Take “Hart,” Judges Will Use Their Powers Including Imprisonment To Punish Contempt In Relation To Non Production Of Documents.

Have you ever felt frustrated by the Courts’ reluctance to use its powers to enforce disclosure?   In the latest round in the long running bout of Hart v Hart, HHJ Wildblood QC sitting as a Deputy High Court Judge has sentenced the Husband (H) to 14 months imprisonment for contempt for failing to produce documents to allow the Wife (W) to run a company, the sentence being given despite the fact that H is suffering from prostate cancer and is 83 years of age!

One gets the feeling that the judge was at the end of his tether after over 6 years of litigation in this case.   HHJ Wildblood QC had heard the final hearing of the financial remedy application in May 2015.   Part of his decision required H to transfer ownership of a company, Drakestown Properties Ltd, to W.    An undertaking was provided by H to take all steps necessary to ensure that W could conduct the efficient and effective management of the company, including to provide W with all necessary documents and information.   At the trial H was described by the Judge as ‘an exceptionally poor and untruthful witness’ and the Judge noted that significant delay and expense was caused by H’s failure to give adequate information or comply with court orders.   The wife was awarded a sum of £3.5m out of assets totalling £9.4m following her 19 year marriage to H seemingly due to the fact that the Judge found H to have substantial pre-marital wealth.   W obtained permission to appeal the award to the Court of Appeal but in 2017 was ultimately unsuccessful in that Court. (See Dean Thistle’s illuminating article on the appeal.)

Despite W’s appeal being unsuccessful H had ‘done his utmost to prejudice W and to put her under pressure by failing to comply with his undertaking and with the subsequent enforcement orders’ that were made. W was compelled to bring proceedings in the Chancery Division of the High Court to obtain possession of the company’s premises.   H also prevaricated on effecting the share transfer. Upon obtaining possession of the premises, W discovered the company had been stripped of all its computers and financial records, with only a couple of bank statements left behind.  It was impossible for W and her accountants to prepare the necessary accounts for HMRC, which lead to tax inspectors threatening enforcement action. W also found herself on the receiving end of a claim for unpaid business rates without the information to defend the claim and without the necessary insurance details to remedy subsidence at one of the commercial properties.

At a hearing on 24 February 2016, a list of the documents sought by W was produced, and it was agreed by H and his sister (she was also involved in Drakestown) that they would be provided.   However no further documents were produced in response to this order.   At a further hearing on 29 July 2016, H was ordered to produce documentation in relation to VAT, and a recital established that H and his sister had confirmed that such documentation was available to them.    H later suggested, having failed to produce this documentation, that he had been mistaken in saying that he could provide it.

W’s committal and enforcement applications within the Family Division proceedings were made on 15 September 2016.  The committal applications finally came to be heard in March 2017, although initially had to be adjourned as H had failed to properly instruct his counsel. A list was produced and agreed of the documents that H was to have produced (without admission that his failure to do so represented breach), however, and it was agreed that these would be produced.    Significant documentation was produced by 22 March 2017 that ‘could and should have been disclosed before’. They did not represent the totality of the documents that H was to have produced.   Live evidence was heard on 27 and 28 March 2017, but the case could not be concluded and due to various difficulties with listing and the availability of counsel the matter was not concluded until February 2018. At several points in the judgment HHJ Wildblood QC rejected H’s suggestions that various records were not kept by the company in the first instance, were not retained, or had been lost during IT changes.

At the conclusion of the hearing the Judge found very significant breaches to the extent that he prepared a number of tables to list the alleged breaches, whether breach at the time of the application was proven, and whether the information had been provided since.    HHJ Wildblood QC concluded that W had ‘proved with ease’ that H was in contemptuous disregard of his undertaking and the subsequent orders of 24 February 2016 and 29 July 2016. In his judgement he reminded himself that he had found H to be an exceptionally poor, untruthful and terrible witness.    The Judge found that during the committal proceedings, H continued to behave in a way that was purposefully evasive and untruthful; found that H was in very serious and sustained contempt of court; found that it had always been in H’s power to provide the information sought; found that H simply chose not to do so; concluded that H’s contemptuous approach had existed from the time he provided his undertaking in 2015 and held that H had shown no remorse about his conduct, and that he behaved as he had in order to increase pressure on W and to demonstrate his resentment towards her following the original financial award. Further, he found the contempt was motivated by a wish to demonstrate his resentment about the financial orders made in W’s favour. It was found that the contemptuous actions brought very significant pressure and expense on W, which is what they were intended to do.

The sentencing decision was adjourned and heard on 15th March 2018.   HHJ Wildblood QC considered the case in the light of Crystal Mews Ltd v Metterick and Others [2005] EWHC 3087 (Ch), and determined that the breaches lay at the high level of culpability, being persistent, damaging, motivated and continuing in part with H showing no remorse. He found that there were serious aggravating factors and “in the language of s 143 of the Criminal Justice Act 2003, H’s “contempt has caused deliberate financial and emotional harm to W”. H alone was responsible for his breaches and he had not co-operated in the enforcement proceedings and nor did he acknowledge the seriousness of his actions.

Balanced against this in the sentencing decision was the fact that H was now aged 83, was suffering from prostate cancer and a prison sentence would have a very significant effect on him. He had also lost his relationship with his children and former wife as a result of the proceedings, and had remedied at least some of the deficiencies in the documentation that he was to provide, albeit on the morning of the sentencing and he had agreed to pay £100,000 in costs.

Given the severity of the acts of contempt, HHJ Wildblood QC held that a financial penalty would be wholly inadequate, and only a sentence of imprisonment was appropriate. A suspension of sentence was not justified where there had been so much opportunity to remedy the breaches previously

The sentence passed by the judge composed two parts. First, a punitive sentence to recognise the blatant breaches by H of the undertaking and orders. Second, a coercive element in order to compel, so far as possible, H to provide W with the information she required to conduct effective management of the business.  The Judge set out his sentencing as follows:

Punitive element Additional coercive element
Undertaking 9 months 5 months
Order of 24th February 2016 9 months 5 months
Order of 29th July 2016 9 months No coercive element

 

Although the sentences on each of the breaches were to run concurrently the coercive elements were to be additional to the punitive elements on each relevant breach, bringing the total to 14 months of which 7 months would be served in prison, per s. 258(2) of the Criminal Justice Act 2003.

In concluding his “sentencing remarks” HHJ Wildblood QC said this Finally, having expressed the sentence, I wish to observe this. Although these parties have funded their own legal costs from the assets that they have, the courts in which this unnecessarily protracted litigation has been fought out for the past 6 ½ years and all those working within it (including myself) are funded from the public purse. This case has placed an immense burden on limited public funds, a burden that will continue now as a result of your incarceration.

This judgment demonstrates that the courts will order the ultimate sanction in cases, although does it also perhaps suggests imprisonment will only be used where there are systemic and repeated breaches of court orders fuelled by a lack of remorse and total resentment for the complainant party.   Time will tell.