Civil Fraud Cases And The Privilege Against Self-Incrimination

The Court of Appeal's decision in V v. C [2001] EWCA Civ 1509 (16 October 2001) discusses the "privilege against self-incrimination" in the context of defending civil claims where there are allegations of conduct which may attract criminal sanctions.

In basic terms, the privilege against self-incrimination prohibits witnesses from being compelled to answer questions, if to do so may incriminate them in criminal proceedings. Often in civil fraud cases, or cases brought to recover the proceeds of fraudulent acts, criminal proceedings are commenced by the authorities once the facts are known.

In this case, V was a company which made a claim against Mr. C. V's Particulars of Claim alleged that Mr. C had misappropriated money using certain accounts and companies which he controlled. V claimed 11.3m for moneys had and received by Mr. C, and also for damages to be assessed following Mr. C's alleged breaches of fiduciary duties.

The Particulars of Claim were served and in his defence to those Particulars, Mr. C stated that he could not plead to certain allegations because by doing so he might incriminate himself. (In fact, criminal proceedings were commenced, and Mr. C was charged with fraudulent trading contrary to s458 of the Companies Act 1985.)

V applied for summary judgment against Mr. C. In that application, the witness statement filed on Mr. C's behalf stated that Mr. C could not provide a detailed defence to the civil claim without providing information which would assist a prosecution. Mr. C purported to invoke privilege against self-incrimination, and argued that it would be unfair to proceed with the summary judgment application in circumstances where he could not defend himself without prejudicing his defence in criminal proceedings.

At the first hearing before a Master in the High Court, this argument succeeded and the summary judgment application was dismissed. It was held that the circumstances of the case indicated that Mr. C had a suitably compelling reason why the case should be disposed of at trial, rather than summary judgment.

This decision was reversed on appeal. McCombe J gave judgment against Mr. C for the moneys had and received and for liability with damages to be assessed on the claim for breaches of fiduciary duties.

Mr. C appealed to the Court of Appeal, which had to decide whether a claim of privilege against self-incrimination could be invoked in a defence as an answer to an application for summary judgment.


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