Islamic Investment Company of the Gulf (Bahamas) ltd v Symphony Gems NV & Ors (2014)
The lifting of a suspended committal order was set aside where a solicitor who had been instructed by a contemnor had, for over three years, been conducting fictitious litigation which had impeded the contemnor's ability to comply with orders and prepare for the committal hearing, and thereby impacted upon the decision to make an actual order.
The applicant (M) applied to set aside adverse orders, particularly an order activating a suspended committal order and a bench warrant issued for his arrest, applied for by the respondent investment company (C).
C had obtained judgment in 2002 against M, whose reliability as a witness had been strongly criticised, for over $10 million. Although it had been common ground that M had the means to pay, he never did. A protracted series of litigation ensued, during which M obtained several adjournments of a hearing to determine his means. In January 2007, he was ordered to attend such a hearing and to produce all the relevant documents. After further interlocutory proceedings, during which it was ruled that it was not open to M to refuse to answer questions on the basis of self-incrimination, M had still failed to provide the documents. A suspended committal order was made in July 2009. The judge criticised M's failure to disclose documents manifestly in his control, and stated that he had been a most obscure and unconvincing witness. At a committal hearing in October 2010, M's solicitor (B) appeared, stating that he was without instructions. The suspension on the committal order was lifted and a bench warrant issued for M's arrest. It emerged that between October 2010 and December 2013, B had conducted fictitious litigation for M, featuring fictitious hearings; purported judgments and sealed court orders, hearing transcripts, skeleton arguments; fictitious correspondence with court officials and C's solicitors, and fictitious instruction and impersonation of solicitors and counsel. In reality, B had had no contact on M's behalf with C or the court. In relation to the suspended committal order, M complained that B had not followed his instructions or forwarded relevant documents, which led to non-compliance with several orders and incomplete preparation for hearings. In relation to the actual committal order, M complained that B: failed to prepare evidence for the October 2010 hearing as instructed and advised by counsel; failed to apply for an adjournment on health grounds, but gave the false impression that one had been sought and was refused; delayed in providing important evidence from C to be considered by the court at the hearing; failed to instruct counsel to attend the hearing; wrongly stated that he appeared without instructions; and had failed to make positive submissions as to why no committal order should be made. The issue was whether the orders should be set aside under CPR r.3.1(7).
M submitted that (1) B's failures allowed an unfairly prejudicial picture to be built up, and he was severely prejudiced in his preparations for giving evidence and in presenting his case when the suspended committal order was made; (2) the order activating the committal should be set aside as, having been instructed to apply for an adjournment, B merely attended the hearing and placed before the court a medical report explaining M's ill health, and had failed to follow instructions in the preceding 12 months to establish his compliance with the orders.
1) None of B's failures affected the decision that M had been in contempt in his complete failure to comply with the order of January 2007. The judge's finding that M had failed to purge his contempt was emphatic and was most unlikely to have been substantially affected by prejudicial preparation and presentation. M had had the opportunity in evidence to meet the non-disclosure complaints and he ought to have been able to answer them, regardless of prejudice in preparation. He had been represented at the hearings by counsel, about whom no complaint was made. The events had taken place at least 15 months before the start of the fictitious litigation and the first proven instance of B's fraud. Even if there was misconduct by B as alleged, it had not been shown that there was a good reason to believe that he was acting against M's interests at that time, or that such misconduct impacted on the order made. There had not been a material change in circumstances that was sufficient to warrant setting aside the suspended committal order, an order upheld on appeal (see paras 126-130 of judgment). (2) The evidence justified B's criticisms, which involved serious misconduct in the conduct of a very important hearing. Notwithstanding understandable scepticism towards M, B's failures significantly impacted on the actual committal order, which would not have been made in the same terms if the judge had had a full and accurate picture. Given the seriousness of the misconduct and its duration, the fact that the clearly evidenced fraudulent conduct commenced within two weeks of the October 2012 hearing, and the nature and sophistication of the fraud, there was a good reason to believe that B was acting against M's interests in respect of that hearing. The jurisdiction under r.3.1(7) might therefore be exercised, Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies)  EWCA Civ 518,  1 W.L.R. 2591 applied (paras 133-134, 136-138). (3) Despite C's submissions that the discretion should not be exercised on account of M's conduct as a judgment debtor and contemnor, his means were disputed and M sought a proper opportunity to demonstrate compliance with the disclosure orders, as he thought was being afforded to him in the fictitious litigation. The case raised serious concerns about the circumstances in which the actual committal order was made. Justice had to be both done and seen to be done, which required setting aside the actual committal order unconditionally. The other orders were to remain in place (paras 139-141).
Application granted in part