The Financial Conduct Authority v McKendrick

A person may be committed for contempt for breaching a court order only where the order is unambiguous and the claimant proves, to the criminal standard, notice or service, a deliberate act or omission contrary to the order, intention to perform or omit that act, and knowledge of the facts making it a breach.

In sentencing for contempt, the court must assess the seriousness and deliberateness of the breach, prejudice, culpability, cooperation, admissions, apology, mitigation and the need to uphold the authority of the court and deter disobedience. Imprisonment is reserved for cases in which custody is justified and must be proportionate to the gravity of the contempt.

The Financial Conduct Authority applied under CPR Part 8 to commit Robert John McKendrick for contempt of court. The alleged contempts concerned breaches of worldwide freezing orders made in earlier Chancery Division proceedings, including failures to disclose assets and the diversion and expenditure of rental income.

Mr McKendrick admitted the five pleaded contempts. The court therefore considered the formal and substantive requirements for establishing contempt, the significance of his subsequent attempt to provide information, and the appropriate sentence.

1. The application was procedurally regular. The application notice contained a penal notice, the supporting evidence was by affidavit or was properly taken into account, and personal service had been effected. The relevant freezing orders also contained penal notices and had been personally served before the relevant breaches.

2. The governing requirements were those stated in FW Farnsworth v Lacy [2013] EWHC 3487 (Ch): the order must be unambiguous; the contemnor must have notice of it; he must have done a prohibited act or omitted a required act within the prescribed time; he must have intended the act or omission; and he must have known the facts making it a breach. The breach must be deliberate, although an intention to flout the order is relevant principally to penalty. Each element had to be proved to the criminal standard.

3. The five contempts were independently established. Mr McKendrick’s admissions shortened the hearing but did not replace the court’s obligation to satisfy itself that the contempts were made out.

4. The purpose of contempt jurisdiction is to uphold the authority of the court by punishment and deterrence, and in appropriate cases to encourage belated compliance. The court considered the factors identified at paragraph 23, including prejudice, pressure, deliberateness, culpability, cooperation, admission, apology, character and personal mitigation.

5. The breaches were planned and deliberate. They concerned important worldwide freezing orders and involved non-disclosure, payment away of monies and use of those monies for Mr McKendrick’s benefit. The subsequent provision of information amounted to a genuine attempt at compliance, but further coercion was not justified because the court was not satisfied that additional information could be provided.

6. A custodial sentence was inevitable. Applying the principles concerning custody and proportionality, the court adopted a starting point of 12 months, reduced it by half to reflect the admissions, apology and genuine attempt at compliance, and ordered an unsuspended sentence of six months from apprehension. Release after half the sentence was confirmed under section 258 of the Criminal Justice Act 2003.

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