Cavendish Square Holdings BV & Anor v El Makdessi

Permission to bring committal proceedings for false statements verified by a statement of truth should be granted only with great caution. The applicant must show a strong case that the statement was false and that the maker knew it was false when made. The statement must have been significant in the proceedings, and the maker must have understood its likely effect and use. The court must also be satisfied that the public interest requires proceedings, while guarding against harassment, improper pressure and disproportionate use of resources. Abandonment of the underlying case before trial does not necessarily remove the public interest where the false statement caused substantial litigation expenditure.

The claimants sought permission under Part 81 of the Civil Procedure Rules to commence committal proceedings against the defendant. The proposed proceedings concerned statements in his Defence and Counterclaim, verified by a statement of truth, about his continuing involvement in the Carat business and related competitive activities.

The defendant had later abandoned the relevant liability case. The claimants contended that the First Statement was knowingly false and had caused extensive preparation and expenditure before the liability issues were abandoned. The defendant opposed permission, alleging procedural defects, bad faith, prejudice and improper use of the committal jurisdiction.

1. Permission granted. The court granted permission to bring committal proceedings in respect of the First Statement. The applications concerning the Second and Third Statements did not warrant permission. In relation to the Second Statement, the evidence did not establish diversion of business to Carat. In relation to the Third Statement, there was no strong case that the defendant knowingly made a false statement.
2. The court adopted the guidance summarised by Hooper LJ in A Barnes t/a Poole Motors v Seabrook [2010] EWHC 1849 (Admin). A strong case is required. The alleged false statement must have been significant, the alleged contemnor must have understood its likely effect, and the public interest must require proceedings. The court must avoid prejudicing substantive proceedings and must exercise the jurisdiction cautiously.
3. False statements verified by statements of truth undermine the administration of justice. The public interest therefore may exist even where the underlying case has been abandoned before trial, if the statement materially caused substantial expenditure and preparation.
4. The First Statement was sufficiently clear. The evidence showed a strong case that the defendant remained substantially involved in Carat after the dates pleaded. The court considered it unlikely that he had forgotten those activities and found a strong case that he knew both that the statement was false and that it was significant to the liability dispute.
5. The overlap between the proposed committal proceedings and later quantum or construction issues did not create sufficient prejudice. Nor did the need to consider documents attached to pleadings prevent permission, since any procedural defect could be cured or waived where no injustice resulted. The proceedings were expected to depend largely on evidence already available.

First-instance decision. No appellate history is stated in the judgment.