Templeton v Motorcare Warranties & Ors

A deliberate and substantial breach of a freezing injunction is a serious contempt because it interferes with the administration of justice and may justify immediate imprisonment. The court must impose the shortest sentence consistent with the circumstances. It must assess the seriousness and duration of the breach, the contemnor’s role, the harm or intended benefit, mitigation, compliance, remorse and the practical effectiveness of a fine or suspended sentence. Unquantified harm does not prevent imprisonment where the breach is otherwise substantial. Family-life consequences under article 8 are relevant mitigation, but do not preclude custody where imprisonment is proportionate and necessary.

Following earlier judgments establishing substantial underpayment and fraudulent misrepresentation, the claimant obtained freezing injunctions against Motorcare, Mr Thomas and Mr Panesar. The court subsequently found both individuals in contempt for conduct involving the establishment of Motorcare Elite and the transfer of Motorcare’s business and goodwill in breach of the injunctions.

This hearing concerned sanction only. The court considered whether imprisonment was appropriate, the significance of the absence of evidence quantifying financial harm, the defendants’ roles and mitigation, the availability of a fine or suspended sentence, and the impact of imprisonment on family life.

1. Nature and seriousness of the contempt. A freezing injunction is an important instrument of the administration of justice. Deliberate and substantial breach is particularly serious, even where the evidence does not establish the precise monetary loss or prove dissipation of physical assets. The defendants’ conduct was prolonged, wilful and intended to obtain financial benefit and divert funds potentially available to satisfy the claimant’s claims.
2. Relevant sentencing considerations. The court must focus on the contempt, not punish the underlying fraud. It must consider the defendants’ respective roles, the seriousness and duration of the breach, the harm or intended benefit, prior character, remorse, attempts to purge the contempt, personal mitigation and the effectiveness of alternative sanctions.
3. Custody and alternatives. A fine is not necessarily justified merely because the contemnor cannot pay it. A suspended sentence may be appropriate to encourage future compliance or permit purging of contempt, but was unsuitable here because the litigation was over and there was no realistic future compliance to secure. Any custodial sentence must be as short as possible consistent with the circumstances.
4. Human rights and mitigation. The severe impact on both families, including the article 8 family-life interests relied upon, had to be taken into account. It did not prevent immediate custody where the public interest in securing compliance with court orders made imprisonment proportionate.
5. Orders. Mr Panesar’s central role warranted 12 months’ custody before mitigation, reduced to nine months. Mr Thomas’s lesser role warranted six months, reduced to four months. Each was entitled to unconditional release after serving half the sentence.

Not an appeal. The judgment records earlier findings of liability, quantum and contempt in the same proceedings, but no appellate decision.