Gerald Martin Smith, Re

An undertaking given to the court is equivalent to an injunction and may be enforced by committal. Contempt requires proof, to the criminal standard, that the defendant deliberately performed an act which breached the order and had notice of its terms. The defendant need not have intended to breach the order or known that the act amounted to a breach.

Orders and undertakings must be construed naturally, contextually and purposively. Committal is available only where the obligation is clear, certain and unambiguous. A restraint order covering assets which the defendant can control applies even if funds are held by a third party or supplied by another person. Later disputes about underlying ownership or settlement validity do not excuse deliberate interference with clear undertakings.

The Serious Fraud Office applied to commit Dr Gerald Martin Smith for contempt. The application concerned fifteen breaches of a restraint order by exceeding a permitted monthly spending limit, and breaches of undertakings recorded in an order following settlement of proprietary proceedings.

The alleged undertaking breaches concerned Flat 21 Hamilton House, including procuring an assignment, changing the locks and permitting occupation, and Flats 11 and 12, including failure to give vacant possession and pursuing an application to stay a writ of possession. The central issues were service, construction and enforceability of the orders, and whether the alleged acts were deliberate breaches proved to the criminal standard.

1. Service. The court dispensed retrospectively with personal service of the Variation Order. Dr Smith had actual notice of its terms: it was made on his application and by consent, in his presence and with legal representation; it was served on his solicitors; and he continued to comply with its reporting requirements. There was no injustice in dispensing with personal service.
2. Applicable test. An undertaking given to the court is equivalent to an injunction and may support committal. To establish contempt, the SFO had to prove beyond reasonable doubt that Dr Smith deliberately performed the relevant act, that the act breached the order, and that he had notice of the order and its terms. Intention to breach, or knowledge that the conduct constituted a breach, was unnecessary.
3. Spending breaches. Funds credited to the nominated pre-paid account were assets which Dr Smith had power to dispose of or deal with as his own, regardless of whether the account was a bank account or the funds came from his brother. The restraint order therefore applied to them, subject to the £2,000 monthly exception. Each of the fifteen deliberate overspends was a contempt. The SFO’s failure to object to statements did not vary the order, although it might bear on sanction.
4. Hamilton House. The undertakings were clear and unequivocal. They required Dr Smith to assist the Settlement Parties in realising the relevant property and not to impede, obstruct or hinder that process. Procuring the assignment relating to Flat 21, arranging the lock change and arranging occupation breached those obligations. So did refusing to give vacant possession of Flats 11 and 12 and pursuing a wholly unmeritorious stay application based on claims previously compromised. Arguments concerning consideration, the Harbour Trust and later litigation did not affect the existing orders or excuse non-compliance.
5. The court was sure that each act was deliberate, that Dr Smith knew the terms of the relevant orders and undertakings, and that he was guilty of all the contempts alleged. Sanction was adjourned for further submissions and evidence.

First-instance decision. No earlier appellate decision concerning the present committal application was stated.