicitors, for copies. Copies were eventually provided in April 2014. Points were immediately taken on the authenticity of these documents, and McClure Naismith refused to provide any further information. A reply and defence to counterclaim, supported by a statement of truth, was served in May 2014 which relied on the authenticity of the signed Variation Orders, and indicated that summary judgment would be sought in respect of them. However, following standard disclosure in March 2015, it became apparent that the applicant’s suspicions had been well-founded. Neither the signatures of Mr Short, nor those of Mr Laing, each of which bore a specific date, had been signed on the date indicated. In fact, the Variation Orders had not even existed on those dates. They had been ‘created’ long afterwards.[4]As a result of this, on 24 March 2015, the applicant issued an application for permission to bring contempt proceedings against Mr Short, arising out of the statements of truth attached to GBMMEC’s pleadings. This application was supported by the affidavit of Kate Allass dated 24 March 2015. The application was opposed on the basis of five affidavits: from Mr Short, Mr Christopher Wright (his solicitor for this application), Mr Thomas Crittenden, the solicitor at McClure Naismith who signed the statement of truth, and two affidavits from David Richards and Anandj Anthony, both purporting to give expert evidence as to how normal it is to backdate Variation Orders. There was a short affidavit in reply from Ms Allass. In addition to the two permanent case management bundles and the two bundles of documents for the hearing, I was also referred to a lever arch file of authorities. I am very grateful to both Mr Plewman and Mr Townend for the clarity and focus of their submissions.[2]THE LAW[5]I take as my starting point the decision of the Court of Appeal in KJM Superbikes Ltd v Hinton (Practice Note) [2008] EWCA Civ. 1280; [2009] I WLR 2406. In that case, Honda were claiming damages for infringement of its trademarks against KJM arising out of the sale of Honda motorbikes imported from abroad. The allegation was that the motorbikes had been supplied to an Australian dealer trading under the name of ‘Lime Exports’ for sale within that country and then wrongfully exported by Lime Exports to the United Kingdom. Mr Anthony Hinton provided a supporting statement in which he said that neither Lime Exports, nor any of Honda’s other distributers in Australia, was authorised to sell its products for export. However, it later 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 apparent that, to the knowledge of Honda Australia, Lime Exports had been supplying motorcycles to dealers in many different countries, including KJM.[6]Sir Andrew Park, sitting at first instance, refused KJM’s application for permission to bring proceedings for contempt against Mr Hinton. KJM successfully appealed. In a number of important paragraphs of the judgment of Moore-Bick LJ, the modern approach to applications for permission to bring committal proceedings was outlined. I note in particular the following passages:
“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…Nonetheless, because the proceedings are of a public nature “the 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.) in Malgar Ltd v R.E. Leach (Engineering) Ltd[2000] FSR 393 at page 396. … 12. In Malgar, Sir Richard Scott 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. … 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. … 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. … 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.”
[7]Two subsequent decisions of the Court of Appeal should also be noted:(a) In JSC BTA Bank v Ablyazov (No. 7) [2011] EWCA Civ. 1386; [2012] 1 WLR 1988, Teare J gave permission to bring committal proceedings following allegations of breaches of freezing orders and the making of false statements. There were 35 allegations of contempt. The Court of Appeal dismissed the appeal against that decision, saying that there was a strong public interest in ensuring that a worldwide freezing order, together with its ancillary and related provisions, was appropriately enforced and thus made effective; that it was therefore of paramount importance for the court to do and to be seen to be doing all it could do to ensure the efficacy of the order; and that accordingly, where an alleged contempt was said to relate to breach of a freezing order the public interest was likely to weigh heavily in the balance in the exercise of judicial discretion when making case management decisions. Gross LJ noted that there was overlap between some of the material relevant to the contempt proceedings and the issues in the underlying trial but he noted at paragraph 42 that overlap, of itself and without more, does not necessitate postponing the determination of a contempt application until after the trial. The risk of satellite litigation was also something which the judge had properly born in mind but he was entitled to conclude that the application should be allowed.(b) In Talal El Makdessi v Cavendish Square Holdings BV [2013] EWCA Civ. 1540 Burton J gave permission to Cavendish Square to apply to commit Mr Makdessi for contempt. The Court of Appeal dismissed the appeal against that decision. The false statement in question was found to have been made knowingly and to be of considerable significance to the case. At the end of his judgment, Christopher Clarke LJ said:
“79 The critical question, in this and every case, is whether or not it is in the public interest that an application to commit should be made. That is not an issue of fact but a question of judgment. The discretion to permit an application to commit should be approached with considerable caution. It is not in the public interest that applications to commit should become a regular feature in cases where at or shortly before trial it appears that statements of fact in pleadings supported by statements of truth may have been untrue. Whether an application for committal is in the public interest will depend on a number of considerations many of which have been considered in the authorities including the significance of the statement in the context of the case, the clarity of its meaning, the strength of the contention that the maker of it knew it to be untrue, the status of the maker, the seriousness of the consequences of it having been made, the length of time over which, and the circumstances in which, it was maintained, and any explanation as to why it was made.”
[8]It is, I think, unnecessary to refer the to the other first instance judgments to which I was referred in any detail. However, Daltel Europe Ltd and Others v Hassan Ali Makki and Others [2005] EWHC 749 (Ch) is a useful case because it stressed that, where the relevant statements were central to the defence, if they were deliberately false, they would comprise a flagrant breach of the obligation to provide a statement of truth. David Richards J went on to say that, in a fair number of cases, allegations of deliberately false statements were well founded and that the court had to be careful to ensure that the usual process of litigation was not seriously disrupted by parties thinking they could gain an advantage by singling out false statements and making them the subject of a committal application. He said the proper time for determining the truth or falsity of the statements was at trial.[9]The other authorities demonstrated a wide range of timing considerations. Thus in Kabushiki Kaishi Sony Computer Entertainment and Others v Gaynor David Ball and Others [2004] EWHC 1984 (Ch), the application for committal was made before trial but heard at some later stage when the defendant no longer contested the principal allegations against him; in Michael J Prest and Another v Marc Rich and Co Investment AG and others [2006] EWHC 927 (Comm.), Gloster J (as she then was) gave permission to bring proceedings at the interlocutory stage but, having found that the decision as to when the contempt proceedings occurred was a matter for the court’s discretion, exercised that discretion in favour of having the contempt proceedings take place after the trial; and a similar approach was adopted in Kalal El Makdessi, to which I have previously referred.[10]Based on those principles, I have adopted the following approach, proceeding with the necessary caution to which reference is made in the authorities. First, is there a strong prima facie case of dishonesty? If Yes, am I satisfied 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? Thereafter, I consider questions of disruption, oppression and proportionality, both in the context of the application as a whole and specifically as to the timing of any committal proceedings. However, before going on to deal with those three central topics, I need to set out the background facts.[3]THE BACKGROUND FACTS[11]Pursuant to a written contract dated 18 January 2010, the applicant engaged GBMMEC to provide consultant services in respect of a Full Feasibility Study of the Farim Phosphate Project in Guinea-Bissau, in Africa. The estimated contract sum was £1,924,023. Claims for interim payments would be made by way of invoices. The services would be performed on a cost reimbursable basis. Clause 4.3.1 of the contract made plain that it “can be varied on application by either Party by written agreement of the Parties”.[12]Between January 2010 and October 2012, it is GBMMEC’s case that the scope of the contract works was significantly altered such that, by reference to Variation Orders 1-17, an increase in the contract price to £10,811,352 was justified and agreed. Thereafter, three further Variation Orders (18, 19 and 20) were produced in 2013. Unlike their predecessors, these were not signed, and lie at the heart of GBMMEC’s claim for unpaid sums in the proceedings.[13]The fact that the original contract had been varied was central to the particulars of claim, served on 3 December 2013. Paragraph 11 of that document stated:
“The Feasibility Study Agreement was varied by written agreement between the parties in respect of additional services to be provided by the Claimant to the Defendant the consequential increase in the costs to the Defendant of the Claimant performing its duties under the feasibility Study Agreement. Agreed ‘Variation Orders’ included those dated 5 May 2010; 25 march 2011; 15 April 2011; 10 July 2011; 29 September 2011; 11 November 2011; 2 December 2011; 17 January 2012; 12 March 2012; 12 May 2012; 15 May 2012; 26 May 2012; 8 July 2012; 31 July 2012; 15 October 2012; 30 October 2012; and 18 July 2013.”
The particulars of claim were supported by a statement of truth but the formalities in respect of the document were entirely unsatisfactory: see footnote 1 below.[14]At paragraph 4 of the defence and counterclaim, the applicant did not admit Variation Orders 1-17. At paragraph 6(a), the applicant noted that the three Variation Orders (18, 19 and 20) dated 18 July 2013 had not been signed or otherwise approved and therefore did not operate to vary the Feasibility Study Agreement or otherwise bind the applicant.

(b) of the defence, the applicant went on to say:

“(b) Save as aforesaid, the defendant has no record of any ‘Variation Orders’ as alleged and in the premises no admissions are made. Through its letters to the claimant of 27 September 2013, 23 October 2013 and the letter of Farrer & Co to the claimant’s solicitor dated 28 January 2014, the defendant has requested copies of any such ‘Variation Orders’ but the claimant has failed to provide them.”
[15]By way of counterclaim, the applicant sought about £4 million by way of restitution or damages. They said that GBMMEC had been overpaid, a plea which (at least impliedly) sought to open up Variation Orders 1-17.[16]On 11 April 2014 McClure Naismith finally provided copies of Variation Orders 1-17. Almost immediately, on 16 April 2014, the applicant’s solicitors noted the delay in their provision and asked, in respect of each of the “purported VO’s”:
“(a) Either • Provide a copy of the email or letter under cover of which your client claims that the purported VO was originally sent to our client; or • If the purported VO was not sent under cover of an email or letter, please set out in full circumstances in which it was first delivered to our client, including whom when and by whom it was delivered; (b) Provide copies of any contemporaneous documents which were sent at or around the same time as the purported VO by way of explanation of the need for the proposed variation; (c) Either • Provide by return a copy of the email or letter by which each purported VO apparently signed by Mr Laing was returned to your client; or • If the signed copy of the purported VO was not sent under cover of an email or letter, please set out in full the circumstances in which it was delivered to your client, including how, when and by whom it was delivered; (d) Confirm that you client has preserved in their original condition the original hard and electronic copies of the purported VO’s together with any [of] the originals of any covering correspondence; and (e) Confirm that your client will make available for inspection and forensic analysis both hard and electronic copies of the purported “Variation Orders”, all associated contemporaneous correspondence and all associated metadata. In the meantime, our client does not admit the authenticity of the purported of the Variation Orders and reserves the right to require your client to prove that at any hearing before an expert or at trial…”
[17]McClure Naismith responded on 24 April 2014. They noted in the second paragraph of their letter that VO’s 1-17 were produced before the applicant’s current chairman, Owen Ryan, was appointed (a point connected to Mr Laing’s authority and the fact that he had allegedly approved Variation Orders 1-17). They went on:
“Since receipt of the letter we have had the opportunity to speak to Glenn Laing who confirms that: (1) He agreed to each of the 17 Variation Orders at various points between January 2010 and December 2012; and (2) He signed each of the 17 Variation Orders.”
Mr Laing has confirmed that the 17 Variation Orders were agreed at meeting that took place at out clients’ offices on a 4-6 week basis between January 2010 and December 2012. Mr Laing either signed the Variation Orders at these meetings as they were agreed or alternatively they were sent by post to Mr Laing after they were agreed. Mr Laing would then bring the Variation Order to the next meeting he had with out client duly signed. (Emphasis added) Mr Laing also confirms that copies of all 17 Variation Orders were provided to your client’s Vancouver office and cannot understand or explain why your client has been unable to locate them there. We will not provide the documents you have requested at (a) to (c) of the letter at this stage… We confirm that our client has preserved the original hard copy Variation Orders, and is in the process of trying to identify any electronic copies that exist. If they do these will also be preserved pending disclosure. Even before we had the opportunity to speak to Mr Laing we did not understand why your client required copies of the Variation Orders (both hard and electronic) to be made available for forensic examination. We trust that the information that Mr Laing has provided is enough to satisfy your clients concerns, whatever those concerns might actually be.” It is accepted that this letter was sent on the instructions of Mr Short. He was also provided with a copy, and never at any stage said that the important information that it contained was in any way incorrect.[18]GBMMEC’s reply and defence to counterclaim was served on 23 May 2014. It was accompanied with a statement of truth signed by Thomas Crittenden, GBMMEC’s solicitor. This pleading was apparently reviewed by Mr Short on three separate occasions and he confirmed the accuracy of what was said. It is accepted on his behalf that Mr Short caused the statements in the reply to be made. In respect of Variation Orders 1-17, the whole document maintained the stance set out in the letter of 24 April. There are 28 separate references to “the FSA as varied”. In particular:(a) In paragraph 3(b), much is made of the fact that Variation Orders 1-17 were signed by Mr Laing in which he recorded his position as president and chief executive officer. The pleading states “the first such order was signed by Mr Laing on 11 May 2010”.(b) At paragraph 3(i) it is said that, if (contrary to GBMMEC’s case) the applicant company did not exist at the time of the FSA contract, “by requesting work to be undertaken by the claimant under the terms of the FSA, by agreeing to Variation Orders thereto which expressly incorporated the terms of the FSA (the first of which was signed on behalf of the defendant on 11 May 2010), and by paying the claimant for work done pursuant to the FSA, the defendant became a party to the FSA after the defendant came into existence.”(c) At paragraph 4 GBMMEC, with some belligerence, join issue with the applicant’s stance on Variation Orders 1-17. It says:
“4…As is set out above, premise A of the Amending Deed recorded that the FSA had been amended by Variation Orders V001 to V017; the defendant has therefore accepted that Variation Orders V001 to V017 were agreed between the parties. It is averred that its non-admission at paragraph 4 of the defence and counterclaim on this point should be struck out and/or subject to summary judgment in the claimant’s favour.” (d) At paragraph 9(a) GBMMEC aver that the original figure of £1,924,023 excluded any provision for contingencies. “The parties agreed under the Variation Orders that the overall cost of the work being undertaken and organised by the claimant increased from this initial estimate.” (e) At paragraph 9(b) there is this important assertion: “(b) By the time the 17th Variation Order was signed on behalf of the defendant on 31 October 2012, the agreed contract price, as recorded in the 17th Variation Order, had increased to £10,811,352. The three Variation Orders dated 18 July 2013, for which the claimant does not have copies signed on behalf of the defendant, took the total contract price to £11,154,627.”
[19]Finally for completeness I should note that the applicant’s amended reply to defence to counterclaim, served on 28 October 2014, set out in some detail the reasons why the applicant maintained that the dates on Variation Orders 1-17 were questionable, and repeated the non-admission “that the Variation Orders were agreed on or about the dates on which they purport to have been signed”.[20]Variation Orders 1-17 are in a template form. Each one purports to come from ‘GBM’ which, in this context, can only be a reference to the applicant. In any event, a Variation Order can only come from the employer, as the party instructing the change: a similar document from a contractor would be a CVI, or Confirmation of Verbal Instruction. There is a reference to the supplier/contractor being GBMMEC. It bears a particular date. It gives some (very generalised) particulars of the variation. It identifies the value of the variation and the new contract price. It is signed by Mr Laing, as the president of the applicant, under the heading “Client Authorisation”. That signature is dated. It is also signed by Mr Short. His signature is also dated. Mr Short’s signature is under the heading “Supplier/Contract Acknowledgment.” The only oddity apparent on the face of these documents is that, for 11 of them, Mr Short, as the contractor and the purported recipient of the Variation Order, always signed it some days before Mr Laing, from whom the Variation Order was (or should have been) sent. On the other six, the dates were the same.[4]THE FALSE STATEMENTS[21]As I have noted, once the applicant raised queries about the Variation Orders, and in particular about the signatures and their dates, McClure Naismith refused to provide any further information or documents. Standard disclosure did not take place until March 2015. But when it did happen, the documents disclosed by GBMMEC made plain that their pleaded case in respect of Variation Orders 1-17 was false. The documents revealed that the explanation given in the letter of 24 April 2014, and in particular the passage highlighted in paragraph 17 above, was almost entirely untrue.[22]It appears that, towards the end of November 2012, at about the time that Mr Ryan was employed by the applicant with the intention (amongst other things) of reviewing this contract and the spiralling expenditure, Mr Short became concerned that there was no audit trail explaining the five-fold increase in costs. This is apparent from an exchange of emails between Mr Short and Mr Laing in February 2013, which was dealing with VO017 (a matter to which I shall return). Mr Laing reminded Mr Short that VO017 “is the one that we signed in Cape Town and dated it as of 28 October 2012. The timing of signing this change order is very important because after 1 November [2012] everybody started getting bent out of shape about spending money on the project and issuing new contracts etc.”[23]Because of Mr Short’s concerns about timing in November 2012, on 17 November, he emailed Mr Laing to say “I would like to start work on the variations today – could you please send me your thoughts in writing so that I can make sure I get it right.” On 19 November Mr Laing replied sending, amongst other things, some thoughts about eight change orders. These were priced in dollars, not pounds, and totalled $13.45 million.[24]The following day, 20 November 2012, Mr Short attached a rather different document on variations. He said:
“The original signed contract was job 0391 for £1,924,023 but there was no contingency. The first variation was to add some contingency and other variations followed, so that the contract (£1,924,023) plus variations (£5,908,482) adds up to £7,832,505. However the cost of 0391 was £667,600 and my forecast for 0412 is £6,875,969 = £7,552,505 so it could be said that there was too much contingency (about £280,000) in the original estimates. Similarly, I have overestimated the costs of 0432, 045 and 0460, however an adjustment downwards (and that is unusual) may be made to the completion of the work. There is a large amount of money of contingency still enclosed within the variations as ‘requested’, about £1,600,000 which was not used out of £1,843,500 which was included in the estimate. Contingency must appear in any quotation, and I have done so but it makes my ‘forecasting’ look good.”
Enclosed with that letter was a summary of variations amounting to 16 in total. These purported to increase the contract price to £10,206,854.[25]On 21 November, Mr Short sent Mr Laing “16 variations for your signature covering jobs 0412, 0432, 0457 and 0560, so far. Towards the bottom of each cover page, there is room for your Name, Position, Signature and Date. When you date the document, please add 5-10 days to the time when I sign the document. When signed, please scan and email them back to me.” Attached were Variation Orders 1-16, all signed by Mr Short. His signature bore various dates between 5 May 2010 and 31 October 2012. These Variation Orders do not always correspond to the summary which he had sent the previous day.[26]On 30 November, Mr Laing responded, returning the Variation Orders. He had broadly complied with Mr Short’s instructions by signing each one and dating his signature a few days after the date filled in by Mr Short although on six they were the same.[27]Although the emails indicate that this signing process took place electronically at the end of November 2012, Mr Short’s sworn affidavit in these proceedings said that Variation Orders 1-17 were indeed signed off at this time, but that this occurred when he and Mr Laing were together at GBMMEC’s offices in Twickenham. On the face of it, this evidence cannot be reconciled with the exchanges of emails to which I have just referred.[28]Variation Order 17 was in the same form as the others. The documents show that it was emailed by Mr Short to Mr Laing on 9 February 2013. It was dated 29 October 2012. Mr Short instructed Mr Laing to “print the VO, sign it, date it 29 October 2012, and post it back to me as soon as possible.” Mr Short chased Mr Laing again for this document on 19 February. It was at this point that Mr Short impressed upon Mr Laing the importance of the date on the Variation Order because of the financial concerns and constraints that arose after 1 November (paragraph 22 above).[29]There are two versions of VO017: one dated 29 October and one dated 31 October. They are both therefore dated before the applicant’s new regime. It may be (but it will be a matter for evidence) that the second version of VO017 was dated 31 October, not 28 or 29 October, because Mr Short realised that VO016 was dated 30 October 2012 and there would therefore be an obvious discrepancy if a later VO (17) was dated before an ostensibly earlier one (16).[30]The emails to which I have referred make plain beyond doubt that, far from these Variation Orders being created over a two year period, as and when the variation instructions were purportedly given, the Variation Orders were all created after the event in November 2012 (with VO017 being created in February 2013). Furthermore, they were created by the contractor seeking additional payment rather than the employer instructing the work; and they were given the impression of contemporaneous authenticity by signatures which had been falsely dated by reference to random dates over the preceding 18 months.[5]IS THERE A STRONG PRIMA FACIE CASE? 5.1. Falsity[31]By the time of the hearing, for a variety of reasons The applicant decided that the similar false statements in the particulars of claim (see paragraph 13 above) should not form any basis of the application because Mr Short suggested in his affidavit that the pleading was served without his approval. There is no evidence about that from either of the solicitors then involved at McClure Naismith, one who signed the statement of truth and is still with the firm and another who had control of the case at the time. I pointed out that this may make the entire particulars of claim invalid. I find it surprising that, in modern litigation, a firm of solicitors can still take a statement of truth so lightly. , the claimant was content to base its application only on three paragraphs in the reply, which had been the subject of the statement of truth signed by Mr Crittenden and authorised by Mr Short. Those are the statements set out at paragraphs 3(b), 3(i) and 9(b) of the reply and defence to counterclaim, referred to at paragraph 18(a), (b) and (e) above.[32]There can be no doubt that those statements were false. The particular Variation Orders identified in those paragraphs were not signed on the dates averred. Indeed, none of the Variation Orders 1-17 were signed on the dates they bore. The whole of the pleaded case advanced by GBMMEC as to the contemporaneous nature of the Variation Orders has been demonstrated to be false, even though the committal proceedings are now limited to the three paragraphs to which I have referred. 5.2. Dishonesty[33]The principal question for me is whether there is a strong prima facie case of dishonesty. Gloster J in Prest notes that it is a mistake for a judge at first instance to provide too detailed an analysis of how and why he or she considers that there either is or is not a strong prima facie case of dishonesty. The detail of that is a matter properly left for the committal proceedings themselves.[34]I consider that, on all the material set out above, there is a strong prima facie case of dishonesty. There are three principal reasons for that conclusion.[35]First, the emails make clear that, from November 2012, Mr Short engaged in a deliberate and careful plan to present the Variation Orders as documents which had been agreed and signed contemporaneously by the parties. It is a trite observation that, where the provision of contractual services over and above that envisaged in the contract is or might be the subject of debate, the more contemporaneous the documentary evidence of the changes to scope and how they came about, the stronger the claim. That is particularly so where, as here, the contract required a written variation agreed by both parties (clause 4.3.1). This was a detailed attempt to create documents in November 2012 and thereafter that looked as if they had been produced and agreed much earlier. Contrary to Mr Townend’s submissions, I find that the material before me has none of the hallmarks of carelessness, and all of the signs of deliberate pre-planning.[36]Second, the email exchanges also suggest a clear motivation for the whole exercise. The advent of Mr Ryan and others within the applicant who were, in Mr Laing’s words, “getting bent out of shape” as a result of the large increase in costs, meant that it was likely that uncomfortable questions were going to be asked. Furthermore, the documents suggest that authorisation limits were being imposed on Mr Laing from early November, preventing him from agreeing further expenditure at these levels. There were therefore clear reasons why, as a matter of urgency, Mr Short required backdated Variation Orders.[37]Third, there is the lack of any credible explanation from Mr Short. He says at paragraph 10.3 of his affidavit that “the claimant was approached in the beginning of November 2012 and asked to prepare the necessary Variation Orders”. But he does not say who approached who or why, after a delay of almost three years, this matter was being raised at all. He does not say why they had not been produced when the changed work was allegedly agreed.[38]Moreover Mr Short says that he could not recall why he asked Mr Laing to date the Variation Orders 5-10 days after the date of his signature. I cannot accept that. The only possible reason was to ensure that the Variation Orders looked plausible, having followed a timed sequence, as opposed to having been signed off after the event, with the risk that the same date was then used by both men. Moreover, for the reasons that I have given, it was important to him that all of the signatures pre-dated the start of November 2013.[39]Finally at paragraph 11.5 of his affidavit, Mr Short says:
“I do not think I attached any particular significance to the date of signature since the Variation Orders did not reflect the quantitative and qualitative changes in the scope of the claimant’s work.”
The second part of that sentence is plainly incorrect: Variation Orders 1-17 explain (albeit in general terms) the extra work that is the subject of the Order, and they provide a figure (often a very odd number like £176,153 or £138,947). But it is the first part of that sentence that causes me the greatest concern. Mr Short went to enormous lengths in November 2012 to backdate both his and Mr Laing’s signatures. His concern about the dates of signatures is palpable from his emails. Prima facie, the reasons for that are clear. Mr Short cannot credibly have forgotten all of that when he came to authorise the reply on May 2014.[40]Finally I note that Mr Short has not attempted to explain the ‘bent out of shape’ email which he received from Mr Laing, and the clear motive that it suggests for his subsequent conduct. I regret to say that the overall impression created by Mr Short’s affidavit is of something rather less than a full and frank explanation, even now, of what happened.[41]Accordingly, I consider on the material before me that there is a strong prima facie case of dishonesty. There was the necessary state of mind, the clear motive, and the absence of any halfway plausible explanation for what happened in November 2012. That false picture was then restated in the reply. The statement of truth was a prima facie attempt to interfere with the course of justice by maintaining that false picture. Of course, whether or not in fact there was dishonesty is a matter for the subsequent proceedings.[42]Mr Townend argued that there was no dishonesty because Mr Laing was also involved and, even if there was dishonesty, it was at the lower end of the scale. For the reasons that I have noted, I cannot accept either submission. As to the first point, the fact that Mr Laing may also be implicated is irrelevant to Mr Short’s dishonesty, as is the existence of proceedings between the applicant and Mr Laing in Canada. And as to the second argument, the prima facie creation of a false back story, in order to enhance the chances of recovering a five-fold increase in the contract sum, by reference to events all said to have pre-dated the applicant’s new financial controls, cannot be dismissed as being at the lower end of the scale.[6]PUBLIC INTEREST 6.1. General[43]For the same reasons as those set out by Moore-Bick LJ at paragraph 23 of his judgment in KJM (paragraph 6 above), I consider that there is a strong general public interest in ensuring that statements of truth of this kind are only provided to support detailed pleaded assertions which are, and which are known to be, truthful. Although invited to do so by Mr Townend, I do not distinguish between witness statements and pleadings supported by a statement of truth: it is equally important that both are truthful. The dangers of making false statements need to be drawn to the attention of all those who confirm to their solicitors that a pleading is true and can properly be supported by a statement of truth.[44]There is a more specific consideration. Those of us who are familiar with international construction work are aware of the regular complaints about corruption, and the often mysterious cost increases which can occur on large-scale projects in developing countries. These allegations are often levelled at local officials and representatives. It is important therefore, and the public plainly have an interest in ensuring, that the conduct of United Kingdom firms and companies, when carrying out such work abroad, is of the highest standard. In my view, a prima facie case that such standards were not maintained here, is a matter of real public interest.[45]Mr Townend also raised points as to the appropriateness of any committal proceedings being brought by the applicant, and whether that could be said to be in the public interest. In my judgment that matter is best dealt with as part and parcel of his case about disruption, oppression and proportionality, which I address in Section 7 below. 6.2. Centrality[46]Mr Townend made a series of crisp submissions to the effect that, since permission to bring committal proceedings should only be granted if the false statements and prima facie dishonesty go to a central issue in the case, such permission should not be given here because, on any view of the pleadings, the Variation Orders are not important to either side. He said that what mattered to the claim was Variation Orders 18-20, which had never been signed and so were not the subject of the false statements, and what mattered to the counterclaim was the claim for restitution, which would turn on the construction of the settlement agreements and/or an analysis of the invoices provided by GBMMEC. He said that you look in vain at the pleadings for any case that puts Variation Orders 1-17 front and centre.[47]Mr Plewman disputed that, and said that the central issue in the case was what was due under the contract, which plainly involved a consideration of Variation Orders 1-17. He also said that the dispute about the settlement agreement and the amended settlement agreement also turned on whether the applicant had reserved its right to consider on their merits the underlying claims made by GBMMEC for additional monies.[48]I think that Mr Townend is right to say that the centrality of the Variation Orders is not a matter that obviously emerges from the pleadings as they presently stand. Certainly the references to them in paragraphs 3(b) and 3(i) of the reply are tangential at best, although I think the reference in paragraph 9 (paragraph 18(e) above) is much more important, because its reference to Variation Order 17 is cumulative, and relates both to timing and amount. In addition, Mr Plewman’s argument that the issue in the committal proceedings was a narrow one, and would not significantly overlap with the trial (a submission advanced in support of his case that the committal proceedings could be dealt with before the trial and/or would have little effect on it), may also have suggested that the Variation Orders 1-17 were not central. But it seems to me that, on any proper analysis of the underlying issues in this case, the validity (or otherwise) of Variation Orders 1-17 are likely to be paramount.[49]Leaving aside questions of construction of documents, GBMMEC will need to justify the large increase in costs from the figure originally estimated and identified in the contract. They will need to do that in order to establish their entitlement to £500,000, and they will also need to do that in order to defeat the counterclaim for around £4 million, which is based on restitution and overpayment. I cannot envisage any way in which those issues can be fought out without a detailed analysis of the events which gave rise to that large increase in costs, and which lie at the heart of the debate about Variation Orders 1-17.[50]In one sense, the proof of the pudding lies in Mr Short’s actions in November 2012. He plainly thought then that justifying the five-fold increase was an important element of the looming dispute with the applicant: that appears to be the reason why he created the false narrative in the first place. Accordingly, whilst I accept that the pleadings do not currently make much of the Variation Orders, the trial will inevitably focus hard upon them.[51]Accordingly, I find that the false statements, particularly the one at paragraph 9(b) of the reply, are of central importance to the issues between the parties and therefore do justify the public interest in bringing contempt proceedings.[7]DISRUPTION, OPPRESSION AND PROPORTIONALITY[52]Mr Townend said that, if permission were granted, this would have a seriously deleterious effect on GBMMEC’s ability to prepare for the forthcoming trial in November and be unduly oppressive for Mr Short.[53]I accept that, if the committal proceedings took place before the trial, they would have a significantly disruptive effect on GBMMEC’s preparation for trial. I also accept Mr Townend’s submission that it would be oppressive for both GBMMEC and Mr Short to have to go through the committal proceedings and then go through the trial. It is of course for that reason that so many of the authorities to which I have referred identify the trial (or after the trial) as the appropriate time for the hearing of any committal proceedings.[54]There is a related point, concerning the question of overlap. As I have already noted, Mr Plewman endeavoured to persuade me that there was very little overlap between the subject of the committal proceedings and the underlying trial. He said that the subject matter of the committal proceedings was very narrow, focussing solely on the dating of the signatures, which would only arise tangentially at the main trial. He therefore said that the issues of disruption and oppression were significantly over-stated.[55]As already foreshadowed, I do not accept that submission. It seems to me that there is a risk of significant overlap. Indeed, it was for that reason that, in Section 6 above, I concluded that the issues in the committal proceedings went to the heart of the underlying trial.[56]Assume for the purposes of this argument that Mr Short was cross-examined in committal proceedings before the trial about the false dates attached to the signatures on Variation Orders 1-17. That would inevitably lead to questions as to the process in which he was engaged, the reasons for dating the signatures as he did, and the entire process by which he created the back story. Then at the civil trial, he would be asked the same questions all over again, as part of the applicant’s attack on the sums said by GBMMEC to be due, and their own counterclaim. It is inevitable that, if the applicant is going to attack the significant costs over-run on this project, it will start with the attempt to create the Variation Orders after the event. All of the same material will be trawled over again because Mr Short’s credibility on all these matters may well be critical.[57]Of course, overlap is not, on its own, a reason to refuse permission to bring committal proceedings: see JSC BTA Bank. However, in this case, just as in that, it is a good reason to exercise the court’s case management function to rule that the hearing of the committal proceedings will not take place until after the trial. Indeed it may be capable of being dealt with at the trial: that will be a matter for the trial judge. But I agree with Mr Townend that, for the reasons noted, it is not a matter that should be heard in advance of the trial.[58]In my judgment, having decided that the committal proceedings should not be heard until at or after the trial, many of Mr Townend’s other concerns fall away. Disruption and oppression do not arise if the committal proceedings can be ‘parked’. Similarly, there can be no question of any tactical advantage to be gained on the part of the applicant, in circumstances where the committal proceedings are not heard until at or after the trial. As to proportionality, it seems to me that is also something that can be considered by the trial judge.[59]At one point, Mr Townend suggested that, because both the applicant’s and Mr Short’s costs were high, the whole of the contempt proceedings was therefore disproportionate. I do not accept that. Committal proceedings for contempt often give rise to costs which are higher than might otherwise be the case, but that is because of what they put at stake: the possibility of the loss of liberty of the subject. Moreover, the public interest is clear: in the right case, if there is a strong prima facie case, contempt proceedings are appropriate. I do not accept that, in this case, such proceedings are in some way disproportionate or contrary to the overriding objective.[60]Finally I should revert to Mr Townend’s point that the applicant is not the appropriate party to bring these contempt proceedings and that the proper party is the Attorney General. I do not agree. In each of the authorities to which I have referred, the court accepted that, where permission was granted to bring committal proceedings, those proceedings could be brought by the other party in the underlying litigation. I do not see any reason to take a different course here. As Moore-Bick LJ said in KJM, that may be distasteful to some, but if the other hurdles are overcome, there can be no reason in principle for imposing the burden of bringing committal proceedings onto the public purse. On all the facts of this case, I find that is not oppressive or otherwise inappropriate for the applicant to bring these proceedings.

CONCLUSION

[61]For the reasons set out above, I consider that this is a case where I ought to grant permission to bring committal proceedings against Mr Short. However, I do so on the express basis that those proceedings will be heard either at the trial, or after the trial, at the discretion of the trial judge. They will not be heard in advance of the trial.[62]As to costs, my provisional view is that the only appropriate order in these circumstances is that the costs of the permission application should be reserved until the resolution of the committal proceedings themselves. However, since the question of costs was not argued before me at the hearing, I should make clear that that is a provisional view, and subject to any contrary submissions from either side.

Cited in 2 later judgments