JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev

Sentencing for contempt serves punitive and coercive purposes. The court must assess prejudice, culpability, intention, mitigation, cooperation and the prospect of compliance. Serious and wilful dissipation of frozen assets may justify immediate imprisonment and the statutory maximum. Separate, unconnected breaches may attract consecutive terms, subject to the overall maximum and the totality principle. The maximum sentence for contempt on one occasion is two years under the Contempt of Court Act 1981. Later compliance may support an application to purge contempt and reduce the sentence, but does not remove punishment for past breaches.

The Applicants sought the committal of Sergei Pugachev for contempt. In the earlier liability judgment, [2016] EWHC 192 (Ch), the court found 12 of 17 alleged breaches proved. The present judgment concerned sentence and costs.

The breaches involved passports and departure from the jurisdiction, disposal of frozen assets, search and seizure orders, disclosure concerning EPK and Basterre monies, and false evidence. The central issues were the appropriate custodial terms, whether sentences should run concurrently or consecutively, the punitive and coercive elements of sentence, application of the totality principle, and costs.

1. Disposition and maximum. The court imposed an aggregate sentence of two years’ imprisonment for the 12 contempts. Under section 14(1) of the Contempt of Court Act 1981, the maximum for contempt on one occasion is two years. Villiers v Villiers [1994] 1 WLR 493 (CA) establishes that one occasion means the hearing at which sentence is imposed. The court also noted the entitlement to unconditional release after half the sentence under section 258 of the Criminal Justice Act 2003.
2. Sentencing principles. Following the guidance in Crystalmews Limited v Metterick [2006] EWHC 3087 (Ch) and Aspect Capital v Christensen [2010] EWHC 744 (Ch), the court considered prejudice and its remediability, pressure, deliberateness, culpability, conduct of others, appreciation of seriousness, cooperation, admissions, apology, frankness, and character. Imprisonment remains a last resort, and the term must be the minimum commensurate with the seriousness of the contempt.
3. Individual breaches. The passport and departure breaches attracted 21 days for the French passport breach, consecutively, and eight months each for leaving the jurisdiction and withholding another travel document, concurrently. The four disposal breaches attracted 12 months for the Petrovka-Rent shares, 24 months each for the Hediard proceeds and motor cars, and three months for the BIT claim proceeds. The sentences for those unconnected breaches were consecutive, subject to the two-year cap. The search-order breaches attracted four months and three weeks concurrently. The EPK/Basterre disclosure and false-evidence contempts attracted 20 months each concurrently. False evidence about lack of funds attracted ten months.
4. Assessment and totality. Continued participation in the proceedings mitigated the departure breach. The court rejected reliance on fear, family expenses, legal fees, and blame placed on advisers as substantial mitigation for the deliberate asset disposals and disclosure failures. Applying the totality principle, as described in S & A Conversions Ltd & Others (1988) 4 BCC 384, the aggregate sentence remained proportionate and was not reduced below the statutory maximum. A later court could consider reducing the sentence if contempt were purged by return, restoration of assets, or further disclosure.
5. Costs. Pugachev was ordered to pay 75 per cent of the Bank’s costs, assessed on the indemnity basis, with an interim payment of £375,000.

First-instance sentencing judgment. The court had previously determined liability in the same proceedings in [2016] EWHC 192 (Ch) , finding 12 of 17 breaches proved. This judgment imposed sentence and determined costs.