England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		October 25 2006

Mr Justice Lawrence Collins:

I Introduction

1. HM Revenue and Customs ("the Revenue") claims that the claimant, Crystalmews Ltd ("the Company"), has been the vehicle for missing trader intra-community VAT fraud. On February 13, 2006 the Revenue issued a winding up petition against the Company and applied before Peter Smith J for the appointment of Mr Timothy James Bramston ("Mr Bramston") as provisional liquidator. The order was made, and immediately following it Mr Bramston applied without notice for a Freezing Order ("the First Freezing Order") against the Company's de facto and de jure directors. The Order was made limited in amount to £200 million.
2. The Company was incorporated in February 2003 and commenced active trading at the end of 2004. Its de jure directors were Andrew Metterick and Ricky Metterick, the Second and Third Defendants. The active business of the Company was conducted by the First Defendant ("Mr Metterick"). Mr Metterick is the father of Andrew and brother of Ricky. The Fourth Defendant, Juliet Metterick ("Mrs Metterick"), is the wife of Mr Metterick and step-mother of Andrew Metterick.
3. The Revenue claims that in a short period of time the Company traded in a manner which bore many of the characteristics of participation in missing trader intra-Community VAT fraud: it engaged in high volume purchase and sale of mobile phones and computer goods; it engaged in a system of making (or passing on to its own purchasers instructions for making) third party payments of the entirety (or almost the entirety) of the purchase price of goods sold to it. The effect of such a system was to deprive either its immediate supplier or a supplier further up the chain of supply of the means with which to discharge its own VAT liability on its sales; the payments were to offshore parties seemingly unconnected with the transactions. Payments were all made to the accounts of various parties maintained at First Curacao International Bank in the Netherlands Antilles. Warnings which had been given by the Revenue about the risk of making third party payments and of the need to conduct checks (amongst other things) into the VAT status of its suppliers were ignored.
4. Over a period of 2 months (August/October 2005) the Company entered into 345 transactions in which it acquired goods from Vollitone Ltd and sold them on to a variety of purchasers. Vollitone Ltd was a company with no recorded director or secretary, which purported to trade from a non-existent address; had never been registered for VAT and provided an invalid VAT number on its VAT invoices to the Company.
5. As a consequence the Revenue disallowed the Company's VAT input tax claims in relation to its purchases from Vollitone Ltd and assessed the Company for VAT in the approximate sum of £31.7 million.
6. The claim in the particulars of claim as then formulated was that the Defendants, as actual or de facto directors, were in breach of duty in allowing the Company to incur VAT liabilities in excess of £31 million and in rendering it insolvent by directing customers to pay the entirety of its book debts to third parties.
7. Having reviewed the available Company's books and records, the provisional liquidator found that substantial sums had been paid by the Company to Mrs Metterick purportedly by way of dividend. £240,000 was paid to her between April and May 2005. Additionally €62,500 was transferred by the Company to a firm of Spanish lawyers in January 2006 in connection with the proposed acquisition of a property in Spain in Mrs Metterick's name.
8. In the light of evidence of Mrs Metterick having received very substantial sums out of the Company for which there was no apparent legitimate entitlement, the Company acting by its provisional liquidator applied on March 21, 2006 before Etherton J without notice for a Freezing Order against her limited in amount to £600,000 ("the Second Freezing Order").
9. On April 5, 2006 a winding up order was made against the Company, and on the following day Mr Bramston was appointed as liquidator by the Secretary of State.

II The Freezing Orders

The First Freezing Order

10. Peter Smith J's Order of February 13, 2006 contained the following provisions:

"5 Until the return date or further order of the court, the Respondents must not:-

(i) remove from England and Wales any of their assets which are in England and Wales up to the value of £200,000,000.

(ii) in any way dispose of, deal with or diminish the value of any of their assets whether they are in or outside England and Wales up to the same value.

6 Paragraph 5 applies to all of the Respondent's assets whether or not they are in his, her or its own name and whether they are solely or jointly owned. For the purpose of this order, the Respondent's assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions.

7 The prohibition includes in particular the following assets:-

(i) any monies in any bank accounts in the name of Respondents or in any bank account over which the Respondents are a signatory or have control…

...

16 Effect of this order

It is a contempt of court for any person notified of this order knowing[ly] to assist in or permit a breach of this order. Any person doing so may be imprisoned, fined or have their assets seized.

…

20 Nothing in this Order shall, in respect of assets located outside England and Wales, prevent any third party from complying with:-

(1) What it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any contract between itself and the Respondent ...

…."

11. On March 6, 2006 the First Freezing Order was continued until trial or further order, by order of David Richards J at an inter partes hearing, at which Mr Metterick was represented by counsel.

The Second Freezing Order

12. Etherton J's Order of March 21, 2006 against Mrs Metterick contained the following provisions:

"4 Until the return date or further order of the court, the Respondent must not:-

(i) remove from England and Wales any of her assets which are in England and Wales up to the value of £600,000.

(ii) in any way dispose of, deal with or diminish the value of any of her assets whether they are in or outside England and Wales up to the same value.

5 Paragraph 4 applies to all of the Respondent's assets whether or not they are in her own name and whether they are solely or jointly owned. For the purpose of this order, the Respondent's assets include any asset which she has the power, directly or indirectly, to dispose of or deal with as if it were her own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with her direct or indirect instructions.

6 The prohibition includes in particular the following assets:-

(a) any monies in any bank accounts in the name of Respondent or in any bank account over which the Respondent is a signatory or have control in particular:

Juliet Metterick

National Westminster Bank plc

Market Place

Chesterfield

Sort Code: 60-40-09

A/C No.: 43476309

Caja Rural Intermediterranea

Sociedad Cooperativa De Credito

Mijas-La Cala

IBAN: ES51 3058 0834 3127 7001 2859

Swift Code CCRIES2A

A/c No 2770012859 ("the Spanish Account") …

…

13 Effect of this order

It is a contempt of court for any person notified of this order knowing to assist in or permit a breach of this order. Any person doing so may be imprisoned, fined or have their assets seized."

13. The Order was continued at an inter partes hearing, at which Mrs Metterick was represented by counsel, by Lightman J on April 4, 2006. On that occasion the claim form and the particulars of claim were amended to join Mrs Metterick to the proceedings, and to make claims against her in respect of payments to her.
14. On June 7, 2006 the Company applied for an order that Mr and Mrs Metterick be committed for breaches of the First and Second Freezing Orders.
15. The alleged breaches of the Freezing Orders relate to: (1) a withdrawal by Mrs Metterick on March 24, 2006, of the sum of €250,589 out of a joint account held with Mr Metterick at the Spanish bank to fund the acquisition of a property in Spain; (2) the payment by Mrs Metterick of £20,000 to her brother on March 27, 2006.

III The facts

16. Following personal service of the First Freezing Order, Mr Metterick swore, on February 24, 2006, an affidavit of assets pursuant to paragraph 9 of the First Freezing Order, in which he stated:

"I have a joint bank account with my wife, Juliet Metterick, at CAJA Rural Intermediterranea, Sociedad Cooperativa De Credito, Mijas–La Cala, …with account number 2770012859, which had a balance of 263,542.23 euros as at 30^th January 2006."

17. On 10 March, 2006 Mr Metterick's solicitors, Dean Thomas & Co, wrote to the provisional liquidator's solicitors, Boyes Turner, requesting that the joint Spanish bank account be released from the First Freezing Order to allow Mrs Metterick to complete the purchase of "Spanish property." The provisional liquidator's solicitors replied on March 14, 2006 to say that because Mrs Metterick had benefited from receiving substantial payments from the Company, they were not prepared to release the joint Spanish account from the First Freezing Order without further and better particulars of the purchase. Dean Thomas & Co replied on March 14, 2006 to say that they were taking instructions.
18. Unsuccessful attempts were made by a process server to serve Mrs Metterick with the Second Freezing Order at the home of Mr and Mrs Metterick on the evening of March 22, 2006, and in the morning of March 23, 2006.
19. On March 23, 2006 the provisional liquidator was scheduled to interview Mr Metterick and Ricky Metterick, the Third Defendant. They attended that morning at the provisional liquidator's office with their solicitor, John Dean of Dean Thomas & Co, and were told at about 11.50 am of the Second Freezing Order and that attempts had been made to serve Mrs Metterick. Following the meeting Boyes Turner wrote to Dean Thomas & Co asking for an appointment for personal service on Mrs Metterick. Arrangements were made for the personal service of Mrs Metterick to take place at Dean Thomas & Co's office on March 28, 2006.
20. Also on the morning of March 23, 2006 Mrs Metterick flew to Malaga in order to complete the purchase of the Spanish property.
21. According to his second affidavit, on the evening of March 23, 2006 Mr Metterick (at home) telephoned Mrs Metterick (at her hotel in Spain). Mr Metterick refused to disclose the contents of the conversation relying on the privilege against self incrimination.
22. On March 24, 2006 Mrs Metterick withdrew the €250,589 from the joint Spanish account and used the funds to complete the purchase of the Spanish property.
23. The purchase price was €675,000. According to Mr Metterick, the total cost was €829,000 including taxes and furniture. €510,000 was borrowed from Deutsche Bank on the security of the property.
24. The mortgage was obtained from International Mortgage Solutions, a Spanish mortgage broker, who were supplied with a document purporting to be a financial reference for Mrs Metterick from Landin Wilcock & Co, accountants in Sheffield. The document set out Mrs Metterick's supposed income and projected income from the Company and its net profit. Her income was said to be £60,000 per annum from January 1, 2006; dividends paid to her were £215,000; she had a projected income for 2006 of £250,000 plus; net profits held within the Company were £610,000. The letter was dated March 8, 2006 and made no reference to the fact that at the time it was written the Company was in provisional liquidation.
25. It has been confirmed by Landin Wilcock that the letter is a forgery. In his Fourth Affidavit (June 5, 2006) Mr Bramston asserted that he believed the forged letter was written by Mr Metterick and invited him to confirm that he prepared and signed it. No response was ever received, although Mr Metterick maintains that he was not responsible for the forgery.
26. According to the Second Affidavit of Mr Metterick, he travelled to Spain on March 24, 2006 and met his wife after the purchase had completed. He refused to disclose the contents of his conversations with his wife that day relying on the privilege against self-incrimination.
27. Mrs Metterick's statement of account with Nationwide Building Society, Sheffield, shows that on March 28, 2006 the account was debited with two transfers of £10,000 each to Mr T Bradley, reducing the balance from £60,561.34 to £40,561.34. These payments were said by Mrs Metterick's solicitors to have been made by electronic transfer on March 27, 2006, which has been treated for the purposes of this application as the date of payment. Mrs Metterick's evidence was that the payment was arranged by Mr Metterick.
28. On March 28, 2006 Mrs Metterick was served with the Second Freezing Order at the offices of Dean Thomas & Co.
29. On the same day, and in compliance with the disclosure obligations in paragraph 8(1) of the Second Freezing Order, Dean Thomas & Co wrote on behalf of Mrs Metterick to the Company's solicitors stating (amongst other things) that: (1) there was a balance of sum of €12,953.60 in the Spanish account; and (2) a credit balance of £40,561.34 in an account at Nationwide Building Society.
30. Since Mr Metterick had previously in his first affidavit disclosed a balance of €263,542.23 in the Spanish account, on March 29, 2006 Boyes Turner wrote to Dean Thomas & Co requesting information, including: (1) when the money was withdrawn; (2) by whom; (3) for what purpose; and (4) when Mrs Metterick was made aware of the existence of the First Freezing Order. It was requested that the replies be verified by affidavit from both Mr and Mrs Metterick.
31. No affidavit was at this stage sworn by Mr Metterick, but one was sworn on March 30, 2006 by Mrs Metterick in which (amongst other things): (1) she verified her assets, including a balance of £40,561.34 at the Nationwide Building Society as at March 27, 2006; (2) she confirmed that she had withdrawn €250,589 from the Spanish account on March 24, 2006; (3) she said that the money had been used to acquire the Spanish property, which had an approximate value of €725,000 and a mortgage with Deutsche Bank of about €510,000.
32. In response to the question "When was Juliet Metterick made aware of the existence of the [First] Freezing Order against Lee Metterick" Mrs Metterick stated in her affidavit (para 7(5)):

"I was made aware of the existence of the freezing order against my husband when my husband and I returned from Canada on 16^th February 2006."

33. On March 31, 2006 Boyes Turner wrote two letters to Dean Thomas & Co. They said that they had extremely serious concerns about the withdrawal from the Spanish account, and said that Mrs Metterick was liable to committal for breaches of both the Freezing Orders. They asked questions about these transactions, and about her knowledge of the Second Freezing Order. Mr Metterick swore an affidavit on April 24, 2006, to which I will revert. As regards her knowledge of the First Freezing Order he said (para 5(5)):

"My wife was made aware of the freezing order against me when my wife and I returned from Canada on 16^th February 2006."

IV Alleged breaches of the Freezing Orders

34. The allegations against Mr Metterick were that he was in breach of the First Freezing Order in the following respects: (1) he encouraged Mrs Metterick to withdraw the monies from the Spanish account; (2) further or alternatively, Mrs Metterick was acting for both herself and Mr Metterick in withdrawing the money; (3) further or alternatively Mr Metterick failed to take all reasonable steps to prevent Mrs Metterick from withdrawing the €250,589; (4) further or alternatively Mr Metterick aided and abetted the breach of the First Freezing Order by Mrs Metterick by on or about March 8, 2006 preparing and sending or alternatively procuring a forged mortgage reference letter to facilitate the obtaining of a mortgage to enable the Spanish property to be acquired.
35. It was alleged that Mr Metterick was in breach of the Second Freezing Order in the following respects: (1) Mr Metterick knowingly assisted in and/or permitted the breach of the Order, and encouraged Mrs Metterick to complete the purchase of the Spanish property; (2) further or alternatively Mr Metterick knowingly aided and abetted the breach of the Second Freezing Order and/or intentionally frustrated the achievement of the primary purpose of the Second Freezing Order.
36. Mrs Metterick is said to have been in breach of the First Freezing Order in the following respects: (1) she knowingly assisted in a breach of the Order, and notwithstanding that she knew of its existence from on or about February 20, 2006, she withdrew €250,589 from the Spanish account on March 24, 2006; (2) further or alternatively by withdrawing the €250,589 on March 24, 2006 she: (a) knowingly aided and abetted a breach of the Order; and/or (b) intentionally frustrated the achievement of the primary purpose of the Order, which was the non-dissipation of Mr Metterick's assets.
37. She is alleged to have been in breach of the Second Freezing Order in the following respects: (1) she withdrew €250,589 from the Spanish account on March 24, 2006 knowing of the existence of the Order against her; (2) she withdrew £20,000 from her account at Nationwide Building Society on March 27, 2006 knowing of the existence of the Order against her.

V Conclusions

38. At the hearing of these applications Mr Metterick submitted to an order in which he admitted that he had been in breach of the Freezing Orders substantially as alleged (except as regards the allegation that Mrs Metterick was acting for him in withdrawing the money from the Spanish account, and the allegation that he had aided and abetted her breach of the First Freezing Order by preparing or procuring the forged mortgage reference letter). Shortly before the hearing Mrs Metterick conceded that the £20,000 payment to Mr Bradley was a breach by her of the Second Freezing Order.
39. Mrs Metterick's evidence in an affidavit sworn on October 16, 2006, as regards the £20,000 payment, is as follows. Her brother Tim Bradley had been living abroad for over 25 years in Germany doing a variety of jobs. He had eventually returned home in 2005 and was living in Sheffield with a new girlfriend and her children. He got a job as a bus-driver in Sheffield but was not happy with the job. He wanted to be a taxi driver so that he could earn better money, but he did not have the capital to buy a car. She had promised him the money for a taxi in December 2005, but she did not pay it to him then as he had to pass his taxi exams first and she did not want him to waste the money in the meantime.
40. He passed the exams and another friend of theirs had a car which he was willing to sell to him. He handed in his notice to the bus company. Mr Metterick had taken over making the arrangements for the purchase and it was all set up to go ahead when she was told about the Second Freezing Order and having to be served on March 28, 2006 at the solicitors. She thought that once she was served, she would not be able to transfer the money. But she thought that she could legitimately pay Mr Bradley before service of the Order. She did not want to let down her brother or the friend who was selling the car and she did not think she was doing something wrong. She had not seen any Order and had not been advised of what it said or the consequences of transferring the money. After she was served on March 28, 2006 she did not think she had broken the Order, because she had not been served at the time the payments had been made. She had no idea that she was doing anything that she should not and would never have acted as she did had she understood the true position. She is bitterly sorry for what has occurred. She apologises unreservedly to the Court since her actions have broken or resulted in breaches of the Orders of the Court. She did not intend to break any Order and acted in ignorance.
41. Apart from the question of penalties, which it has been agreed will be dealt with at a later date, the only substantial question on this application is whether Mrs Metterick knew of the First Freezing Order and/or Second Freezing Order when she withdrew the money from the Spanish account to fund the purchase of the Spanish property.
42. The burden is on the Company to establish the facts constituting an alleged contempt beyond a reasonable doubt: CPR Sched 1, RSC 52PD, para 1.4.
43. As regards the liability of the third party with knowledge of an order, in Z Ltd v A-Z and AA-LL [1982] QB 558, at 578 Eveleigh LJ said:

"…the following propositions may be stated as to the consequences which ensue when there are acts or omissions which are contrary to the terms of an injunction. (1) The person against whom the order is liable for contempt of court if he acts in breach of the order after having notice of it. (2) A third party will also be liable if he knowingly assists in the breach, that is to say if knowing the terms of the injunction he wilfully assists the person to whom it was directed to disobey it. This will be so whether or not the person enjoined has had notice of the injunction.

…

He is liable for contempt of court committed by himself. It is true that his conduct may very often be seen as possessing a dual character of contempt of court by himself and aiding and abetting the contempt by another, but the conduct will always amount to contempt of court by himself. It will be conduct which knowingly interferes with the administration of justice by causing the order of the court to be thwarted."

44. Mrs Metterick's main point is that she did not have the necessary knowledge of the First or Second Freezing Orders when she withdrew the money from the Spanish account to complete the purchase.
45. But two additional points were taken on her behalf. First, counsel for Mrs Metterick argued the point originally made by Mr Metterick that there was no basis for contempt proceedings based on the First Freezing Order. The argument was as follows: (1) the court's power to grant a freezing injunction is governed by CPR 25.1(f) and CPR 25PD, paras 5 and 6; (2) CPR 25PD, para 5.3 provides that an order for an injunction must set out clearly what the respondent must do or not do; (3) the Order of David Richards J did not set out clearly what Mr Metterick was required to do or not do; (4) the Order of David Richards J did not follow the example of a freezing injunction in the annex at CPR 25PD, para 10 as suggested in CPR 25PD, para 6; (4) the Company should have drawn an order in the form or approximately the form at CPR 25PD.10 for there to be an order against Mr Metterick which was sufficiently clear to be a basis for any subsequent application to commit him for its breach; (5) it was not sufficient to have referred in the Order of David Richards J to another order, i.e. the Order of Peter Smith J; (6) the First Freezing Order was the Order of Peter Smith J made on February 13, 2006, which, by its terms, only lasted until the return date, March 6, 2006, when David Richards J ordered that the Order of Peter Smith J be continued until trial or further order; (7) the Order of David Richards J, although expressed as "continuing" the terms of the Order of Peter Smith J, replaced the Order of Peter Smith J and was the Order which existed after March 6, 2006, the breach of which could be a contempt; (8) the Order of March 6, 2006 did not properly or clearly set out the terms of the continuing injunction, referring only to the previous Order of Peter Smith J, and was consequently defective; (9) that was not an order, therefore, in relation to which Mrs Metterick could be guilty of contempt.
46. I was referred to authorities (especially Attorney-General v Harris [2001] 2 FLR 895, paras 288-295; Rudkin-Jones v Trustee of the Property of the Bankrupt (1965) 109 Sol Jo 334; Ellerman Lines Ltd v Read [1928] 2 KB 144, 157-158) which criticise the practice of making orders by reference to earlier orders. I rejected this argument at the outset of this hearing because the effect of the two orders was that the order of the court as varied on March 6, 2006, continued in full force and there was nothing relevant in the point that (as often happens) a fresh freezing order was not made on March 6, 2006, in circumstances where Mr Metterick was represented at the hearing and either consented, or at any rate did not object. The cases cited were cases where it would have been difficult for the person affected by the order to have known what the effect of the orders would have been. This is not such a case.
47. Second, it was suggested in the skeleton argument on behalf of Mrs Metterick (but not pressed in argument) that because Mrs Metterick was completing a contract for the purchase of a property to which she was a party and in respect of which a deposit had been previously paid, there was therefore no contempt in relation to the First Freezing Order in so doing, because she was protected as a third party by paragraph 20(1) of the Order. There is nothing in the point. Paragraph 20(1) is designed to protect the interests of bona fide third parties, and is a provision saving such parties from being in contempt. It was designed in particular to prevent banks with overseas branches at which the respondent held an account from being potentially in breach of a freezing order or in breach of local law: Gee, Commercial Injunctions, 5^th ed. 2004, paras. 19.043–19.045. Whilst there may have been a contract in relation to the purchase of the Spanish property, it is not alleged that the completion of that contract was the breach of the First Freezing Order. The breaches of the Freezing Order relate not the purchase of the property but to the withdrawal of the money from the Spanish Account.
48. What Mrs Metterick says about the withdrawal of the money in her affidavit of October 16, 2006 is as follows: she had money in a joint account in Spain to be used for the purchase of two investment properties and a villa for themselves in Spain. She understood from Mr Metterick that the money had been paid to her by the Company and consequently she understood it to be her money. She had not really understood the basis of the payment, but she assumed it was money properly paid to her. Mr Metterick had dealt with all the documentation, and all she knew was that the purchase was proceeding and completion was approaching. She understood from Mr Metterick that the purchase was to be in her name because the monies being used to purchase it had been paid to her and it was her money. Mr Metterick told her that completion on the purchase was approaching. She had understood that she would be going to Spain for the completion, as the purchase was to be by her in her name. She was told by Mr Metterick a few days before she actually went to Spain that completion would be on March 24, 2006 and that she should fly out on March 23, 2006. He said that he would not be able to come out with her on March 23 as he had an appointment (for the interview with the provisional liquidator). At about midday on March 22 Mr Metterick booked her flight to Malaga, Spain, over the internet, leaving from Doncaster airport the following morning at 10.30 a.m.
49. In the witness box, Mrs Metterick said that she believed it was Mr Metterick's idea to buy properties in Spain. She acknowledged that both her name and Mr Metterick's name appeared on the documents, although she was under the impression that the property would be in her name alone, and that she may have suggested this to give her financial security. On further questioning, she said that Mr Metterick usually dealt with the finances and that he may have suggested that the property was bought in her name.

Knowledge of First Freezing Order

50. As I have said, in her affidavit of March 30, 2006, Mrs Metterick said: "I was made aware of the existence of the [First] Freezing Order against my husband when my husband and I returned from Canada on 16^th February 2006." Her account was substantially changed in an affidavit sworn a few days before the substantive hearing.
51. Mrs Metterick's account in her affidavit of October 16, 2006 of what she knew about the First Freezing Order was as follows:

(1) Matters began while she and Mr Metterick were on holiday in Canada, staying with friends at their apartment. February 15, 2006 was her birthday, and Mr Metterick received a telephone call in the bedroom, and then made only a brief reference to the call, merely saying that the assets of the business were frozen.

(2) They travelled back overnight on February 16, 2006 arriving back in the UK on February 17, 2006, again with their friends, and Mr Metterick did not say anything further at that stage.

(3) All she knew was that the business assets were frozen, and she did not know what those assets were, or the nature of the process by which they had been frozen.

(4) She had little understanding of what was involved in the concept of Mr Metterick's assets being frozen.

(5) Neither Mr Metterick nor anybody else explained to her what had happened nor what was involved. She was not shown or sent a copy of the Order nor given any summary of its substance or effect, even by the Company's solicitors.

(6) All she had was Mr Metterick's statement to the effect that his business's assets had been frozen, and she did not understand that his personal assets, or her personal assets, had been affected.

(7) No-one told her about the Order of March 6, 2006, extending the effect of the First Freezing Order.

(8) All she knew was that, in mid-February 2006, Mr Metterick's business had had its assets frozen and he was still involved with solicitors in relation to the affairs of his business.

52. In the witness box she said that she had not seen the letter of March 29, 2006 from Boyes Turner, and the questions may have been read to her. She could not clearly remember who was at the meeting where she discussed her replies to the questions with her solicitor but thought that her husband was present. She confirmed that the answers were her own answers and said that she presumed she had read the affidavit before swearing it. She said that she had found the situation very stressful and buried her head in the sand and cannot now recall things. With hindsight, she should have said that she was aware that the business assets had been frozen, and she does not know why she did not say that at the time. She was simply asked questions and that she gave answers. She did not ask Mr Metterick for details when he told her about the Order. She did not because they were staying with friends and it was her birthday. She had slept for most of the flight back from Canada, and was travelling with friends, and so she had not asked for details. She did not ask for details when they got home.
53. She said that even though she had received large sums of money from the Company, and the Company was her husband's source of income, she was not unduly concerned about the family's finances because she had credit cards to pay bills and expenses. She assumed that they would let out the Spanish property to cover the mortgage. She did not think about how she would convince the lenders to give her a mortgage.

Knowledge of Second Freezing Order

54. As regards the Second Freezing Order, her case is that she was unaware of the attempt to serve her or the making of an Order against her personally. There was no attempt to avoid service.
55. The facts were that on March 22, 2006 a process server instructed by the provisional liquidator's solicitors endeavoured to serve her with the Order and made two attendances at her home, 9 Paddock View, Todwick, Sheffield but she was not served.
56. The notes of the process server state that on receipt of the documents on March 22, 2006 he immediately travelled to the address. After knocking on the door he was greeted by a teenage girl who said that Mrs Mettrick was at Meadowhall, which was a shopping complex near Sheffield, having her hair done. She said that Mrs Metterick would be home later. The girl then called upstairs for her father, who came down the stairs and said that Mrs Metterick was his wife and he would be happy to take the documents. The process server told him that he had to give them to Mrs Metterick only and he could not leave them with Mr Metterick. Mr Metterick asked the process server if he was there regarding the house in Spain. He told the process server that Mrs Metterick would be back at about 8.00 p.m. The process server revisited the property at approximately 8.00 p.m. and again at 9.00 p.m. and was unable to obtain a response. He came back at 10.00 p.m. and knocked on the door but received no answer. He could see a figure walking down the corridor and up the stairs but the person did not come to the door. The door had frosted glass and he could not work out who it was. On March 23, 2006 he again attended the address at approximately 10.00 a.m. After knocking on the door, a different teenage girl answered the door who informed him that Mrs Metterick had gone to a friend's house and she had no idea when she would be back.
57. As I have said, on March 28, Mrs Metterick was served with the Second Freezing Order at the offices of Dean Thomas.
58. On March 31 the Company's solicitors wrote to Dean Thomas asking various questions including (i) whether Mrs Metterick was at 9 Paddock View on either occasion when the process server called and, if so, why she had evaded service; (ii) what Mr Metterick had told her on March 22 of the visits of the process server; (iii) what Mrs Metterick was told on the March 23 and 24, 2006 and by whom about the existence of the Second Freezing Order.
59. Mr Metterick's affidavit served on April 24, 2006 stated that Mrs Metterick was not present at 9 Paddock View on the first and second visits of the process server on the evening of March 22, 2006. Mr Metterick had spoken with the process server and then went out for the evening, and when he returned Mrs Metterick was asleep in bed. On March 23, 2006 Mrs Metterick went to Spain and Mr Metterick did not speak to her until that evening when he telephoned her at her hotel. He travelled to Spain on March 24 but did not meet his wife till sometime after 3.00 p.m., and did not speak to her that day prior to meeting her. By the time he met her the purchase of the property had been completed. Mr Metterick refused to disclose the contents of his conversations with his wife on the evening of March 23, 2006 and on March 24, 2006 or to answer to the question what Mrs Metterick was told on either March 23 or March 24, 2006 about the Second Freezing Order, on the grounds of privilege against self incrimination.
60. Her evidence in her affidavit of October 16, 2006 as to her knowledge of the Second Freezing Order is as follows:

(1) The Company or its solicitors never contacted her, warned her or informed her of the true position regarding the Freezing Order, whether by a letter, sending her a copy of the Order or otherwise and she acted throughout in ignorance.

(2) On March 22, 2006 she was unaware that the previous day an Order had been made in private freezing her assets.

(3) She had an appointment at the Meadowhall Centre with an audiologist that evening at about 6.30 p.m. (not a hair appointment). She went out at 6.00 p.m. or just after to go to the appointment. Mr Metterick's teenage daughter was in the house visiting him. The appointment lasted about half an hour, and then she went shopping in the Meadowhall Centre.

(4) She does not remember exactly when she got home, and Mr Metterick was not there and nor was his daughter.

(5) Her teenage niece Kayleigh, who lived with them at the time, was there.

(6) She therefore may have been at home at 10.00 p.m. when the process server says he came to the house and knocked on the door, but if she was there she certainly did not hear him and no-one told her that he had been there earlier or someone had been trying to serve her with papers. Because of her hearing problem, if there had been a knock on the door she might not have heard it.

(7) She was asleep by the time Mr Metterick came back, and he said nothing to her about any visit by a process server. She got up before Mr Metterick and set off early to catch her flight to Spain. Mr Metterick was still sleeping in bed and they had no conversation of substance. He said nothing to her about a process server wanting to serve her.

(8) In her telephone conversation with Mr Metterick on March 23, 2006 Mr Metterick did not warn her about the Freezing Order or mention anything about it at all. She says that she has no reason to claim privilege against self-incrimination about the conversation.

(9) After she had completed the sale, Mr Metterick came out to join her and told her when she saw him that an Order had been made to freeze her accounts, but not to worry. He told her that he had arranged for her to be served with the Order on March 28 at his solicitor's office.

61. She thought all of the money in the Spanish account was hers, and she did not think that any of it belonged to her husband. She said that she did not know how much money was in the account because she left the finances to her husband.
62. In the witness box Mrs Metterick confirmed that she must have been at an audiologist appointment on March 22, 2006 when the process server first attempted to serve her with the Second Order. Mr Metterick was not at home when she got back from her appointment and she had only a passing conversation with him the next morning as she left very early to catch a plane to Spain and he was still in bed. She had a thirty to forty minute drive to the airport on a route that she was not familiar with and wanted to leave plenty of time. She confirmed that despite his appointment with the provisional liquidator in London that day, he was still in bed when she left.
63. Mr Metterick called her on the evening of March 23, 2006 when she was in Spain. They had a general discussion, probably about her flight and about how she would get to the solicitor the next day to complete the purchase of the property. It was put to her whether, given that her husband knew about the Second Freezing Order against her by this stage, she would have wanted him to mention it during that phone call. She replied that she was a very nervous person so she perhaps would rather not have known about it but with hindsight, knowing the serious consequences of breaching the Order, she would rather have known about it. She denied that Mr Metterick had told her about the Order.
64. She would not have gone ahead with the purchase if she had known about the freezing order over her assets, because she would not have purposely done something wrong. She was asked why she then made a large payment to her brother out of one of her frozen accounts after she was told about the Order. She replied that she had promised the money to her brother and did not want to let the family down. Mr Metterick had made the transfer for her because she did not know how to transfer money online. It had to be done quickly (on March 27, 2006) because Mr Metterick and Mrs Metterick knew that Mrs Metterick would be served with the Freezing Order against her the next day.
65. I am satisfied of the following matters. First, Mrs Metterick is by no means as financially unsophisticated as the impression she tried to give in the witness box. She told me in the witness box that she was with NatWest bank for 17 years, as a foreign clerk and cashier. I am sure that she understood that the First Freezing Order had been made against Mr Metterick personally, and that she lied when she went along with the new theory that the Order applied only to Mr Metterick's business assets. Second, I am satisfied that she lied when she said that she did not ask Mr Metterick anything about the Order when they were in Canada or on the way home. It is wholly contrary to commonsense and reality that she asked nothing. Third, I found her account that Mr Metterick (or her stepdaughter or niece) told her nothing of the efforts of the process server to serve the Second Freezing Order wholly unbelievable, and in particular her account that she had virtually no communication with Mr Metterick from the time the process server came to the house until the time she flew to Spain.
66. I am satisfied that the reality of the matter is that Mrs Metterick was proceeding (as she accepted in the witness box) on the basis that a person who is not named in an order is not bound by it. This explains why it was she who went to Spain to complete the purchase. Secondly, she was proceeding on the basis that a person who has not been served with an order is not bound by it. As she said in her affidavit of October 16, 2006 (para 27): "… I did not think I had broken the order [the Second Freezing Order], because I had not been served at the time the payments had been made .." This explains why she paid money to her brother on March 27, 2006 and why Mr Metterick arranged Mrs Metterick's urgent trip to Spain. I do not accept her evidence that she was kept wholly in the dark and simply did what she was told without knowing of either the First Freezing Order or the Second Freezing Order. Mr Metterick had no motive for concealing the existence of the First Freezing Order and of the attempts to serve her with the Second Freezing Order. They had numerous conversations or opportunities for conversation, and it is wholly unbelievable that she was not told.
67. Consequently I am satisfied beyond reasonable doubt that she knew of both Orders when she withdrew the money from the Spanish account on March 24, 2006. The fact that she was proceeding on the basis set out in paragraph 66 above does not absolve her from responsibility: Att.-Gen. v Times Newspapers Ltd [1992] 1 A.C. 191, 217.
68. It should be clear from the above that I am sure that I have not been given a true or full account by Mrs Metterick of what happened. Although I am satisfied that she was well aware what she was doing, I have no doubt that she was acting on the instructions of Mr Metterick, and that her evidence was designed to protect him, at a considerable cost to herself.
69. The consequence is that both Mr Metterick and Mrs Metterick are guilty of serious contempts of court. It has been agreed that the question of penalty should left over for a further hearing. Subject to further argument, it seems to me that the penalty should be influenced by whether the breaches can be made good. I was told by counsel for Mrs Metterick that the Spanish property has been valued by Deutsche Bank at €747,000, and that Mr and Mrs Metterick have suggested that it is worth €825,000. The mortgage now stands at €517,400.