Atkinson & Ors v Varma & Ors

In civil contempt proceedings, the court may proceed in the respondent’s absence where service and notice are established, the absence is deliberate or amounts to a waiver, representation remains available, and the balance of prejudice and forensic fairness favours proceeding.

Sentencing for serious breaches of freezing and disclosure orders requires assessment of prejudice, culpability, deliberateness, cooperation, remorse and the need for coercion. Continuing and wilful non-compliance may justify a sentence at or near the statutory maximum. A custodial sentence may be divided between punitive or deterrent and coercive elements, with the coercive element capable of remission if the contempt is purged.

The applicants were the company in liquidation and its joint liquidators. They sought the committal of the first respondent for contempt arising from false statements, failures to disclose assets and breaches of orders made in insolvency proceedings.

The court had previously found several contempts proved. An appeal against those findings had been dismissed. The sentencing hearing was delayed, and the respondent did not attend, asserting that he was unwell. The issues were whether the hearing should proceed in his absence, what sentence was appropriate, and the costs of the committal application.

1. Proceeding in absence. The court proceeded in the respondent’s absence. He knew of the hearing, had received sufficient notice, was represented, had had ample time to prepare and had already caused substantial delay. The medical evidence did not justify non-attendance. His conduct showed deliberate absence and waiver of the right to attend. The checklist in Sanchez v Oboz was applied.
2. Sentence. The contempts were serious, numerous and largely deliberate. They involved false evidence, interference with the administration of justice, continuing failures to disclose assets and substantial prejudice to the liquidators and creditors. A fine would not adequately reflect the seriousness of the conduct. The starting point was two years’ imprisonment, having regard to JSC BTA Bank v Solodchenko (No. 2), FCA v McKendrick [2019] EWCA Civ 524 and the continuing nature of the breaches.
3. Three months were deducted for the respondent’s health, the pandemic and the additional restriction on liberty resulting from passport orders. No deduction was made for the purported apology, which did not acknowledge wrongdoing. The sentence was therefore 21 months’ immediate imprisonment.
4. The sentence was divided into a 12-month punitive and deterrent element and a nine-month coercive element. The latter could be remitted if the continuing contempt was purged, particularly by proper disclosure of assets or payment towards the judgment debt. The distinction was guidance only.
5. The applicants succeeded on the committal application and were awarded their costs on the indemnity basis, including the sentencing hearing and specified earlier applications, with payment on account of approximately £268,000.

The earlier findings of contempt were appealed to the Court of Appeal and the appeal was dismissed. This judgment concerned the subsequent sentencing hearing and costs of the committal application.