Farnsworth v Lacy And Ors

Committal for contempt requires proof to the criminal standard of a deliberate breach of an unambiguous court order by a person who knew the facts making the conduct a breach. An intention to breach is unnecessary, although an intention to flout the order is relevant to sanction.

The absence of a penal notice does not prevent enforcement where the court may waive the formal requirement and the applicant proves that the respondent suffered no injustice. Actual knowledge, legal advice and an admission of the consequences of breach may establish that conclusion. In sentencing, the court assesses prejudice by reference to the term breached, and serious, deliberate and contumacious disobedience may justify immediate custody, even if suspended.

The claimants applied to commit the first and fourth defendants for contempt and to fine or sequester the assets of the third defendant. The application concerned breaches of a consent order which prohibited the first defendant, pending a further hearing, from working for a competing business, in particular the third defendant.

The first defendant nevertheless worked for the third defendant at the fourth defendant’s behest. The defendants admitted that they understood the prohibition and deliberately acted contrary to it, but relied on commercial pressure arising from an audit crisis at the third defendant’s business. The court also had to address the absence of a penal notice on the consent order and the uncertain definition of the “Return Date”.

1. The committal application was granted. Proudman J was sure that the first defendant’s work for the third defendant, procured by the fourth defendant, breached the consent order. The order was sufficiently unambiguous in the circumstances. Although “Return Date” was not expressly defined, both defendants understood it to mean the adjourned hearing date and understood precisely what conduct was prohibited.

2. Committal required proof beyond reasonable doubt of an unambiguous order, deliberate conduct contrary to it, and knowledge of the facts making that conduct a breach. The respondents admitted those matters. Their work was deliberate, not inadvertent. An intention to commit contempt was unnecessary, although their deliberate decision to disregard the order was highly relevant to penalty.

3. The new terms of the consent order had no penal notice. The judge doubted that they were an undertaking to the court, rather than agreed contractual terms. In any event, the court could waive the relevant formal requirements if the applicant established absence of injustice. That requirement was met: the respondents had legal advice, knew breach could lead to committal, and did not rely on the lack of a penal notice.

4. The commercial pressure on the third defendant did not excuse the breach. The respondents did not seek a variation from the court and deliberately concealed the first defendant’s work. Potential prejudice was assessed by reference to the prohibition actually breached. The first defendant was using expertise acquired from the claimants to assist a competitor, even though use of confidential information had not been proved.

5. Applying the sentencing considerations stated in Crystalmews Limited v. Metterick and Ors [2006] EWHC 3087 (Ch), the court treated the admissions, apology, cooperation, good character and pressure as mitigation. But the early, deliberate and contumacious breach required custody. Each of the first and fourth defendants received six months’ imprisonment, suspended for 18 months conditional on future compliance with court orders. Sequestration against the third defendant was inappropriate; it was fined £15,000.

High Court (Chancery Division): First-instance committal application. Earlier in the proceedings Henderson J made an order restraining the defendants from dealing with confidential information. The parties subsequently agreed the consent order. Hildyard J later determined, as a preliminary issue, that the first defendant’s restrictive covenant was binding. This judgment determined only contempt arising from breach of the consent order.