Otkritie International Investment Management Ltd & Ors v Gersamia & Anor

A custodial sentence is ordinarily appropriate for serious, deliberate and contumacious breaches of freezing and disclosure orders. Sentence depends principally on culpability, harm and personal mitigation. Prolonged dissipation, concealment, false disclosure and continuing non-compliance justify a sentence near the statutory maximum.

An early admission may attract a reduction comparable to that allowed for a guilty plea. The court may suspend committal to secure compliance, but suspension remains discretionary. An alleged contempt must be proved to the criminal standard. A prior judgment against other parties creates no issue estoppel and its judicial opinions are not themselves admissible, although the court may use recorded primary facts to reach its own conclusions.

The applicants brought two committal applications arising from litigation in which freezing and proprietary injunctions had been made. Mr Gersamia admitted deliberate breaches involving dissipation of restrained assets and prolonged failures to provide truthful asset disclosure. The hearing concerning him was confined to sanction.

Mrs Jemai did not participate. The applicants alleged that she knowingly verified false disclosure and statements of case, concealed relevant documents, and persistently refused to comply with asset-disclosure obligations under freezing orders. The court also considered retrospective permission under the Civil Procedure Rules 1998 and whether findings recorded in an earlier judgment could be used against a person who had not been a party to that judgment.

The central questions were whether Mrs Jemai’s contempts were proved beyond reasonable doubt and what committal sentences were proportionate for each respondent.

1. Mr Gersamia: The admitted contempts were established. Ground 1, viewed alone, would not have justified custody because the sums were comparatively small. The remaining breaches were extremely serious. They involved deliberate and repeated dissipation of substantial restrained funds, concealment through third parties, dishonest use of fraud proceeds, false information and prolonged non-disclosure. The conduct demonstrated persistent and ingrained non-compliance rather than an isolated lapse of judgment.

2. Culpability and harm were the principal sentencing considerations. A starting point of 20 months’ imprisonment was appropriate. The limited mitigation justified a two-month reduction. A further one-third reduction was allowed because the contempts had been admitted at the earliest opportunity. The resulting sentence was 12 months’ imprisonment.

3. Suspension was discretionary. The court was reluctant to suspend because Mr Gersamia had long had an opportunity to restore the money and had produced no evidence explaining how repayment would be achieved. Nevertheless, because the applicants raised no objection in principle, the sentence was suspended on condition that US$3.1 million be repaid within 120 days.

4. Mrs Jemai: Permission to pursue the relevant allegations was granted retrospectively under rule 81.10(4) of the Civil Procedure Rules 1998, with liberty to apply to set the order aside. Her deliberate decision not to participate did not require a further adjournment.

5. The applicants had to prove each contempt to the criminal standard. The earlier trial judgment created no issue estoppel because Mrs Jemai had not been a party, and its opinions were not themselves admissible under Hollington v Hewthorn [1943] KB 587. The court could, however, consider the primary facts recorded there and independently reach the same conclusions.

6. The evidence proved beyond reasonable doubt that Mrs Jemai knowingly verified false disclosure and statements of case, concealed relevant documents, and persistently disobeyed the freezing orders. Her contempts were deliberate, prolonged and dishonest. She had made no admission, apology or amends and continued to flout the orders. A sentence of 20 months’ imprisonment was imposed.

• Commercial Court: The underlying trial resulted in judgment in [2014] EWHC 191 (Comm).
• Commercial Court: Permission to pursue two earlier grounds of contempt against Mr Gersamia was granted in [2014] EWHC 4489 (Comm). Those grounds were subsequently abandoned.