North of England Coachworks Ltd v Khan (Rev 1)

A false statement verified by a statement of truth constitutes civil contempt only where it is false, has interfered, or would likely interfere if persisted in, with the course of justice in a material respect, and was made without an honest belief in its truth with knowledge of that likelihood.

In sentencing, the court assesses culpability and harm, then considers whether a fine is sufficient. Deliberate or reckless false statements will ordinarily cross the custody threshold, but the sentence must reflect the particular harm, motive, admissions, remorse, health and personal circumstances. A custodial sentence may be suspended where immediate imprisonment is unnecessary for punishment and deterrence.

North of England Coachworks Ltd applied under CPR 81.18(1)(a) to commit Mohammad Khan for contempt of court. The alleged contempt concerned false entries in counter-schedules verified by a statement of truth signed by his solicitor.

Mr Khan admitted that entries concerning four women falsely or recklessly attributed personal expenditure to legitimate company expenses. The application was heard before the substantive action had progressed beyond pleadings. The central issues were whether the admitted conduct satisfied the elements of civil contempt and, if so, the appropriate sentence.

1. The application succeeded on the basis of Mr Khan’s admissions. The court sentenced him to 10 weeks’ imprisonment, suspended for one year.

2. Under AXA Insurance UK plc v Rossiter [2013] EWHC 3805 QB, the elements of contempt involving a false statement of truth were: falsity; interference, or likely interference if the statement were persisted in, with the course of justice in a material respect; and absence of an honest belief in the statement’s truth, together with knowledge of its likelihood to interfere with justice. The objective interference requirement was the real mischief.

3. CPR 81 regulates procedure but does not itself create or define the jurisdiction to commit for civil contempt. Actual interference need not be proved where likely future interference is established: Neil v Henderson [2018] EWHC 90 Ch.

4. The admitted conduct was serious. False statements of truth undermine the administration of justice, and deliberate or reckless statements ordinarily cross the custody threshold. The harm was nevertheless at the lower end because the claimant already knew the essential truth, acted promptly, and the entries had not materially altered the substantive dispute. Shame rather than financial gain was the motive.

5. Following Liverpool Victoria Insurance Co Ltd v Khan and Zafar [2019] EWCA Civ 392, reported at [2019] 1 WLR 3833, the court assessed culpability and harm, considered mitigation and the effect of admissions, and reduced an otherwise appropriate 12-week sentence to 10 weeks. Strong mitigation, rehabilitation, good character, remorse, ill-health and the impact on dependants justified suspension.

6. The court also endorsed the case-management principle in International Sports Tours Limited (trading as Inspire Sports) v Shorey [2015] EWHC 2040 QB that a contemnor may properly defend the underlying litigation. Further allegations of dishonesty should ordinarily be dealt with at the trial, unless genuinely urgent or determinative.