Nebahat Evyap Işbilen v Selman Turk & Ors

A person may be in contempt for deliberately failing to comply with a court order even where the failure results from misunderstanding the order. The required intention is an intention to do the act, or omit the act, constituting the breach. A subjective lack of understanding may affect contumaciousness and penalty, but does not ordinarily prevent breach.

Disclosure obligations under a proprietary freezing order must be construed from the order’s natural and ordinary meaning, context and purpose. They may require disclosure of current or last known destinations, purposes and transferees, but do not necessarily require a complete equitable tracing exercise. Where money is invested in company shares, money later used by the company in its business is not necessarily proceeds of that investment.

The claimant sought committal of the first defendant for contempt arising from alleged failures to comply with disclosure obligations in a proprietary freezing order made by Miles J on 4 March 2021. The order required disclosure concerning traceable proceeds, Barton assets and assets owned by the claimant, together with an affidavit verifying the information.

The alleged failures concerned transfers involving Bethlehem, Alphabet, AET Global, SGP, Sphera and Softco. The defendant argued, among other things, that the order was ambiguous, that its penal notice was defective, that he had not understood the extent of the obligations, and that the relevant transactions had been adequately disclosed. The central issues were the construction and scope of the order, the mental element of contempt, and whether the alleged non-disclosures were proved beyond reasonable doubt.

1. Contempt and intention. The application was determined by the criminal standard of proof. The applicant had to prove the order, the relevant omission, the defendant’s intention to omit the required act, and knowledge of the facts making the omission a breach. A further intention to disobey the order was unnecessary. The defendant’s lack of understanding could bear on contumaciousness and sentence, but did not prevent breach.
2. Construction of the order. The order was to be given its natural and ordinary meaning in context, having regard to its purpose, and was to be strictly construed because breach could result in committal. Its obligations required disclosure of current or last known whereabouts and relevant information about transfers. They did not require disclosure merely of the first transfer away, nor a full legal tracing exercise. Ambiguity was to be resolved in favour of the alleged contemnor.
3. Meaning of proceeds. Where the claimant’s money was used to acquire an investment in shares, the investment itself was within the order. Money subsequently received by the company and applied in its business was not, without more, proceeds of the investment. The order therefore did not require disclosure of the company’s subsequent use of those funds.
4. Penal notice. The penal notice was effective. No single wording was prescribed. The question was whether the order sufficiently called the defendant’s attention to the obligations and penal consequences. Mr Turk was personally bound by the relevant provisions, including where his knowledge arose in his capacity as a director.
5. Application. No contempt was established in relation to Bethlehem, apart from a technically incomplete disclosure concerning the number of shares. Contempt and serious or significant breaches were established in relation to the Alphabet, AET, SGP, Sphera and Softco matters. The failures included presenting false or misleading invoices, failing to disclose purposes and transferees, failing to identify persons who could provide information, and failing to disclose the value and location of Sphera shares. Mr Turk had acquired a sufficient general understanding of his obligations and his failures were deliberate, contumacious or the result of wilful blindness.
6. Further order. The court directed that submissions on penalty and associated procedural matters be heard after judgment.