MOHAMMED KHAWAJA v (1) PARESH POPAT (2) ANJU POPAT (2016)

A company director had breached a freezing injunction by procuring the company’s breach of a requirement not to deal with assets and by failing to comply with a requirement to provide information. He was in contempt of court and it was irrelevant that he claimed not to have intended to breach the injunction. The judge had been entitled to order his committal to prison, suspended for 12 months provided that he complied with the freezing injunction.
The appellant appealed against a decision that he was in contempt of court and ordering his committal to prison, suspended for 12 months provided that he complied with certain conditions.

The respondent had obtained a freezing injunction against the appellant and a company which he directed. The order was made by consent and restrained them from removing from England and Wales or in any way disposing of or dealing with any of their assets up to the value of £300,000. It also required the appellant and the company to provide details of certain transactions and receipts by a specified date. The order was not personally served on the appellant although it had been signed by his solicitors. The judge dispensed with service because the appellant clearly had notice of its terms. The order stated that it would cease to have effect if the appellant provided security by paying £300,000 into court or made provision for security in that sum by another method agreed with the respondents. The appellant undertook not to dispose of or deal with two identified properties, and permitted restrictions to be entered on their titles. The court found that the appellant had breached the order because five transfers had been made from the company’s bank account to accounts under the appellant’s control. It also found that the appellant had failed to provide the information specified. The appellant denied that the bank transfers breached the order, arguing that there was no intention to diminish assets because the transfers were from his company’s accounts to accounts of other companies which he controlled. He accepted that there had been an oversight in providing the information, but indicated that he had now complied. During the contempt hearing, the respondents wished to cross-examine him. The appellant had provided two affidavits, but declined to give oral evidence. The judge found that he had failed to comply with the freezing order, both in respect of the failure to provide information and in respect of the transfers. He inferred that the appellant had not gone into the witness box because he knew that what he said in his affidavit was untrue. He imposed a committal order, suspended on condition that the appellant comply with the freezing order.

The appellant submitted that (1) the respondents had not proved the alleged breaches to the criminal standard of proof and the judge had been wrong to draw an adverse inference from his refusal to be cross-examined; (2) he was not in breach of the orders because his assets exceeded £300,000; (3) the order restraining him from disposing of or dealing with assets applied only to himself and not to the company; (4) he had provided security by giving the undertaking and that was sufficient to prevent the freezing order from applying to the company; (5) the judge had been wrong to dispense with personal service of the consent order; (6) the penalty imposed for the breaches was excessive.

HELD: (1) The judge had been entitled to reach the conclusion that he did on the evidence before him. His overall remarks on the right to remain silent and the risk of adverse inferences were in accordance with the law and practice in relation to persons accused of contempt, as set out in The White Book 2015 Vol.1 para.81.28.4. It was clear that the judge recognised that the burden of proof was upon the respondents and recognised the standard of proof required to discharge that burden. He did not conclude that the appellant’s silence on its own proved his guilt. He recognised that the respondents’ evidence produced a case to answer; he found the explanations in the appellant’s affidavits unsatisfactory; and in the absence of oral evidence he drew the inference that the appellant’s explanations were untrue (see paras 26-29 of judgment). 

(2) It was alleged that the appellant had procured the company’s breach of the freezing order, to the extent that its assets did not exceed £300,000. It was never suggested that the company had assets in excess of that sum and the extent of the appellant’s own means was immaterial. Further, the breach was not excused by the appellant’s belief that he was entitled to act as he did (para.32).

(3) The meaning of the order was clear and it was obvious that it applied both to the appellant and to the company (paras 3, 34).

(4) The effect of the undertaking was that the freezing order against the appellant was discharged, but the order expressly continued the freezing order against the company. In any event, the appellant’s undertakings did not constitute either a payment into court of £300,000 or security for that sum by another method agreed with the respondents, as required by the order (para.36).

(5) The judge had jurisdiction to dispense with service of the consent order under CPR PD 81 para.16.2. It was clear that the appellant was well aware of the terms of the order. The judge had not been wrong to exercise his discretion as he did (para.40).

(6) It was impossible to say that the judge had erred in the exercise of his broad discretion as to penalty (para.41).
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