Thursday Law Report: Contemnor might be allowed to call witness

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25 February 1999

Grupo Torras SA and another v Sheikh Fahad Mohammed Al Sabah and others

Court of Appeal (Lord Woolf, Master of the Rolls, Lord Justice Aldous and Lord Justice Sedley 19 February 1999

A JUDGE had a discretion to allow a contemnor to adduce evidence, and, if he did so, the witness should be called by the contemnor if acting in person, or by an advocate instructed on his behalf.

The Court of Appeal allowed in part the appeal of Grupo Torras SA against a decision to allow Sheikh Fahad, who was in contempt of court, to call expert witnesses.

Grupo Torras was the holding company of a large group of companies which carried on a variety of businesses in Spain. It commenced proceedings against Sheikh Fahad and others in connection with a series of frauds.

Among the defences raised to the claims were contentions that Grupo Torras lacked capacity to bring the present action, since the shareholders' resolution required by article 134 of the Spanish Companies Act had not been passed before the writ was issued; and that any loss suffered by Grupo Torras had been extinguished when loans and other advances were capitalised in 1991.

Sheikh Fahad did not attend the trial due to ill-health, and, following his failure to comply with various orders made by the judge, he ceased to be legally represented. The trial proceeded, and Sheikh Fahad sent the judge a letter enclosing expert reports of two Spanish law professors relating to the article 134 issue.

The judge gave Sheikh Fahad leave to call one of the Spanish witnesses, and to call expert accountancy evidence in relation to the "no loss" issue. Grupo Torras appealed and the following issues arose: whether, in the circumstances of the case, the judge was entitled to allow Sheikh Fahad to adduce expert evidence when he was in contempt; and whether a party was entitled to adduce evidence when he was not represented and did not propose to be present at the hearing.

Anthony Boswood QC and Andrew Popplewell QC (Baker McKenzie) for Grupo Torras; Sheikh Fahad did not appear and was not represented.

Lord Woolf said that, notwithstanding the wilful, contumacious behaviour of Sheikh Fahad, the judge clearly had a discretion to allow the additional evidence to be called.

So far as the Spanish expert witness was concerned, the judge had been perfectly entitled to exercise the discretion as he had: he had rightly appreciated that the circumstances with which he was faced were unlikely to occur often, and it would be wholly wrong to interpret his decision in relation to that witness as a signal that contemnors in general could ignore court orders without any fear of repercussions.

The witness's evidence went to the issue as to whether Grupo Torras was competent to bring proceedings under Spanish law, which was very close to being an issue going to jurisdiction. Moreover, reliance was being placed on his report which was already in evidence.

The position of the accountancy expert was, however, different. No report of his was already in evidence, and it was by no means clear that his evidence was essential for the just resolution of the issue, i.e. quantum, which was very much one for the judge.

The court had extensive powers to deal with situations where, for good reason, a party was unable to take part in the proceedings in the normal way. There was, however, no reason in the present case for a departure from the normal approach.

If the Spanish expert were to be called to give evidence, he should be called by Sheikh Fahad if he chose to act in person, or by an advocate instructed on his behalf. Sheikh Fahad's former legal advisers had acted with propriety in withdrawing from the case in the way in which they had. That did not, however, mean that there was any impediment to counsel and solicitors acting on his behalf in relation to the discrete issue of the competence of Grupo Torras to bring the proceedings.