England and Wales High Court (Family Division) Decisions

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Bristol Court
		25/10/2018

HHJ Wildblood QC:

1. Introduction – I have typed this judgment in a brief adjournment this afternoon. It is therefore not as perfect as a reserved judgment and is the equivalent of an extemporaneous judgment. I am only dealing with the issue of whether contempt has been established against Mrs Byrne and Halesowen Estates Ltd at this stage. I very much regret having to deal with yet further issues of contempt in these very long-running and now notorious proceedings.
2. On the 23^rd February 2018 I gave a judgment, [2018] EWHC 548 (Fam), finding that Mr Hart, the First Respondent, was in contempt of court for failing to comply with an undertaking given in a financial order on 25^th June 2015 and for breaches of enforcement orders made on 24^th February 2016 and 29^th July 2016. On 15^th March 2018 I committed Mr Hart to prison for 14 months for his contempt. On 11^th May 2018 the Court of Appeal allowed, by consent, the appeal relating to the enforcement of the undertaking; the argument that the undertaking was too wide and too vague to be enforced was conceded by counsel for the Applicant 'for pragmatic reasons' which are explained in paragraph six of the judgment of Moylan LJ. However, the balance of the appeal, including that relating to the sentence imposed on Mr Hart, was dismissed. A subsequent attempt by Mr Hart to appeal to the Supreme Court was also unsuccessful.
3. Mrs Byrne is Mr Hart's younger sister. She is 18 years younger than Mr Hart and is therefore in her mid 60's.
4. At the core of the issues that now arise in these proceedings lies the transfer of shares in the property company, Drakestown Properties Limited, to Mrs Hart as a result of the 2015 financial order. Prior to that order Mrs Byrne was the sole director of the company and the shares in it had been held by Mrs Byrne and a Mr Grayson 'for the equal and joint benefit of Mr and Mrs Hart' (see para 14 of the judgment of February 2018). The 2015 order provided for the transfer of the shares to Mrs Hart. In the judgment of 23^rd February 2018 I explained the difficulties that she has faced in relation to that transfer and will not repeat the details here. She still has not had the documentation that she needed to run the company effectively.
5. As to Halesowen Estates Limited (which I will call 'Halesowen' from now on), it used to manage Drakestown Properties Ltd. The shares in Halesowen are held, nominally, by Mrs Byrne and, at the time of the hearing in 2015 at least, Mrs Byrne was also the only listed director. However, as I said in paragraph 21 of the February 2018 judgment: 'when Mrs Byrne gave evidence at that hearing she was unable to explain any aspect of the accounts and knew very little about the company. I had and have no difficulty in accepting Mrs Hart's evidence that it was Mr Hart who controls that company also and the records that it kept. That view is reinforced by the explanation that Mr Hart gave at the hearing in March 2017 about how Drakestown's income was applied – Halesowen Ltd collected the rents, paid them to the trust company, Dudley Estates Ltd (which he controls) which then re-applied some of the income to Drakestown (see response xv in Mr Hart's statement of 22^nd March 2017).' On 31^st July 2015, in an email written by Mrs Byrne to Mrs Hart's commercial solicitors on behalf of Halesowen, Mrs Byrne asserted that Halesowen 'hold a lien over all documents and funds of Drakestown Properties Ltd'.
6. The committal application came before me on a number of occasions in 2017 and, at each hearing, Mr Hart was represented by the same legal team as Mrs Byrne and Halesowen. In paragraph ten of the judgment that I gave on 23^rd February 2018, I voiced my criticism of the fact that the issue of conflict had not been considered within that legal team, or its previous members. When I raised the issue, I was told that there was a possibility of conflict and that Mrs Byrne and Halesowen needed to be advised by others. It is for that reason that this exceptionally delayed committal application had to be adjourned in order that separate legal representation might be found.
7. Further, in paragraph nine of the judgment I said: 'As I will go on to describe the three Respondents appeared by the same solicitors and counsel (Ms Seddon) on 6^th March 2017. On 27^th March 2017 they instructed new counsel (Mr Trevis) through the same solicitors. At this hearing, after an agreed adjournment to reflect his commitments, Mr Armstrong represented them. I have raised with each counsel whether there is any suggestion that Mrs Byrne and the company were wrongly joined to these proceedings and was told in March that there was not and at this hearing that the matter had not been considered by Mr Armstrong but without submission that there was any form of misjoinder.'
8. The committal application that founds the basis of this hearing was made as long ago as 15^th September 2016. Of course, Mrs Byrne and Halesowen were not parties to the undertaking given at the time of the substantive financial order but had been joined to the proceedings by consent on 24th February 2016 when the first of the above enforcement orders was made. That enforcement order was made as a compromise of an earlier committal application that Mrs Hart had made against Mr Hart on 1^st October 2015. On 24^th February 2016, Mr Hart, Mrs Byrne and Halesowen agreed to provide certain information. The information was not given to the extent that I identified in the judgment of February 2018. The case therefore came back to court and, on 29^th July 2016, I made a further order for the provision of information by Mr Hart, Mrs Byrne and Halesowen. Again, to the extent that I set out in the judgment of February 2018, that information was not given. It was as a result of the absence of information arising that order that the application for committal was made by Mrs Hart on 15^th September 2016.
9. Allegations against Mrs Byrne and Halesowen - It is alleged by Mrs Hart that they are both in contempt of court for failing to comply with paragraphs 4 and 5 of the order of 24^th February 2016 and of paragraph 6 of the order of 29^th July 2016. On each of those dates the hearings were compromised on the basis that the information and documentation set out in the orders could and would be produced. Further, during an adjournment of the hearing that started on 7^th March 2017, an order was made [1-B13] which contained a preamble recording the then outstanding documentation, the ability of Mrs Byrne to produce documents and their agreement to produce them by 4 p.m. on 22^nd March 2017. That information was not provided to the extent stated in the preamble.
10. The breaches alleged in relation to the order of 24^th February 2016 are the same as those that were alleged against Mr Hart although, of course, the allegations against Mrs Byrne and Halesowen must be considered entirely separately from those relating to him. The committal application cites paragraphs 4 and 5 of the order of 24^th February 2016 as varied by paragraph 4 of the order of 4^th May 2016. Paragraph 4 of the May order merely varied the time for compliance with paragraphs 4 and 5 of the February order from 31^st March 2016 to 18^th May 2016. Therefore, in their amended form, Paragraphs 4 and 5 of the February order provided [C9]:

i) By paragraph 4: 'On or before 4 p.m. on 18^th May 2016 the first Respondent, third Respondent and fourth Respondent shall each file and serve an affidavit providing full details of: [23 matters that are then set out at C9-11]'.

ii) By paragraph 5: 'on or before 4 p.m. on 18^th May 2016 the first respondent, third respondent and fourth respondent are to deliver up to the applicant such of the records as are currently in their possession, custody or control'.

11. In relation to the order of 29^th July 2016 the committal application cites paragraph six which provided that the first respondent, third respondent and fourth respondent were to provide specific documentation that is then set out at C17.
12. When this current hearing was listed in May 2018 directions were given that, if Ms Byrne or Halesowen should intend to give evidence, they should file a witness statement by 4 p.m. on 8^th June 2018; no such statements have been filed.
13. Law - In the judgment of February 2018 I summarised the principles that apply as follows:

i) The first task for the court is to identify, by reference to the express language of the order, precisely what it required the Respondents to do. That is a question of construction and, thus, a question of law.

ii) The next task is to determine whether the Respondents have done what was required of them and, if they have not, whether it was within their power to do it. Could they do it? Were they able to do it? These are questions of fact;

iii) The burden of proof lies throughout on Mrs Hart: it is for her to establish that it was within the Respondents' power to do what the order required, not for the Respondents to establish that it was not within their power to do it;

iv) The standard of proof is the criminal standard, so that before finding the Respondents guilty of contempt the court must be sure: -

(a) that they have not done what they were required to do and

(b) that it was within their power to do it.

v) If the court finds the Respondents guilty the judgment must set out plainly and clearly

(a) the court's finding of what it is that the Respondents have failed to do; and

(b) the judge's finding that they had the ability to do it.

14. I also recorded in the judgment that Mr Mitchell accepts that 'the court must find that the facts set out in [Mrs Hart's] application are proved as at the date of it (i.e. 15^th September 2016). She cannot, and does not, rely on any subsequent conduct to support her case (although subsequent matters may be relevant to sentence and, in particular, as to mitigation, aggravation and/or whether to suspend the sentence.)'.
15. Summary of the position of Mrs Hart - Mrs Hart says that, in the proceedings relating to Mr Hart the court identified what documentation had and had not been produced. The current Respondents have chosen not to file any evidence, as is their prerogative and no further documentation has been produced. There is no evidential basis for departing from the findings that were made in the proceedings concerning Mr Hart as to the documentation that has not been produced in compliance with the orders. Indeed, it is accepted in these proceedings that the documentation has not been produced.
16. Further, Mrs Hart says, both relevant 2016 orders were made by consent and were made after it had been accepted that the documentation could be produced.
17. As to whether it can be said that the current Respondents acted under the domination of Mr Hart or at his direction, the Respondents have decided, as is their right, not to file any evidence. Therefore, Mrs Hart contends, 'it is impossible for R3 and R4 to run such a case without filing further evidence. They have not done so.'
18. Therefore, Mr Mitchell submits in paragraph 11 of his helpful note: 'W's primary position is therefore that, as a matter of logic, having found that W has proved H to be in contempt of court, it is impossible to conclude that the same evidence does not compel the same conclusion in respect of the breaches of the orders of 24^th February and 29^th July 2016 by R3 and R4. Putting it differently, R3 and R4 have put nothing new before the court to permit any contrary conclusion (a submission which acknowledges that W alone bears the burden, but which acknowledges the reality of the stage that has been reached in proceedings).'
19. The position of Mrs Byrne and Halesowen – They have been very skilfully represented by Mr Williams who has had to get up to speed with a very large amount of material in a short time and has had no prior involvement in this case.
20. He does not pursue any arguments about misjoinder nor does he argue that Mrs Byrne and Halesowen should have been discharged from these proceedings or should now be discharged. There was a lengthy debate about this at the start of the hearing and an adjournment for him to consider the position further. On return to court he explained his position in relation to joinder as I have just set it out to be. However, he maintained the submission that the circumstances in which the Respondents were joined are relevant to whether contempt is proved against them.
21. His submissions had to recognise the difficult boundaries that are set when a client does not give evidence (as happened here in relation to both Respondents despite my invitation that they should think carefully about whether they would do so). His main arguments at this stage of the proceedings were, as set out in his skeleton argument:

i) The 3^rd respondent may have been unable to comply without the 1^st Respondent's co-operation, or else may have been actively prevented from complying by him.

ii) The 4^th Respondent may have been unable to comply as it was controlled by the 1^st Respondent (and the 3^rd Respondent may not have been able to cause it to comply for the same reasons that she has not complied).

22. Mr Williams reinforces his submissions by saying at page 4: 'there is no dispute as to the first limb of contempt – the 3^rd and 4^th Respondents, like the 1^st Respondent, had not by the date of the committal application done that which they were required to do (as set out in the tables produced by the court)…It is submitted that the court cannot and should not find it proven to the criminal standard that either the 3^rd or 4^th Respondents' non-compliance was contumelious, that is to say, born of deliberate disobedience. In short, it is submitted that the court cannot rule out: a) that the failure by Susan Byrne was due to her either: i) being unable to provide the material without co-operation from her brother, or else, ii) being overborne by her brother and prevented from complying, or that the failure by Halesowen Estates Ltd was due to it being in reality run and controlled by the 1^st Respondent'.
23. Order of 24^th February 2016 – It is alleged that Mrs Byrne and Halesowen are in breach of the following paragraphs of the order: 4(i), 4 (xii), 4 (xvi), 4 (xxv), 4 (xxvi), 4 (xxvii) and 5.
24. In the judgment of 23^rd February 2018, I set out those paragraphs and the state of the evidence as it stood in relation to Mr Hart in a table at paragraph 89 of the judgment. The position about the production of information in accordance with that order remains as stated therein. Of course, the fact that the allegations may have been proved against Mr Hart does not mean that they are proved against Mrs Byrne and Halesowen.
25. The table is at B39 of the core bundle and was amended by me so that it recorded as follows:

Para. number in schedule of breaches (they begin at para 10)	Para. of order	Requirement of order (some words are specifically defined in the orders and they are in inverted commas).	Alleged breach as at date of committal application (15.9.2016).	Is the breach proved?	Info. produced since?
10 (i)	Para 4 (i)	Full details of the procedures by which the 'company' maintained 'accounting records'.	No meaningful information provided.	Yes. The affidavits that were filed by Mr Hart and Mrs Byrne in March 2016 were manifestly inadequate and failed to give any reliable details (see para 2). There was a correct letter, dated 27th April 2016, from Irwin Mitchell explaining the default [3-1227]. The extension of time [p13 File 1] produced nothing.	Only in part. Contradictory evidence given by H: i) told kept by accountants; ii) then kept by staff; iii) kept in book ledgers; iv) kept in computer records.
10 (ii)	Para 4 (xii) of 24.2.16	Full details of the current whereabouts of the 'records', the 'board records' and 'the correspondence'.	Past leases and licences, documents recording payments from occupants, documents recording payments made or due to the company, documents recording payments made or due from the company and terms of contractual relationships between the company and any third-party not produced.	Yes.	No credible evidence has been given.
10 (iii)	Para 4(xvi)	Full details of the means by which Halesowen Estates Ltd accounted to the company for the monies received or paid by it on the company's behalf.	Information not provided – see 1-80.	Yes. Bank account statements not produced until March 2017. No credible evidence given as to whether this is the only bank account used for collection of rent.	Yes, in part. Records incomplete.
10 (iv)	Para 4 (xxv)	Full details of the means by which Halesowen Estates Ltd accounted to the company for the monies received or paid by it on the company's behalf.	Information not provided, see 1-80. In particular information as to: a) the method by which Halesowen Estates Ltd and the company maintains their records and exchanged information so as to enable each to know what was due and owing as between them at any time and b) the means by which Halesowen Estates Ltd made payment to and received payment from the company.	Yes. No credible evidence given.	Yes, in part.
10 (v)	Para 4 (xxvi)	The identity of the bank account or accounts used by the company.	Failed to identify the account or accounts used by Halesowen Estates Ltd to receive or pay monies on behalf of the company.	Yes. The bank account records are not complete. Disclosure not given until March 2017 but no satisfactory information about where money went.	Yes.
10 (xvi)	Para 4 (xxvii)	A complete list of the 'records' which were in his possession, custody or control as at 4 p.m. on 22 July 2015 and, in each case, the current location of each such record.	Failed to produce the information required.	Yes.	Yes, in part. No credible evidence given.
10 (xvii)	Para 5	Deliver up to Mrs Hart such of the 'records' as were then in his possession, custody or control.	Failed to produce the information required. In particular has not delivered to Mrs Hart: a) a complete set of the bank statements of the company; b) a complete set of the historic leases and licences of the company's property; c) any rent book or ledger; d) the accounting records prepared by hand by Wendy Fletcher; e) a complete set of the accounting records of the company; f) a complete set of the correspondence of the company.	Yes.	Yes, in part.

26. In paragraph 90 of the same February 2018 judgment I set out the position concerning paragraph six of the order of 29^th July 2016 insofar as it related to Mr Hart as follows:

	Paragraph of order	Requirement of order (some words are specifically defined in the orders and they are in inverted commas).	Alleged breach as at time of committal application on 15th September 2016.	Is the breach proved?	Has the information been provided since the committal application?
17	Para 6	i) produce to Mrs Hart the underlying rental invoices and purchase invoices to support the input VAT claimed on invoices from Ryan Estates Ltd, Sandwell Developments Ltd and Kidderminster Properties Ltd for the period 1.9.15 to 11.11.15 ii) produce to Mrs Hart the purchase invoices and rental invoices for the company for the period 1.9.15 to 11.11.15. iii) disclose to Mrs Hart the identity of the entity or entities: a) to whom the rental income of the company was paid; b) who paid the purchase invoices from Ryan Estates Ltd, Sandwell Developments Ltd and Kidderminster Properties Ltd; for the period 1.9.15 to 11.11.15.	Information not provided	Yes. These at (i) and (ii) have never been provided. (iii) (a) not proved – the answer he gives is Halesowen Estates. (iii) (b) Proved. Information never given.	Yes.

27. Mr Mitchell's oral submissions – Mr Mitchell advanced the following oral submissions in support of his contention that contempt had been proven against both Respondents, beyond those that he had already set out in writing:

i) Both orders were made on the basis that each of the Respondents understood what was required of them, that they could provide the information and would do so. There was no equivocation or complication. The order and the consequences of any breach were explained to them. The case has returned to court on many occasions and the seriousness of breach has been affirmed repeatedly.

ii) Mrs Byrne's acceptance of an ability to provide information is inevitable given the position that Mrs Byrne was the director of Drakestown and also of Halesowen. The court cannot but conclude that being the sole director, she had the power to command the provision of documents of which she had legal control.

iii) There simply has never been any evidence to suggest that she cannot produce the documentation.

iv) She knows about the affairs of Drakestown Properties Ltd well. She signed the accounts of Drakestown and approved them [p1086 – Yellow File 3].

v) In the financial hearing it was Mrs Byrne's very clear contention that Halesowen was her company. That contention was inevitable since she is the shareholder and director. It is her company and she has the right to control it.

vi) In the email of 31^st July 2015 (Grey file 1 – p75) Mrs Byrne wrote as managing director of Halesowen Ltd [p76] to Mrs Hart's solicitors saying: 'We have been passed a letter whereby you wrote to Mr John Hart personally. We, Halesowen Estates Ltd are replying to this letter...Our company is conducting efficient and effective management of its assets and will continue to do so under our contract with Drakestown Properties Ltd…You state that all current rents should be paid to your client. All licence agreements are in the name of Halesowen Estates Ltd and we have the right to collect rent at present under our contract agreement...One other major point is that Drakestown Properties Ltd owe our company a substantial amount of funds. In view of this we hold a lien over all documents and funds belonging to Drakestown Properties Ltd until such time as our company is paid in full'. So, there was Mrs Byrne speaking in the name of Halesowen and asserting its rights, including the right to documentation, relating to Drakestown.

vii) Mrs Byrne's affidavit in response to the order of 24^th February 2016 is at p90 of the same file (the husband's is at page 79). It is, of course, a document under oath. In it Mrs Byrne swore that 'the information provided above is from my own knowledge. I have consulted John Hart to assist him with the answers to the questions, as this was not in his own knowledge but knowledge that I have provided him with' [p92]. She said that she was the sole director of Drakestown, there were no formal meetings and any board decisions were made by her (see p 90 (v)). Her affidavit is similar to Mr Hart's but not identical (p80). The affidavit that was filed on behalf of Halesowen [p93] was sworn by her; she swears that affidavit in her capacity as a director of the company and says: 'Should Mrs Hart require any further information about how Halesowen Estates Ltd is run, then please do not hesitate to ask questions which I am more than happy to answer'. This, Mr Mitchell submits, is a clear example of the extent of the control that Mrs Byrne has asserted, on oath, in relation to the two companies.

viii) When, eventually, possession was given of the Drakestown properties to Mrs Hart a note was left saying that 'Mrs Susan Byrne is available to assist in any queries you may have [phone number]. This is at p 96. So, again, Mrs Byrne is demonstrating an ability to give information about Drakestown.

ix) In the order of 7^th March 2017 Mrs Byrne and Halesowen said that they would produce information during the adjournment of the hearing. Some was produced but other information was not (as I found in the contempt proceedings against Mr Hart). In particular, the order recorded that the Respondents (i.e. including Mrs Byrne and Halesowen) would produce historic leases and licences but did not do so – see Core bundle p14 (i.e. para v).

x) The requirements in paragraph 4 of the order of 24^th February 2016 were not just to provide documentation. They were to provide information. There is nothing to suggest that any conflict that might have existed between Mr Hart and Mrs Byrne invaded her ability to give truthful answers in her affidavit.

xi) The court cannot speculate about the relationship between Mr Hart and Mrs Byrne, absent evidence. Even if Mr Hart is the stronger character, the court cannot speculate that this might deprive her of the ability to comply with court orders.

xii) There are duties and responsibilities of a director. She cannot seek to avoid those responsibilities.

28. Mr Williams relied on his written submission and made focussed and helpful submission in his oral address. He said that were four over-arching submissions:

i) The Applicant is seeking to have her cake and eat it. She suggested that Mr Hart is in control in his proceedings but is now seeking to assert that Mrs Byrne controlled the companies Drakestown and Halesowen in these proceedings.

ii) The court should have regard to the findings that it has already made about the relationship between Mr Hart and Mrs Byrne and should consider the reality 'on the ground' (rather than the strict legal position).

iii) There is a distinction between available inferences and speculation. The court is not being asked to speculate but is being asked to decide whether the inferences expressed by Mr Williams in his written submissions can be ruled out.

iv) It is not Mrs Byrne's positive case that these things (i.e. dominance by Mr Hart and inability to produce documents) are the case. It is a submission that things cannot be ruled out, to the effect that the allegations of contempt cannot be substantiated against the Respondents by the Applicant to the requisite criminal standard.

29. As to the submissions of Mitchell, Mr Williams' replies included –

i) the orders were made after express representations were made by the Respondents that they understood what was required and said that they could and would do it. But those representations were made at a time when Mr Hart and Mrs Byrne were not represented and so any dominance or influence by Mr Hart could still have been operative and could have led to the acceptance by Mrs Byrne of the terms of the order. Further, as a litigant in person, she might well not have differentiated between thinking that she could produce documents (in terms similar to those used on her behalf in 2017 by Ms Seddon at p 14 of the blue file) and being able with certitude to do so.

ii) As to her position as legal director and shareholder of the companies, it is necessary to look at the practical issues about control rather than the strict legal position. It is a theme running through the papers that Mr Hart controlled the companies. The fact that she signed accounts does not mean that she had the knowledge to go with them.

iii) As to the email of 31^st July 2015, if Mr Hart did dominate her then that dominance could have led to the email and her use of the terms in it.

iv) The same applies to the affidavits. They could have been cut and pasted from Mr Hart's.

30. In summary, Mr Williams submitted, the court cannot rule out as a reasonable inference that Mrs Byrne did not have control over the company or company records without the input of Mr Hart. Having found that Mr Hart did not wish to comply with the orders it would be logical to conclude that he would not want Mrs Byrne to do so either and would have actively obstructed any effort by Mrs Byrne.
31. Mr Williams then helpfully took me through the passages in his skeleton argument at pages 5 to 7 in which he had skilfully extracted passages from the documentation and judgments that suggested the dominance of Mr Hart.
32. Findings – I have no doubt whatsoever that Mrs Byrne and Halesowen are in contempt of the order of 24^th February 2016 and 29^th July 2016 in the particulars alleged. The breaches against them are proved to the same extent as they were proved against Mr Hart. I accept each of the submissions advanced by Mr Mitchell but find in particular:

i) Mrs Byrne and the company consented to the provision of information as set out in both orders.

ii) Mrs Byrne knew precisely what she was doing and what the orders required her to do.

iii) Mrs Byrne accepted that she and the company could produce that information and has simply chosen not to do so now.

iv) There has never been any evidence produced by her to say that she could not or cannot produce the information.

v) Although Mr Hart may have exercised control of the corporate structure, Mrs Byrne had the power and right to provide information relating to Halesowen and Drakestown. There is no evidence at all that her right and power to do so was impeded by anyone, least of all Mr Hart, to whom she is very close. There is no reason to think that Mr Hart would put her in a position where she, his sister, was in contempt of court against her wishes.

vi) There is no evidence that the failure by the Respondents to produce the information has been caused through the undue influence of Mr Hart.

vii) There is no evidence at all that Mrs Byrne or the company were so dominated or influenced by Mr Hart as to cause them to disregard court orders of which they were well aware.

viii) There is no basis for thinking that any conflict that might have existed over legal representation after the orders were made would have impacted on the ability of Mrs Byrne and/or Halesowen to comply with the orders. Indeed, the possibility of conflict of lawyers only arose later, when the application to commit her had been made.

ix) When Mrs Byrne wanted to assert her positions in relation to the two companies she did so as shown in affidavit, the accounts, her email (31.7.2015) and the note on giving up possession of Drakestown properties.

33. Therefore, on the facts of this case, I am left in no doubt that it was in the power of both Respondents to do that which they had been ordered to do in the pleaded parts of the orders of 24^th February 2016 and 29^th July 2016. Since Mrs Byrne bore the legal control of Halesowen, her decision not to comply with the orders puts the company in the same position as she is in insofar as the proof of contempt is concerned. No logical basis for differentiating between them has been suggested.

HHJ Stephen Wildblood QC

24^th October 2018.