Hicken v Ellison

The applicant, Mr Richard Hicken, is the trustee in bankruptcy of the respondent, Dr Clive Ellison. The application before me is for committal of Dr Ellison for breach of a number of orders of the court requiring disclosure of financial information. I heard the application in the absence of Dr Ellison. My reasons for proceeding in his absence are explained later in this judgment.

The principal evidence in support of the application is found in an affidavit of Mr Hicken sworn on 21 April 2016. Dr Ellison has himself provided four witness statements in response to which Mr Hicken made his fifth witness statement in these proceedings on 28 September 2016. Mr Hicken’s case is that the witness statements provided by Dr Ellison are wholly inadequate to comply with the various orders for disclosure of financial information to which I will come.

There have been two bankruptcy orders made against Dr Ellison. The first was on 4 October 2000 following a petition by HMRC in respect of unpaid tax. A Mr Boyden was in due course appointed trustee on 21 November 2000. As a result of a lack of cooperation by Dr Ellison with Mr Boyden, his discharge from bankruptcy was suspended as remains suspended to this day. Mr Boyden retired from practice and Mr Hicken became Dr Ellison’s trustee as I relate below.

The second bankruptcy order was made on 14 March 2013, again following a petition by HMRC in respect of unpaid tax. Mr Hicken was appointed trustee of that bankruptcy on 13 March 2014. This was only 1 day before the automatic discharge from bankruptcy under the Insolvency Act 1986, giving Mr Hicken no opportunity himself to consider whether to apply for suspension of the discharge. Mr Hicken’s view is that, having investigated matters subsequently, it is clear that Dr Ellison did not fully cooperate with the Official Receiver (“the OR”) (just as he had not cooperated with Mr Boyden) and should not have been allowed to achieve automatic discharge from the second bankruptcy as has in fact occurred. That, of course, is water under the bridge.

Mr Hicken’s evidence is that Dr Ellison has not cooperated with him in respect of the first bankruptcy. It is clear, from the evidence, that that is so. I will highlight in due course the failures which are directly relevant to the application for committal. It is, however, relevant for me to have in mind the wider failure to cooperate as well as breaches of court orders which are not relied on as breaches founding the application. Although those other failures are not to be taken into account in deciding whether the alleged breaches which are relied on have been established, they are relevant as part of the context in which the breaches relied on took place and thus, if breach is established, to the sanction (such as a sentence of imprisonment), if any, which is appropriate.

Mr Hicken was appointed as trustee of the second bankruptcy because the OR had been unsuccessful in his attempts to agree an Income Payment Agreement with Dr Ellison. The OR had issued an Income Payments Order Application (“the IPOA”) which needed to be dealt with notwithstanding the automatic discharge and which Mr Hicken took over on his appointment.

To cut a long story (including a lack of cooperation and even obstruction) short, the IPOA came before Deputy Registrar Lawson on 23 October 2015. One substantive outcome of the hearing was adjournment of the IPOA (for reasons which I do not need to go into). Another substantive outcome was an order, which was eventually approved by DR Lawson (“the Lawson Order”). As Mr Hicken explains, Dr Ellison expressly instructed his counsel not to agree the terms of the draft order. DR Lawson was therefore asked to approve the order, which he did. The part of the Lawson Order which is relevant for present purposes is found in paragraph 3, which is in the following terms:

The Lawson Order did not specify a period in respect of which Dr Ellison was to provide information as to his means or about his income and expenditure. At the very least, Dr Ellison was required to provide details of his sources of income at the date of the Lawson Order and the heads of the expenditure which he was then incurring or had recently incurred. But he must clearly provide more than that. The Lawson Order was made in the context of the IPOA and is to be interpreted, in that context, as requiring provision of information concerning means which would or might be relevant to the IPOA. Mr Hicken was entitled, in my view, to information about Dr Ellison’s means going back a reasonable period before the date of the Lawson Order, if only because that information would be relevant to an assessment of what Dr Ellison’s then current income and expenditure really were. Given that he was required to provide tax returns going back 6 years, I consider that the requirement to provide information concerning his income and expenditure goes back 6 years too. But even if that is wrong, he must surely provide information going back for at least 12 months. As to the payments to IG Index, the period over which details of payments were to be provided was not specified. In order to comply fully with that part of the Lawson Order, Dr Ellison ought to have provided the whole history of his dealings with IG Index. If he considered that unnecessary and unduly onerous, he could have approached Mr Hicken to obtain agreement for the provision of information over a reasonable limited period but he made no such approach.

In response to the Lawson Order, Dr Ellison filed a witness statement dated 18 November 2015, purporting to be “in keeping with” the Lawson Order. Although providing some information, it is clear that it did not constitute proper compliance with the Lawson Order. I do not propose in this judgment to set out any detail of that witness statement. The witness statement is important for what it does not say as much as for what it does say. Dr Ellison does not, in any case, appear before me to suggest that the witness statement was full compliance with the Lawson Order.

On 18 December 2015, an application made by Dr Ellison against Mr Hicken was heard by Registrar Derrett seeking, as Mr Hicken puts it, “damages for various imaginary claims” which Dr Ellison saw fit to assert. Having looked at the application, the particulars of claim and the supporting witness statement, I find it hard not to agree with Mr Hicken that these demonstrate why he has had such difficulty dealing with Dr Ellison. Registrar Derrett dismissed the application and ordered Dr Ellison to pay Mr Hicken’s costs (which he has not done).

At the same hearing, Registrar Derrett considered the Lawson Order and the extent of Dr Ellison’s compliance (or rather non-compliance) with it. She took the view that there had been non-compliance and that the Lawson Order should be re-issued with a penal notice attached to it and with extended dates for compliance. Her order reflecting her view (“the Derrett Order”) was made on that date. It contains a penal notice and recites the representation of Mr Hicken by Mr Couser and of Dr Ellison by counsel, Mr Philip Brown. Paragraph 1 of the Derrett Order is identical to paragraph 3 of the Lawson Order but with the substitution of 4 January 2016 for 20 November 2015. The Lawson Order, of course, remained in force and was not discharged; the Derrett Order essentially reinforced it.

Mr Couser correctly submits that what both the Lawson Order and the Derrett Order required were “a detailed witness statement as to his means” and in particular “all sources of income and all expenditure”. Clearly Registrar Derrett accepted (as she was obviously right to do) that the witness statement of Dr Ellison to which I have already referred, did not satisfy those requirements. In response to the Derrett Order, Dr Ellison made a further witness statement dated 4 January 2016. Mr Couser submits that this witness statement does not effect compliance with the Derrett Order. I agree with his criticisms, which I can summarise as follows:

Paragraph 2 of the witness statement states: “I have emailed Mr Hicken all of the CFD trading entries for City Index and IG as required of me by the order of Registrar Derrett.” So far as City Index is concerned, the information provided by Dr Ellison contains nothing not available on the internet. So far as IG is concerned, it is true that Dr Ellison provides a number of pages of some sort of account, but it is not easy to understand precisely what this is and it clearly does not provide information about where the money concerned in the transactions has come from or gone. As Mr Couser submits, Dr Ellison has simply provided a raft of documents leaving Mr Hicken to “get on with it” and work out for himself what they are all about.

Paragraph 3 of the witness statement refers to the printouts provided and states that the monies are transferred by debit card, the last 4 digits of which are evident. Dr Ellison states: “The card numbers recur and relate to the relevant accounts namely the practice account and my personal account”. [The practice referred by Dr Ellison is his practice as a dentist.] Mr Couser accepts that this evidence is just about adequate so far as the source of the payments to IG is concerned. However, reference to the printouts shows large movements of funds which remain unexplained. It appears to be the case that Dr Ellison was under the impression that, having obtained the automatic discharge of his second bankruptcy, he was discharged altogether, whereas he in fact remains undischarged from the first bankruptcy. The large movements of funds are thus transactions of which Mr Hicken is entitled to receive information and, more importantly for present purposes, falls within the scope of the Derrett Order. Mr Hicken is entitled to properly printed-off statements (the current prints are defective in having some information cut off) and is entitled to a full explanation of the print-offs.

For reasons which I come to (see 27 ii below), it is now apparent that Dr Ellison had made payments to spread betting companies which he has never told Mr Hicken about. That is a serious breach of the Derrett Order.

Paragraph 3 also states that Dr Ellison’s only source of income is the dental practice (with amounts in his personal account originating from the practice). This is manifestly incorrect. It is apparent that Dr Ellison has attempted to supplement his income by spread betting: his income from that should have been detailed, it being insufficient, in my view, for him simply to provide the printouts which he has done.

Paragraph 4 of the witness statement relates to living costs. Dr Ellison says that proof of his living costs

Mr Couser submits, perfectly fairly in my view, that Mr Hicken should not have to trawl through bank statements and other documents to ascertain that which Dr Ellison should have provided pursuant to the Derrett Order, namely a detailed witness statement specifying his expenditure. In fact, Mr Hicken did trawl through the documents and discovered material which led to a successful application for a freezing order against Dr Ellison to which I will come in due course.

The agreement referred to in paragraph 4 is headed “Licence to Occupy – A room at 15 The Ridgeway, London N14 6NX”. Two definitions need to be noted, namely “Property”, meaning a single room on the first floor at the above address and “Licence Fee”, meaning £1,500 per month. Under this agreement, one Barbara Boyewska licences the Property to Dr Ellison for the Licence Fee. Mr Hicken accepts that Dr Ellison has on two or possibly three occasions paid the sum of £1,500 although the more regular sum was £600 per month. Researches by Mr Hicken show that a single room in this area would let for between £400 and £600 per month with perhaps £900 for an exceptional room. I agree with Mr Couser that this agreement cries out for an explanation; Dr Ellison has given none. This represents another failure to comply properly with the Derrett Order.

As for the expenditure on his daughters, if one is to take at face value the figures for past and present maintenance which Dr Ellison has put forward, then in order to comply with the Derrett Order, Dr Ellison would need to show (i) the source of the payments and (ii) that the payments have actually been made. His witness statement and supporting documentation do neither of those things.

Paragraph 5 of the witness statement refers to “the Surgery Licence of £30,000”, pension, legal costs and taxation (with no figure being placed on those last three items). These “have yet to be fully accounted for in the banks statements and they will be reflected in the financial statements on completion thereof”. It is not apparent what financial statements are being referred to. Whatever they are, the information given by Dr Ellison is woefully incomplete and constitutes a failure to comply with the Derrett Order.

The Surgery Licence would appear to be a reference to a document called “Licence to Occupy” purportedly made between Oakleigh Investment Trust (“the Trust”) and Dr Ellison. I understand that the Trust is a family trust through which Dr Ellison and his family are benefited. I also understand that the funds of the Trust are ultimately derived from Dr Ellison and that he is the sole trustee of it. The Surgery Licence, according to its terms, clearly purports to create a licence over the ground floor of 23 High Street, Stevenage for use (among other permitted uses) as a dental surgery. The Surgery Licence makes no reference to dental equipment; but see further at paragraph 30 below.

Dr Ellison does not detail the pension contributions to which he refers. Mr Hicken states, and I accept this, that even now he does not have a full understanding of what it is that Dr Ellison says he has expended on pension contributions or when. It is clearly the case that paragraph 5 of the witness statement (even read with the exhibits) does not explain the position. Dr Ellison should have given this information in compliance with the Derrett Order.

Paragraph 6 of the witness statement refers to the last 6 years’ tax returns. Dr Ellison states that he has asked his accountant for the tax returns, but has not received them from him. Mr Hicken has now obtained the returns which do exist from the accountant, although Dr Ellison himself has not even now provided them as he ought to have done in the context of a witness statement.

In summary, not only has Dr Ellison failed to comply with his general duty to cooperate with his trustee (not a matter for contempt proceedings), but he has also failed to comply with the Derrett Order in that he gives no, or no sufficient, detail his income and expenditure or about how he was able to afford the large amounts of money concerned in his transactions with IG and City Index.

Dr Ellison has provided print outs of financial statements relating to the business account of Dr Ellison’s dental practice. They have not been explained in a witness statement or at all. Mr Hicken asks why, assuming they are the bank statements of the business account, why Dr Ellison has not also provided any bank statements relating to his own personal account or why they only cover the period from 8 May 2014 to 18 December 2015. I agree that, in those respects, Dr Ellison has failed to comply with the Derrett Order.

In relation to those statements, Mr Hicken has identified substantial credit balances and substantial expenditure on items such as trips abroad, golf and restaurant meals (Dr Ellison’s daughter lives in South Africa, so it is fair to observe that trips to South Africa are not surprising). Mr Hicken has set out in his affidavit in support of this application the transactions which he identified when successfully applying for a freezing order. They are to be found in 89 sub-paragraphs of paragraph 34 of his affidavit. I agree that, pursuant to the Derrett Order, Mr Hicken is entitled to an explanation of each of those transactions; instead, they have been ignored with little information being provided and some of the information actually provided being inconsistent with what Dr Ellison had previously said.

The extent of the transactions which Mr Hicken had identified and listed in paragraph 34 amount to nearly £103,000. This means that the amount which Mr Hicken considered he would be able to establish on the IPOA would be large. He was concerned that if Dr Ellison knew that a large claim was being made, he would either leave the country or divert funds under his control in some way so as to frustrate the claims of Dr Ellison’s creditors. For that reason, and others presented to the court, Mr Hicken obtained a freezing order from Henry Carr J on 12 February 2016 (“the Carr Order”). The Carr Order contained a penal notice. So far as relevant for present purposes, it contained the following provisions concerning provision of information at paragraph 9:

First, Dr Ellison was, within 2 days of service, to inform Mr Hicken’s solicitors of all of his assets worldwide exceeding £500 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all assets.

Secondly, he was to comply, within 2 days or service, with the Derrett Order, the relevant terms of which were set out: clearly Henry Carr J was satisfied (as am I) that Dr Ellison had not properly complied with that Order by 12 February 2016.

Within 7 days of service of the order, Dr Ellison was to swear and serve an affidavit setting out the above information. That clearly included the information which the Derrett Order had merely required to be set out in a witness statement.

The Carr Order also contained the standard provisions relating to freezing orders, with the result that Dr Ellison was not entitled to spend any money other than on permitted weekly expenditure and in respect of legal costs, in respect of which he had to inform Mr Hicken’s solicitors where the money was coming from. Accordingly, he should not have withdrawn money from any bank account save for permitted expenditure in respect of which he should have given Mr Hicken’s solicitors notice. This is not a matter on which Mr Hicken seeks to commit Dr Ellison. It is raised only by way of background to reinforce the seriousness of such contempt as is established and relied on.

Dr Ellison’s response to the Carr Order was a witness statement dated 16 February 2016. In paragraph 2, he says this:

I can well understand that Mr Hicken would like full and complete details of these “tax efficient protective structures”; and he may well be entitled to orders requiring Dr Ellison to reveal them. But that is not what any of the Lawson Order, the Derrett Order or the Carr Order requires. The Lawson Order (as repeated in the Derrett Order and the Carr Order) requires a detailed statement of means, specifying sources of income and all expenditure. The Carr Order, however, goes further than the earlier orders in requiring Dr Ellison to disclose his assets over and above £500 in value whether in his own name or not. Of course, if Dr Ellison has an interest in the Trust, that will be an asset which he should disclose; and similarly if he has an interest in any other protective structure. If he is simply a discretionary beneficiary, I doubt that any of the orders requires him to disclose that status (although, as I have just said, Mr Hicken may well be entitled to obtain an order requiring him to disclose such interests).

On the other hand, if the Trust assets are vested in Dr Ellison as a trustee of the Trust, then he ought, in my view, to disclose them under the Carr Order even if they are not beneficially owned by him: they are “his assets” even if he does not own them beneficially. Further, if Dr Ellison has transferred assets (part of his practice income for instance) into the Trust or other protective structure in recent years, and certainly since the issue of the IPOA, then he should have disclosed such transfers under each of the orders as “expenditure”. Although Mr Hicken may reasonably hold the view that Dr Ellison has made such transfers in recent years, the evidence is insufficient to persuade me to the criminal standard of proof required on a contempt application that he has in fact done so.

The witness statement does, however, reveal that Dr Ellison’s income over the 9-month period April to December 2015 was in excess of £193,000, equivalent to an income of over £250,000 pa. This income must, on Dr Ellison’s case, be derived from the dental practice since, according to him, that is his only source of income. He claims that only £15,480 was referable to his drawings during the 9-month period, the equivalent of £20,640 annually. I agree with Mr Hicken that this seems to be an extremely low profit margin. Mr Hicken also considers that this level of profit flies in the face of various items of expenditure which he had identified in the application for the freezing order. It was for that reason that he continued to press for provision of the accounts for the last six years. Dr Ellison said that he was unable to obtain these from his accountant. That is an explanation which I find deeply unsatisfactory given that Mr Hicken’s solicitors made a direct approach to the accountant and were reasonably promptly provided with Dr Ellison’s tax returns for 2008-2010. Returns after 2010 have not been provided, but it may well be that Dr Ellison has not in fact made any.

I am satisfied from the evidence of the process server, Mr Harry Mellor, that the Carr Order was personally served on Dr Ellison on 15 February 2016. Further, various banks and financial institutions were served with the Carr Order. Unfortunately, Santander did not immediately freeze Dr Ellison’s bank account with it. Dr Ellison withdrew £300 in cash after he had been served with the Carr Order. It is reasonable to infer that this money has been spent. It is obvious that it has been. Even if it has been spent on permitted living expenses or on legal advice, Mr Hicken’s solicitors were not informed of this intended expenditure before the money was spent. On any view, there has been a clear breach of the Carr Order.

In the light of (a) the inadequate response to the provision of information in response to the freezing order application and (b) the failure to provide an affidavit as required by the Carr Order, the application was adjourned on the first return date (14 March 2016) before Mann J to enable Dr Ellison to obtain legal assistance in complying with the Carr Order and the further order made by Mann J (“the Mann Order”) on that return date. So far as the provision of information was concerned, the Mann Order repeated the Carr Order with the substitution (at Dr Ellison’s request – Mr Hicken had wanted an earlier date) of 24 March 2016 as the date for provision of information and of 31 March 2016 as the date for the swearing and serving of the affidavit verifying the information provided.

Shortly prior to that hearing, Dr Ellison had provided, on 13 March 2016, a further witness statement. I do not consider that it has any impact on the present application, providing no, or very little, further information of relevance. Paragraph 10A states that the Trust is a separate legal body, the beneficiaries of which are Dr Ellison’s three daughters residing in South Africa. Dr Ellison provides, however, no details of the trust. Paragraph 10B states that the Traveldata payments (revealed in the bank statements) “are payments to the landlord”.

The Mann Order was personally served, again by Mr Mellor, on Dr Ellison on 15 March 2016 as appears from Mr Mellor’s witness statement dated 16 March 2016.

By the time of the hearing before Mann J, Mr Hicken explains that he was in receipt of further information to the effect that Dr Ellison owns at least one property in South Africa; Dr Ellison had not disclosed his ownership of any property. Having learned of the existence of this property, Mr Hicken took steps to have his appointment recognised by the South African courts. On 12 March 2016, Registrar Barber signed a letter of request addressed to those courts and the necessary application has now been made. Mr Hicken was unable to make this information known to Mann J at the hearing since the hearing, being in open court, Dr Ellison might have been able to take steps to make it more difficult for Mr Hicken to get possession of the property once his appointment had been recognised.

Following the Mann Order, Dr Ellison failed to provide the required information by 24 March 2016. Instead of providing the information, Dr Ellison wrote to Mr Hicken’s solicitors on 31 March 2016 (a week after the deadline for provision of the information). He said he had been ill and requested an extension to 4 April 2016, which was agreed (notwithstanding the wholly unjustified allegations of intransigence on the part of those solicitors). Late in the evening of 4 April, Dr Ellison provided some further documentation including a witness statement dated 31 March 2016 purporting to comply with the Derrett Order. Mr Hicken regards the information provided as, again, woefully short of what was ordered:

I agree with Mr Hicken’s assessment in the light of the following matters concerning that witness statement (paragraph numbers being those of the witness statement):

Paragraph 2(i): Dr Ellison states that his only source of income is from his practice as a dentist, suggesting that “The detail of this income is in the hands of the Trustee, in the form of the Bank Statements for the 2 years up to 18^th December 2015”. As to that, Mr Hicken considers that the bank statements are not sufficient to enable him to identify Dr Ellison’s income. As Mr Hicken says, it is for Dr Ellison to provide him with figures, not just bank statements which he is expected to reconcile. Reconciliation is a time-consuming and expensive task; and the partial reconciliation carried out led to the application for, and granting of, the freezing order by Henry Carr J. As explained in Mr Hicken’s affidavit, there are numerous transactions appearing from the bank statements which require explanation.

The assertion by Dr Ellison that the practice income is his only income is, as Mr Hicken says, manifestly incorrect. Indeed, as Dr Ellison himself says in paragraph 3(xi), “…I rely on share trading to boost my income. I do not consider the spread betting to be income as it is extremely unpredictable”. This shows that he does have other income: I have no doubt at all that Dr Ellison was required by the various orders starting with the Lawson Order to disclose his receipts from spread betting. Taking the incorrect stance which he has, he has I imagine felt able to justify his failure to disclose spread betting accounts other than the City Index and IG accounts on the basis that they did not produce income, accounts which were only discovered through the partial reconciliation exercise in relation to the bank accounts which revealed payments out to these accounts.

At paragraph 3(xiv), Dr Ellison repeats his explanation for the failure to provide his tax returns, stating that his accountant had not provided them in spite of email requests. The only request appears to have been made on 16 February 2016 and there is no evidence that it has been followed up. And, as I have already noted, Mr Hicken has been able to obtain such returns as exist from the accountant, making it difficult to see how Dr Ellison has an excuse for not obtaining them. Dr Ellison himself received the returns on or about 5 April 2016 but has not passed them on to Mr Hicken which it remained his duty to do (even if he knew, as to which there is no evidence that Mr Hicken had already received them from the accountant).

The tax returns demonstrate, in any case, that Dr Ellison’s income was far greater than the figure which he has suggested. In his 2007/08 return, he shows pension contributions of over £102,000 and discloses a profit of nearly £156,000 from his dentist’s practice, making drawings of over £70,000. The corresponding figures for his 2008/09 return were £22,500 (pension contributions), in excess of £188,000 (profit) and in excess of £336,000 (drawings) and for 2009/10 were in excess of £17,400 (pension contributions), in excess of £176,000 (profit) and in excess of £183,000 (drawings). In the light of those figures, it is essential for him to comply fully with the various information orders so that Mr Hicken has the full detail of Dr Ellison’s income and expenditure to enable him to assess Dr Ellison’s true financial position in the context of the IPOA.

One particular concern of Mr Hicken is the difficulty in understanding how the figure of estimated expenditure by Dr Ellison in the context of the IPOA of £5,515 per month (a figure which has varied over time) can be right when Dr Ellison says that his income is now only £1,000 per month. This is coupled with the concern arising out of the various items of expenditure listed in paragraph 34 of Mr Hicken’s affidavit which, I agree, demonstrate expenditure by Dr Ellison on himself far in excess of his suggested income.

Mr Hicken is unsurprisingly concerned about Dr Ellison’s dealings in respect of South Africa. The only explanation which Dr Ellison has given (and this is not done in a witness statement let alone an affidavit as required by the Carr Order) is that his involvement in South Africa is through the Trust, an aspect which I have already considered. His suggestion is that ongoing legal matters in South Africa are Trust matters, but that is not an answer to one main complaint which is that Mr Hicken has not been provided with the detail of the expenditure out of Dr Ellison’s bank account(s) to South Africa. Mr Hicken is entitled to know where that money has gone: it is not good enough to say simply that it has gone to the Trust without informing (by way of a “detailed witness statement”) Mr Hicken of details of the recipient. In particular, a trust is not a legal entity: Mr Hicken is entitled to know at the very least who the recipient trustees of the Trust are.

The matter came before Arnold J on 11 April 2016 when Dr Ellison (who had not sought advice or instructed counsel but was represented under the CLIPS scheme) sought an adjournment. Mr Hicken reluctantly agreed to this. There was dispute about the form of the order after the hearing: I do not need to say anything about that save to note that Dr Ellison was, so it seems to me, behaving entirely unreasonably. In the end, Arnold J made an order (“the Arnold Order”) on 15 April 2016. The order contained a penal notice and continued the freezing order in a sum in excess of £780,000. It also contained an order concerning the provision of information identical to the Carr Order with new dates (relevantly 14 and 21 April 2016) for the provision of that information. It also required Dr Ellison to provide full information of where his income from the practice has been paid since 12 February 2016 with details of bank accounts and financial books and records relating to the practice. The Arnold Order was personally served on Dr Ellison by Mr Mellor on 22 April 2016 as appears from his witness statement dated 26 April 2016.

I have already referred to the Licence to Occupy at paragraphs 11ix) and x) above. It is to be noted that Dr Ellison has provided the following explanation for the quarterly sum of £5,500 being paid out of the practice bank account to an entity called Traveldata. He explained, in an email to Mr Hicken’s solicitor sent on 5 April 2016, as follows:

This explanation, which was not given before April 2016 and which is the first time any mention has been made of dental equipment, is confusing and unsatisfactory when coupled with the actual terms of the Licence to Occupy. According to this evidence, Traveldata is the owner of the property and there is a lease (to someone) of the premises at £22,000 pa. But an examination of the Licence to Occupy shows that it is licence over the same property, which is licenced by the Trust (not Traveldata) to Dr Ellison (not to Traveldata). The licence fee of £30,000 thus relates to the property but Dr Ellison describes a licence fee of £30,000 payable by the dentists (not just Dr Ellison) to the Trust (as owner of the dental practice). Unless there are two amounts of £30,000 pa involved (which seems almost inconceivable), the position is unclear and Dr Ellison’s evidence confusing.

The matter is even more unclear when reference is made to the Office Copy entries which Mr Hicken’s solicitors have obtained from the Land Registry. These show two individuals (Robin Thomas Edwards and Bridget Anne Edwards) and a company (Union Pension Trustees Ltd) as the registered proprietors of the freehold of the building under title HD138877. The title is subject to the leases referred to in the schedule which include the two leases which I describe in the next paragraph.

The entries also show a registered leasehold title HD513643 of which Dr Ellison is the registered proprietor. Unfortunately, the extent of the property is not known to me since the plan, by reference to which the property is defined, is not included in the bundle. The property register states that details of the land and of the leases under which the land is held are contained in the Property Register Schedule. That schedule in turn refers to two leases of the ground floor of the building. The first lease is dated 20 March 2001 between (1) Traveldata Executive Pension Scheme and (2) Driveland Ltd (a company about which I know nothing); it is for a term of 15 years from and including 20 March 2001 (and thus expired on 20 March 2016). The second lease, described as a reversionary lease, is dated 8 August 2011 between (1) Robin Thomas Edwards and others and (2) Dr Ellison; it is for a term of 10 years from and including 20 March 2016. The lessors title in each case is the same, namely HD138877. The persons comprising the Traveldata Executive Pension Scheme in relation to the first lease must either be the same persons or have been succeeded by Mr Edwards and others (whoever those others might be, but quite probably Ms Edwards and Union Pension Trustees Ltd). I have no information about how the two leases have been dealt with or how Dr Ellison came to be the registered proprietor. But in the absence of any explanation from Dr Ellison, and he has given none, I proceed on the basis that he is now the leaseholder in possession and has been since 20 March 2016.

There is one further witness statement made by Dr Ellison to which I should refer. It is dated 27 June 2016. It is a long witness statement which I have read carefully. At paragraph 88, Dr Ellison deals further with the matter which I have addressed in the preceding three paragraphs. He says that he has addressed the matter before (which so far as I know he had not) but to recap (as he puts it) he “confirms” that (i) the Trust is the holder of the lease (which, I note, has never been identified or produced by Dr Ellison) (ii) the landlord is Traveldata pension (iii) the owner of the practice assets is the Trust (iv) Dr Ellison is the licensee of the practice and (v) the Trust is the licensor of the premises.

That evidence only adds to the confusion. As to (i) and (v), it is not clear what lease Dr Ellison is referring to. Since he himself is the registered proprietor of the leasehold title, any lease is surely held by him. But even if one takes the leaseholders under the original leases as retaining their leases, the first lease has expired so that Dr Ellison is, under the second lease, now the holder of the lease. Before the first lease expired, Driveland Ltd would, on this treatment, have been the holder of the lease. Thus I do not understand item (i) of Dr Ellison’s explanation. His item (ii) may be correct if it is the case that Traveldata pension is a reference to a pension trust of which the freeholders (Mr Edwards, Ms Edwards and Union Pension Trustees Ltd are trustees either as, or in succession to, the persons comprising “Traveldata Executive Pension Trust” at the date of the first lease). I do not understand – there may be an explanation but Dr Ellison has not given it – why he says (his item (v) ) that the Trust is the licensor of the premises. The title shows that he is the lessee in possession and the person able to grant licences.

There is this further confusion. The Licence to Occupy shows Dr Ellison as the licensee (although that point is not identified in Dr Ellison (i) to (v)). Ignoring the legal difficulty inherent in Dr Ellison being both licensor and licensee, what the Licence to Occupy envisages is payment of £30,000 by Dr Ellison to the Trust (albeit that he may have an arrangement, which he has not described, with any other dentist in the practice to contribute). It is not apparent from Dr Ellison’s recap what the Trust pays to Traveldata (according to him, the landlord) under the lease. But since, as I see it, Dr Ellison is the lessee and Mr Edwards, Ms Edwards and Union Pension Trustees Ltd are the landlords, the real question is what he, as lessee, is paying to them, as landlord. I do not know what Dr Ellison means when he says he is the licensee of the Trust: perhaps he is saying no more than that is what the Licence to Occupy provides but I do not understand how that can be correct. Moreover, I do not understand the relevance of the Trust being the owner of the practice assets. Even assuming that to be the case, the licence fee under the Licence to Occupy does not relate to such assets, it relates to the premises.

Mr Hicken is entitled to information which would clarify all of this confusion. Not only is he entitled to it as part of Dr Ellison’s obligation to cooperate with his trustee, he is, in my judgement, entitled to it as part of Dr Ellison’s obligations under the various orders requiring him to provide information. The registered leasehold interest is prima facie, property of Dr Ellison and he should (assuming it is worth more than £500) have given details in accordance with the Carr Order, the Mann Order and the Arnold Order. Further, Mr Hicken is entitled to full details, which he has certainly not received, of payments to and by Dr Ellison in connection with the property and the lease which he holds.

Paragraphs 1 to 87 really add nothing of relevance to the current contempt application which Dr Ellison had not already raised and which I have referred to already. Dr Ellison makes a number of complaints about Mr Hicken’s approach and about the making of the freezing order, regarded by him as totally unnecessary. Although Dr Ellison did make what was treated as an application to set aside the freezing order, Dr Ellison did not appear at the hearing and the application was dismissed by Mrnold J who recorded it as being wholly without merit. In paragraph 91, Dr Ellison refers to that part of the Arnold Order relating to the practice bank accounts. His response shows a remarkable approach to an order of the Court:

It is not open to Dr Ellison to disobey an order of the court in this way. If the order was unacceptable he should, either on the return date or by a separate application, have sought to have had it varied. He was not entitled, in any case, to refuse to obey the order because his associates forbade it.

Subsequent paragraphs of the witness statement do not constitute compliance with the earlier orders.

There is an addendum to the witness statement in which Dr Ellison responds, sub-paragraph by sub-paragraph, with the queries raised by Mr Hicken in the 89 sub-paragraphs of paragraph 34 of his affidavit referred to at paragraph 15 above. A significant proportion of these responses simply state “Drawings” and give no explanation of what the drawings were expended on. The responses are manifestly no answer to Mr Hicken’s justifiable concerns.

The final piece of evidence which I need to consider is Mr Hicken’s fifth witness statement made on 28 September 2016. It contains a section headed “Recent events – England and Wales”. It is quite a lengthy section and I do not propose to go into it in detail but I note the following in particular:

In early May, Mr Hicken received bank statements from the Santander and RBS accounts. Mr Hicken noticed various transfers to Dr Ellison of up to £3,000 at a time during the time of the bankruptcy. The payments were made to accounts which he had not previously heard of. The inevitable conclusion is that other accounts exist which Mr Hicken had not been told about. Dr Ellison’s only substantive response to queries about this has been to state that the payments were “OTD Practice licence payments to the Oakleigh Investment Trust” and refusing to provide information about the trust assets.

Subsequently, Dr Ellison has stated that he has paid nothing to the Trust since 1997 which appears to me to be impossible to reconcile with the explanation of where the payments shown in the bank statements just mentioned had been paid.

Mr Hicken identifies a number of aspects of Dr Ellison’s behaviour which, if substantiated, show a serious lack of cooperation between a bankrupt and his trustee. They are not directly relevant, however, to the matters alleged to give rise to the contempts of court with which this application is concerned and I say nothing about the detail of these failures.

Dr Ellison is fully aware of the application and the nature of the allegations made against him. He sought payment out of his RBS account to enable him to instruct counsel for the contempt hearing but there were insufficient funds in the account. Mr Hicken’s solicitors have kept Dr Ellison fully informed of the progress of the application and of Dr Ellison’s duties in compliance with directions made. There has been a complete lack of engagement by Dr Ellison.

On 1 July 2016, Snowden J made certain directions. A copy of his order was emailed to Dr Ellison on 14 July 2016. In response to that, Dr Ellison informed Mr Hicken’s solicitors: “I am suffering from depression and have left the country for 6 months to recouperate [sic]”. The solicitors then sought details of his address but have received no response. On 7 September 2016, Mr Hicken obtained a passport order against Dr Ellison from Arnold J which, hardly surprisingly, has not been complied with.

I now give my reasons for hearing this application in the absence of Dr Ellison (as I said in the first paragraph of this judgment that I would do).

It is evident that Dr Ellison was well aware of the application and the hearing date before me. It is an exceptional course to hear an application in the absence of the respondent. I addressed the principles in my recent decision in Phonographic Performance Ltd v Nightclub (London) Ltd [2016] EWHC 892 (Ch). I referred in that context to JSC BTA Bank v Solodchenko[2011] EWHC 1613 (Ch) (“Solodchenko”) at [13], where Briggs J set out the summary given by Roth J in JSC BTA Bank v Stepanov [2010] EWHC 794 (Ch) at [12]. I do not propose to set the passage out again.

I found of assistance the checklist, set out by Cobb J in Sanchez v Oboz[2015] EWHC 235 (Fam), of considerations for the Court to have in mind when considering whether to proceed in an alleged contemnor’s absence. The checklist reflects the factors addressed by the Court of Appeal in R v Hayward [2001] QB 862. The list, and its application on the facts of the present case, is as follows:

Whether the respondent has been served with the relevant documents, including the notice of this hearing. Dr Ellison has been served with the relevant documents, including notice of the hearing.

Whether the respondent has had sufficient notice to enable him to prepare for the hearing. Dr Ellison has had more than sufficient notice.

Whether any reason has been advanced for his non-appearance. The reason is apparent. Dr Ellison has left the country and has demonstrated a complete lack of engagement with the process. He says he is suffering from depression but has produced no evidence about that nor sought an adjournment.

Whether by reference to the nature and circumstances of the respondent’s behaviour, they have waived their right to be present (ie is it reasonable to conclude that the respondent knew of, or was indifferent to, the consequences of the case proceeding in his absence). Any reasonable person in the position of Dr Ellison would surely realise that if he failed to attend, the Court may hear the application in his absence. That is not, of course, conclusive, and it could be said in many cases where a respondent fails to attend. I do not attach much weight to this factor.

Whether an adjournment would be likely to secure the attendance of the respondent, or at least facilitate his representation. I consider that an adjournment is unlikely to secure his attendance. He has failed to take advantage of previous opportunities to secure representation.

The extent of the disadvantage to the respondent in not being able to present his account of events. Dr Ellison has had ample opportunity to challenge Mr Hicken’s evidence. He has filed evidence but it goes nowhere near answering the case made by Mr Hicken. It is not a question of presentation of the case, but the absence of any adequate evidence on which a case could be presented.

Whether undue prejudice would be caused to the applicant by any delay. It is clear that Mr Hicken must be afforded the assistance of the Court in the pursuit of his statutory functions which are being hampered by the behaviour of Dr Ellison.

Whether undue prejudice would be caused to the forensic process if the application was to proceed in the absence of the respondent. I can see no prejudice.

The terms of the overriding objective to deal with cases justly, expeditiously and fairly. It is fair to proceed in the absence of Dr Ellison. He has decided not to attend and must know that the Court would ultimately proceed in his absence.

In the light of those factors, I decided that I would hear the application.

The breaches on which Mr Hicken relies are set out in the application notice.

The first breach is breach of the Derrett Order in that Dr Ellison did not, by 4.00 p.m. on 4 January 2016, file and serve a detailed witness statement as to his means specifying all sources of income and all expenditure and exhibiting (a) all necessary documents to substantiate the same; and (b) copies of his income tax returns for the last six years; and (c) providing details of all monies paid to IG Index. Further, he did not provide copies of all of the documents listed by that date (or at all).

In the light of the facts and matters considered in detail earlier in the judgment, I am satisfied on the criminal standard of proof that Dr Ellison was in breach of the Derrett Order as alleged. I rely in particular on (i) paragraphs 26 and 27 above (ii) the lack of proper explanation of Dr Ellison’s practice income and the expenditure in connection with the practice premises and the structure concerning the Trust, Traveldata and the (unidentified) pension scheme (iii) the failure to disclose spread-betting income (on the basis that Dr Ellison did not regard it as income) and (iv) the impossibility of reconciliation of the explanations given by Dr Ellison (a) that he has paid nothing to the Trust since 1997 and (b) that the payments shown in the bank statements had been paid in lieu of the occupation licence fee for the practice premises which, on his case, are due to the Trust (each of these paragraphs being sufficient on its own to establish breach without the need to rely on the others).

The second breach is that Dr Ellison failed to comply with paragraphs 9 and 10 of the Carr Order in a number of respects.

First, he did not within 2 days of service, and to the best of his ability, inform Mr Hicken’s solicitors of all of his assets worldwide exceeding £500 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all assets. Mr Hicken no doubt has substantial grounds for thinking that Dr Ellison has not provided full and frank information about his assets in the light of the matters which I have considered above. In particular, he has concerns about the Trust and who really owns its assets. It may well be that he is entitled to information concerning the Trust but the Carr Order does not require provision of that information. What it requires, so far as asset disclosure is concerned, is disclosure of Dr Ellison’s own assets (which would include beneficial ownership of property vested in another person or beneficial interests in trusts). He has said that he has no interest in the Trust. He may or may not be telling the truth, but on the evidence at present before the court, it cannot be said that he does own the Trust assets or have a beneficial interest in them. Mr Hicken needs to obtain a wider-ranging order to obtain full details about the Trust from Dr Ellison. I should add this. In my view, the Carr Order is wide enough to oblige Dr Ellison to disclose assets which are vested in him as a trustee (whether jointly with others of not). If he is a trustee of the Trust (as to which the position is obscure) he is obliged to disclose the assets of the Trust. I do not consider that breach of this part of the Carr Order in respect of alleged ownership of the assets of the Trust is established to the criminal standard.

However, Mr Hicken’s evidence is that he has discovered (i) property in South Africa and (ii) bank accounts in the name of Dr Ellison into which payments have been made from Dr Ellison’s accounts with Santander and RBS. It is, I suppose, possible that at all material times the balances on those other accounts were less than £500, but Dr Ellison has given no evidence to that effect since Mr Hicken’s fifth witness statement (where he gave information about these accounts which he had discovered) made on 28 September 2016. I see no reason to doubt Mr Hicken’s evidence and am satisfied on the criminal standard of proof that Dr Ellison’s failure to reveal these assets was a breach of the Carr Order.

Secondly, he did not, within 2 working days of service, comply with the Derrett Order. Having provided no adequate additional information concerning income and expenditure as a result of the Carr Order, it follows that Dr Ellison remained in breach of the Derrett Order and a fortiori was in breach of the Carr Order.

Thirdly, he was in breach of paragraph 10 of the Carr Order in that he did not within 7 working days of service swear and serve an affidavit setting out the information which he gave, or should have given, under paragraph 9 and under the Derrett Order. It is clearly beyond doubt that he has not complied with this obligation and I do not believe it has even been suggested by him or on his behalf that he did so. Provision of an affidavit of this sort is not a mere formality. It is a very important aspect of the policing of the freezing order. It is one thing, albeit it very serious, to fail to disclose assets; but then to go on oath to say that all assets have been disclosed when they have not is a serious contempt of court. A person required to make an affidavit is likely to take special care to identify his assets if he is required to go on oath in this way. The queries which Mr Hicken has, with justification, raised, demand an answer. Even if Dr Ellison is not required by the Carr Order to provide that explanation in the affidavit which he has been ordered to give, the provision of the affidavit is especially important in the present case because the order will, or should, cause Dr Ellison to pause to consider the accuracy of what he is swearing to in the light of Mr Hicken’s queries. In particular, Mr Hicken’s concerns about undisclosed assets in South Africa and undisclosed bank accounts will, or should be, in Dr Ellison’s mind so that, if he fails to disclose something which he in fact owns, he will be committing a serious contempt.

The third breach is that Dr Ellison has failed to comply with the Mann Order. The failures here correspond to those of the Carr Order. Although some information was provided between the dates of the Carr Order and the Mann Order, the provision of information about means remained inadequate. Again, importantly, no affidavit was made and served as required by the Mann Order. I am satisfied on the criminal standard of proof, that Dr Ellison is in breach of the Mann Order in the same way as he was, and remains, in breach of the Carr Order.

I am satisfied, therefore, that the allegations of contempt of court are established to the extent determined in paragraphs 46 to 50 above. The application before me has complied fully with the procedural requirements.

I do not, however, consider that I should proceed to sentence at the present time. As Briggs J said in Solodchenko, in a case where serious contempt has been proved in a respondent’s absence, it is appropriate for the court to pause before proceeding immediately to sentence and to consider whether the matter should in the alternative be adjourned.

The appropriate course, I consider, is to adjourn the application before sentence, if any, is passed. I direct service of this judgment on Dr Ellison requiring attendance at an adjourned sentencing hearing. If he does not respond, the court will be likely to sentence him in his absence.

It goes without saying that Dr Ellison would be well advised to comply fully with the orders for provision of information and the swearing of affidavits by the time of the sentencing hearing. I will certainly take into account everything which Dr Ellison has done by then to regularise his position. He would also be well advised to provide all the information which Mr Hicken has requested over the months and years even if, and to the extent that, such information goes beyond what has been ordered to be provided. In accordance with his obligations of cooperation with Mr Hicken which I have mentioned more than once.