Varma v Atkinson & another

The Court of Appeal dismissed the appeal against HHJ Johns QC's committal findings. The court upheld that eight contempts could be found where the appellant breached multiple court orders and made false statements in affidavits and a witness statement, and emphasised that once knowledge of an order and the factual breach are proved the contemnor may be held in contempt regardless of subjective intent. The appeal also raised whether fresh evidence (including witness statements relied on at a later trial) undermined the criminal standard findings; the evidence was admitted but the court held it would not have undermined the judge's conclusions. The decision applied principles concerning directors' liability for company breaches of order, the criminal standard of proof in committal proceedings and the limited role of motive or subjective belief on liability (relevant to breaches of the Birss, Falk, Johnson and Hochhauser orders).

Background and parties: The joint liquidators of Grosvenor Property Developers Ltd (the Respondents) pursued proceedings to recover about c66 million alleged to have been misappropriated. The appellant, Mr Varma, was alleged to be a de facto director and controller of Grosvenor and of Grosvenor Consultants FZE (GCFZE). The liquidators obtained interim orders including a worldwide freezing order (the Birss order) and disclosure orders (the Falk, Johnson and Hochhauser orders).

Procedural posture: After a substantive hearing before Deputy Insolvency and Companies Court Judge Agnello QC (13 May 2020) and a trial before ICC Judge Prentis on related claims, the Respondents applied to commit Mr Varma for contempt. HHJ Johns QC, sitting in the High Court, found eight contempts established to the criminal standard and adjourned sentence. Mr Varma obtained permission to appeal; the appeal was heard in the Court of Appeal which also considered an application to admit fresh evidence pursuant to CPR 52.21(2).

Nature of the application and issues: The committal application sought imprisonment for contempt for breaches of court orders and for making false statements in affidavits and a witness statement. The principal issues on appeal were (i) whether new evidence and findings made in separate proceedings (notably by Judge Prentis) produced an inconsistency or procedural unfairness that undermined the committal findings, and (ii) whether the mental element required for contempt had been wrongly assessed by HHJ Johns.

Key facts and contested matters: Central to the disputes were payments totalling c.c631,22841 from Grosvenor to GCFZE said to be consideration for jewellery and diamonds (the "Jewellery"). The Respondents suspected sham transactions and sought delivery-up or account of those assets. Mr Varma relied on documents (an invoice and a Settlement Agreement) and later on family evidence that jewellery had been gifted and that sums had been paid to his son as an advance inheritance.

Court's reasoning: The Court of Appeal admitted the new evidence but concluded it did not undermine HHJ Johns' findings. The appellate court endorsed the judge's careful assessment to the criminal standard that the appellant's narrative about the Jewellery and associated documents was not credible. It found no real inconsistency between HHJ Johns' conclusions and Judge Prentis' findings in separate proceedings: Prentis' orders were confined to the case pleaded against Mr Khadka and to whether the Respondents' claim for misfeasance and recovery of assets was made out on the evidence before him. On the mental element, the court reaffirmed the established principle that, once knowledge of the order and the relevant acts or omissions are proved, contempt is made out without proof that the contemnor intended to disobey the order; subjective belief or motive is relevant only to sentence.

• Relief sought: committal to prison for contempt for breaches of court orders and for making false statements.
• Issues framed: falsity of sworn statements, compliance with disclosure and instruction orders, relevance of fresh evidence, and required mental element for civil contempt.
• Outcome of reasoning: fresh evidence admitted but insufficient to disturb criminal-standard findings; liability for contempt upheld where breaches and falsehoods were proved; lack of subjective intent relevant only to sentence.

Appeal dismissed. The Court of Appeal held that HHJ Johns had properly applied the criminal standard of proof in finding contempt for breaches of court orders and false statements; the new evidence (admitted) and later findings in separate proceedings did not create an inconsistency sufficient to undermine those findings. The court reaffirmed that subjective intention to disobey is not a necessary element of civil contempt once knowledge of the order and the act or omission are established, although such matters are relevant to sentencing.

Appeal from the High Court (HHJ Johns QC, judgment and order dated 13 July 2020; committal hearing 9-12 June 2020) (see [2020] EWHC 1868 (Ch)). Permission to appeal granted by Floyd LJ on 24 August 2020; appeal heard in the Court of Appeal resulting in judgment [2020] EWCA Civ 1602 (27 November 2020).