Moutreuil v Andreewitch (Contempt: No.2)

In contempt proceedings arising from an alleged breach of a freezing order, the applicant bears the burden of proof to the criminal standard. The court must establish that the respondent deliberately performed the act or omission constituting the breach. It is unnecessary to prove that the respondent knew, or believed, that the conduct amounted to a breach of the order. A respondent’s reliance on legal advice does not ordinarily prevent a finding of contempt, although it may be relevant to mitigation. Where contempt proceedings are heard alongside an application requiring the alleged contemnor to give evidence, the proceedings should be separated to preserve the right to silence.

The applicant sought sanctions against the first respondent for alleged breaches of a freezing order made on 22 March 2019 under the Family Procedure Rules 2010. The order restrained dealings with the assets and income of a company of which the respondent was director. A previous hearing before Lieven J resulted in findings which were set aside on appeal because the unrepresented respondent had not been informed of his right to silence: [2020] EWCA Civ 382.

The matter was reheard before Cobb J. The respondent admitted making payments from the company account but contended that they were authorised company liabilities, including remuneration, loan repayments and legal costs. The central issues were whether the payments breached the freezing order and, if so, whether the breaches were deliberate.

1. The court found that the freezing order was clear and unambiguous. The respondent knew, at least by May 2019, that he could apply for variation, but did not do so until expenditure from the account was exposed.

2. In accordance with Pan Petroleum AJE Limited v Yinka Folawiyo Petroleum Co Ltd [2017] EWCA Civ 1525, it was unnecessary to prove that the respondent knew that his conduct constituted a breach, or that he acted believing that it was a breach. The applicant had to prove deliberate performance of the relevant acts or omissions. Legal advice could go to mitigation, but did not itself provide a defence.

3. The court applied the criminal standard of proof and held that the burden rested on the applicant. It was satisfied that the respondent deliberately removed funds for his own benefit and treated the company account as his personal account.

4. The asserted director’s salary was unsupported by any recognised obligation or contractual basis. The alleged loan was not established by contemporaneous documentation or company accounts. The legal-cost payments were not shown to be bona fide liabilities of the company and were principally personal costs. The explanations were therefore rejected.

5. The court found that the respondent breached the freezing order by making or procuring the payments and that the breaches were deliberate, in the sense that he knew the payments breached the order.

6. The issue of sanction was adjourned. The separate application to vary the freezing order was not determined with the contempt application, so that the respondent would not be placed in a position where evidence on the variation application impaired his right to silence.

1. Court of Appeal — Findings made by Lieven J at the earlier hearing were set aside on 17 March 2020 because the unrepresented respondent had not been informed of his right to silence: [2020] EWCA Civ 382.
2. High Court (Family Division) — On rehearing, Cobb J found deliberate breaches of the freezing order. The sanction issue was adjourned.