Madison Pacific Trust Limited v Sergiy Mykolayovch Groza & Anor

In contempt proceedings arising from deliberate non-compliance with a disclosure order supporting a freezing injunction, the court may proceed to sentence despite a late application to adjourn where the contemnors have had a fair opportunity to provide mitigation and continuing delay causes substantial prejudice.

Sentencing is fact-specific but must address culpability, harm, mitigation and whether a fine is sufficient. Breach of disclosure obligations supporting a freezing injunction is ordinarily serious and may justify immediate imprisonment. Where contempt continues, the court may identify a punitive minimum term and a coercive balance capable of remission upon prompt and full compliance.

The claimant sought sanctions against two defendants found guilty of contempt for breaching a disclosure order made in support of a freezing injunction. The contempt and costs issues had been adjourned to allow mitigation and an opportunity to purge the contempt.

The defendants sought a further adjournment shortly before the sanctions hearing, relying on newly instructed English lawyers, asserted willingness to provide further disclosure, and a request for time until the end of November 2024. The central issues were whether the hearing should be adjourned, the appropriate sanction for continuing contempt, and the costs consequences.

1. Adjournment. The application was dismissed. The defendants had received the contempt judgment, orders, timetable and notice of the hearing, and had had a fair opportunity to make written mitigation submissions and purge their contempt. Their late instruction of unfamiliar solicitors and counsel was deliberate tactical manoeuvring, unsupported by evidence. The claimant suffered continuing prejudice because the disclosure was needed to police the freezing injunction and trace assets. The overriding objective therefore favoured proceeding.
2. Sentencing principles. The court could impose imprisonment for up to two years under Contempt of Court Act 1981, s 14(1), an unlimited fine, and sequestration under CPR 81.9(1). Contempt sanctions may be punitive and deterrent, and coercive. The court should assess seriousness by culpability and harm, consider whether a fine suffices, impose the shortest custodial term properly reflecting the seriousness, give weight to genuine mitigation and the impact on others, and consider suspension.
3. The court applied the factors identified in Crystal Mews Limited v Metterick and others [2006] EWHC 3087 (Ch) and Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd [2015] EWHC 3748. The contempts were deliberate and contumacious, culpability and harm were high, the claimant suffered significant prejudice, and the defendants remained in continuing breach. The purported apology and prospective willingness to comply were hollow and unsupported by adequate disclosure or evidence.
4. Only imprisonment was sufficient. The court imposed an immediate sentence of 21 months on each defendant. Nine months represented the punitive element that had to be served in any event. The balance was coercive and could be considered for remission if the defendant achieved prompt and full compliance.
5. The claimant was awarded the costs of the contempt and jurisdiction applications on the indemnity basis. The costs were summarily assessed at US$145,000 for the jurisdiction challenge and US$237,500 for the committal and sentencing hearing.

First-instance decision. The judgment records earlier contempt and disclosure decisions in the same proceedings, but this was a sanctions and costs hearing in the High Court Commercial Court.