The Court of Appeal recently considered the question of  how to deal with parties who are dishonest witnesses  in Lloyds v Shanley. In this case, the respondent’s  dishonesty was held to be fatal to only part of his original  breach of copyright claim against the appellant banks.

Shanley had agreed with Halifax to re-write part of its  computerised claims management system using his  own proprietary software - a scoping tool. After its 2009  takeover of HBOS, Lloyds began using the software.  Shanley commenced proceedings for breach of copyright,  claiming that he had not given his permission and relying  in part on an alleged written agreement. The banks  asserted that the agreement was a forgery, which Shanley  denied. However, shortly before the trial, he admitted he  had indeed fabricated the agreement.

Shanley was nevertheless partially successful in his  claim. The court held that Shanley’s lies were not fatal  to his claim in respect of the activities of Lloyds. Kitchin  LJ concluded “Mr Shanley has prevailed in his claims in  respect of … Lloyds despite his manifest and repeated  dishonesty. But… the fact that a claimant tells lies does  not necessarily lead to the conclusion that the whole of his  case is without substance.” Notwithstanding the fact the  written agreement was a forgery, Shanley had not given  his permission.

Following this, the banks sought Shanley’s committal  for contempt. The High Court imposed a three month  custodial sentence following the observation that it was  “difficult to see… how there could be a more serious or  flagrant contempt”.