Varma v Atkinson & Anor

For civil contempt, once a person knows of a court order and knows the facts of their act or omission, it is unnecessary to prove that they knew their conduct breached the order or intended that breach. A mistaken belief that compliance is unnecessary may bear on sentence, but not liability.

A director responsible for a company’s failure to comply with an order may be personally liable in contempt. A finding that an order required action forthwith is not unsafe merely because the applicant did not elicit excuses in cross-examination where the alleged contemnor had a full opportunity to provide one.

The joint liquidators of Grosvenor Property Developers Ltd obtained orders requiring Sanjiv Varma and others to disclose assets, provide information and send authorities to third parties. HHJ Johns QC, sitting as a High Court judge, found Mr Varma guilty of eight contempts, including false statements in an affidavit and failures to comply with disclosure and authority orders: [2020] EWHC 1868 (Ch).

Mr Varma appealed. He relied on new evidence and on findings made in related proceedings concerning jewellery said to have been sold to Grosvenor. He also challenged the mental element for contempt and the finding that he had failed to act forthwith. The central questions were whether the later material undermined the false-statement finding, and whether knowledge that conduct breached an order was required for civil contempt.

1. Appeal dismissed. Rose LJ, with Stuart-Smith and Lewison LJJ agreeing, granted the application to admit the new evidence but held that it did not render any of the challenged findings unjust.
2. There was no material inconsistency between Judge Johns’s findings and those of Judge Prentis in the related proceedings. Judge Johns had not made a firm finding that the jewellery did not exist. He found beyond reasonable doubt that the asserted sale by GCFZE to Grosvenor was untrue. Judge Prentis’s order against Mr Khadka was based on the consequences if he held the jewellery or its proceeds for Grosvenor; it did not determine that the sale transaction had occurred.
3. The new evidence concerning Maneet Singh and the jewellery could not undermine that conclusion. Even if the jewellery derived from Mr Varma’s mother, it did not provide a credible explanation for a gift of it to GCFZE or for Grosvenor’s purchase from GCFZE. It also did not cure the defects in the invoice and settlement agreement.
4. On the mental element for civil contempt, the court applied the established rule reflected in Stancomb v Trowbridge UDC [1910] 2 Ch 190 and Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456. Once knowledge of the order and of the relevant acts or omissions is proved, it is unnecessary to prove knowledge that those facts amounted in law to a breach. Irtelli v Squatriti [1993] QB 83 could not stand with that authority.
5. Mr Varma knew of the orders, knew that no affidavit had been made for GCFZE, and knew that he had not sent the required bank instruction. His asserted misunderstanding was therefore relevant only to sentence. His unexplained delay of 13 or 14 days in sending letters required forthwith also established the final challenged contempt.

• Court of Appeal (Civil Division) Granted the application to admit new evidence but dismissed Mr Varma’s appeal against the contempt findings.
• High Court of Justice, Business and Property Courts HHJ Johns QC found Mr Varma guilty of eight contempts and adjourned sentence: [2020] EWHC 1868 (Ch).