Lexi Holdings Plc v Shaid Luqman & Ors

In committal proceedings, the applicant must prove each alleged contempt beyond reasonable doubt and must identify the allegation clearly in the pleaded grounds. The court must confine the committal hearing to the alleged breaches, while allowing sufficient regard to the surrounding context. A respondent subject to freezing, disclosure and preservation orders must comply promptly and fully; disagreement with an order is addressed by seeking variation, discharge or appeal, not by disobedience. Where an order requires asset disclosure subject to a minimum-value exception, the respondent bears an evidential burden of producing credible evidence capable of establishing that the exception applies. Civil contempt may attract both punitive and coercive imprisonment, but the maximum sentence is reserved for the most serious cases.

Lexi Holdings Plc applied to commit Shaid Luqman for contempt arising from alleged breaches of worldwide freezing, asset-disclosure, tracing-disclosure, document-preservation and passport orders made in November 2006. The proceedings arose in the context of the company’s administration and allegations of substantial misappropriation and destruction of records. The principal issues were whether Mr Luqman had failed to disclose beneficial interests and assets, whether he had dealt with frozen property after service of the order, whether his tracing information was false or incomplete, whether he had preserved and disclosed documents, and whether he had delayed surrendering his passports.

1. Disposition. The court found beyond reasonable doubt that Mr Luqman had committed serious breaches of the asset-disclosure, tracing-disclosure, document-preservation and passport orders, and had breached the freezing order by permitting a mortgage over the Marbella property to proceed after service. The allegations concerning departure from the jurisdiction and pre-service dealings with the Marbella property were not made out.
2. A committal application is quasi-criminal. The criminal standard applies, and the applicant must be held to the pleaded grounds. Allegations of prior knowledge of an order cannot be introduced indirectly where they have not been fairly pleaded.
3. The court found that Mr Luqman beneficially owned Imaan and the properties held under declarations of trust. Those interests were assets requiring disclosure. His evidence did not establish that the assets fell within a minimum-value exception. The respondent bears an evidential burden of producing credible evidence capable of supporting that exception.
4. The UNB account belonged to Lexi Holdings Plc. The contrary explanation in Mr Luqman’s affidavit was false. The alleged repayments to Mr Cheema were also found to be false, although those findings were later stated to be provisional pending an application to adduce new evidence.
5. The mortgage of the Marbella property was a dealing with frozen property through an agent. Failure to revoke the power of attorney permitted the transaction to proceed and constituted a breach, even though the loan proceeds had largely been dealt with before service.
6. Freezing and ancillary disclosure orders are vital in fraud investigations. A person who considers such an order wrong must apply promptly for variation or discharge, or appeal. The court imposed an immediate sentence of 18 months, with shorter concurrent terms for the individual breaches. The sentence was both punitive and coercive.