Malgar Ltd v RE Leach (Engineering) Ltd

Factual and Procedural Background

The Claimant, Company A, acquired the business, trade marks, copyrights, design rights, goodwill, and other intellectual property rights of a former company that manufactured and sold slurry handling equipment. The Defendant, Company B, unsuccessfully attempted to acquire this business and subsequently commenced competing against Company A without those rights.

Company A initiated proceedings against Company B alleging unfair and unlawful competitive practices, including breach of copyright, design right infringement, and passing off. The claim form was issued on 17 June 1999, accompanied by particulars of claim seeking declarations, injunctions, damages, and delivery up of infringing materials.

Company A applied for summary judgment on all claims on 23 June 1999. Company B resisted, submitting witness statements verified by statements of truth from two officers, Defendant Director and Defendant Manager. On 29 July 1999, Company B consented to judgment on two copyright claims relating to price lists and a photograph, resulting in an injunction and orders for delivery up and damages inquiry. The remainder of the claims proceeded to trial.

On 25 October, Company A applied under CPR 32.14 for permission to bring committal proceedings against Company B and its two officers for contempt of court, alleging false statements made in verified witness statements and the defence regarding the price lists and photograph copyrights.

Legal Issues Presented

1. Whether permission should be granted under CPR 32.14 to bring contempt of court proceedings against the Defendant Company and its officers for making false statements verified by statements of truth without an honest belief in their truth.
2. The appropriate standard of mental state required to establish contempt in relation to false statements made in documents verified by statements of truth.
3. The extent to which committal proceedings for contempt should be permitted in the context of ongoing civil litigation between private parties.

Arguments of the Parties

Claimant's Arguments

• Statements of truth are a critical new procedural requirement intended to ensure responsibility and veracity in pleadings and witness statements.
• False statements verified by statements of truth undermine the administration of justice and should be policed by committal proceedings where flagrant breaches occur.
• The witness statements and defence contain falsehoods regarding the origin and pricing of the Defendant's price lists and the photograph, which justify contempt proceedings.
• Unless a strong line is taken to enforce truthfulness in statements of case, the benefits of the new procedural rules will be lost.

Defendant's Arguments

• The Defendant's officers explained that similarities in price lists were due to the nature of similar products and independent creation efforts.
• The Defendant submitted to judgment on the copyright claims relating to the price lists and photograph, abandoning reliance on the allegedly false statements.
• The explanations given for pricing methodology and the production of price lists, while challenged, do not demonstrate an intent to interfere with the course of justice.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court began by explaining the procedural context of CPR 32.14, which allows committal proceedings for contempt where false statements verified by statements of truth are made without an honest belief in their truth, subject to court permission or the Attorney General's involvement. The court emphasised that CPR 32.14 does not create new substantive law but operates within established contempt principles requiring an appropriate mental state and interference with the course of justice.

The court acknowledged difficulties in determining the precise mental element for contempt but posited that the individual must know the statement is false and that it is likely to interfere with justice.

The court noted that contempt proceedings are public law matters and that permission to proceed serves as a public interest control, particularly where private individuals seek to bring such proceedings.

Turning to the facts, the court observed that the Defendant had submitted to judgment on the copyright claims related to the allegedly false statements, effectively abandoning them. The alleged false statements were made within a short timeframe and were not persisted in. Consequently, the court found the application for committal to be tenuous and not sufficiently serious to warrant prosecution in the public interest.

Furthermore, substantial proceedings remained ongoing between the parties, with the Defendant's officers likely to be key witnesses. The court considered that allowing committal proceedings concurrently would be an undesirable and unnecessary interference, potentially obstructing the efficient disposal of the remaining issues.

In light of these considerations, the court concluded that the application for permission to bring committal proceedings was disproportionate.

Holding and Implications

The court DISMISSED the application for permission to bring committal proceedings for contempt against the Defendant Company and its officers.

The direct effect of this decision is that no committal proceedings for contempt will proceed at this stage. The ruling reflects the court's view that the alleged false statements were not sufficiently serious or persistent to justify contempt proceedings and that allowing such proceedings would impede the ongoing civil litigation between the parties. The decision does not establish new legal precedent but applies existing principles concerning contempt and the public interest in the administration of justice.