ABC & Ors v CDE & Ors

Contempt for breach of a freezing order must be proved by the applicant to the criminal standard. Documentary evidence may establish a prima facie breach requiring explanation, but the ultimate burden remains on the applicant.

A serious contempt may justify imprisonment while still permitting a coercive approach and suspension of the sentence. Any suspension must be defined and time-limited. It cannot be linked indefinitely to the outcome of substantive proceedings, because the effect of an earlier contempt may survive the end of the freezing order. Non-compliance does not automatically activate the sentence; the court must reconsider the matter on a further application.

Teare J found that the first defendant had committed five breaches of a worldwide freezing order concerning a property in Riga. He imposed a 12-month sentence of imprisonment, suspended until the conclusion of the substantive proceedings or further order, and required periodic reports concerning steps taken to purge the contempt.

The defendant appealed against the finding of contempt. The claimant appealed against the sentence as wrong in principle and unduly lenient, arguing that the sentence should have been immediately effective or that suspension should have been refused. The central issues were whether the finding was properly made on inferential evidence and whether the terms of suspension were lawful.

Disposition. Lloyd LJ, with Moore-Bick and Ward LJJ agreeing, dismissed the defendant’s cross-appeal and allowed the claimant’s appeal in part. The finding of contempt was upheld, but the terms of suspension were replaced.

1. Proof of contempt. The burden remained on the claimant and the criminal standard of proof applied. The documents in the Latvian proceedings showed a prima facie alienation of the property. The defendant therefore had to explain the apparent transactions and distance himself from the proceedings, but this did not reverse the legal burden of proof. The judge was entitled to assess each evidential issue separately and then reach a conclusion on the evidence as a whole.
2. Nature of the sanction. Contempt sanctions may contain both punitive and coercive elements. The seriousness of the contempt required a custodial sentence, but it was not wrong in principle to give greater weight to coercion and suspend the sentence. The distinction drawn in Lightfoot v Lightfoot [1989] 1 FLR 414 between punishment and coercion was relevant, but did not require immediate imprisonment in every serious case.
3. Suspension. The judge’s open-ended suspension, linked to the conclusion of the substantive proceedings, was illogical and outside the proper exercise of discretion. The contempt did not disappear merely because the underlying claim failed or the freezing order ended. If suspension was chosen, it should operate for stated periods and be conditional on defined remedial steps by the contemnor.
4. Substituted order. The 12-month sentence was suspended first until 14 May 2010, conditional on retransferring the first half-share to the defendant. It was then suspended until 18 June 2010, conditional on removing the pledge over the other half. If both conditions were met, suspension continued for a further 12 months. Failure to comply would not automatically activate the sentence. A further application would be required, on which the court would consider all circumstances then existing. Permission to apply was given, with further applications to be made to the Commercial Court.

• Court of Appeal (Civil Division) — In [2010] EWCA Civ 533, the court upheld the contempt finding, allowed the claimant’s appeal to the extent of substituting defined and staged suspension terms, and dismissed the defendant’s cross-appeal.
• Queen’s Bench Division — Teare J found five breaches of the freezing order and imposed a 12-month custodial sentence suspended until the conclusion of the substantive proceedings or further order.