Podstreshnyy v Pericles Properties Ltd & Anor

A freezing order requiring immediate disclosure of assets creates a separate breach when the required information is not provided in respect of each order. The court may dispense retrospectively with personal service where the respondent undoubtedly received the order and no injustice results. Contempt involving deliberate breaches of freezing and disclosure orders is particularly serious. Imprisonment remains a last resort and must be for the shortest necessary period, but immediate custody will normally be required where the breaches are serious, deliberate and prejudicial. Mitigation, including family responsibilities and later disclosure, must be weighed against the public interest in enforcing court orders and deterring contempt.

The claimant sought the committal of the second defendant, who had operated an estate agency through the first defendant. The underlying claim concerned rent said to have been received and held on trust for the claimant.

Freezing orders made by Nugee J and continued by Barling J required disclosure of assets and imposed restrictions on expenditure. The second defendant failed to comply, including by withholding information about properties, bank accounts, income and expenditure. She admitted three grounds of contempt concerning disclosure and living expenses. The court considered whether procedural defects prevented committal, the seriousness of the breaches, mitigation arising from her children and later disclosure, and the appropriate sentence.

1. Procedural requirements. The orders had not been personally served. The court nevertheless dispensed with personal service under CPR 81.8(2), having concluded that the second defendant undoubtedly received the orders, understood their requirements and had made herself unavailable for personal service. The court also relied on paragraph 16.2 of Practice Direction 81, since no injustice had been caused.
2. Breaches. The second defendant breached the disclosure requirements personally and as a director of the first defendant. Each order required information to be provided immediately. Failure to comply therefore constituted a separate breach of each order: Solicitor General v Jones [2014] 1 FLR 852 at [20]. The admitted breaches concerned non-disclosure of assets and information about expenditure. The court proceeded only on those grounds.
3. Seriousness and sentence. The breaches were deliberate, prolonged and calculated. They involved substantial withdrawals, undisclosed accounts and properties, and conduct capable of frustrating the freezing orders and prejudicing the claimant. A contempt sentence serves to punish, uphold the authority of the court, deter others and, where appropriate, encourage compliance. Imprisonment is a last resort and must be for the shortest necessary period, but breaches of freezing orders are particularly serious. The guidance in JSC BTA Bank v Solodchenko [2011] EWCA Civ 1241 supported the conclusion that immediate custody was normally required.
4. Mitigation. Later disclosure, an admission, an apology, limited evidence of poor advice, attendance at hearings and the effect on the defendant’s dependent son were taken into account. The family-life interests engaged by custody had to be considered proportionately, applying R v Petherick [2012] EWCA Crim 2214. Those matters did not outweigh the seriousness of the contempt. The court imposed concurrent sentences of nine months for each disclosure breach and six months for the expenditure breach, making a total immediate custodial sentence of nine months. Suspension was unjustified.
5. Costs. Costs of £11,300 and £18,708 were ordered to be paid within 14 days. Section 26 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 did not restrict the costs order in this contempt application.

This was a first-instance committal application. Earlier hearings concerned the freezing orders, summary judgment, unless orders, striking out of the defences and adjournment of the committal hearing. The present court determined the contempt proceedings and imposed sentence.