Josef Eim v Perry Lewis
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bryan |
| Judgment Date | 14 October 2021 |
| Neutral Citation | [2021] EWHC 2761 (Comm) |
| Docket Number | Case No: CL-2018-000289 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2761 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand
London,
THE HON. Mr Justice Bryan
Case No: CL-2018-000289
and
Andrew Fletcher QC instructed by Bryan Cave Leighton Paisner for the Applicants
Christopher Sykes instructed by for the Second Defendant
Hearing 7 October 2021
Approved Judgment on Committal Application and Sentencing Remarks
A: INTRODUCTION .
A1: The Contempt Application
On 7 October 2021 the parties appeared before the Court on the hearing of the Claimants' (“Applicants'”) committal application against the Second Defendant (“Mr Lewis”). I heard oral evidence from Mr Lewis, and oral and written submissions from Mr Andrew Fletcher QC on behalf of the Applicants and Mr Christopher Sykes on behalf of Mr Lewis. At the end of that hearing I reserved my judgment. This is my judgment on the committal application.
The committal application was issued by the Applicants against Mr Lewis on 16 October 2020. It was originally listed for hearing on 8 March 2020, but adjourned by the Court and refixed at Mr Lewis's request.
Originally, the Applicants made two allegations of contempt:-
(1) The first contempt allegation (“Allegation 1”) is as follows:
“On two occasions between June and November 2019, dealing with and or disposing (or attempting to dispose) of assets (namely part of his entitlement as a legatee under his late mother's will) in breach of §4 of the Revised Freezing Injunction… .”.
The “Revised Freezing Injunction” there referred to was the freezing injunction granted in these proceedings on 15 February 2019 by Mr. Andrew Henshaw QC sitting as a Deputy Judge of the High Court.
The sums in question were:
(i) £120,000 disposed of on 9 – 14 June 2019 and
(ii) £186,104.80 disposed of on 11 November 2019.
The majority of these sums were recovered by Mr Lewis' Trustee in Bankruptcy (the “Trustee”) when the disposals were discovered by him, but costs were incurred by him for this purpose (the extent of which, and reasonableness of which, are in dispute).
(2) The second allegation (“Allegation 2”) was that Mr. Lewis made knowingly false statements as to his assets in his 7 th Affidavit sworn on 23 September 2019 (“Lewis 7”).
Allegation 2 is maintained as a factual allegation (in circumstances where the Applicants say that it is relevant to the Court's assessment of Mr. Lewis's conduct in relation to Allegation 1), but not as an allegation of contempt of court (as Lewis 7, although sworn, was not filed or put before the Court by Mr. Lewis.) The Applicants took the view that in these circumstances it was questionable whether, as a matter of law, an interference with the administration of justice had arisen, and accordingly decided not to proceed with an Allegation 2 as an allegation of contempt. The Court and Mr. Lewis were informed of this decision by the letter of Bryan Cave Leighton Paisner (“BCLP”) (the Applicants' solicitors), dated 7 December 2020.
A2: Evidence and Directions
The Applicants relied upon the following evidence in support of their Application:-
(1) The 2 nd affidavit of Mr. Andrew Tuson (a partner in BCLP) sworn on 16 October 2020 (“Tuson 2”) which contains the principal evidence in support of the application.
(2) Mr. Tuson's 3rd affidavit sworn on 22 January 2021 (“Tuson 3”) which updates the Court as to developments in relation to recoveries and costs since his first affidavit.
(3) Mr. Paul Allen's witness statement dated 10 August 2021 (“Allen 1”) and accompanying exhibit providing further details in respect of the Trustee's costs and legal expenses supplemented by Mr Allen's 2nd witness statement dated 20 September 2021 (“Allen 2”).
On 30 September 2021 it was indicated on behalf of Mr Lewis that the Applicants' witnesses (Mr Tuson and Mr Allen) were not required to attend for cross-examination. Their affidavits and statements accordingly stand as their evidence.
On 17 December 2021, by consent, Jacobs J gave directions (the “Directions”) for the oral hearing of the Contempt Application (the “Committal Application”), including as to the filing of evidence by Mr. Lewis.
In accordance with those directions, on 4 January 2021, Mr. Lewis served an affidavit. Service of this affidavit did not override or displace Mr. Lewis's right to silence, so that this affidavit remained in limbo unless and until Mr. Lewis chose to deploy it: see Deutsche Bank v Sebastian Holdings [2020] EWHC 3536 (Comm) per Cockerill J at [53].
Shortly before the hearing Mr Lewis served a witness statement dated 22 September 2021. It was agreed between Counsel that this statement should stand as Mr Lewis's evidence in chief for the purposes of the Committal Application and that he should be cross-examined on it. I agreed to that course.
A3 The Admitted Contempt
In the event it was accepted by Mr Lewis that the Affidavit was relevant for providing the date when the contempt (Allegation 1) was admitted by him (as acknowledged at paragraph 4 of the Skeleton Argument served on behalf of Mr Lewis (the “Lewis Skeleton Argument”)). Mr Lewis confirmed his admission at the outset of his oral evidence, confirming paragraph 25 of his Affidavit which provided, “I hope it will be apparent from the foregoing that I have elected at a very early stage to acknowledge the contempt and to relieve the Applicants of having to overcome various technicalities and procedures in order to pursue the permission application and/or establish the contempt conclusively”.
In the light of the admission, what remained in issue for determination at the hearing for the purpose of considering the appropriate penalty to be imposed, were two questions. First, what was the mindset of Mr Lewis at the time of the contempt. In this regard it is common ground that the key factual issue for determination is whether Mr Lewis was acting in deliberate breach of the Revised Freezing Injunctions (as the Applicants allege but Mr Lewis denies). Secondly, did Mr Lewis knowingly make false statements as to his assets in his Seventh Affidavit sworn on 23 September 2019 (as the Applicants allege but Mr Lewis denies).
B. APPLICABLE PRINCIPLES
The applicable principles in relation to an allegation of contempt were common ground.
CPR 81.8 makes provision in respect of the hearing of contempt proceedings — see subrules (1)-(2), (6) and (7).
Page 3 of the Contempt Application sets out important information as to the defendant's rights and as to the course the hearing may take, including:
a. The defendant is entitled but not obliged to give written and oral evidence in his defence.
b. The defendant has the right to remain silent and may not be compelled to answer any question which may incriminate him.
c. If the defendant does not attend the hearing, the court may proceed in his absence.
d. If the court is satisfied that the defendant has committed a contempt, the court may punish him by a fine, imprisonment or other punishment permitted under the law.
e. If the defendant admits the contempt and wishes to apologize to the court, that is likely to reduce the seriousness of any punishment by the court.
f. The court's findings will be provided in writing as soon as practicable after the hearing.
Any term of imprisonment, is for a fixed term which, by virtue of s. 14(1) of the Contempt of Court Act 1981, must not exceed 2 years (the maximum term applies irrespective of the number of contempts alleged and dealt with by the Court on any occasion — see Arlidge, Eadie & Smith on Contempt 5th Ed (2017) (“Arlidge”) at 14–16).
Allegation 1 is an allegation of civil contempt. Nevertheless, the standard of proof is the criminal standard of proof. As Christopher Clarke J (as he then was) stated in Masri v Consolidated Contractors International Company SAL [2011] EWHC 1024 (Comm) at [144]:
“The onus of proving the acts of contempt of which he complains rests on the judgment creditor. He must satisfy the court so that it is sure that the judgement [debtors] are in contempt in the respects alleged i.e. to the criminal standard. The judgment debtors are to have the benefit of any reasonable doubt.”
See also Kea Investments Ltd v Watson & Others [2020] EWHC 2599 (Ch) per Nugee LJ at [13] approving Rose J's statement of the applicable principles, including the following:
“i) the burden of proving the contempt that it alleges lies on the Bank. Insofar as [the Defendant] raises a positive defence he carries an evidential burden which he must discharge before the burden is returned to the [Applicant].
ii) the criminal standard of proof applies, so that the [Applicant's] case must be proved beyond reasonable doubt – or so that the court is sure.”
So far as mens rea is concerned, it is not necessary to show that there is a direct intention to disobey the order: but it is necessary to show that what the defendant did was intentional in the sense that it was not accidental — see Khawaja v Popat [2016] EWCA Civ 362 per McCombe LJ at [32].
Thus, as was said by Christopher Clarke J in Masri v Consolidated Contractors International Company SAL (supra) at [150] (applied in XL Insurance v IPORS Underwriting [2021] EWHC 1407 (Comm) per Cockerill J at [57–60]):
“In order to establish that someone is in contempt it is necessary to show that (i) that he knew of the terms of the order; (ii) that he acted (or failed to act) in a manner which involved a breach of the order; and (iii) that he knew of the facts which made his conduct a breach.”
In relation to knowledge, and as was explained in Atkinson v Varma [2020] EWCA Civ 1602 per Rose LJ at [54] (with whom Stuart-Smith and Lewison LJJ agreed):
“… once...
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