November 14, 2019

Court of Appeal finds committal proceedings can be brought for false statements made pre-action

In a decision that will be welcomed by insurers and fraud practitioners, the Court of Appeal has held that committal proceedings can be brought in respect of false witness statements made under a pre-action protocol.

Our success in EUI v Dodd last year highlighted that the knowing pursuit (and issue) of a fraudulent claim is likely to receive a custodial sentence. The question posed in Yavuz - whether pre-action statements can be the subject of committal for contempt - has now been clearly addressed. This decision is likely to mean that the prospect of successful committal actions will increase further, placing further pressure on those who pursue fraudulent claims.

In addition, the Court found it was effective for allegations of further contempt arising from a party's response to committal proceedings to be dealt with in those same proceedings. Such a move would "not give rise to any unfair prejudice to the respondents."

Background

The Respondents, Karl and Laura Hughes, pursued a claim for holiday sickness under the Package Travel Regulations against the Appellant, Jet2 Holidays Limited. They alleged they had contracted food poisoning as a result of unsanitary conditions at their hotel.

The Respondents commenced claims under the Personal Injury Pre-Action Protocol ("PAP"). Witness statements ("the initial statements") were sent to the Appellant detailing the allegations. The Appellant located social media posts directly contradicting the allegations; the claims were rejected. Proceedings were not issued.

In early 2018, the Appellant commenced proceedings seeking permission to commence committal proceedings. In response, the Respondents filed witness statements ("the subsequent statements") stating that the initial statements were accurate and the social media posts was not "a true reflection" of the holiday.

HHJ Godsmark QC granted permission, and listed the committal proceedings to be heard at a case management conference in October 2018.

At the case management conference, HHJ Owen QC ruled that the question of jurisdiction be addressed as a preliminary issue at another hearing, as the initial statements were not made in connection with extant proceedings. CPR 32.14 deals with false statements, stating that:

"Proceedings for contempt of court may be brought against a person if he makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth."

In the event that he found there was no jurisdiction in respect of the initial statements, the Appellant applied to add grounds of contempt resulting from the subsequent statements.

At the hearing, HHJ Owen QC found there was no jurisdiction for committal based on the initial statements as they were not 'false statements' as defined by CPR 32.14; they were not served as part of proceedings which were categorised as 'started' under CPR 7.2. The committal proceedings were struck out.

In addition, he found the subsequent statements could not be relied upon in the alternative, as it would be "oppressive and contrary to the Overriding Objective" and not in the public interest.

Appeal

Jet2 appealed on the grounds that:

  1. HHJ Owen QC misdirected himself when striking out the committal proceedings, by finding the initial statements did not provide a basis for bringing the proceedings.
  2. He further misdirected himself by dismissing the application to amend in respect of the subsequent statements.

Outcome

The Court of Appeal granted the appeal on both grounds:

  1. HHJ Owen QC was correct in finding that the initial statements did not fall within CPR 32.14. Nonetheless, he had an inherent jurisdiction to commit for contempt, and it was "well established that an act may be a contempt of court even though carried out before proceedings have begun".

    Pre-action protocols state that they enable proceedings to be managed where litigation cannot be avoided. They are "integral and highly important part of litigation architecture."

    The service of the statement in an effort to comply with the PAP was capable of engaging the jurisdiction for committal for contempt, as there was "a close connection between the original witness statements… and the administration of justice."

  2. The subsequent statements did fall within CPR 32.14. They "gave further false evidence in seeking to explain the social media posts", and satisfied the requirements for suitability for contempt proceedings. There was a clear public interest in bringing contempt proceedings off the back of those statements.

    On the request for the subsequent statements to be considered within the same proceedings as the initial statements, it was considered "plainly convenient, efficient and cost effective" to allow it, as it did not prejudice the Respondents.

What can we learn?

  • There is an increased appetite for insurers to seek redress against false claims through committal proceedings. This decision will only serve to whet that appetite. Parties who have attempted to bring fraudulent claims can no longer escape their actions by choosing not to issue proceedings.
  • This decision further emphasises that deliberately false statements in support of a claim will not be tolerated by the Courts. The Court of Appeal made clear earlier this year in Romaine that the judiciary is aware of the "modus operandi" of issuing "tranches of deliberately low-value claims (sometimes on an industrial scale)" only to discontinue if fraud is alleged. These recent decisions has shown that abandoning claims, pre-issue or otherwise, will not be considered as exculpatory for claimants if insurers wish to pursue committal.
  • The decision to allow subsequent statements to be considered in the same proceedings suggests that claimants can dig themselves deeper when denying they acted dishonestly.
  • On the issue of other false statements made in relation to other types of pre-litigation documents are capable of giving rise to contempt, the Court was silent, deeming it "not necessary to appropriate" to address it within the appeal. This may be subject to satellite litigation in due course.
  • However, on the issue of bringing contempt proceedings generally, the Court of Appeal was clear that the current position is unsatisfactory as false statements served pre-action in compliance with a Pre-action Protocol fall outside CPR 32.14. It was neither "satisfactory or convenient" for committal involving pre-action statements to require an application to the Administrative Court under CPR 81.13(2). The Court suggested that changes to the CPR and Practice Directions should be made to expressly deal with this issue.