UK: Statements of Truth – Alternative Facts

To what extent can a statement of truth be signed when there are inconsistent sets of facts pleaded? This was the issue addressed in the case of Clarke (Executor of the Will of Francis Bacon) v Marlborough Fine Art (London) Limited and Marlborough International Fine Art Establishment [2002] 1 WLR 1731. 

Mr Justice Patten found that, in certain circumstances, inconsistent sets of facts could be pleaded within a claim. Patten J held in relation to Part 22 of the Civil Procedure Rules (CPR) that those signing particulars of claim could plead the inconsistent facts in the alternative if they did not have personal knowledge of the relevant matter, provided there was plausible evidence to support both alternatives.

The purpose of CPR Part 22 is that by requiring a party to verify the factual content of his statement of case, claims in which the party could not maintain an honest belief would be eliminated. Proceedings for contempt of court may be brought against a party making a false statement (CPR 32.14).

In this case, the claimant had sought permission to further amend the particulars of claim to introduce a plea which was inconsistent with one of the existing claims.

In October 1958, the artist Francis Bacon entered into an agreement with Marlborough Fine Arts Limited (Old Marlborough) for a period of ten years, with an option to terminate in 1963 (the 1958 Agreement). The agreement provided for the acquisition by Old Marlborough of a specified number of Bacon’s paintings and gave them the sole right worldwide to sell and authorise the sale of artistic works by Bacon. Bacon terminated the agreement in 1963, but he continued to sell his paintings through Marlborough (in its various entities, including the first and second defendants) until his death in 1992.

The original version of the particulars of claim alleged that the 1958 agreement gave rise to fiduciary duties on the part of Old Marlborough and that an essentially contractual arrangement continued after the introduction of the first defendant (a successor to Old Marlborough) in 1968. This arrangement was alleged to comprise an exclusive sales agency for Bacon’s works and an agreement made by conduct under which the first defendant would provide management and other services for Bacon. In the alternative, it was pleaded that even if there was no underlying agency relationship or contractual agreement for management services, there was nonetheless a de facto relationship of trust and confidence between Bacon and the defendants under which Bacon relied on them to act in his best interest. 

The particulars of claim were then amended to remove any allegation of a contractual relationship after 1964 and to remove references to the alleged contract in respect of management services. The revised particulars of claim therefore focused on alleging a fiduciary relationship between Bacon and the defendants. Under that relationship, the defendants were under a duty not to put themselves in a position of conflict between their personal interests and their duties to Bacon, a duty not to profit from Bacon without his fully informed consent and a duty to account to Bacon for all their dealings in respect of his work and all monies received by them in respect of his paintings. 

The underlying claim therefore relied upon allegations of breach of fiduciary duty and presumed undue influence as the basis for seeking compensation and other relief from the defendants in respect of their dealings with Bacon’s art.

The claimant then sought to further amend the particulars of claim to plead actual, as well as presumed, undue influence. In summary, the proposed further amendments alleged that in March 1978 Bacon informed Frank Lloyd of Marlborough of his intention to sever his ties with Marlborough and instead be represented by a rival gallery. The claimant alleged that Lloyd’s response was to tell Bacon that if he left Marlborough, he would have problems obtaining access to funds belonging to him which Marlborough had paid into Bacon’s Swiss bank account, and Bacon would be "exposed to the English tax authorities". Bacon then wrote to the rival gallery informing them that he had decided not to change his gallery and was remaining with Marlborough.

The defendants objected to the proposed amendments on grounds which included inconsistency, arguing that the claimant could not advance, as part of a unified claim, allegations that Bacon lived under threat from Marlborough of exposure of his tax affairs, yet maintained in Marlborough trust and confidence that they would continue to give him a fair deal. The threats, if made, would have destroyed any belief by Bacon that Marlborough was continuing to act in his best interests. They argued that by applying CPR Part 22, the amendments should be refused.

Patten J did not accept the claimant’s submission that no factual inconsistency existed between the claims of presumed undue influence and actual undue influence in this case. He accepted that actual and presumed undue influence may co-exist in a particular relationship, but he found that in this case they were mutually contradictory and the amendment could not be allowed in its current form. However, the judge considered that it was open for the claimant to plead both presumed and actual undue influence in the alternative, rather than in one unified claim.

The judge held that CPR Part 22 was not designed to exclude the possibility of pleading inconsistent factual alternatives, but rather to prohibit dishonest or opportunistic claims. It was also to discourage cases which are unsupported by evidence but put forward in the hope that something might turn up on disclosure or at trial. If an alternative set of facts is clearly pleaded as such, then the claimant is not necessarily stating that he believes both sets of facts are true. The claimant in this case is affirming his honest belief that, in this case, on the basis of either one set of facts or the other, Bacon was the subject of undue influence in his dealings with the defendants.

Whilst it is unusual to plead facts which are inconsistent, it does occur. It is especially the case in situations where the claimant, or signatory of the statement of truth, is an executor or a liquidator of a company, as they are often looking back at events of which they have no personal knowledge, and trying to assemble a claim from the facts. In such cases, they may need to plead alternative sets of facts, and the statement of truth will then be a declaration that they believe one of the sets of facts to be true. It is for the court to decide which set of facts this is.

This decision will give comfort to those putting their name to statements of case where there are claims arising out of matters which have been pleaded on inconsistent facts. This may include lawyers, insurers, in-house counsel, as well as executors or liquidators. What is clear, however, is that the courts will not allow this to undermine CPR Part 22 and its strict requirements for the maker of the statement of truth to have an honest belief in the facts stated in the document.

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