Flogas Britain Ltd v Attock Metal & LPG Ltd & Anor

Contempt for breach of a court undertaking requires proof beyond reasonable doubt that the defendant had notice of the undertaking, performed a prohibited act or omitted a required act, intended that conduct, and knew the facts making it a breach. The prohibited act must be deliberate, although an intention to flout the court’s order is unnecessary. A company director may be personally responsible where the breach was carried out with his knowledge and approval, particularly where he was the company’s guiding mind and had given instructions intended to prevent the conduct. The court found both corporate and individual contempt established on that basis.

The claimant supplied LPG in cylinders that remained its property. In 2014 the defendants gave undertakings to the court not to deal in the claimant’s cylinders. After test purchases in November 2017 showed employees filling such cylinders, the claimant applied to commit both defendants for contempt.

The defendants accepted that the transactions were prima facie breaches, but disputed the second defendant’s understanding of the undertakings and his responsibility for the employees’ conduct. The central issues were whether the undertakings had been knowingly accepted and whether both defendants were responsible for the later acts.

1. Applicable standard. The claimant bore the burden of proving each alleged breach beyond reasonable doubt. Applying the summary in Farnsworth v Lacy and others [2013] EWHC 3487 (Ch) at [20], the necessary matters were notice of the order, conduct prohibited by it or omission of required conduct, intention to perform the act or omission, and knowledge of the facts constituting the breach. The act had to be deliberate, but an intention to flout the order was unnecessary.
2. Knowledge and understanding. Although the second defendant had poor English and limited literacy, he understood that formal litigation concerned his businesses, that the claimant objected to the filling of its cylinders, and that the activity had to stop. His correspondence, signature of the undertakings, and instructions to employees demonstrated knowledge of both the undertakings and the penal notice.
3. Responsibility for the breaches. Employees of the first defendant filled the claimant’s cylinders on 3 and 24 November 2017. The transactions appeared routine. The second defendant was the company’s director and guiding mind, was closely involved in its operation, and had previously instructed employees not to breach the undertakings. The court concluded beyond reasonable doubt that the filling was carried out with his knowledge and approval. Both defendants therefore committed contemptuous breaches of the undertaking.
4. Penalty. The contempts were serious and committed for financial gain. The question of penalty was adjourned for further submissions. The court directed attention to the principles summarised in Crystalmews Limited v Metterick [2006] EWHC 3087 at [8] and [13].