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Contempt of court in parallel trade proceedings

By Johanna Gibson, David Pearce, Jeremy Phillips and Ilanah Simon.

Another chapter in the tale of Honda v Neesam , bits of which have been reported by the IPKat(here and here ). The defendants in that case imported Honda bikes from Australia, which were sold in the UK. Ultimately it was found that Honda's trade mark rights were exhausted since Honda's consent to their sale in the EEA could be implied. The existence of that consent depended on Honda's expectations, as conveyed to the exporter from Australia, as to where the bikes were to be sold on leaving Australia. Honda's witness, Mr Hinton, originally claimed in his witness statement:

"From time to time, without having any continuous contact, Honda Australia deals with Lime Exports ("Lime"). Lime fulfils a useful role in servicing the Pacific Islands (e.g. Fiji, New Caledonia and Vanuatu) which Honda Australia does not have the capacity or desire to service. This is the only reason Honda Australia deals with Lime. Honda Australia advises Lime verbally that it is only allowed to sell to the Pacific Islands. By so advising Lime Honda Australia tries to ensure that product supplied to Lime finishes in the Pacific Islands. . . . Honda Australia does not authorise those to whom it sells to export, except to the Pacific Islands as mentioned above."

This implied a lack of consent to sale outside the Pacific Islands. However, documents that came to light in the course of the proceedings made it clear that the statement was untrue. The defendant's solicitors wrote to Hinton, pointing out that it was contempt of court to include in a witness statement verified by a statement of truth a statement that is false and that the witness does not honestly believe to be true. Hinton then made a second statement, admitting that what he had said in the first statement was untrue, but pointing out that his intention was not to mislead the court, but rather to protect Honda Australia's reputation in the eyes of the wider Honda group.

At trial, the defendant attempted to bring a private action for contempt of court against Mr Hinton. This was refused by Sir Andrew Parke, who held that it would be disproportionate for contempt proceedings to be brought since Hinton had already had a stressful experience, the expense would be great and the public interest of promoting the integrity of the legal system wouldn't necessarily be served.

Yesterday the Court of Appeal allowed an appeal on this point, and held that contempt proceedings could be brought. The contempt was serious since, if the falsity of the statement hadn't been uncovered, the defendant would be been liable to pay Honda hundreds of thousands of pounds in damages. The fact that the witness had had a difficult time in cross-examination was not relevant, nor was the fact that he had shown remorse for his lies (though this might be relevant to the sentence). The judge had been wrong to conclude that a contempt action in these circumstances wouldn't promote the integrity of the legal system. Instead it would be 'likely to have a salutary effect in bringing home to those who are involved in claims of this kind, of which there are many, the importance of honesty in making witness statements and the significance of the statement of truth'. The fact that the proceedings would be costly was relevant, but was given too much weight in the light of the seriousness of the contempt at issue. In any event, it would be the applicant for contempt proceedings who bore the cost, and not the public purse. There was also a question-mark over whether it was worth bringing proceedings at this stage since Mr Hinton had returned to Australia, and so was outside the reach of British contempt action unless he returned to England or appointed someone to accept service on his behalf, but this wasn't fatal since refusing the action on those grounds would send out the message that foreign witnesses wouldn't need to maintain the same standards of honesty as those in the UK.

The IPKat finds this decision hard to fault. Witnesses should know that it's wrong to lie in the witness box, or in a witness statement. Although the trial judge may have felt sympathy for the witness, Mr Hinton brought it on himself. Granted, he was trying to protect the reputation of his business, but this was at the expense of someone else's business, and their liability to pay a huge sum in damages. It's always going to be difficult to imply consent in parallel importation cases - at least this decision should make it clear that those who provide false evidence that suggests that there was no consent will feel the full force of the law.

Full post as published by IPKat on November 21, 2008 (boomark / email).