Contempt of Court - Centek Holdings v Giles

Author Simon Speed  Copyright waived by author

Jane Lambert

Chancery Division (Mr Justice Marcus Smith) Centek Holdings Ltd and others  v Giles [2020] EWHC 1682 (Ch) (26 June 2020)

The shillelaghs shown above are known as tipstaves. They were used by officers of the Crown to compel obedience.  In time the officer who carried one of these weapons was known as "the tipstaff". One of the duties of the tipstaff is to conduct an individual who breaches an undertaking or injunction into custody. Ultimately, that is how courts in this and other common law countries ensure compliance with their orders.   Civil law countries enforce court orders in a different way.  The court imposes a daily penalty for non-compliance known as an astreinte when it makes its order.  Instead of lengthy, risky and expensive committal proceedings, a simple arithmetic calculation is made and the astreinte is recovered in the same way as damages. I have never met a continental lawyer who has seen any advantage in committal over the astreinte. 

A case that shows how the committal procedure works is Centek Holdings Ltd. and others v Giles EWHC 1682 (Ch) (26 June 2020).  For over 17 years Mr Trustram Giles has been the claimant companies' product development manager.  In August 2019 Mr Giles left the claimants to take up a job in Malaysia.  He took with him what was described as "very substantial amounts of confidential and proprietary material" belonging to his employer.  His bosses suspected what he was doing and contained an order ("the Order") from Mr Jystice Norris "not to use, access or distribute Centek Material (paragraph 2 of the Order), abide by specific restrictive covenants (paragraph 3 of the Order), disclose and preserve Centek Material and the "Devices" and "Accounts" on which it was kept (paragraphs 4 and 5(a)-(b) of the Order), preserve disclosable documents (paragraph 5(f) of the Order) and facilitate the imaging of such Devices and Accounts by "Independent Experts" (paragraph 6 of the Order)."

Instead of complying with the Order Mr Giles made a number of false statements under oath and breached the Order in many other respects.  A table summarizing all those breaches takes up a very large part of the report of this case.  On 7 April 2020, the claimants applied to commit Mr Giles to prison. Their application was heard Mr Justice Marcus Smith on 15 and 16 June 2020.  The learned judge delivered his judgment on 26 June 2020.

Mr Giles admitted the contempts:

"I accept the contempt as set out in [Centek's] Application Notice dated 7 April 2020. I apologise to the Court and Centek for breaching the Order of Mr Justice Norris dated 30 August 2020 and for giving false evidence in my third, fourth and fifth affidavits as set out in [Centek's] Application Notice dated 7 April 2020. Unfortunately, I am unable to purge the contempt for the reasons set out below…"

After satisfying himself that the case against the defendant had been made out, the judge accepted Mr Giles's admission.  Consequently, the only issue for his lordship to decide was the appropriate sentence,

Mr Justice Norris's order landed Mr Giles in a dilemma which the judge described at paragraph [13] of his judgment:

"The reality of the situation is that Mr Giles had left Centek and was looking to make his fortune in Malaysia. He admits as much in Giles 6, where he states at paragraph 11:

'What was going round in my mind was that I could be about to lose my new position and the security and lifestyle I had hoped my family would get through my working in Malaysia.'

That, I think, puts Mr Giles' dilemma very well. He had burnt his boats with Centek by extracting the Centek Material from the company, resigning, and committing to the Malaysian venture. When he was caught, there was no going back. The choice Mr Giles had was either to proceed with the Malaysian venture or to forgo the money he would thereby derive from it by complying with the order, in circumstances where there was no prospect of a return to Centek."

Centek Holdings Ltd and its subsidiaries adduced evidence that Mr Giles's wrongdoing had harmed them substantially.  The judge acknowledged that that was the case but did not consider it to be an aggravating factor.  Earlier in his judgment he had said:

"[11] I begin with the trite, but important, proposition that court orders are meant to be obeyed and that – when they are not – the rule of law is undermined. In this case – and this is implicit in the fact that I have accepted Mr Giles' admissions – the Order contained a clear penal notice; was clear and unequivocal in its terms; and was prospective in that both in its terms, and in terms of when it was served, it was capable of being complied with."

He continued at paragraph [17]:

"But it seems to me that courts are to be presumed to make orders for good reason. Where such an order is breached, the harm lies in the material and deliberate breach of the order. The harm lies in the damage to the authority of the court and the rule of law."

The maximum sentence a judge can impose for contempt of court is limited to 24 months by s.14 (1) of the Contempt of Court Act 1981.  While Mr Giles's misconduct was serious Mr Justice Marcus Smith would not go so far as to say that this was the "very worst sort of contempt" though it did not fall far short.   He, therefore, took as his starting point a sentence of 20 months.  He reduced the sentence from 20 months to 14 to take account of Mr Giles's admissions and "the devastating effect that imprisonment would have on Mr Giles' family – his wife, his children, his mother, the community around him."

His lordship held open the possibility that the sentence could be reduced if Mr Giles purged his contempt:

"In McKendrick, the Court of Appeal made clear that, in an appropriate case, it was important, when sentencing, to differentiate between the punitive/deterrent and coercive aspects of the sentence. This is undoubtedly the case here. I consider that, in this case, there are significant elements of both in play. The punitive/deterrent element of the 14-month period is 8 months; and the coercive element 6 months. There is a significant coercive element because – for the reasons I have articulated – I do not consider that Giles comes anywhere near to purging Mr Giles' contempt, nor do I accept Mr Giles' assertion that his contempt cannot be purged. Of course, there are things done by Mr Giles that cannot be undone. But that makes Mr Giles' obligation – if he is to purge his contempt – to make a full and candid disclosure of his wrongdoing all the more important."

The judge noted that like any prisoner Mr Giles could look forward to unconditional release after serving half his sentence, by virtue of section 258 of the Criminal Justice Act 2003.

Anyone wishing to discuss this article or the issues raised in it should call my clerk Stephen on 07986 948267 or send me a message through my contact page.


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