England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand London, WC2A 2LL
		07/10/2016

MR. JUSTICE POPPLEWELL :


 


1. On 2nd and 4th August 2016, I heard Therium's application to commit Mr. Brooke to prison for contempt of court. Mr. Brooke did not attend the hearing. In an e-mail sent on the eve of the hearing, he claimed to be medically unfit to do so. I rejected the application made on his behalf to adjourn the hearing, for the reasons set out in my judgment of 2nd August. In short, I concluded that he was fit to attend, but had chosen to absent himself.
2. At the conclusion of the hearing, I announced my findings that he was in contempt in a number of the respects alleged, for the reasons that I said I would deliver in writing thereafter, but which were essentially those advanced by Therium in argument. I reserved my decision on the remaining allegations of contempt for further consideration, and I adjourned sentence to a hearing fixed for today. My further findings of contempt, and reasons for those and my earlier findings are set out in the written judgment which I circulated in draft earlier this week and handed down this morning. There is no need, in this judgment, to recite the facts or the history of the proceedings which are set out in those judgments. The most serious of the contempts, which I have found proved, are that Mr. Brooke caused the Claim Proceeds to be transferred out of the Curaçao account, in breach of restraining freezing orders, failed to procure that Cable Plus paid those Claim Proceeds into court, and has failed to tell Therium where the Claim Proceeds are.
3. When I adjourned sentence on 4th August I ordered Mr. Brooke to attend the hearing today. I issued a warrant for his arrest for that purpose and I made clear that he would likely be facing a substantial prison sentence, which he might avoid by purging his contempt by procuring the transfer of the Claim Proceeds into the Court Funds Office. Mr. Brooke has not attended today. He has not purged his contempt and the warrant for his arrest has not been executed.
4. Mr. Williams has, again, appeared on his behalf. Mr. Williams sent an e-mail to my clerk yesterday in response to a request as to whether Mr Brooke would be attending. It confirmed that he would not be attending and said:

"He once again apologises for his personal absence, but instructs me that his medical condition is once again such that he is unable to travel. He has asked me to pass on to Mr. Justice Popplewell the attached medical report in German, but with an English translation, which relates to his condition in early August, the time of the last hearing. He has not been able to obtain a report in relation to his current condition. He would ask that a copy of the report is not passed to the claimant or its representatives, but borne in mind by the judge when he considers sentence at the hearing tomorrow."

The e-mail was not copied to Therium or its legal advisers.

5. That was an entirely improper approach to take. It will very rarely be appropriate to put material before the court which is relevant to the substance of an application, without making it available to the other side. This is not such a very rare case.
6. There are several reasons for that, amongst which are that the interests of justice and common fairness require that the other side should have an opportunity to consider and make submissions on any material which is to be put before the court and, if so advised, to adduce further material in relation to it. Moreover the principle of open justice requires that the public should have access to any material which is relied on in a hearing in open court, save only where the narrow derogations from that principle, which are set out in the rules and the authorities, are made out. Such narrow derogations have to be made out by an application to the court to sit in private or to treat the material as being in private. It is doubly wrong for material to be sent to the judge, in the way which Mr. Williams did, without even alerting the other side to the fact that such a course is being taken.
7. I therefore responded through my clerk to Mr. Williams, making clear that this course was inappropriate, alerting Therium's advisers to the fact that it had taken place, and explaining that I had not looked at the attached medical report. Following that, the medical report was made available to Therium's advisers. The request that I consider it without it being provided to them was withdrawn and no objection was taken to it being put before me. I have, therefore, read it. Mr Williams has apologised for the course he took.
8. What it comprises is a report by a doctor when discharging Mr. Brooke from hospital on 11th August 2016, that is to say, some two months ago. It reveals that Mr. Brooke presented himself to the casualty department of a hospital in Graz on 6th August 2016 on the grounds that he was suffering from excessive breathlessness. He said that it had been brought on by stress during the previous months and had essentially come on in its severe form in the last two days. The diagnosis was that there was also some infection, which was treated by antibiotic medication and he was discharged on 11th August 2016. The report concluded that Mr. Brooke was in a good general state of health, with his cardiorespiratory problems significantly improved, and was being cared for at home. The medical report affords no explanation for his non-attendance today; nor indeed does it afford any explanation for his non-attendance on 2nd August 2016.
9. There has been put in evidence before me, by Therium, an article in The Sunday Times newspaper, which was published on 25th September 2016, a little under a fortnight ago. It is by a reporter who said he had spoken to Mr. Brooke and quoted Mr. Brooke. It included a photograph of Mr. Brooke in a wheelchair, in apparent good health, which the text of the article implies was taken when the reporter spoke to him recently. It includes the following passages:

"For a man on the run, Guy Brooke is not particularly mobile. Aged 78, confined to a wheelchair, with a spluttering cough that comes from chronic lung disease, he looks unlikely to outpace even the most portly policeman.

Yet sitting in the courtyard of a five-star hotel somewhere in Europe last week, the retired businessman explained how he has spent the past five months dodging a litigation funder.

...

The London-based litigation funder has secured a worldwide freeze on his assets and is pushing for a two-year prison sentence as a 'coercive' measure to make Brooke hand over the money. He has already been found in contempt of several High Court orders.

Brooke slipped out of Britain in April and went into exile with his long-term girlfriend, Emmy Ettema. They have moved from country to country, from rented flat to rented flat, living 'day to day' on money provided by old friends. Brooke, a former trader with close-cropped white hair and sharp blue eyes, said the couple felt 'as though we're being harassed'. He is determined not to give up, however. He claimed the law firm that introduced him to Therium had failed to advise him properly on the funding agreement, which he believes was flawed.

'It's our money', Brooke said. 'For €4m I can take a few problems, you know. It's not a bad reward. They'll just have to put up with it. They've tried everything they could, intimidation-wise. They've been quite vicious.'

He said the proceeds of the case were now beyond even his reach because the director of his Caribbean company had moved them elsewhere. Therium 'will need a good bloodhound' to find the millions, he added, with a smile. 'Or Sherlock Holmes.'

...

Rolling his wheelchair back and forth in the hotel courtyard and dragging on an ecigarette, he was unapologetic. In clipped public school tones, he said that Neil Purslow, Therium's chief investment officer, 'still believes to this day that €4m is their money, and of course it's not. That money belongs to the [offshore] company.'

...

It is unclear how straightforward it would be for the High Court to locate Brooke and haul him back as the case is civil, not criminal. He is happy to stay on the move: 'We rent an apartment for a month or so, then go and see something'.

With his blue eyes rebellious and unflinching, Brooke swatted away the threat of imprisonment. 'They're just like angry bees', he said."

10. Mr. Brooke has chosen to put in no evidence in response and he has not suggested that he has been misreported in any respect.
11. A number of matters emerge from that article. It makes clear, as I found in my judgment, that Mr. Brooke lied in his evidence to the court, and in the instructions he gave to Mr. Williams, to the effect that he had no control over the Claim Proceeds, that he had tried to procure their payment into court, and that he was not responsible for their transfer out of the Curaçao account.
12. It also makes clear, as I found in my judgment on 2nd August, that he has lied to the court about being medically unfit to attend, and is lying to Mr. Williams in his recent instructions that his non-attendance today has anything to do with his health. It demonstrates that he is defiant about the court orders which he has breached. He never had any intention of complying with them, but was always bent on putting the Claim Proceeds beyond the reach of Therium and of the court. It demonstrates that he shows no remorse or contrition. On the contrary, he is bragging to the press, and through the press to the public, about his defiance of the court orders, in what is a demonstration of a contempt for the court in the colloquial sense, as well as the legal sense of the word.
13. I should say that the criticism of Therium's conduct as vicious or intimidatory, is wholly unjustified. Therium has been legitimately seeking to secure the Claim Proceeds, which comprise a large sum of money, to which it has, to put it at its very lowest, a good arguable claim.
14. In that context I turn to the sentence which I shall impose for the contempts. The principles are those which I endeavoured to summarise from a number of authorities in Asia Islamic Trade Finance Fund Ltd v Drum Risk management Ltd and others [2015] EWHC 3748 (Comm), where at paragraph 7, I said this:

"I was referred to a number of relevant authorities, including Crystal Mews Limited v Metterick & Others [2006] EWHC 3087 (Ch) at paras.8 and 13, Trafigura Pte Ltd v Emirates General Petroleum Corporation [2010] EWHC 3007 (Comm), JSC BTA Bank v Solodchenko [2011] EWHC 2908 (Ch), JSC BTA Bank v Solodchenko (No 2) [2012] 1 WLR 350 at paras.52 to 57 and 66 to 67, Templeton Insurance Limited v Thomas & Panesar [2013] EWCA (Civ) 35 at para.42, JSC VTB Bank v Skurikhin [2014] EWHC 4613 (Comm) and ADM Rice Inc v Corporacion Comercializadora de Granos Basicos SA [2015] EWHC 2448 (QB). From those authorities I derive the following principles which are applicable to the present case:

"(1) In contempt cases the object of the penalty is to punish conduct in defiance of the court's order as well as serving a coercive function by holding out the threat of future punishment as a means of securing the protection which the injunction is primarily there to achieve.

(2) In all cases it is necessary to consider (a) whether committal to prison is necessary; (b) what is the shortest time necessary for such imprisonment; (c) whether a sentence of imprisonment can be suspended; and (d) that the maximum sentence which can be imposed on any one occasion is two years.

(3) A breach of a freezing order, and of the disclosure provisions which attach to a freezing order is an attack on the administration of justice which usually merits an immediate sentence of imprisonment of a not insubstantial amount.

(4) Where there is a continuing breach the court should consider imposing a long sentence, possibly even a maximum of two years, in order to encourage future cooperation by the contemnors.

(5) In the case of a continuing breach, the court may see fit to indicate (a) what portion of the sentence should be served in any event as punishment for past breaches; and (b) what portion of a sentence the court might consider remitting in the event of prompt and full compliance thereafter. Any such indication would be persuasive but not binding upon a future court. If it does so, the court will keep in mind that the shorter the punitive element of the sentence, the greater the incentive for the contemnor to comply by disclosing the information required. On the other hand, there is also a public interest in requiring contemnors to serve a proper sentence for past non-compliance with court orders, even if those contemnors are in continuing breach. The punitive element of the sentence both punishes the contemnors and deters others from disregarding court orders.

(6) The factors which may make the contempt more or less serious include those identified by Lawrence Collins J as he then was, at para.13 of the Crystal Mews case, namely:

(a) whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy;

(b) the extent to which the contemnor has acted under pressure;

(c) whether the breach of the order was deliberate or unintentional;

(d) the degree of culpability;

(e) whether the contemnor has been placed in breach of the order by reason of the conduct of others;

(f) whether the contemnor appreciates the seriousness of the deliberate breach;

(g) whether the contemnor has co-operated;

to which I would add:

(h) whether there has been any acceptance of responsibility, any apology, any remorse or any reasonable excuse put forward."

15. That was a case of breach of a freezing order and disclosure provisions, which is analogous to Mr. Brooke's breaches in relation to the Claim Proceeds in the present case.
16. Mr. Brooke's contempt in this case in relation to the Claim Proceeds is at the most serious end of the scale for a number of reasons. The breaches were deliberate and premeditated and part of a calculated and sustained defiance of the authority of the court. The prejudice to Therium is serious. The purpose of the orders was to secure Therium's claim, without which it might very well turn out to be a worthless claim because it would be impossible to enforce it. Mr. Brooke's conduct is calculated to achieve just that result, i.e. to thwart Therium's ability to pursue an effective claim. A deliberate and a substantial breach of a freezing order and ancillary disclosure order merits condign punishment, which normally means a severe prison sentence, and where there is a continuing breach, the court should consider a long sentence in order to ensure future cooperation by the contemnor: see Jackson LJ in Solodchenko (No. 2) at paragraph 55.
17. It is appropriate in such cases to impose a sentence which is at or near the maximum permitted of two years, in order to have a coercive effect in securing compliance, albeit belated compliance, with the orders. Such a sentence will in part reflect punishment for past behaviour, and in part operate as a deterrent to others, but in large part, it is intended to have a coercive effect in order to secure compliance with the orders.
18. It is open to Mr. Brooke to purge his contempt by procuring transfer of the claim proceeds into court, and should he do so, he can apply to be discharged under CPR 81.31(1) and, in those circumstances, he can confidently expect that the coercive element of the sentence will be remitted. I do not propose, in this judgment, to identify which part of the sentence is to be attributed to the punitive and deterrent element and which part is to be treated as coercive, but it is right to say that a very substantial part of it can properly be attributed to the coercive effect which I wish the sentence to have. Therefore, as I made clear to him on 4th August when announcing my findings and adjourning sentence, if the contempt is purged, the period of imprisonment is likely to be very substantially reduced, if not entirely remitted.
19. Moreover, I must bear in mind that where draconian orders have been made, such as the orders which have been breached in this case, there is a strong public interest in policing and enforcement. It is important that the court does (and is seen to be doing) all that it can to enforce and ensure the efficacy of the order: see JSC BTA Bank v Ablyazov (No. 7) [2012] 1 WLR 1988 per Gross LJ at paragraphs 33 and 48.
20. The contempt in this case is aggravated by the lack of remorse and the public defiance exhibited in The Sunday Times article, to which I have already referred. This is a case in which Mr. Brooke has had every opportunity to put matters right. He has had a clear indication of the gravity of the contempts and of the consequences which would flow from what I said on 4th August, and he has had the benefit of advice from counsel so that he cannot have been left in any doubt about how serious the contempts are, and the approach that the court would take. Nevertheless, his response, since 4th August, has been one of non-compliance and, indeed, public defiance.
21. On Mr. Brooke's behalf, Mr. Williams urged on me, essentially, two matters by way of mitigation. The first was Mr. Brooke's age and his health. He is 78 and he suffers from emphysema, which is a condition which he can generally cope with at the moment but may cause extreme breathlessness and pneumonia in the case of infection, or so it would appear, on his on word, from stress.
22. In criminal cases, it is right that old age and ill-health are factors which the court can take into account in sentencing following a criminal conviction, but the court will also take into account the fact that there are arrangements in place in prisons to ensure that the elderly and that prisoners with ill-health are properly and appropriately treated. Moreover, in this case, Mr. Brooke has it within his own power to minimise the time in prison by purging his contempt. In those circumstances, I treat his age and ill-health as some, but limited, mitigation.
23. The second matter which Mr. Williams asked me to consider was that the possibility of a settlement in this case should encourage me to suspend any custodial sentence; that being a factor which His Honour Judge Simon Baker QC took into account, or might have taken into account, in Dermot Power v Richard Hodges [2015] EWHC 2931 (Ch).
24. That was a very different case. In this case, I have no evidence of any ongoing negotiations. All that Mr. Williams was able to point to was a reference in The Sunday Times article to Therium having offered to let Mr. Brooke keep €400,000. The article itself suggests that that was last November, at the latest, and Mr. Dougherty, on instructions, has told me that in fact that was in August of 2015. The article affords no basis whatsoever for suggesting that Mr. Brooke is now willing to enter into any proposals to hand over the Claim Proceeds. There is an arbitration going on, but the fact that the hearing has taken place, and an award is awaited, tells one nothing about Mr. Brooke's attitude to fulfilling any such award by paying it, whether out of the Claim Proceeds or otherwise.
25. What is clear from Mr. Brooke's conduct of these contempt proceedings, and from what he said as reported in The Sunday Times article, is that at the moment he is bent upon preventing Therium receiving any part of the Claim Proceeds. It is, therefore, entirely inappropriate to treat a theoretical possibility of settlement negotiations, which is not a real prospect, as any justification for suspending the sentence.
26. Taking all those matters into account, the sentence which I will impose is a concurrent sentence on each of the findings of contempt of 21 months' imprisonment.
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