Zi Wang v Graham Darby

Sentencing for civil contempt must be fact-specific and must reflect both the contemnor’s culpability and the harm caused. Imprisonment is appropriate for serious, contumacious flouting of court orders, including substantial breaches of freezing orders and deliberate false statements in witness statements. The court should consider whether imprisonment can be suspended and whether part of a sentence should encourage belated compliance. Continuing failure to disclose assets may justify a substantial custodial sentence, potentially up to the statutory maximum. Multiple contempts should be sentenced in accordance with their individual seriousness, with concurrency considered where appropriate.

The claimant obtained judgment for a substantial sum arising from cryptocurrency exchange contracts. A freezing injunction required the defendant to disclose worldwide assets exceeding £5,000, including cryptocurrency holdings, and to serve a verified witness statement.

The defendant failed to disclose approximately 100 Bitcoin, provided a witness statement that did not supply the required information, and knowingly verified a false statement. Following a reserved judgment finding all three contempts proved, the court proceeded to sentence. The defendant appeared in person and disputed the findings.

1. The court’s sentencing powers for contempt derived from Contempt of Court Act 1981, section 14, and rule 81.9 of the Civil Procedure Rules 1998. Imprisonment for up to two years was available on any one occasion.
2. Sentencing had to be fact-specific. The court considered culpability, harm, the seriousness of the flouting of the orders, the desirability of keeping first-time offenders out of prison where a custodial term would necessarily be short, and whether imprisonment should be suspended. The guidance in JSC BTA Bank v Solodchenko (No.2) and Attorney General v Crosland was adopted, together with the guidance on multiple offences summarised in Lim v Ong.
3. A substantial breach of a freezing order was a serious matter ordinarily warranting imprisonment. A substantial fine might suffice where the contempt had been purged and the assets recovered. Where relevant information continued to be withheld, a longer sentence could be justified to encourage co-operation.
4. Knowingly making a false statement in a witness statement was also serious. The court had regard to the sentencing observations concerning false statements in Business Mortgage Finance 4 plc v Hussain, although that case concerned expert reports.
5. The defendant’s failure to disclose approximately 100 Bitcoin, his failure to provide the information required by the order, and his knowingly false verification were deliberate and materially threatened the enforcement of the judgment. His good character, personal circumstances and volunteering were taken into account, but the absence of remorse, acceptance of culpability or remedial steps aggravated the contempts. No sufficient basis existed for suspension.
6. Immediate custodial sentences were imposed: 18 months for the first contempt, 18 months concurrent for the second, and six months concurrent for the third, making 18 months in total. The defendant was entitled to unconditional release after nine months. The court indicated that belated full and frank disclosure might support an application to discharge all or part of the remaining sentence.