Walsh v Decca Capital Ltd & Anor

This was an application for permission under rule 81.3(5) to pursue contempt proceedings based on allegedly untruthful statements verified by statements of truth in the petitioner's witness statement and Points of Claim in underlying proceedings under section 994 Companies Act 2006. The judge applied the established public interest and proportionality tests for granting permission to bring committal proceedings, requiring a strong prima facie case that the statement was false and known to be false. Applying those principles to the evidence about the incorporation of Orama and the transfer of the joint venture, the court found a strong prima facie case of knowing untruthfulness in paragraph 55 of the witness statement and granted permission to proceed in respect of that paragraph. The court refused permission in respect of paragraph 38 because the evidence did not establish a sufficiently strong prima facie case that that paragraph was knowingly false.

This was an inter partes application by the second respondent, Mr Shahraab Ahmad, for permission to pursue committal proceedings against the petitioner, Mr Alexander Walsh, in respect of statements verified by statements of truth in a witness statement (dated 9 October 2019) and in Points of Claim. The underlying substantive litigation was a petition by Mr Walsh now pursued as a section 994 Companies Act 2006 unfair prejudice claim concerning alleged diversion of company value to an offshore vehicle (Orama) and related conduct by Mr Ahmad, the majority shareholder and director.

The application arose because paragraphs of the witness statement and paragraphs of the Points of Claim asserted that Mr Ahmad had transferred the company's value to an offshore company without Mr Walsh's knowledge or consent. Mr Ahmad relied on contemporaneous documents and emails showing Mr Walsh's involvement in discussions, a signed shareholder agreement for Orama and other material suggesting awareness and participation by Mr Walsh in establishing the offshore structure.

The court framed the issues as:

• whether there was a strong prima facie case that the challenged statements were false;
• whether the petitioner knew they were false when made (knowledge/recklessness);
• whether it was in the public interest and proportionate to allow committal proceedings to proceed, having regard to delay, overlap with the substantive trial, prejudice and likely resources required; and
• whether allowing the application would unduly interfere with the fair trial of the s.994 claim or produce collateral litigation.

The judge reviewed legal authorities establishing that permission should not be given lightly and summarised relevant considerations (including KJM Superbikes v Hinton; Zurich Insurance v Romaine; Barnes v Seabrook; Tinkler v Elliott and North of England Coachworks v Khan). The court found that documentary evidence undermined the account in paragraph 55 and that there was a strong prima facie case that paragraph to be false and known to be false. By contrast, paragraph 38 could reasonably be read more narrowly (as referring to accrued fees) and the contemporaneous materials did not establish a strong prima facie case of knowing falsehood in that paragraph. The judge also considered delay and proportionality, concluded delay did not bar permission, that a short standalone committal hearing was proportionate, and that proceeding would not unacceptably prejudice the substantive trial. Accordingly, permission was granted in relation to paragraph 55 and refused in relation to paragraph 38.

Permission to pursue committal proceedings was granted in relation to paragraph 55 of the petitioner's witness statement because there was a strong prima facie case that the statement was false and known to be false; permission was refused in relation to paragraph 38 because the evidence did not establish a sufficiently strong prima facie case of knowing untruthfulness. The decision was grounded on the public interest test, proportionality, strength of evidence and potential overlap with the substantive s.994 claim.