JSC BTA Bank v Stepanov

A court may determine a committal application in an absent defendant’s case only in rare and exceptional circumstances. It must exercise great care, give prime importance to fairness, and consider whether the absence is deliberate, whether an adjournment would secure attendance, the disadvantage to the defendant, and the public interest in timely enforcement.

Contempt must be proved to the criminal standard. A continuing and wilful refusal to obey an order may justify a coercive sentence of up to two years’ imprisonment. That maximum is not automatic, and the contemnor may seek release by complying with the order and purging the contempt.

The bank obtained judgment for a substantial debt and two injunctions requiring the defendant to disclose information about his assets and certain corporate disposals. After substituted service, the defendant supplied none of the ordered information. He also failed to attend the committal hearing, having withdrawn instructions from his solicitors.

The court had to decide whether it should hear the committal application in his absence, whether contempt was proved to the criminal standard, and what sentence was appropriate for the continuing breach.

1. The application would be heard in the defendant’s absence. Committal proceedings are quasi-criminal and constitute criminal proceedings for the purposes of Article 6 of the European Convention on Human Rights. The discretion to proceed without the defendant therefore had to be exercised with great care and only in an exceptional case. Fairness to the defendant remained of prime importance, although the court could also consider fairness to the applicant and the public interest.

   The defendant knew of the application and had enjoyed an opportunity to make representations with the assistance of experienced solicitors. His absence was deliberate and voluntary. He had waived representation at the hearing, although not his right to a fair hearing. An adjournment was unlikely to secure his attendance because he resided in Russia, and might postpone the matter for a prolonged period. The alleged breaches were simple, documentary instances of total non-compliance, so proceeding without him created no real risk of an improper conclusion. The public interest in enforcing court orders also weighed against allowing deliberate absence to postpone the determination indefinitely: Lamb v Lamb [1983] FLR 278, R v Jones (Anthony) [2002] UKHL 5, [2003] 1 AC 1, and R v Hayward [2001] QB 862 applied.

2. Contempt was proved. The criminal standard of proof applied. The affidavit evidence established complete non-compliance with the disclosure requirements. No information had been provided despite earlier assurances from the defendant’s solicitors. The court was sure that the defendant had breached the orders as alleged.

3. A two-year coercive sentence was appropriate. Sentences for contempt may be punitive or coercive. A sentence for a continuing refusal to obey an order contains a punitive element but may also seek to secure compliance. Continuing and wilful defiance may justify the statutory maximum of two years, although the maximum is not automatic and proportionality depends on the particular circumstances: Lightfoot v Lightfoot [1989] FLR 414 applied.

   The disobedience was flagrant, wholly unexplained and connected with orders supporting enforcement of a very substantial judgment debt. The defendant had withdrawn instructions from experienced solicitors after service of the committal proceedings and had made no effort to participate. The court ordered two years’ imprisonment, expressly permitting the defendant to apply to vary or discharge the order by complying and purging his contempt.

This was a first-instance committal application arising from earlier orders in the same proceedings. Summary judgment had been entered against the defendant on 14 October 2009. Two injunctions made that day imposed disclosure obligations. Further orders dated 19 February 2010 authorised substituted service and extended the time for compliance. An order dated 9 March 2010 dispensed with personal service of the committal application.