Crystal Mews Ltd v Metterick & Ors

A deliberate and knowing breach of a freezing order, intended to put assets beyond the order’s protection, is a serious contempt which may justify immediate imprisonment. The penalty both punishes defiance of the court and encourages compliance with the injunction.

Sentencing must be proportionate. The court should consider prejudice, the prospect of remedy, pressure from others, deliberateness, culpability, appreciation of seriousness and co-operation. Concurrent sentences are appropriate where several formulated contempts arise from the same act. A custodial term should be no longer than necessary, and suspension on conditions may be suitable where it can secure compliance or restoration.

Crystal Mews Ltd was subject to a Revenue claim concerning alleged missing-trader intra-community VAT fraud. After a winding-up petition and the appointment of a provisional liquidator, freezing orders were made against the company’s directors and later against Mrs Metterick.

Mr Metterick admitted four contempts arising from his encouragement of, and failure to prevent, the withdrawal of about €250,000 from Mrs Metterick’s Spanish account. Mrs Metterick had withdrawn those funds despite both orders and also admitted withdrawing £20,000 from a Nationwide account knowing of the second order. The court had previously found her contempt proved beyond reasonable doubt.

This hearing concerned the appropriate penalties and conditions following those admissions and findings.

1. The court directed committal orders of eight weeks for each defendant. Mr Metterick’s sentence was immediate. Mrs Metterick’s sentence was to be suspended for a period and on terms to be settled after argument, including repayment of £5,000 into the frozen account and monthly payments of £400.

2. The purpose of contempt sentencing is punitive and coercive. It punishes defiance of the court’s order and may secure the protection which the injunction was made to provide. Under Contempt of Court Act 1981, section 14(1), immediate custody is limited to two years. A custodial term must be as short as the circumstances permit. The court may also suspend custody, fine without a statutory maximum, or order sequestration.

3. Serious contumacious flouting of a court order warrants committal. The court found that both defendants deliberately acted with knowledge of the freezing orders. Their withdrawal of funds was specifically intended to undermine the orders. There was little prospect of restoring the loss caused by the Spanish-account withdrawal, and the late admissions attracted very little mitigation.

4. Mr Metterick was punished for the substance of his conduct, rather than separately for each formulation of breach. All four contempts arose from the same act, so the appropriate punishment was concurrent rather than consecutive.

5. Mrs Metterick’s instructions from Mr Metterick, her personal circumstances and the proposed family contribution towards restoring the £20,000 justified a different execution of the same custodial term. Suspension was directed towards both compliance with the freezing order and restoration of funds.

High Court proceedings: following a winding-up petition, a provisional liquidator obtained freezing orders. The court had already determined Mrs Metterick’s contempt in a judgment of 25 October 2006. This first-instance judgment determined the penalties for the contempts.