OVERVIEW
The judgment of Edwin Johnson J in Hadcliffe Properties Ltd v Fenton [2024] EWHC 2587 (Ch), handed down on Friday 11 October 2024, provides a salutary warning to commercial fraud practitioners when deciding whether to issue committal proceedings for breach of a freezing order.
Joseph Sullivan appeared for the successful Defendant, instructed by Quastels LLP, in his application to strike out a committal application which had been brought on the ground of failure to comply with information orders in a freezing order granted in the Chancery Division.
The Claimant had been granted a search order and a freezing order on 2 November 2023. Both orders required the Defendant to provide information to the Claimants by certain dates. In the case of the freezing order, the requirements were to provide information as to a charity’s assets the working day after service of the order, which information was to be confirmed by affidavit within five working days of service of the order.
The Claimant executed the search order at the Defendant’s home on the morning of Friday 3 November 2023. Execution went on for the whole of the day. In the course of the day, the Claimant’s solicitor handed over a box of documents to the Defendant which contained the freezing order and told him that the documents inside “related to the freezing injunction”.
The next week, the Claimant’s solicitors sent a letter to the Defendant dated 7 November 2023 enclosing a copy of the freezing order headed “Service of Court Order and Claim”. The letter was marked as being sent “by post” though in fact it was couriered to the Defendant’s house. The Defendant instructed solicitors and provided them documents, including the 7 November 2023 letter. He did not recollect that he had been provided with a copy of the freezing order during the course of 3 November 2023. The solicitors calculated that, by reason of the deemed service provisions in the CPR, this meant that the deadline for provision of information under the freezing order was 10 November and the deadline for the affidavit was 16 November 2023, and made this clear to the Claimant’s solicitors in correspondence. The Defendant duly provided the required information by 10 November 2023 and the affidavit by 16 November 2023.
The Defendant’s solicitors were mistaken because the actual date of service of the freezing order was 3 November 2023 (when the order was personally given to the Defendant during the course of execution of the search order). This meant that the deadline for the information was 6 November and for the affidavit was 10 November, and the Defendant was therefore inadvertently in breach of those orders in providing the information and affidavit late. The Claimant issued an application for committal of the Defendant on 15 November i.e. after the information had been provided on 10 November and the day before the Defendant’s understanding of the deadline for the affidavit.
The Defendant applied to strike the committal application out on the ground that it was an abuse of process. It relied on the decision of Briggs J, as he then was, in Sectorguard plc v Dienne plc [2009] EWHC 2693 (Ch), that a committal application is an abuse of process unless it is issued either to secure compliance with an order or to draw to the Court’s attention a serious (as opposed to technical) breach of an order.
The strike out application was listed to be heard together with the committal application itself. The Claimant sought to argue that the committal application was justified both because (i) it was issued to secure compliance with the order and (ii) it was necessary to draw to the Court’s attention a serious breach.
As to (i), the Claimant’s argument was rejected by the Judge. He noted that the Claimant had not, at any time before 13 November, raised any issue regarding the Defendant’s compliance with the order, including when the Defendant provided the required information on 10 November. He held that this was entirely inconsistent with the contention advanced at the hearing that it was anxious to secure compliance. Even when, on 13 November, it wrote to the Defendant’s solicitors contesting their calculation as to the dates for compliance, it did not make any suggestion that it had in mind a committal application or suggest that the Defendant must comply failing which an application would be made. It issued the application without any warning on 15 November (despite its knowledge that the Defendant understood the deadline to be 16 November) and then did not serve the application until 20 November (days after the affidavit had been provided).
As to (ii), the Claimant sought to argue that the breach was serious by alleging that the Defendant acted deliberately and knowingly in providing the information and affidavit late. The Judge held that there was no evidential basis for this argument, that it should not have been made by the Claimant and that the allegation had been made simply as a means of seeking to defend the strike out application.
In striking out the committal application, the Judge was careful to make clear the importance of compliance with court orders. Nonetheless, this case and others also illustrates the need for commercial fraud practitioners to exercise judgment before pushing the button on a committal application. Whilst every case will turn on its own facts, as a general rule if a Defendant is failing to comply with an order, a Claimant should provide warnings to the Defendant before launching committal proceedings. As the Judge made clear, committal should be a “last resort”. In addition, litigants should, of course, not make allegations of knowing or deliberate breach of an order unless there is a cogent evidential basis for so doing.