Atkinson & Glyn Mummery & Anor v Varma & Ors

Contempt of court must be proved to the criminal standard. For disobedience of an order, the applicant must prove knowledge of the order, conduct amounting to breach, and knowledge of the facts constituting that breach. A penal notice is ordinarily required before an order can be enforced by committal, although the requirement may be waived where its absence caused no injustice.

For a false statement verified by a statement of truth, the applicant must prove falsity, material interference with the course of justice, and absence of an honest belief in the statement’s truth, together with knowledge of that likely interference. A director may be personally liable for a company’s contempt where responsible for the company’s failure to comply. The court must define the alleged contempt with precision and should be cautious when relying on inferences.

The liquidators of Grosvenor Property Developers Limited applied to commit Sanjiv Varma for contempt arising from insolvency proceedings. The allegations concerned breaches of disclosure, asset-disclosure, freezing and information orders, failures to provide documents and authorities, and false statements in affidavits and witness statements.

The application followed compulsory liquidation of the Company, private examination and disclosure orders, worldwide freezing orders, cross-examination in aid of those orders, and subsequent orders requiring further information and documents. The liquidators alleged that Mr Varma concealed assets, misrepresented the use of approximately £3.1 million paid to Grosvenor Consultants FZE, and invented a jewellery transaction and silent shareholders. The central issues were whether the alleged breaches and statements were proved beyond reasonable doubt and whether procedural requirements, including penal notices, were satisfied.

1. Applicable principles. The applicants had to establish contempt beyond reasonable doubt. For disobedience of an order, this required proof that Mr Varma knew the order, breached it, and knew the facts making his conduct a breach. A penal notice was required unless its absence caused no injustice. For false statements, the applicants had to prove falsity, material interference with the course of justice, absence of honest belief, and knowledge of the likelihood of interference.
2. Findings on false statements. Mr Varma’s account that approximately £3.1 million paid to Grosvenor Consultants FZE represented payment for jewellery and diamonds was false. So was his statement that GCFZE used the money for debts, expenses and failed transactions. His statement that he had only one potentially disclosable asset was also false. The statements were made without honest belief and materially impeded recovery by the liquidators. His statement that GCFZE had silent shareholders was likewise false.
3. Findings on breaches. Mr Varma breached the 1 May 2019 freezing order by failing to disclose all assets. He was personally liable for GCFZE’s failure to serve the required asset affidavit because he controlled the company and took no reasonable steps to secure compliance. He also breached the 3 July 2019 order by failing to send the signed bank instruction by the deadline, and the 1 August 2019 order by delaying the authority letters. The latter order’s penal-notice requirement was waived because there was no injustice.
4. Unproved allegations. Breaches concerning documents under the 2 April 2019 order, attendance at private examination, spending disclosures, passport delivery and Hallam Street documents were not established as contempts. The document breach failed because the order lacked a penal notice. The court also declined to treat alleged fabricated documents or answers as separate contempts where the application had not been framed on that basis.
5. Mr Varma was found in contempt on eight grounds. Sentencing was adjourned to a further face-to-face hearing.

The judgment was a first-instance determination of the liquidators’ committal application. It records earlier insolvency, freezing-order and cross-examination orders, but no appeal decision relevant to this judgment.