Hart v Hart

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.

On the 23^rd February 2018 I gave a judgment 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.

Mrs Byrne is Mr Hart’s younger sister. She is 18 years younger than Mr Hart and is therefore in her mid 60’s.

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.

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’.

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.

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.’

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.

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.

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]:

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.

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.

Law - In the judgment of February 2018 I summarised the principles that apply as follows:

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.)'.

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.

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.

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.’

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).’

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.

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.

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:

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’.

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.

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.

The table is at B39 of the core bundle and was amended by me so that it recorded as follows:

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:

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:

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:

As to the submissions of Mitchell, Mr Williams’ replies included –

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.

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.

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:

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.