Templeton Insurance Ltd v Motorcare Warranties Ltd & Ors

A person who is not expressly restrained by a freezing injunction may be committed for contempt where his conduct deliberately interferes with, or assists or permits breach of, the injunction. The necessary intention is an intention to interfere with or impede the administration of justice; it is not necessary to prove that the person believed his conduct breached the order where liability arises under the general law applicable to the restrained party.

A company director who knows of an order against the company has a duty to take reasonable steps to ensure compliance. Wilful failure to do so may constitute contempt. Goodwill, including established connections with agents, dealers and customers, is an asset capable of falling within a freezing injunction.

The claimant obtained a freezing injunction against Motorcare, an insurance intermediary, and against two individuals connected with it. The order restrained Motorcare from disposing of, dealing with or diminishing the value of its assets, including the property and assets of its business.

Shortly afterwards, Motorcare Elite was incorporated. The claimant alleged that the defendants transferred Motorcare’s business and goodwill to Motorcare Elite, including its agent network, website, premises, telephone number and email address. The application sought committal of Anthony Thomas and Harbinder Panesar for contempt. The central issues were whether the conduct breached the injunction, whether the individuals had the requisite intention, and whether Panesar was additionally liable as a director of Motorcare.

1. Contempt by third parties. The court adopted the principles summarised in Masri v Consolidated Contractors Intl Co SAL & Ors [2011] EWHC 1024 (Comm). A stranger to an order is liable where his act constitutes wilful interference with the administration of justice and he intends to interfere with or impede it. That intention may be inferred from the circumstances and must be proved to the criminal standard.
2. Directors of restrained companies. The court rejected both the submission that a director automatically stood in the same position as the company and the submission that a director could never be liable without satisfying the general law. Following A-G of Tuvalu v Philatelic Distribution Corp Ltd [1990] 1 WLR 926, a director aware of an order against the company must take reasonable steps to secure compliance. Wilful failure to do so may constitute contempt.
3. Goodwill. Applying Darashah & Or v UFAC (UK) Limited & Or [1982] WL 222281, goodwill was an asset within the freezing injunction. It included the established connections between Motorcare and its agents and dealers. The transfer of those connections, the website arrangements, and the use of Motorcare’s premises, telephone number and email address amounted to dealing with or disposing of Motorcare’s assets.
4. The court found that both defendants knowingly participated in establishing and operating Motorcare Elite outside the purview of the injunction. Their conduct was intended to interfere with the injunction and impede the administration of justice. Panesar was also in contempt in his capacity as director because he wilfully failed to take reasonable steps to ensure compliance.
5. The defendants were found in contempt of court. Sentencing was adjourned, with all options remaining open, including imprisonment. Counsel were directed to agree a draft order, including costs.