Lexis Nexis E-Bulletin Series: Contempt Proceedings and Contempt of Court – Part 11

Committal Proceedings and Contempt of Court

11/12 Writs of Sequestration

This e-bulletin is part of a series covering contempt of court in all its forms and the series is designed to be relevant to all practice areas. Richard Shepherd has been commissioned by Lexis Nexis to draft their Professional Practice Notes on the subject. Albion Chambers is delighted that we have been granted permission by Lexis Nexis to share these guides with our instructing solicitors and professional clients before they have been published online. The next e-bulletins in the series will be published every Tuesday morning.

Generally

This e-bulletin covers the circumstances in which committal proceedings can be brought alongside, or for failure to comply with, writs of sequestration, and the process to be adopted in bringing them. This includes circumstances where an order, judgment or undertaking has not been complied with.

The e-bulletin does not cover (other than where necessary) the circumstances where writs of sequestration can be applied for and granted. For further details please see CPR 81.19 to 81.27.

This e-bulletin should be read in conjunction with the ‘Nuts and Bolts’ e-bulletin, giving a general overview of these types of proceedings.

For the most part, the relevance of a writ of sequestration is where a debtor fails to pay within a particular or specified period, or fails to comply with an order; a writ of sequestration can be issued to secure the debt (or an order) against property. If that property is not forthcoming, the court can commit for breach of the writ.

Committal for breaches of such writs are relatively uncommon but applications for writs of sequestration can provide a useful, intermediate stick to secure compliance with underlying orders without necessarily requiring a committal application to secure compliance. Such a process falls very much within the coercive objective of committal-type proceedings. However, there is nothing to prevent an applicant from pursuing both a writ of sequestration and committal for contempt at the same time.

As per CPR 81.19 and 81.26 any application for a writ of sequestration (or more accurately, permission for a writ of sequestration) must be to the High Court. The application for permission is by notice under Part 23.

Enforcing a Writ of Sequestration (CPR 81.24)

Unless the court orders otherwise, to be able to attempt to enforce an order through a writ of sequestration the applicant must first ensure:

• A copy of the (or all relevant) order(s) has/have been served on the respondent;

• It/they has/have been served prior to the expiry of the fixed time for complying;

• If the timescales have been varied, the service of the order varying the timescales should also be served;

• It must include the relevant penal notice.

The requirements set out in the section ‘The Application and Supporting Evidence – a Strict Regime’ of the e-bulletin “Nuts and Bolts” apply equally to writs of sequestration, though the requirements are derived from CPR 81.21 to 25, rather than CPR 81.5 to 81.0.

Penal Notices

As with committal applications for contempt (see practice note “Nuts and Bolts”), when serving the underlying order, the document must include a penal notice. In relation to an order on which a later writ of sequestration or committal application is made, the order must include the penal notice prescribed by CPR 81.25. CPR 81.25 states:

“(1) Subject to paragraph (2), a judgment or order to do or not do an act may not be enforced by a writ of sequestration unless there is prominently displayed, on the front of the copy of the judgment or order served in accordance with this Section, a warning to the person required to do or not do the act in question that disobedience to the order would be a contempt of court punishable by imprisonment, a fine or sequestration of assets.”

The penal notice on the underlying order is a shorter version than that required for a committal hearing, it is set out at CPR PD 81.9, it states:

“If you the within-named [   ] do not comply with this order you may be held to be in contempt of court and imprisoned or fined, or your assets may be seized.”

For a belt and braces approach it is also worth the proposed applicant drawing the effect of the penal notice to the attention of the proposed contemnor, prior to issuing the application. In so doing, it helps to protect the application against any procedural doubts, allowing a judge to waive particular requirements or proceed in the full knowledge that the proposed contemnor is aware of proceeding and the consequences, as an example see Compania Sud Americana De Vapores S.A. v Hin-Pro International Logistics Ltd [2013] EWHC 987 (Comm).

Undertakings

The position is slightly different where an applicant is seeking to enforce an undertaking (even if that undertaking is incorporated into an order). In such circumstances the court may decline to deal with the disobedience of the order as a contempt or by writ of sequestration unless the proposed contemnor has signed a statement acknowledging the potential consequences of failing to comply with the undertaking. For further details, please see PD 81 2.1 to 2.4.

Therefore, if a practitioner is in a situation where undertakings are being given, an advisable extra step to take prior to concluding those negotiations/proceedings should be the drafting and signing of a PD 81 2.1 to 2.4  compliant statement.

The Strict Requirements of an Application

The application for permission must adopt the formulae set out at CPR 81.26. It is suggested that a similar methodology as set out in the e-bulletin “Nuts and Bolts” under the heading ‘The Application and Supporting Evidence – a Strict Regime’ should be adopted to ensure compliance.

Particular regard should be taken of CPR 81.26(3)(b), namely:

“[the application] be supported by one or more affidavits containing all the evidence relied upon”.

As per Makdessi v Cavendish Square Holdings BV & others (committal) [2013] EWCA Civ 1540 (a case concerning contempt applications but with analogous requirements under CPR 81.14), “All” means all”. An applicant can expect short shrift if the application fails to comply with the procedural requirements.

The case of Hither Green Developments Ltd v Devere [2015] EWCA Civ 1365 is an example of where the applicant made a number of procedural and technical errors, despite the strict regime. The applicant may have been somewhat fortunate that the respondent ‘knew the ropes’, having previously served a sentence for similar behaviour in the same proceedings. As such there was no “hint of unfairness and no possible prejudice”. This case should be viewed as the exception to the rule.

Similarly, Tuohy v Bell [2002] EWCA Civ 423 is an example of a case where, once again, there were significant procedural problems, but in this case the court had verbally warned the contemnor of what may happen should he fail to comply. Once again, the court found no prejudice was caused to the contemnor.

As a writ of sequestration (or committal for that matter) simply relates to breaches of orders to which penal notices were attached, the range of orders that they can relate to is almost infinite  Below is simply a distillation of the more common orders and breaches as examples to assist the practitioner, and should not be seen as an exhaustive list:

• Breach of an injunction preventing the playing of licensed sound recordings – Phonographic Performance Ltd v Nightclub (London) Ltd [2016] EWHC 892

• Failure to provide information pursuant to a court order – Broomleigh HA v Okonkwo [2010] EWCA Civ 1113

• Breach of an order to provide specific disclosure – IPartner Pte Shipping Ltd v Panacore Resources DMCC [2014] EWHC 3608 (Comm)

• Husband’s failure to pay in accordance with maintenance order – Mann v Mann [2014] EWHC 2032 (Fam)

• Non-compliance with an assets freezing order – Templeton Insurance v Thomas [2013] EWCA Civ 35

• Failure to give full and frank disclosure – Taher v CMC Group [2009] EWHC 1445 (QB)

Companies and Corporations

Such orders can be made against directors or other office holders, subject to the usual service obligations (as above). A “wilful failure on the part of a director to take reasonable steps to prevent the breach of an order gives rise to liability for contempt”.

A Last Resort

In the e-bulletin “Nuts and Bolts” under the heading ‘A Last Resort’ it is suggested that other approaches, falling short of committal should be explored prior to commencing proceedings because the court considers the issue of proportionality in such matters. As will be appreciated, writs of sequestration may be one of those intermediate steps, but it is also arguable that prior to applying for a writ of sequestration alternatives should be explored.

Where individuals would appear to be in breach of court orders, especially in relation to disclosure obligations, other options such as:

• Applying to cross examine the individual on their assets

• Requests via correspondence

• Part 18 requests for information

• Strike out applications for non-compliance with the overriding objective of disclosure regimes.

The positive effect of an affidavit supporting an application for a writ of sequestration or committal (or both), which sets out all the attempts made at securing compliance, cannot be underestimated.

Discharge of a Person in Custody

Where a respondent failed to deliver up goods subject to a writ of sequestration and was subsequently committed to prison, that person may be released where those goods are passed to the relevant persons. For further details see the ‘sentencing’ section of the e-bulletin “Nuts and Bolts”.

Richard Shepherd

The final e-bulletin in this twelve-part series will be published next Tuesday and will examine “Appeals, Purges and Discharges”.