Cherwayko v Cherwayko (No 3) (contempt in financial remedy proceedings and costs)

In financial remedy proceedings, repeated and deliberate breaches of orders for attendance and disclosure, together with destruction of security given by undertaking, may justify immediate imprisonment. The court must assess the contempts separately, while considering totality and whether terms should run concurrently or consecutively. A custodial term is not required to be suspended merely because suspension might encourage compliance. The court must consider the context, the objectives of punishment and coercion, aggravating and mitigating factors, parallel proceedings and the statutory maximum. Exceptional conduct in bringing and defending committal proceedings, including deliberate frustration of enforcement and lack of transparency, may justify indemnity costs.

The applicant sought enforcement and committal orders against the respondent in financial remedy proceedings. The respondent had failed to attend court and provide ordered information and documentation. He had also breached an undertaking requiring shares to be held as security for lump-sum obligations by obtaining replacement certificates and realising the shares.

The respondent relied on alleged financial difficulties, inability to obtain legal advice, business and medical commitments, proposed future payments and the prospect that imprisonment would impair payment. The court considered the seriousness of the contempts, whether imprisonment should be immediate, the structure of any custodial terms, and the appropriate costs order.

1. Contempt and sentence. The respondent was found guilty beyond reasonable doubt of two breaches concerning attendance and disclosure, and of breaching his undertaking concerning the shares. The breaches were deliberate, grave and substantially frustrated the applicant’s ability to enforce the financial remedy order.
2. The sentencing exercise required consideration of whether imprisonment was necessary, the available alternatives, the objectives of punishment and securing compliance, the two-year maximum, suspension, totality, concurrent or consecutive terms, parallel proceedings and the need to explain the reasons for the sentence. A term could be immediate even on a first breach.
3. The respondent’s assertions were untested because of his non-attendance and were unsupported by reliable documentation. His failure to disclose the realisation of the shares, his repeated non-compliance, obstructiveness, lack of transparency and absence of genuine contrition aggravated the contempts. The earlier suspended sentence had not secured compliance.
4. Each breach of the attendance and disclosure orders merited nine months’ imprisonment, to be served concurrently and immediately. The breach of the undertaking was more serious and merited twelve months, to be served consecutively. The total sentence was therefore thirty months, subject to the usual possibility of release after serving half the term and the ability to apply to purge the contempt.
5. A fine or requisition of property was unrealistic because the respondent was outside the jurisdiction and his assets could not readily be traced. The seriousness of financial contempts was not reduced because the underlying obligations concerned money rather than physical harm.
6. The respondent’s conduct, both before and during the proceedings, was exceptional and unreasonable. The applicant had been required to bring necessary enforcement proceedings as a direct consequence of that conduct. An order for the applicant’s costs on the indemnity basis was therefore inevitable, although summary assessment was deferred pending a response on quantum.