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Guidance from the High Court on when it will be appropriate to imprison for contempt of court

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Other

01-10-2018

 

Absolute Living Developments Limited (In Liquidation) v DS7 Limited, Andrew Camilleri and others [2018] EWHC 1717 (Ch)

Facts of the case

– The claimant (“Absolute”) was granted a freezing order against a number of parties.

– Mr Camilleri (“Mr C”), one of the respondents, admitted that he had breached the terms of the order on a number of occasions: by swearing a false affidavit and by failing to provide information and deliver up documents relating to his assets.

– Absolute made an application under CPR 81.10 to commit (imprison) Mr C.

– Mr C opposed the application on the basis that: (i) the application to commit in respect of certain of the breaches should be struck out under PD 81.16.1(2) as an abuse of process; and (ii) the other breaches were de minimis and did not therefore warrant punishment.

– The two issues for consideration were: (i) whether certain of the breaches were so trivial or technical that they should be struck out; and (ii) in respect of those that were not technical or trivial, what the appropriate penalty should be.

The decision

– In relation to the abuse of process argument, the judge, Mr Justice Marcus Smith, considered that where committal was disproportionate to the seriousness of the breach and its consequences, it would constitute an abuse of process.

– He therefore struck out the application in respect of one of the breaches because: (i) the time for compliance with the relevant term had been “too tight”; (ii) an (albeit tardy) extension of time had been sought; and (iii) the order had ultimately been complied with.

– However, Mr Justice Marcus Smith declined to strike out the other breaches in respect of which Mr C alleged abuse of process on the basis that the breaches were “altogether more substantial”.

– The remainder of the breaches, each of which had been admitted, were therefore considered for appropriate punishment, with Mr Justice Marcus Smith stressing that committal is a “last resort” to ensure compliance or punish the most serious breaches.

– He was satisfied that they merited only a fine since: (i) none of the breaches was ongoing; (ii) although more than technical (in the sense that Mr C knew he was breaching the order), the breaches fell short of being “contumelious”; (iii) there had been no prejudice to the claimant; and (iv) there was some evidence, whilst not a major factor, of Mr C’s ill health.

Analysis and practical advice

– For committal to be available, the court order to be enforced must meet the following procedural requirements:

– endorsement with a penal notice; and

– personal service on the respondent before expiry of the deadline by which he/she should have taken the relevant action in the order.

– Further, contempt can only be established if the order was clear and unambiguous and the actions constituting the breach were deliberate, i.e. the defendant’s conduct was intentional and that they knew of all the facts which made it a breach of the order, although is not necessary to prove that they appreciated that it did breach the order. The criminal standard of proof applies.

– In assessing whether the relevant contempt is serious enough to warrant a prison sentence, in addition to the factors identified above, the following will also be relevant:

– the importance of the order in question. Although all orders of the court should be obeyed, the breach of some will have more serious consequences than others; and

– the number of breaches of the order.

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