Templeton (Applicant/Claimant) v Motorcare Warranties and Others (Respondents/Defendants)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 19 July 2012 |
| Neutral Citation | [2012] EWHC 2309 (QB) |
| Docket Number | Case No: 2009/915 |
| Court | Queen's Bench Division |
| Date | 19 July 2012 |
[2012] EWHC 2309 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Eder
Case No: 2009/915
Mr M Cook (instructed by Nelsons) appeared on behalf of the Claimant
Mr C Quiney (instructed by Peter Davies Solicitors) appeared on behalf of the Second Defendant
Mr M Gadsden (instructed by Vale Solicitors) appeared on behalf of the Third Defendant
These proceedings concern the operation of a company called Motorcare Warranties Limited ("Motorcare") which was established in the 1990s by Mr Anthony Thomas. During the relevant period Mr Anthony Thomas and his wife each owned 50 per cent of the shares in Motorcare. Mr Panesar was the managing director. Motorcare's business was primarily in the sale of the mechanical breakdown insurance policies, which were sold by a network of several hundred appointed representatives, mainly car dealers to their customers. In addition, Motorcare had agency arrangements with a number of self-employed sales agents who worked with the appointed representatives.
Between July 2004 and July 2008 Motorcare acted as agents on behalf of Templeton in selling mechanical breakdown insurance policies, which would either be sold to the customers by the dealer or given away "free" at the time the vehicle was sold.
Following a three-week trial in November 2010 Simon J concluded in summary that Motorcare had underpaid Templeton by £2.3 million and that misrepresentations which had induced Templeton to extend the relationship in July 2007 were false and were known to be false by both Mr Panesar and Mr Anthony Thomas, with the result that Motorcare, Mr Panesar and Mr Anthony Thomas were all liable in deceit.
Quantum in relation to that fraudulent misrepresentation claim was adjourned by Simon J, and following a hearing before me earlier this year I concluded that the quantum of that claim was £3,250,000 plus interest and costs.
The sums due under both those judgments remain unpaid. Motorcare is in liquidation. The money obtained by these defendants as a result of their activities appears to have disappeared but how, when or where is a mystery. I have seen no documents which might explain the position.
At the outset of these proceedings Templeton sought and obtain from this court on 8 July 2008 a freezing injunction against Motorcare and also against Mr Thomas and Mr Panesar. Thereafter, Templeton applied to the court for an order for committal for contempt of court against Mr Panesar and Mr Thomas. In essence, it was Templeton's case that within a week of the freezing injunction (that is on or about 14 July 2008) another company, that is Motorcare Elite 2008 Limited ("Motorcare Elite") was set up and registered by, amongst others, Mr Anthony Thomas and Mr Panesar, that thereafter the business and goodwill of Motorcare was in effect transferred to Motorcare Elite; and that this conduct constituted a serious breach of the freezing injunction.
I dealt with that application earlier this year and following a hearing I concluded that both Mr Panesar and Mr Anthony Thomas had been in contempt of court. The reasons for that conclusion are set out in my judgment dated 28 March 2012, and also my order dated 4 April 2012. At the request of counsel for both Mr Panesar and Mr Anthony Thomas I adjourned the question of sanction in relation to such contempt, in order to enable both those individuals to obtain a psychiatric report on their mental capacity, if so advised, and for the service of any other evidence.
Guidance on sentencing for civil contempt and specifically in the context of freezing orders may be found in the judgment of Lawrence Collins J in Crystalmews Ltd v Metterick [2006] EWHC 2653, although I accept that as indicated by Jacob LJ in a later case Shah v Patel & Ors [2008] EWCA Civ 979, each case is fact specific, and what was stated by Lawrence Collins J is not to be regarded as anything like "sentencing guidelines".
So far as penalties are concerned the court may impose an immediate custodial sentence, limited to a two-year maximum, pursuant to section 14(1) of the Contempt of Court Act 1981. A person committed to prison for contempt of court is entitled to unconditional release after serving half of that sentence. A committal order is appropriate where there is serious contumacious flouting of orders of the court; see Gulf Azov Shipping Company Ltd v Idisi [2001] EWCA Civ 21 at paragraph 72. This is in my judgment particularly so in relation to freezing injunctions, which have become an important part of modern litigation. As I said in my earlier judgment, a claimant's success on its substantive claims are generally worthless if there are no assets to meet their claim. It is for that reason that the jurisdiction in relation to freezing injunctions, which was developed in recent years, has become such an important part of the administration of justice.
In my view, again as I stated in my earlier judgment, the jurisdiction should be jealously guarded and in appropriate circumstances rigorously enforced. Breach of a freezing injunction is, in my judgment, a particularly serious matter, as was recognised, for example, in the recent decision of the Court of Appeal in JSC BTA Bank v Solodchenko & Ors [2011] EWCA Div 1241, in particular at paragraphs 45–58. As there stated in the context of non-compliance the disclosure of provisions of a freezing order:
"I shall not attempt to catalogue all those first instance decisions. What they show, collectively, is that any deliberate and substantial breach of the restraint provisions or the disclosure provisions of a freezing order is a serious matter. Such a breach normally attracts an immediate custodial sentence which is measured in months rather than weeks and may well exceed a year."
Then later on in the judgment there was stated the following:
"I derive the following propositions concerning sentence for civil contempt, when such contempt consists of non-compliance with the disclosure provisions of a freezing order:
(i) Freezing orders are made for good reason and in order to prevent the dissipation or spiriting away of assets. Any substantial breach of such an order is a serious matter, which merits condign punishment.
(ii) Condign punishment for such contempt normally means a prison sentence. However, there may be circumstances in which a substantial fine is sufficient: for example, if the contempt has been purged and the relevant assets recovered."
It is important to note that any custodial sentence imposed should be as short as possible, consistent with the circumstances of the case, see Aqualina v Aqualina [2004] EWCA Civ 504 at paragraph 14.
On behalf of Mr Thomas, Mr Quiney submitted that a custodial sentence is only a matter of last resort and should be exercised with care. In that context Mr Quiney drew my attention to the guidance in R v Kefford [2002] 2 Cr App R (S) 106 and also
to the passage in the judgment of Phillips LCJ in R v Trigger Alan Mike Seed and Philip Stark [2007] 2 Cr App R (S) 69.
I accept of course what is stated in those cases. In addition, it is important to note that the execution of any custodial sentence may be suspended for such a period, or on such terms as the court deems fit. See CPR Schedule 1 order 52, rule 7(1). That is certainly a possible sanction that may be applied in a particular case. The suspension of a custodial sentence is particularly appropriate in, for example, circumstances where it is intended to encourage or to seek to achieve compliance with a court order going forward, or providing the contemnor with an opportunity to purge his or her contempt with regard to past contempts. However, it is important to note that that does not arise in these circumstances. I am presently concerned with breaches of the court order as I found in my earlier judgment. The case has finished, and to that extent a suspended sentence is not at least for those reasons, in my view, appropriate, although, of course, it may be appropriate to suspend a sentence for other reasons.
In addition to the powers that I have just mentioned the court may also...
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Templeton Insurance Ltd (Respondent / Claimant) v Anthony Thomas and Another
...to prison for 4 months in the case of Mr Thomas, and 9 months in the case of Mr Panesar: see the further judgment dated 19 July 2012, [2012] EWHC 2309 (QB), (the "sentence 2 The committal proceedings were brought by Templeton Insurance Limited ("Templeton"), the claimant in an action agains......