In the recent case of Kinform Ltd v Tsui Loi (DCMP 947/2011), the Hong Kong District Court found two defendants guilty of contempt of court for verifying, or causing to be verified, a false statement by a statement of truth, and handed down immediate custodial sentences of five and six months respectively. This is the first time such severe sanctions have been imposed since the implementation of the Civil Justice Reform in April 2009. The decision reflects the court's view of the gravity of deliberately making false statements of truth in litigation. It also serves as a reminder to practitioners (including in-house counsel) properly to advise their clients as to their obligations with regards to verifying court documents by a statement of truth and the consequences of making false statements.
The underlying dispute was principally in relation to alleged outstanding payment for products which the plaintiff had sold and delivered to the defendants. The defendants' case was that the plaintiff's products were substandard and that numerous complaints had been made to that effect. In particular, the defendants made specific reference in their answer to a request for further and better particulars of their defence ("FBPs") to a written letter of complaint which they claimed they had sent to the plaintiff on 30 October 2008 ("complaint letter"). The FBPs had been verified by a statement of truth signed by the defendants' solicitor on their behalf.
Largely on the basis of the defendants' contentions in relation to the complaint letter, the plaintiff's subsequent application for summary judgment was dismissed. The matter proceeded and the 1st defendant and one of the plaintiff's then employees (being the 3rd defendant in the contempt proceedings as referred to below) each made a witness statement in support of the defendants' case referring to the complaint letter. The 1st and 3rd defendants then each signed a statement of truth to verify their respective witness statements.
In the course of discovery, the plaintiff's solicitors discovered that the so-called 'original' of the complaint letter had been printed on the reverse side of part of a letter from a third party to the defendants dated 24 March 2009. The plaintiff therefore concluded that the complaint letter could not have been issued on 30 October 2008 as claimed by the defendants and applied for leave to commence contempt proceedings on the basis that the defendants had made, or caused to be made, false statements in documents verified by statements of truth without honest belief in their truth pursuant to O.41A, r.9 and O.52, r.2 Rules of the District Court.
The District Court
On the facts, the judge held that the 1st and 3rd defendants had verified, or caused to be verified, a false statement by a statement of truth which had, or would likely to have, interfered with the course of justice. The judge found the duo guilty of contempt of court.
In sentencing the defendants, Au Yeung DJ pointed out that:
"Like the commission of the offence of perjury, the giving of a false statement verified by a statement of truth would undermine the whole process of our system of justice and the Court will not tolerate such an act. A clear message has to be sent to all litigants that they must not lie when they put forward their case in the form of pleadings or witness statements."
The 1st and 3rd defendants were sentenced to five and six months' imprisonment respectively. The 1st defendant was apparently given a small discount of one month in his sentence due to his genuine remorse. The plaintiff was also awarded costs on the indemnity basis.
The Civil Justice Reform of April 2009 introduced the requirements for pleadings (including amendments and further and better particulars in relation thereto), expert reports, witness statements, and other documents to be verified by a statement of truth. That statement must confirm that the facts in the document are true and, in the case of witness statements and expert reports, that any opinion expressed is honestly held. The purpose of requiring this verification is to deter imprecise and speculative pleadings and to deter the parties from advancing a dishonest case.
The Kinform decision highlights the severe consequences for false statements of truth and demonstrates the court's strict approach. The decision also serves to remind practitioners (including in-house counsel) to ensure that their client reads and understands the document to be verified and to be careful in explaining the importance of a statement of truth and the possible consequences of verifying, or causing to be verified, a false statement. As best practice, practitioners should also keep proper documentation of such advice given.