High Court censures City firm for threatening respondent with jail

City firm gunnercooke has been criticised by the High Court after threatening to ‘bang up’ a respondent for contempt of court, in a move that ‘illegitimately tipped the scales and upset the trial process’.

Handing down his judgment in Atkinson & Glyn Mummery & Anor v Varma & Ors, ICC Judge Prentis said the threat of a committal application put ‘illegitimate pressures’ on respondent Siddhant Varma, because ‘he is inevitably going to be looking over his shoulder at what may come’.

According to the court transcript, the judge added: ‘It just seems to me to illegitimately tip the scales and upset the trial process...I wonder if the judgment had gone the other way whether I would not be reopening it and rewriting it, or reconsidering it on the basis of the pressure which I now knew the fourth respondent was under… It upsets the whole trial process. It puts it at risk.’

The case, which involved multiple respondents, related to an allegedly fraudulent scheme involving a derelict Bristol hotel, which was due to be turned into student accommodation. While adverse judgments have been made against other respondents, claims against Siddhant Varma were dismissed.

Rory Brown, counsel for the applicants, admitted that an email in which gunnercooke partner Seamus Gray said the respondent could end up in prison was ‘a step too far’. However, he added: ‘I want to be very careful that there is no singling out of individuals on the legal team, because it is a team’.

A spokesperson for gunnercooke said: ‘We are acting for the joint liquidators (JLs) of Grosvenor Property Developers Limited in a case that is still ongoing. These are (civil) fraud proceedings where the JLs have been successful and obtained judgment in excess of £20m against four of the five respondents. In addition, the first respondent, Mr Sanjiv Varma, has been found guilty (to the criminal standard) of multiple contempts of court. The sentencing hearing for this is scheduled for September. The JLs were not successful against a fifth respondent, Mr Siddhant Varma, but will be applying for leave to appeal shortly.

‘So as to not prejudice the upcoming sentencing hearing or indeed the appeal, we cannot comment beyond the following: The judge of course considered the conduct of all parties when deciding the issue of costs. We note that our opponent’s application for indemnity costs was rejected by the judge and that standard-basis costs were awarded.’

Last month, another judge lamented a ‘significant general increase in hostility and aggressiveness in the conduct of disputes’ in the Commercial Court.

In Navigator Equities v Deripaska, Mr Justice Andrew Baker had said: ‘In the working generation of 30 years or so during which I have been engaged in commercial dispute resolution in this jurisdiction, principally in this court and in London arbitrations, there has been a significant general increase in hostility and aggressiveness in the conduct of disputes.

‘The taking of any and every point, good or bad, and other failures to display proper independence from the litigating client, is treated too often as if it were a normal or appropriate adjunct of well funded, hard fought, business disputes, particularly if there are issues of dishonesty involved.’