(1) Peter Sage (2) Walter Jason Farfan v (1) Hewlett Packard Enterprise Company (a company incorporated in Delaware, USA) and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Henderson,Lord Justice David Richards,Lord Justice Kitchin |
| Judgment Date | 14 July 2017 |
| Neutral Citation | [2017] EWCA Civ 973 |
| Docket Number | Case No: A2/2017/0725 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 July 2017 |
[2017] EWCA Civ 973
Lord Justice Kitchin
Lord Justice David Richards
and
Lord Justice Henderson
Case No: A2/2017/0725
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Jay
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Kevin Metzger (instructed by Noble Solicitors) for the Appellant
Mr Anthony Peto QC and Mr Robert Weekes (instructed by Mishcon de Reya LLP) for the Respondents
Hearing date: 11 May 2017
Approved Judgment
Introduction
On 11 May 2017 we heard the appeal of Peter Sage from his conviction and sentence on nine grounds of civil contempt of court for which he was found guilty on 20 January 2017 after a three day hearing before Jay J in the Queen's Bench Division of the High Court on 12, 13 and 16 January 2017. The contempts all concerned failures to comply in specific respects with the terms of (a) a freezing order, and (b) a search order, both originally made by Coulson J on 2 December 2015 and then continued with variations until judgment or further order of the court by Sweeney J on 16 December 2015 (respectively "the Freezing Order" and "the Search Order").
For the contempts of which he was found guilty, Mr Sage was sentenced to an immediate term of 18 months' imprisonment.
Mr Sage's appeal to this court against both conviction and sentence lies as of right, without any requirement of permission: see CPR 52.3(1)(a)(i), which excepts an appeal against "a committal order" from the usual need to obtain permission to appeal. The relevant order was made by Jay J on 20 January 2017 ("the Committal Order"), after he had handed down his written judgment ("the Judgment") on the same day.
The claimants (and respondents to the appeal) are four companies in the Hewlett Packard group. Nothing turns on their separate identities, and I shall follow the judge in referring to them collectively as "HPE". They were represented on the appeal, as they were below, by leading and junior counsel (Anthony Peto QC, leading Robert Weekes), instructed by Mishcon de Reya LLP.
Mr Sage obtained legal aid and was represented at the hearing of the committal application by junior counsel (Andrew Maguire), instructed by JBR Morgan Solicitors. This representation did not continue after the making of the Committal Order, so he initiated his appeal as a litigant in person from Pentonville Prison, filing his appellant's notice significantly out of time on 17 March 2017 together with grounds of appeal running to 15 pages and 71 paragraphs. In due course, he obtained public funding for the appeal and (after various late changes, apparently at his instigation) was eventually represented at the hearing before us by Kevin Metzger of counsel, instructed by Noble Solicitors.
On 28 March 2017, Master Meacher granted the necessary extension of time for the appeal.
At the conclusion of the hearing on 11 May, we were able to state our conclusion, which was that the appeal would be allowed in part (in relation to Mr Sage's alleged failure to disclose or deliver up an engagement ring, which I will call "the Engagement Ring issue"), and that his sentence would be reduced from 18 to 12 months' imprisonment. His appeal against all the other findings of contempt was dismissed.
We said that we would give our reasons in writing later for reaching these conclusions. In this judgment I explain why I agreed to the disposal of the appeal in the terms which I have summarised.
Background
Much of the relevant background is set out in the Judgment, the neutral citation number of which is [2017] EWHC 66 (QB), at [1] to [11], on which the following summary draws.
For several years before 2015, Mr Sage lived in Dubai where he owned and ran a business called Space Energy. HPE manufactures and sells computer networking and storage products on a worldwide basis. HPE claims that Mr Sage and the second defendant, Walter Farfan, conspired between 2010 and 2013 to defraud HPE by holding themselves out as owning, through Space Energy, large solar energy facilities in the Middle East and Asia. HPE alleges that these facilities were a fiction, contrived for the purpose of obtaining substantial "big deal" discounts from HPE. The amount of the claim is approximately US$ 17.5 million. Proceedings were begun on that basis against Mr Sage and Mr Farfan in England by issue of a claim form on 3 December 2015.
On 2 December 2015, HPE had made a without notice application to Coulson J for a freezing order against both defendants, and for a search order relating to a residential house in Leicester to which Mr Sage had returned in April 2015. This was the hearing at which the Freezing Order and the Search Order were first made. According to the judge, who had read the papers for the without notice hearing and the transcript of the proceedings, "Coulson J was satisfied that HPE had demonstrated a strong prima facie case that a fraud, or series of frauds, had been perpetrated".
Before Mr Sage's departure from Dubai in January 2015, a number of relevant developments had taken place in the United Arab Emirates. In about 2011, Mr Sage began a friendship with his future fiancée, Thea Thorpe, who herself moved to Dubai in early 2013. In April 2013, Mr Sage established another company in Dubai, Sage International FZE ("Sage International"), which became the corporate vehicle for his activities as an entrepreneur and motivational speaker in the world of business. The judge described Sage International as "Mr Sage's outfit or alter ego", and Mr Sage as "the promoter and speaker, the engine and public face of the company". Behind the scenes, the financial side of the business was run by Ms Beverley Jill Bromige, who had been the partner of Mr Sage's late father for almost 30 years, and had worked on and off for Mr Sage and his companies since 1997. In her affidavit in the committal proceedings, Ms Bromige said that during this period she had held several roles and positions, mainly centred on the management of both his personal and his business finances. In addition, she had spent several years as his personal assistant. She described herself as "a qualified bookkeeper and experienced administrator".
In March 2014, Mr Sage was subject to some form of freezing order in Dubai. Shortly afterwards, in June 2014, Mr Sage transferred, or purported to transfer, the whole of his interest in Sage International to Ms Thorpe. The judge dealt with this transaction in some detail at [43] to [59] of the Judgment, finding (in brief) that the legal interest in Sage International was indeed transferred by Mr Sage to Ms Thorpe, but that Mr Sage remained the beneficial owner of the company which continued to function as his "corporate alter ego".
On 31 December 2014, Mr Sage became engaged to Ms Thorpe. A day or two later, he gave her a diamond and sapphire engagement ring for which he paid the sterling equivalent of between £22,000 and £23,000. This is the ring which became the subject of the Engagement Ring issue at the committal hearing.
In January 2015, a Ms Carolyn Sampson, who lives in Colorado, became the new CEO of Sage International. She visited Dubai for a period of time in order to promote the business. Meanwhile, Mr Sage had decided to leave Dubai with his fiancée, and after travelling for about three months they came to the UK in April 2015, when Mr Sage's house in Leicester was vacated by tenants. According to the judge, Mr Sage agreed that his reason for leaving Dubai was that he had lost his appeal against the freezing order imposed in March 2014. Upon his return to the Leicester property, Mr Sage immediately put the utilities in Ms Thorpe's name. The judge inferred that his purpose in doing so was to keep himself "off the radar", or "less metaphorically … to conceal himself from creditors and the tax authorities".
Sage International continued its business activities outside Dubai. Mr Sage and Ms Thorpe were in Leicester; Ms Sampson in Colorado; and Ms Bromige in Spain. On 22 November 2015, Mr Sage spoke at his "Millionaire Business School" in London. The event was apparently successful, and money came into the company over the following weeks, although no financial details were disclosed to the judge.
Less than a fortnight later, HPE obtained the Freezing Order and the Search Order. The judge noted that both of these orders were "in fairly standard form". The Freezing Order was in worldwide form, with an upper limit of US$ 10 million. It applied to all of Mr Sage's "assets", broadly defined, and included disclosure obligations requiring Mr Sage to give details of all his assets worldwide exceeding £1,000 in value. There were also wide-ranging orders for the preservation and delivery up of documents, including Mr Sage's passports. The order contained standard exceptions for expenditure on ordinary living expenses and up to £20,000 on legal advice and representation, and for "dealing with or disposing of any of his assets in the ordinary, lawful and proper course of business".
The Search Order authorised a search to be carried out at the Leicester property between 8 am and 5 pm on a weekday, under the supervision of a supervising solicitor (from a different firm than HPE's own solicitors). The order extended to, and required the delivery up of, all of the documents and articles listed in Schedule C to the order, defined as "the listed items". These included "asset documents" (broadly...
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