Skip to main content

Centek Holdings Ltd v Giles – When Contempt of Court Leads to Imprisonment

In a recent Perspectives piece, we discussed the implications of the new rules in paragraph 2 of Practice Direction 22. It is no longer possible for anyone signing a statement of truth to claim that they were unaware of the risks and consequences. Indeed, Practice Direction 22 now explicitly puts a person who provides a false statement of truth at risk of being liable for contempt of court. The High Court decision in Centek Holdings Ltd v Giles is a direct demonstration of how seriously the courts now take statements of truth and court orders.

Background

The claimant, Centek, an oil and gas industry devices manufacturer employed the defendant, Mr Giles, who gave notice to take up employment with a Malaysian enterprise instead. On leaving Centek, Mr Giles took a substantial amount of confidential and proprietary material with him. Suspecting this had been the case, Centek sought interim relief and commenced proceedings. Interim relief was soon granted. Mr Giles was ordered not to use, access, distribute or disclose Centek material, and abide by specific restrictive covenants. Mr Giles purported to comply with the order and swore several affidavits – five of them having been sworn long after the order was sealed, meaning that Mr Giles was fully aware of his obligations. Following this, Centek sought an order for the committal of Mr Giles, alleging multiple individual contempts for the swearing of affidavits that were false in material respects.

The Judgment

Mr Giles had already admitted to the activities constituting the contempt which included – amongst others – failure to deliver and preserve materials and deletion of information. Therefore, the Court was only concerned with the question of the appropriate punishment.

The Court concluded that the order’s content was clear and unequivocal in its terms and perfectly capable of being complied with. As a result, the breaches were found to be deliberate. Mr Giles’ defence that he had “not realised the seriousness of the order” when swearing the affidavits was not valid. Moreover, the Court described his conduct as involving “deception of a high order”. The lack of knowledge of precisely what harm breaching the order would do to Centek did not make any difference. Mr Justice Marcus Smith specified the harm lay in the “material and deliberate breach” of the order and “the damage to the authority of the court and the rule of law” which would be undermined if the order was not obeyed. He also added that any defendant’s evidence that a court order did not matter – by reason of facts specific to the claimant – would have to be discounted.

When concluding, the Judge recognised that the maximum term shall not be reserved for the “very worst sort of contempt” only. Rather, there should be a comparatively broad range of conduct regarded as falling within the most serious category. Mr Giles was sentenced to 14 months imprisonment.

Practical implications going forward

This case reaffirms the Court’s strict treatment of contempt applications. Further to the amendments to Practice Direction 22, the courts will no longer be lenient with parties who bring some evidence that they did not realise the seriousness of their statement of truth.

With this decision, the Court also demonstrates that contempt of court for a broad range of the most serious conduct can lead to a fairly long prison sentence. It is, therefore, not unreasonable to expect that less serious breaches may also be punished with imprisonment, albeit for a shorter period of time.

Judgment in Centek Holdings v Giles

With thanks to intern Laura Omnes for co-authoring this blog.

Related Lawyers: John McElroy
Related Practice Areas: Commercial Disputes

Related Lawyers