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How Serious Is It If A Court Order Is Not Complied With?

How Serious Is It If A Court Order Is Not Complied With?

Published: 28 June 2018

On 4 May 2018, husband and wife defendants were sentenced to 20 weeks’ imprisonment (suspended for 18 months) for breach of a freezing injunction – a stark reminder that court orders are to be respected and strictly complied with otherwise the consequences can be serious in the event of any breach.  Civil Courts have the power to impose custodial sentences for contempt of Court by anyone even if they are not a party to proceedings and sometimes, not even a fine can make things go away!

Fletcher Day’s Insolvency Department has recently been instructed to bring committal proceedings against two defendants for contempt of Court.

 

Factual Background

The two defendants concerned are husband and wife. Upon a claim being brought against them for £1.6million relating to their conduct as directors prior to their company entering liquidation, a freezing order was made against them in December 2016, after the couple sold their property in breach of an undertaking given to the claimant not to do so. The order was intended to stop them from removing funds and required them to disclose their assets. The couple ignored the order, transferred £50,000 to two of their friends and £70,000 to their sister-in-law. The £120,000 was also not mentioned in their affidavits disclosing their assets. The monies were later transferred back to the couple and dissipated.

The claimant applied for the defendants’ committal for three acts of contempt of Court:

  • The removal and dissipation of £50,000;
  • The removal and dissipation of £70,000; and
  • Failure to disclose the existence of the £120,000.

The defendants accepted fully that they were in contempt and returned to the UK from Greece (where they had moved) to face the committal proceedings. The application for committal was granted and both defendants were given a suspended sentence.

It is also interesting to note that as a general rule, an application of this serious nature should be served personally on the respondent. However, in this case, the claimant applied for service by email on the grounds that i) the couple were not living at the address which they had provided for service in the UK; and ii) previous correspondence with the couple had been by way of email. The claimant was permitted by the Court to serve the committal application by email to the defendants’ personal email addresses with no acknowledgement required.

Relevant factor which the Court took into account when sentencing

The Court observed that breaching a court order ‘strikes at the heart of the administration of justice’ and it has the power to commit in order to protect the administration of justice not only for the applicant but also for the public in general.

The defendants’ breaches were extremely serious and although the husband took full responsibility for the dissipation of the funds (and the wife was merely following his instructions), both of them were equally culpable. The Judge considered that the claimant was unlikely to recover the monies from them any time soon (or indeed at all) and as such a fine was not sufficient and so therefore the last resort of a prison sentence was considered the only way of achieving justice.

When deciding what sentences were appropriate, the Court considered that:

The husband

It was relevant that the husband had the ‘courage and honesty’ to return to the UK to face the proceedings and the possibility of imprisonment. He has also received an employment offer which may enable some amends to be made to the claimant.

Taking into account his guilty plea, he was sentenced to 20 weeks imprisonment on each of the three acts of contempt, to be served concurrently.

The Court further considered whether such sentence should be suspended – as it was unlikely that the contempt could be remedied. It was held that the husband’s ‘honesty’ in returning to the UK and his ‘genuine remorse’ tipped the balance in favour of suspension. As a result, his sentence was suspended for 18 months on the condition that there were no further breaches / offences.

The wife

Much of the Court’s observation on the husband applied to the wife on the basis that they were equally culpable. It was held by the Court that the wife was also otherwise a good character and ‘honest’ in facing up to the possibility of imprisonment. Without any sensible distinction between her circumstances and the husband’s, she was given the same suspended sentence.

As there are not many recent decisions, this case is expected to be of use as potential guidance when deciding on civil contempt sentencing. No doubt this will also bring attention as to the potential impact in an event that a court order was not complied with.

For further advice, or to discuss your cases generally, please contact Cory Bebb at cory@fletcherday.co.uk or on 01403 263535 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.