Daltel Europe Ltd. & Ors v Makki & Ors

Committal proceedings for civil contempt, including proceedings under CPR rule 32.14 brought within civil litigation, are civil proceedings for the purposes of hearsay legislation. That classification does not displace the full fair-trial protections of article 6.

Article 6 does not impose a categorical exclusion of hearsay. Fairness depends on the opportunity to challenge the evidence, its reliability and weight, and the safeguards used by the court.

Summary judgment under CPR Part 24 may be given only on a claim or issue properly raised by the statement of case. A court cannot determine an unpleaded trusteeship or fiduciary-duty case merely because the available evidence may support it.

Three telecommunications companies in liquidation and their liquidators alleged that Hassan Makki had diverted proceeds generated by the companies’ use of BT interconnect services. Following without-notice search and freezing orders, they applied to commit him for breaches of those orders and for dishonestly verifying defences by statements of truth.

David Richards J found most contempts proved and imposed concurrent and consecutive custodial sentences totalling 12 months. He later granted the claimants summary judgment under CPR Part 24 for sums said to have been diverted from Pacifica and Globenet. The decisions below were reported as [2005] EWHC 749, 997, 998, 999 and 2258 (Ch).

The appeal concerned the admissibility of hearsay in committal proceedings, the factual findings and sentences, costs, and whether the pleaded case entitled the claimants to summary judgment.

1. Appeal allowed in part. Lloyd LJ, with whom Wilson and Auld LJJ agreed, dismissed the appeal against the contempt findings and the aggregate 12-month sentence. Permission to appeal the costs order and to adduce further evidence was refused. Permission to appeal the CPR Part 24 order was granted and that appeal allowed.

2. The committal applications were civil proceedings to which the Civil Evidence Act 1995 applied. They were brought within High Court civil litigation and under civil procedural rules. Their quasi-criminal character, the criminal standard of proof, and the application of article 6 did not convert them into criminal proceedings for domestic hearsay rules.

3. Article 6 did not prohibit hearsay categorically. The question was whether the proceedings as a whole were fair. The judge had considered the reliability and weight of the hearsay, the opportunities available to answer it, and whether it was decisive. His admission and use of it were therefore lawful.

4. The challenges to the contempt findings failed. The judge was entitled to find deliberate concealment of assets and bank accounts, interference with frozen funds, and dishonest statements about ownership and trading arrangements. Information held on the telecommunications switches was within the search order because it comprised company records to which the companies had access. The duty to permit copying of remotely accessible information was proactive, not merely a duty to respond to a specific request.

5. Imprisonment could properly serve punishment and deterrence as well as coercion. There was no general rule that committal was inappropriate for dishonest statements verified under CPR rule 32.14. The order that the sentence for those contempts run consecutively to sentences for breaches of the search and freezing orders was within the judge’s discretion.

6. The Part 24 judgment could not stand. The claimants had not pleaded that Daltel USA acted as agent or trustee for Pacifica and Globenet, nor that arranging its use of their interconnect services was itself a breach of fiduciary duty. The judge could not grant summary judgment on that unpleaded basis, even if it might later be advanced by amendment.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 94, dismissed the appeal against the contempt findings and sentences, refused permission on costs, and allowed the appeal against summary judgment under CPR Part 24.
• High Court, Chancery Division: David Richards J made committal and costs orders and later granted summary judgment under CPR Part 24: [2005] EWHC 749, 997, 998, 999 and 2258 (Ch).