Confiscation of Assets (‘Writs of Sequestration’)
This week’s bulletin considers the circumstances where a party’s assets can be confiscated (also known as a ‘writ of sequestration’) as a remedy, punishment or coercion as part of contempt proceedings under CPR 81 (also referred to as committal proceedings’). This Practice Note does not address writs of sequestration to enforce a judgment, order or undertaking in a situation where no proceedings for contempt of court are brought.
Confiscation of assets—enforcement or contempt?
Note that prior to 1 October 2020, all methods of sequestration (both the ‘contempt’ kind and the ‘enforcement’ kind) were dealt with in CPR 81 but by an amendment to the CPR in force as of 1 October 2020, a decision was made to confine CPR 81 only to contempt proceedings.
Post-1 October 2020 the terminology ‘writ of sequestration’ is not used in CPR 81, but the principles regarding writs of sequestration remain (in a contempt context), referred to in CPR 81 as ‘confiscation of assets’ (see CPR 81.2, CPR 81.4(2)(p) and CPR 81.9(1)). As explained in the consultation document:
‘Confiscation of assets’ in 81.9(1) embraces the currently used term “sequestration” which is difficult for unrepresented parties to understand. “Sequestration” or seizure of assets is a remedy for contempt of court which is particularly useful for enforcing payment of fines by corporate or other bodies’
This is the type of writ of sequestration addressed in this bulletin, but is now referred to in CPR 81 as ‘confiscation of assets’. Note that pre-1 October 2020 case law (and potentially some more recent case law) referred to in this bulletin will use the terminology of ‘writs of sequestration’.
When should confiscation of assets be sought?
For the most part, the relevance of confiscation of assets will be where a debtor fails to pay within a particular or specified period, or fails to comply with an order. In these circumstances, confiscation of assets can be sought to secure the debt (or an order) against property. If that property is not forthcoming, the court can commit for breach of the order.
As an example of where a committal application and an application for a writ of sequestration (as was then the terminology) were used in tandem, see ICBC Standard Bank v Erdenet Mining Corp  EWHC 3135 (QB). In this case, due to the defendant being out of the jurisdiction, only a declaration of the defendant being in contempt was sought, alongside a writ of sequestration to secure assets. Under the post-1 October 2020 rules, it may well be the case that in similar circumstances a single application for committal would be made, seeking a ‘confiscation of assets’ as the remedy.
A further example of where a writ of sequestration/confiscation of assets was contemplated, alongside a financial penalty, is Nash v Lygren  EWHC 3088 (Ch). In particular, reading paragraphs 50 to 54 together, confiscation of assets being used as a stick to ensure future compliance was contemplated, and remained contemplated.
Committal for breaches of such orders are relatively uncommon but applications for confiscation of assets under the umbrella of a contempt application can provide a useful, intermediate stick to secure compliance with underlying orders, bearing in mind the coercive purpose of ‘sentencing’ for contempt of court, without necessarily seeking a committal to prison to secure compliance.
There is nothing to prevent a claimant in a contempt application from pursuing both confiscation of assets and an order of committal (i.e. sentence of imprisonment) at the same time.
Making the contempt application
In compliance with CPR 81.4, to be able to attempt to impose confiscation of assets as a remedy for contempt of court, the application must be supported by written evidence given by affidavit or affirmation dealing with the matters set out at CPR 81.4(2)(a) to (g), unless this is ‘wholly inapplicable’.
In some circumstances permission will be required – see our previous bulletin ‘Permission and Appropriate Forum’ for a more in-depth analysis.
The order must include a penal notice
As with any application for contempt, the underlying order which is allegedly breached must include a penal notice (CPR 81.4(2)(e)).
As an example specific to writs of sequestration (as they were then called), see ICBC Standard Bank v Erdenet Mining Corp  EWHC 3135 (QB), where the importance of the penal notice was underlined, but in the particular circumstances of this case, the strict requirements were waived.
Proceeding against companies and corporations
Contempt proceedings can be brought against companies, organisations, directors or other office holders (as evidenced by the definition of ‘penal notice’ in CPR 81.2).
In pre-1 October 2020 tandem applications (i.e. where proceedings are commenced against a company and the directors of the company), often the company assets will be targeted with a request for confiscation of assets, while directors will be pursued for contempt of court using a litigation ‘pincer’ movement. As an example of this, see Touton Far East PTE v Shri Lal Mahal  EWHC 621 (Comm).
Discharging/purging the contempt
Where a defendant fails to deliver up goods subject to an order for confiscation of assets and is subsequently committed to prison, that person may be released where those goods are passed to the relevant persons as the contempt will have been purged/discharged.
In next week’s bulletin we’ll look at the related issues of Sentencing and Costs.