Deutsche Bank AG v Sebastian Holdings Inc & Anor

Sentencing for contempt requires the court first to assess harm and culpability, then aggravating and mitigating features, before determining the proportionate sentence.

Deliberate breaches of orders requiring information and disclosure undermine the administration of justice and may warrant imprisonment. Multiple breaches, dishonesty, substantial continuing prejudice and a deliberate attempt to frustrate enforcement are strongly aggravating. Later independent recovery of information does not mitigate culpability. A suspended sentence may be appropriate where there is a realistic prospect that conditions will secure future compliance, reflecting both punitive and coercive purposes.

Following an earlier judgment finding Mr Alexander Vik in contempt, the court conducted the sentencing hearing. The contempts comprised deliberate failures to provide information about Sebastian Holdings Inc’s means at a cross-examination hearing and deliberate failures to produce electronic and third-party documents required by court order.

Deutsche Bank sought a two-year custodial sentence, suspended on conditions requiring further cooperation. The issues were the seriousness of the contempts, the appropriate sentence, and whether suspension subject to compliance conditions was justified.

1. Sentence. The contempts were towards the top of the range. Mr Vik was committed to prison for 20 months for failing to provide information and 10 months, concurrent, for failing to produce documents. Of the 20-month sentence, 10 months represented punishment for the historic contempt and 10 months represented coercion intended to encourage future cooperation.
2. The court adopted the approach in McKendrick v the Financial Conduct Authority: first assess culpability and the harm caused, intended or likely to be caused; then consider aggravating and mitigating features; and finally determine the sentence in all the circumstances. Breach of a court order is inherently serious because it undermines the administration of justice.
3. Mr Vik’s deliberate lies, wholesale failure to disclose electronic documents, failure to obtain documents from third parties and multiple instances of non-compliance materially increased culpability. The continuing judgment debt, incomplete information about assets, and the risk that documents had been deleted or lost established significant harm. Independent recovery of documents did not mitigate culpability.
4. The absence of previous convictions, age, litigation costs, personal and commercial consequences, and alleged stress attracted little or no weight. There was no genuine acceptance of responsibility or remorse. The court also doubted whether the proposed post-judgment steps showed a genuine willingness to purge the contempt.
5. The two contempts were separate for sentencing purposes, although totality had to be respected. Comparisons with sentences in other cases were of limited assistance because committal cases are fact-dependent.
6. Suspension was appropriate where it could realistically secure compliance and could be linked to conditions limiting the contemnor’s room for manoeuvre. The sentence was therefore suspended on conditions requiring Mr Vik to make all reasonable efforts to obtain and provide the specified information and documents. The court excluded VBI, Universal and Zimmerman & Gauch from the substantive conditions.

First-instance sentencing decision following this court’s contempt judgment of 24 June 2022. No appellate history was stated.