Mohammed Khawaja v Paresh Popat and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Lord Justice Kitchin,Lady Justice Arden DBE |
| Judgment Date | 14 April 2016 |
| Neutral Citation | [2016] EWCA Civ 362 |
| Docket Number | Case No: A3/2015/1036 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 April 2016 |
[2016] EWCA Civ 362
Lady Justice Arden
Lord Justice Kitchin
and
Lord Justice McCombe
Case No: A3/2015/1036
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Peter Smith
HC13F00948
Royal Courts of Justice
Strand, London, WC2A 2LL
Henry Hendron (Direct Access) for the Appellant
Giddeon Roseman (instructed by Mills Chody LLP) for the Respondents
Hearing date: 8 March 2016
This is an appeal by Mr Mohammed Khawaja ("the appellant") from the order of Mr Justice Peter Smith of 6 March 2015 whereby the judge found the appellant to be in contempt of court and ordered that he be committed to prison for a period of 3 months, suspended for 12 months, on condition that he complied with the order of Mr Justice David Richards (as he then was) of 17 October 2015 (sic: 2014) during that period of 12 months.
The judge found the appellant to be in breach of the order of 17 October 2014, which had continued a freezing order previously made on 2 October 2014 by Mr Justice Birss against three defendants, namely the appellant himself, Cleo Clinic Wimbledon Limited ("CCW") and Singhar Beauty Salon Limited ("Singhar").
The order of 2 October 2014 had restrained "the Respondent" from removing from England and Wales or in any way disposing of or dealing with any of his assets up to the value of £300,000. References to "the Respondent" were stated to mean "both or all of them" if there was more than one respondent. This was not particularly helpful as there were in fact three respondents, the defendants named above. However, it was entirely clear that the idea was that the term was to mean any respondent or all of them and in the circumstances it could not reasonably have been understood in any other sense. By paragraph 8 of the order, if the total value of the respondent's assets in England and Wales exceeded £300,000, it was provided that such assets could be removed, disposed of or dealt with so long as unencumbered assets to a value in excess of £300,000 remained. In paragraph 11(2) there was the standard exception for dealings "in the ordinary and proper course of business". By clause 11(4), the order was to cease to have effect if the respondent provided security by paying £300,000 into court or made provision for security in that sum by another method agreed with the applicants' legal representatives.
The order of 17 October 2014 was a consent order, signed by the solicitors acting on each side of the record. By its terms the appellant undertook to the court not to dispose of, deal with or diminish in value two identified properties and to allow and give consent to the applicants to enter restrictions on the relevant titles to those properties registered at HM Land Registry. It recited that "the Respondent's" (presumably the first respondent's) undertaking would cease to have effect if he provided security as before. By paragraph 1(i) of the order, it was ordered that the freezing order against the first respondent (i.e. the appellant) was discharged, but that,
"(iii) The Freezing Order shall remain in force as against the second respondent" (i.e. against CCW)
By paragraph 2(ii) of that order the first and second respondents (the appellant and CCW) were ordered to provide by 4 p.m. on 21 November 2014,
"Details of [CCW's] transactions and receipts for the period from 1 August 2013 until the date of this order, including but not limited to, all printed and handwritten receipts, all calendars, diaries and appointment cards, all computer ledger cards, card machine print outs and receipts and invoices."
The order was not personally served on the appellant until a date in January 2015, although (as noted above) the order was in fact a consent order signed by the appellant's solicitors.
By Application Notice issued on 22 January 2015, the respondents applied for orders that the requirement of personal service of the consent order be dispensed with and that the appellant in his personal capacity or as director of CCW be committed to prison in respect of breaches of both the order of 2 October 2014 and that of 17 October 2014.
We were informed that at a hearing, which appears to have been on 27 February 2015, the judge dismissed the application in respect of the alleged breach of the first order. However, following a further hearing on 6 March 2015, the judge found that the appellant had breached the terms of the second order. The breaches found by the judge to have been proved were in respect of five transfers made from the bank account of CWL (Sort Code 20–58–51, Account No. 83505995) to two other accounts under the appellant's control. The dates of the transfers, the amounts and the transferee accounts were as follows:
October 2014 £1,709.63 to Account 70804088, Sort Code 20–90–69
October 2014 (two payments) £1,500 and £884 to Account 53564584, Sort Code 20–58–51
October 2014 £800 to Account 03014649, Sort Code 20–90–69
November 2014 £6,000 to Account 63309657, Sort Code 20–58–51.
There was no dispute as to the fact that the appellant had caused these transfers to be made or that the accounts were accounts under the control of the appellant, either personally or through a company or companies in his control.
The judge also found the appellant to be in breach of the requirement in paragraph 2(ii) of the second order in failing to provide by 4 p.m. on 21 November 2014 details of the transactions of CCW from August 2013 to the date of that order.
There was no dispute that the information had not been provided in time (although subsequently remedied in February 2015). The argument centred on the reason for the omission and the fact that the appellant had not been personally served with the consent order, requiring him to do this positive act of providing information, before the date for compliance, as required by CPR 81.5(1)(a).
The judge dispensed with the service in so far as the order contained negative obligations. He decided that that was covered by the provisions of CPR 81.8 because the appellant clearly had notice of the terms of the consent order: see paragraph 4 and 5 of the judgment. In this respect, he must have had in mind CPR 81.8(a). He did not invoke CPR 81(8)(b) in respect of the positive obligations imposed by the order. Instead, he appears to have accepted the submission of Mr Roseman that the absence of service could be waived as a procedural defect under the Practice Direction to CPR 81, paragraph 16.2 which provides:
"The court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect."
The appellant filed two affidavits in response to the application. The first was made on 26 February 2015 and the second on 3 March 2015. So far as the bank transfers were concerned, in the first affidavit, the appellant first dealt with the alleged breaches of the first order (which, in the end, were no longer in issue when the judge made the committal order) and he said this:
"4. I do not consider these are breaches because paragraph 11(2) of the Order permits the Respondent from dealing with or disposing of any of his assets in ordinary and proper course of business. All of the above were under this category. Furthermore items A-H are transfers from amongst companies' accounts to another one of the company's accounts. Therefore there is no way there is any intent to diminish, remove from England and Wales or any other breach. As far as Cleo Clinic Wimbledon Limited's bank account is concerned, there was a net input of £1,129.90 between 13 September 2014 to 14 November 2014, so again no funds have diminished."
With regard to the transfers, alleged to have been in breach of the second order, the appellant said this in paragraph 7 of the same affidavit:
"In respect to the alleged breaches of a-d it once again falls under the above mentioned exclusion as these transfers were from amongst our companies' accounts to another one of our company's accounts. Therefore there is no way there is any intent to diminish, remove from England and Wales or any other breaches. As far as Cleo Clinic Wimbledon Limited bank account is concerned between 13 September 2014 to 14 November 2014 there was a net input of £1,129.90."
As for the failure to provide the information as to dealings by CCW, the appellant said this in paragraphs 8 and 9 of the same affidavit:
"All transactions and receipts have now been provided to the Applicants' solicitors. I accept there was an oversight on my part in initially providing these to the Applicants' solicitors. My solicitors also overlooked this part and had not mentioned to me or reminded me. However it was not my intention not to comply with the court order. Indeed I have provided at least 5000 pages of bank statements from the date of the order to the current date. Where there was something not provided to the Applicants' solicitors, as soon as they made a request for me to comply with something that might have been overlooked, I did so immediately."
"My solicitor is in constant contact with the Applicants' solicitors and they need only have asked me to comply with a part of an order that I had overlooked and I would have done so. I have for example provided to the Applicants' solicitors on a fortnightly basis, all the Cleo Clinic Wimbledon Limited's bank statements as required by the order. The order is very onerous but I have done my best to comply...
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