Claimant v First Defendant and 9 other Defendants

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Warren
Judgment Date15 November 2012
Neutral Citation[2012] EWHC 3214 (Ch)
Docket NumberCase No: HC11C02143
Date15 November 2012

[2012] EWHC 3214 (Ch)



Royal Courts of Justice

Strand, London, WC2A 2LL


Mr Justice Warren

Case No: HC11C02143

First Defendant And 9 other Defendants

Charles Holbech (instructed by Messrs Tees) for the Claimant

Penelope Reed QC (instructed by Hewitsons LLP) for the 1 st Defendant

Hearing date: 7th November 2012

Mr Justice Warren

I have before me two related applications. One is by the Claimant (C) for permission to adduce in evidence a conviction of the First Defendant (D1); the other is by D1 for an order that C redacts from her witness statement reference to the conviction. Although these applications were heard in open court, it is best, I think that I anonymise the names of C and D1 until after the trial of the substantive action.


The underlying action is a probate action under which C challenges the apparent last will (the Will) of her mother (the Testatrix). D1 is her brother who fares better under the Will as compared with C than he did under an earlier will. It is alleged by C that D1 tricked their mother into signing the Will so that she lacked knowledge and approval or that he procured its execution by undue influence. The Will was properly witnessed and, no doubt, the evidence of the witnesses will be of significance in deciding whether or not she knew that the document which she was signing was a will.


D1 suffers from Parkinson's disease which has affected his mental state. It is feared that his condition will be worse by the time the trial takes place. As the result of an order which I made some time ago, his evidence is to be taken by deposition. This was planned to take place last week but, unfortunately, he has been hospitalised for reasons nothing to do with his mental health and the deposition has had to be adjourned.


In her witness statement prepared for the trial, C refers to a conviction in the magistrates' court of D1 for offences relating to National Insurance Contributions in relation to the affairs of a company of which he was a director and which I will explain in more detail in a moment. She also exhibits a contemporaneous newspaper article which contains a reference to that conviction.


The conviction was as long ago as 1995. It is a spent conviction (and has been for 12 years). Section 4(1) Rehabilitation of Offenders Act 1974 prevents reference being made to it in any civil proceedings unless the court allows it to be admitted. The rehabilitated person is to be treated as a person who has not committed or been charged with or prosecuted for or been convicted of or sentenced for the offence. It is not permissible to ask the rehabilitated person any question relating to his past which cannot be answered without acknowledging or referring to a spent conviction or the circumstances ancillary thereto.


Under section 7(3), the court has power, in some cases, to admit evidence relating to a spent conviction. The present case is such a case; the court has power to allow such evidence relating to D1's conviction. The court may do so if it is

"satisfied, in the light of any considerations which appear to it to be relevant (including any evidence which has been or may thereafter be put before it), that justice cannot be done in the case except by admitting or requiring evidence relating to a person's spent convictions or to the circumstances ancillary thereto…."


D1's conviction arose out of the provisions of sections 114 and 115 Social Security Administration Act 1992. As enacted at the time when D1 was convicted, section 114 provided that a person who failed to pay certain national insurance contributions under Part 1 Social Security Contributions and Benefits Act 1992 for which he was liable, was guilty of an offence. Section 115 provided that, in some circumstances, a director of a company which was liable under section 114 would also be liable for the offence as well. He could only be made liable where the company's offence was "proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of" the director. It was not necessary to establish any sort of dishonesty on the part of the company or the director for an offence to be committed.


Amendments were made to section 114 which came into force on 6 April 1999. An offence under the amended provision arose only where the person was "knowingly concerned in the fraudulent evasion of any contributions which he or any other person is liable to pay". Unlike under the old provision, a person could be guilty of an offence under section 114 even if he himself had no liability to pay contributions; but, in contrast with the old provision, he had to be concerned in fraudulent evasion of contributions. Although section 115 had been amended in 1996 to a minor extent, its application to an offence under section 114 remained unchanged: for a person to be guilty of an offence in that regard after 6 April 1999, there had to be fraudulent evasion of contributions and that offence (fraudulent evasion) had to have been committed with the consent or connivance of, or to be attributable to neglect on the part of the director concerned.


In the present case, the offence of which D1 was convicted arose under section 115 in respect of an offence by a company of which he was a director. The conviction was under the old versions of sections 114 and 115 and was, of course, several years before the new version of section 114 came into force.


In her witness statement in support of C's application to admit evidence of D1's conviction, her solicitor, Caroline Metcalfe, referred to the new version of section 114. D1 could not have been guilty of any offence under the old section 114 since he was not a person liable to pay contributions for which he, rather than the company was liable. But he could have been guilty of an offence under the old section 115 and that, indeed, seems to be what actually happened. But, as already mentioned, neither that section nor the old section 114 required dishonesty to be proved. It was, however, on the basis that D1 had committed an offence of dishonesty that C's application was launched and this was the basis on which Mr Holbech (who appears for C) prepared his skeleton argument. In a supplemental skeleton argument lodged on the morning of the hearing, Mr Holbech concedes that the old section 114 made no reference to fraudulent evasion of contributions.


Notwithstanding his concession with the central plank of his original submissions removed, Mr Holbech nonetheless suggests that there was material to suggest that there was dishonesty or at least what he refers to as nefarious behaviour on the part of D1. He says that in reliance on three items.


The first item is a reference to the prosecution against D1 in Tolley's National Insurance Contributions, 2012–13, para [22.14] which proceeds on the basis that the prosecution was brought under the old section 115 of the 1992 Act. That takes Mr Holbech nowhere in establishing dishonesty since sections 114 and 115 as they stood at the time of D1's conviction did not require dishonesty to be shown.


The second item is a contemporaneous newspaper article in the Financial Mail on Sunday, 5 November 1995. The first part of the article is concerned with a crackdown by the Government of the day on "crooked directors who trick the State of millions of pounds" with the Secretary of State launching "a special team of investigators to stamp out so-called 'phoenix companies'". Reference is made to a blacklist of suspected fraudsters. The second part of the article referred to the "first successful criminal prosecution against the directors of a phoenix company", going on to identify D1 and the company of which he was a director. The article states that he was convicted of six charges by the magistrates and fined the maximum £400 for each offence, as well as being ordered to pay contribution arrears in excess of £50,000.


The third item is a circular produced by D1 a few days later setting out his side of the story and his reaction to what he referred to as "libellous newspaper reports". In that circular, he says this: "In our case, there has not been any suggestion of incorrect behaviour, let alone fraudulent behaviour, and any suggestion that I or any other director behaved in a fraudulent manner is absolutely scandalous and gross libel". I do not know if libel proceedings were threatened or commenced. Later in the circular, he identified, correctly, what the legislation provided, namely that "the DSS has only to show that a director or executive knew, or should have known, that monies were outstanding or overdue to the DSS and unpaid, for such directors to be held personally responsible to pay the unremitted contributions, and pursued through the local...

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