Walsh v Decca Capital Ltd & Anor

Permission for private contempt proceedings based on allegedly false statements depends on whether pursuing them is in the public interest. The court must assess the strength of the evidence that the statement was false and knowingly false, its significance, the maker’s state of mind, the use made of it, proportionality and the resources required. A strong prima facie case is necessary but not sufficient. The court must also consider delay, overlap with the substantive proceedings, prejudice, the overriding objective and whether the statement actually misled the court. A knowingly untruthful statement remains serious even where it did not secure interim relief or otherwise mislead the court. Where the public interest favours proceedings, permission should ordinarily be followed by an early hearing rather than delay until trial.

Alexander Walsh petitioned in relation to Decca Capital Ltd and also pursued a claim for relief under section 994 of the Companies Act 2006. Shahraab Ahmad applied for permission to bring contempt proceedings alleging that Mr Walsh knowingly made false statements in his witness statement and Points of Claim.

The alleged statements concerned Mr Walsh’s knowledge of, and consent to, the establishment of an offshore structure and the transfer of value from the company to Orama. The court considered the documentary evidence, the apparent strength of the allegations, the overlap with the substantive unfair-prejudice claim, delay, proportionality and possible prejudice to the future trial.

The central issue was whether it was in the public interest, and consistent with the overriding objective, for contempt proceedings concerning Paragraph 55 and Paragraph 38 to proceed.

1. Permission granted in part. Permission was granted to pursue contempt proceedings concerning Paragraph 55 of Mr Walsh’s witness statement, but refused concerning Paragraph 38 of the Points of Claim.
2. The governing question was whether it was in the public interest for contempt proceedings to be brought. Relevant considerations included the strength of the evidence that the statement was false and knowingly false, its significance in the proceedings, the maker’s understanding of its likely effect and actual use, proportionality, resources, delay, overlap and the overriding objective. The approach in KJM Superbikes Ltd v Hinton [2009] 1 WLR 2406 and the related Court of Appeal guidance was adopted.
3. There was a strong prima facie case that Paragraph 55 was false as written and that Mr Walsh knew it was false. The allegation was serious and material. Ambiguity would have to be resolved in his favour at a substantive contempt hearing, but the surrounding documents and the failure to correct the pleading or witness statement supported granting permission.
4. The case was sufficiently distinct from the substantive unfair-prejudice trial. The contempt application could be heard within a short period without materially prejudicing the trial or unduly interfering with its preparation. Delay did not bar permission in the circumstances.
5. Paragraph 38 was less clear. It could refer narrowly to accrued or liquid assets rather than the transfer of the joint venture business, and there was no strong prima facie case that the statements in that paragraph were knowingly untruthful. Permission was therefore refused in relation to it.
6. The absence of actual misleading of the court reduced the potential seriousness compared with a case involving reliance on false evidence to obtain onerous interim relief, but did not make the alleged dishonesty insignificant. The contempt application should not be postponed until the substantive trial or left unresolved for a year or more.