Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE MORGAN
Between:
HEATHCLIFFE PROPERTIES LIMITED | Claimant |
- and - | |
(1) RASMIKANT PREMCHAND DODHIA (2) VANITA RASMIKANT DODHIA | Defendants |
Jeremy Callman (instructed by LSGA, Solicitors) for the Claimant
Oliver Radley-Gardner (instructed by Gunnercooke LLP) for the Defendants
Hearing dates: 20 September and 20 October 2016
Judgment Approved
MR JUSTICE MORGAN:
By an application notice dated 22 July 2016, the Claimant applied for an order that the First and Second Defendants be committed to prison for contempt of court.
The contempt of court alleged by the Claimant against the First and Second Defendants was that they had failed to comply with an order made by Chief Master Marsh on 10 May 2016. The relevant part of that order was an order that the First and Second Defendants do attend before the Chief Master at a specified time and place for the Chief Master to seek assurances from them that all Orders of the Court will be complied with by them and to explain to them the effect of the Order made on 10 May 2016 and the effect of any breach thereof.
The First and Second Defendants subsequently applied to Master Marsh for an adjournment of the hearing at which they were to appear before him and the Master acceded to that application and specified a time on 14 June 2016 when the First and Second Defendants were to appear before him in accordance with his order of 10 May 2016.
The First and Second Defendants did not comply with the order to attend before Master Marsh on 14 June 2016.
The Claimant’s committal application was heard by me on 20 September 2016. Mr Callman appeared on behalf of the Claimant and Mr Radley-Gardner appeared on behalf of the First and Second Defendants. The First and Second Defendants admitted that they had been in breach of the order of 10 May 2016 by failing to attend on 14 June 2016 and they accepted that the Claimant’s application for their committal complied with the requirements of the CPR. At the conclusion of the hearing on 20 September 2016, I made a finding that the First and Second Defendants were in contempt of court, in particular, were in breach of the order of 10 May 2016 by failing to attend the hearing before Master Marsh on 14 June 2016.
At the hearing on 20 September 2016, I heard detailed submissions as to the appropriate sentence which the court should impose in respect of the First and Second Defendants’ contempt of court.
Mr Callman submitted that the appropriate sentence should have two elements:
first, a short custodial sentence, he suggested for a period of 7 days, to bring home to the First and Second Defendants the seriousness of their contempt of court; and
a longer custodial sentence, he suggested for a period of 56 days, but suspended for so long as the First and Second Defendants did not impede or obstruct the process of selling certain properties pursuant to orders for sale which had been made by the court.
Mr Radley-Gardner submitted that the contempt in this case was towards the lower end of a spectrum of gravity and that a custodial sentence of any length was not appropriate. He further submitted that a suspended custodial sentence was also too severe a response and that, instead, the court should consider a conditional discharge of the First and Second Defendants.
At the conclusion of the argument on the 20 September 2016, I indicated that I would defer sentence to a later hearing, which is now today’s hearing. I further stated that I would not impose an immediate custodial sentence but that I would consider imposing a fine on the First and Second Defendants. In connection with the possibility that I might impose a fine, I wished to be informed as to the financial circumstances of the First and Second Defendants and I therefore directed them to serve witness statements dealing with their financial means and I permitted the Claimants to serve brief submissions as to such witness statements.
The First and Second Defendants duly served witness statements giving information as to their financial circumstances and the Claimant served written submissions as to the appropriate sentence in the light of that information.
In order to consider the seriousness of the contempt of court in this case, it is necessary to refer to some of the history of this dispute. I will describe the history as briefly as possible. That is not because it is unimportant. The history is unfortunately very lengthy but I am assisted by referring to a judgment which Master Marsh gave on 14 June 2016 when he took some trouble to refer to the history and to comment upon it.
The underlying dispute between the parties is a partnership dispute. There had been a partnership at will between the parties which, it is now clear, was dissolved as long ago as 7 July 2006.
The present proceedings were brought by the Claimant against the First and Second Defendants in 2007. After many court hearings and court orders, the litigation was settled at a mediation on 15 and 16 February 2012. It was agreed that certain partnership properties would be sold and the net proceeds of sale divided in accordance with the settlement agreement. One might have thought that it would have been straightforward to implement an agreement of that kind. What actually happened is described in Master Marsh’s judgment of 14 June 2016.
Master Marsh described the way in which the First and Second Defendants conducted themselves and the litigation as “extremely unsatisfactory”. He referred to the history of the litigation up to the time of the settlement and up to the making of a Tomlin order giving effect to the settlement. He then referred to the court hearings from 2012 until 2015 when he became the Master assigned to the case. Master Marsh had taken this case over from Master Bowles who had expressed a deep sense of frustration about the First and Second Defendants’ inability or unwillingness to deal with the matter.
Master Marsh then described the many hearings in this litigation which he had himself conducted. He stated that it was plain that the First and Second Defendants were intending to create difficulty with the sales of the properties and there was a marked lack of assistance from them. Up to around April 2016, the First and Second Defendants had been legally represented. They then ceased to be legally represented and they stopped attending court hearings. They did not attend the hearings on 12 April 2016 and 10 May 2016. Master Marsh stated that by 10 May 2016, it was plain that the First and Second Defendants were resolute in their intention not to provide any assistance and indeed to obstruct the sale process.
At the hearing before me, I was taken through the evidence as to the history of this litigation and I am able to judge for myself the accuracy of Master Marsh’s comments. I find that his criticisms of the First and Second Defendant’s behaviour were entirely justified.
On 10 May 2016, Master Marsh ordered the First and Second Defendants to attend a further hearing before him. As he explained in his judgment on 14 June 2016, he made that order to give them a final opportunity to provide the court with the assistance which was required so that the sale of the properties could proceed. His intention was to explain to them the very serious position they faced in view of their obstruction of the sale process and to tell them in the clearest possible terms that the course of action they had embarked upon was unwise. Master Marsh added that it was absolutely plain that the recent behaviour of the First and Second Defendants had been calculated to disrupt and delay the sale process. That behaviour went back to early 2015 and had become more and more extreme during recent months. Again, based on the material put before me, I find that Master Marsh’s comments were entirely justified. In his judgment on 14 June 2016, Master Marsh said that it was a matter of very grave concern to him that the First and Second Defendants had not attended that hearing.
The First and Second Defendants have served evidence in response to the committal application and in support of their applications to set aside earlier court orders. The First Defendant has served affidavits sworn on 7 and 13 September 2016 and the Second Defendant has served affidavits sworn on 7 and 13 September 2016 and witness statements dated 7 and 18 September 2016. The evidence served in support of their applications to set aside earlier court orders showed that they did not wish to comply with the settlement agreement or those court orders. At the hearing on 20 September 2016, I dismissed their applications to set aside earlier court orders. I certified that their applications were totally without merit.
In her affidavit of 7 September 2016, the Second Defendant stated that the First and Second Defendants would rather die than allow the Claimant to (as she put it) “snatch any benefit that is due to [the First and Second Defendants] after 34 years of hard labour and toil”. She asserted that the First and Second Defendants were the only beneficial owners of the relevant properties. She appeared to assert that she had not committed a contempt of court and she specifically said that she did not intend to commit a contempt of court. She did not apologise for failing to attend a hearing as ordered by Master Marsh and she did not offer any explanation as to why she did not attend. She did say that she would comply with court orders unless they were set aside or varied. The First Defendants’ affidavit of 7 September 2016 effectively adopted the affidavit of the Second Defendant.
Before 13 September 2016, the First and Second Defendant obtained legal advice in relation to the committal application. They then served affidavits of 13 September 2016. They both apologised to the court for not attending on 14 June 2016. They put forward various explanations for their non-attendance. As to those explanations, I make the following findings:
I do not accept that they did not understand the order of 10 May 2016 requiring them to attend a hearing (if that is what they are suggesting);
I also do not accept that they did not understand the orders made requiring them to cooperate with the sale of the relevant properties (if that is what they are suggesting);
I do not accept that the constraints on their time meant that they were unable to attend the hearing on 14 June 2016;
I do not accept that they stayed away from the hearing on 14 June 2016 by reason of fear or stress;
the First and Second Defendants did not put forward the suggestion that they stayed away from the hearing on 14 June 2016 because they thought they did not need to by reason of an appeal they had brought on 9 June 2016; I mention this because their counsel suggested that they had formed the view that the appeal needed to be resolved before the hearing before the Master took place; in the absence of any evidence to that effect, I do not accept that suggestion;
I do find that the overwhelmingly probable reason for their not attending the hearing on 14 June 2016 was that they were determined to obstruct the sale of the properties and the distribution of the proceeds of sale notwithstanding any court order and they felt that an attendance at court on 14 June 2016 would not help them to achieve their objective.
The Claimant has served evidence as to events which have occurred since the 14 June 2016. In summary, the Claimant says that the First and Second Defendants have effectively prevented an inspection of some of the relevant properties by valuers acting for the mortgagee of those properties. The First and Second Defendants’ behaviour is said to consist of making statements which are contrary to the basis on which the partnership dispute was settled and the basis of various court orders. The First and Second Defendants’ behaviour has also extended to standing on the pavement outside various properties to discourage the valuers from carrying out inspections. For reasons which I will give, I am not going to make findings at this stage in relation to these allegations but I can say that the First and Second Defendants plainly have a case to answer to the effect that they are in serious breach of other parts of the order of 10 May 2016 and, to date, they have not attempted to answer that case.
Having made my findings of fact, I can now begin to explain my approach to sentencing in this case.
The first point to make is that I am sentencing for one breach of one court order. I am sentencing the First and Second Defendants for their failure to attend the hearing on 14 June 2016. In these circumstances, I need to explain the attitude I will take to the many criticisms of the First and Second Defendants’ behaviour both before and after that date.
As regards the justified criticisms of the First and Second Defendants’ behaviour before 14 June 2016, I take account of those matters as they are relevant to the importance to be attached to their compliance with the order to attend a hearing on 14 June 2016 and the seriousness of their breach of that order. Those matters are also relevant to the question as to the degree of confidence I might have as to whether they will comply with court orders in the future.
As regards the Claimant’s evidence as to the more recent behaviour by the First and Second Defendants in relation to the valuers’ attempts to inspect some of the properties, I have already stated that I will not make specific findings on those matters. I am today sentencing the First and Second Defendants for failing to attend on 14 June 2016, I am not sentencing them for any possible breach of the order of 10 May 2016 by obstructing inspections of the properties. The evidence in this respect might be material to an assessment of how likely the First and Second Defendants are to comply with court orders in the future, but I would reach the same assessment of that likelihood, with or without this evidence.
I was referred to a number of authorities on the approach I should adopt to sentencing in this case. The principal authorities to which I was referred are: Otkritie International Investment Ltd v Gersamia [2015] EWHC 821 (Comm), HMRC v Munir [2015] EWHC 1366 (Ch) and Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd [2015] EWHC 3748 (Comm).
From these authorities, I derive the following general guidance which is relevant to the particular circumstances of this case:
the purpose of a sentence for contempt of court is twofold; one purpose is to punish the offender for his offence; a second purpose is to attempt to secure compliance with a court order;
the court has power to impose a custodial sentence for a contempt of court; the maximum length of such a sentence is two years and the defendant will serve only one-half of the sentence;
the court may impose an immediate custodial sentence or it may suspend all or part of that sentence;
the court may suspend a custodial sentence conditional on compliance with a court order, either the order that was broken resulting in the relevant contempt of court or even another court order;
a custodial sentence may well be appropriate where there is serious contumacious flouting of a court order;
there is no rule that a defendant should not be imprisoned for a first offence;
conversely, the court should bear in mind the desirability of keeping offenders, in particular first-time offenders, out of prison;
the court can impose a fine; there is no statutory limit to the amount of the fine;
the court should consider the questions of culpability and of harm;
the court should consider whether the defendant has admitted the contempt, whether he has expressed remorse, whether he has belatedly complied with the order of the court and his personal circumstances and character;
punishment should not be manifestly discrepant from the sentence of a criminal court based on the same facts.
In the light of that guidance, I make the following comments;
the Master’s order that the First and Second Defendants attend a hearing on 14 June 2016 was an important order designed to bring home to them the seriousness of their bad behaviour;
the First and Second Defendants deliberately failed to comply with the order of the court;
their failure to comply with the order of 10 May 2016 was part of a pattern of refusal to accept that they were bound by the orders of the court;
in terms of the spectrum of the gravity of the breach of the court order, this breach is not at the bottom end of the spectrum but equally it is much less serious than many of the breaches which have been considered in other cases and which have attracted custodial sentences;
the First and Second Defendants deserve to be punished for their contempt of court;
the purpose of the order of 10 May 2016 has now been belatedly secured as the First and Second Defendants attended the hearing on 20 September 2016; at that hearing, it was made clear to them that it was imperative that they fully and promptly comply with all court orders hereafter; it is also clear to me that they have received responsible and accurate advice on that score;
the Claimant has suffered prejudice by reason of the breach of the order but that prejudice can be remedied by an appropriate order for costs;
at the hearing on 20 September 2016, the First and Second Defendants admitted their breach of the order;
the First and Second Defendants have apologised for their breach of the order; I regard the apology as something they have felt forced to make and it is probably not very sincere; nonetheless, they have made it;
the First and Second Defendants have promised to comply with court orders in the future; I cannot have total confidence as to whether they will keep their promise; I expect they mean to keep it while they are under the influence of their legal advisers, as they are at present; I am less confident about what might happen when left to themselves;
the First and Second Defendants are first offenders although their bad behaviour leading up to the contempt of court has been persistent;
as I indicated on 20 September 2016, this combination of circumstances does not justify an immediate custodial sentence;
although I have been urged to pass a custodial sentence and then suspend it on condition that the First and Second Defendants do not obstruct or frustrate the sales of the properties, such a sentence involves an element of pre-judgment of the sentence which it might be appropriate to pass if and when the First and Second Defendants were to break a court order to that effect in the future;
the First and Second Defendants are both able to pay a substantial fine; the Claimant has expressed concern that if the court were to impose a substantial fine on the First and Second Defendants, that might have an adverse effect on the Claimant’s recovery of sums due to it in the underlying dispute; in the event, I do not consider that the fine which is otherwise appropriate in this case will have that effect;
in considering the amount of any fine, I will proceed on the assumption that I will also make an order that the First and Second Defendants do pay their own costs of the committal application and the Claimant’s costs of that application on the indemnity basis;
I will impose a separate sentence on each of the Defendants but, in the event, I will not distinguish between them.
I will now ask the First and Second Defendants to stand up. Mr Dodhia stand up. Mrs Dodhia stand up.
Mr Dohia, you have heard what I have said about your behaviour in this case. I will not send you to prison but I will fine you for your contempt of court. The fine which you will pay is £25,000. I will hear your counsel as to the time within which you must pay that fine.
Mrs Dodhia, you have heard what I have said about your behaviour in this case. I will not send you to prison but I will fine you for your contempt of court. The fine which you will pay is £25,000. Again, I will hear your counsel as to the time within which you must pay that fine.