Discovery Land Company, LLC & Ors v Jirehouse (A Body Corporate) & Ors

Failure to comply with an undertaking is contempt where the contemnor deliberately gives an unqualified undertaking knowing that compliance is impossible, or is reckless as to whether it is possible. A subsequent hope that a third party may provide funds does not excuse the breach.

For disclosure obligations, the claimant must prove that the required act was not done in time, that the respondent intended not to do it, and that the respondent knew the facts making the omission a breach. Disclosure must be complete, accurate and verified to the best of the respondent’s ability. A respondent cannot purge contempt by withholding material information subject to use restrictions or without affidavit verification.

The first claimant applied to commit the seventh defendant, Mr Stephen Jones, for contempt of court. The alleged contempt concerned personal undertakings given on 15 March 2019 and disclosure obligations imposed on Jirehouse by orders made on 15 and 18 March 2019.

The undertakings required payment into court of approximately US$9.3 million and procurement of repayment of sums drawn under the Dragonfly Facility. The disclosure obligations required information about the location and use of those funds. Mr Jones accepted that the payment undertakings had not been performed and that his disclosure was incomplete. The issues were whether the breaches were deliberate, whether impossibility or the Debtors Act 1869 prevented committal, and whether later material had purged the contempt.

1. Contempt established. The court found Grounds A1, A2, B3 and B4 proved to the criminal standard. Mr Jones breached both payment undertakings and deliberately failed to provide material information required by the disclosure obligations.
2. For breach of an undertaking requiring an act, the claimant had to prove that the act was not done within the required time, that the respondent intended not to do it, and that he knew the facts making the omission a breach. The same principles applied to the disclosure obligations.
3. Mr Jones knew that the funds were not held in the accounts described to the court when he gave the undertakings. His hope that another client or a third party might provide replacement funds did not alter the meaning of the undertakings or excuse non-compliance. An undertaking given knowing that compliance is impossible, or recklessly concealing that performance depends on others, may found contempt.
4. The court distinguished a case where performance subsequently proves impossible from one where the undertaking was given with knowledge, or reckless disregard, that it could not be performed. The undertakings were construed as requiring transfer of the particular funds represented to be available in the Hambros accounts.
5. Mr Jones’s affidavits were incomplete and misleading. They omitted the borrowers, payment dates, destination accounts and loan terms, and failed fully to explain the use of the Dragonfly Facility monies. The court was sure that he knew, or at least had the means of discovering, that information. His refusal to submit to cross-examination supported adverse inferences because a strong evidential case requiring an answer had first been established.
6. Later documents supplied on a without-prejudice or restricted-confidentiality basis did not purge the contempt. The information was not verified by affidavit and could not be used fully to trace or preserve the claimant’s funds.
7. The Debtors Act 1869 did not prevent committal. Properly construed, the undertaking concerning the Dragonfly Facility required procurement of transfer of identified funds, not payment of Mr Jones’s own debt. In any event, the fiduciary exception in section 4 would have applied.

First-instance decision. No appellate history is stated in the judgment.