A company is obliged to do or not do something by an injunction but acts in breach of the injunction. In these circumstances what is the liability in contempt of a director of that company? The issue was considered by Hamblen J in the case of Ipartner v Panacore.

In this case a number of companies were obliged to provide details of their assets “to the best of their ability” by a specified date. This is a pretty common form of order. Hamblen J held that after that date there was no continuing obligation of disclosure. As is typical with such orders, there was an obligation to verify the information by affidavit on a yet later date. The judge stated that if further or different information was known by the time it was to be verified, such information should be stated, but the order did not impose a duty on the companies to continue to search for information.

In light of these findings, claimants will want to consider the wording of orders going forward. If they wish respondents to be under a continuing duty to search, then this should be specified.

An interesting question of causality arose. It had previously been held by Biggs J (in Sectorguard v Dienne [2009] EWHC 2693) that failure to comply with an order to do something, where the doing was impossible, would not amount to contempt. Hamblen J took this further in Ipartner and applied the same principle to the situation where it was impossible to comply more fully with the order.

In this particular case, the directors of one of the companies had no involvement in the day to day activities of the company and had no access to its trading records. All they could do was make enquiries of the people most likely to know the requested information and then report that to the claimants. This they did and in fact continued to do.

Against this background, Hamblen J did not feel that it had been proven to the criminal standard required on application for contempt that even the company had failed to provide disclosure “to the best of their ability”. If the company was not in contempt, then the directors could not be either. Although a clear cut finding of contempt was made for another company and director (where the order had simply been ignored), one is left with the feeling that the judge thought that this was an application too far.

There were two postscripts in the case. The first concerns service of the freezing orders. Hamblen J noted that generally contempt proceedings could not follow unless the underlying freezing order (and also the committal application and evidence in support) had been served personally, but nonetheless there are provisions in the Civil Procedure Rules which allow for alternative means of service. In this case alternative service was permitted by email and registered post. The judge was satisfied that service was duly effected.

The second postscript concerned sentence. Those found in contempt were not represented. .Hamblen J gave them a further 14 days to comply with the injunction order, stating explicitly that imprisonment was a real possibility if there was no compliance. Such an approach is to be applauded as a sensible use of the regime and procedure and its coercive element.

Ipartner Pte Shipping Limited and others v Panacore Resources DMCC and others [2014] EWHC 3608 (Comm)

Post By bernardoosullivan (8 Posts)


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