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What’s gone wrong with the law of contempt?

In this article, Helen Evans KC, William Harman and Samuel Cuthbert of 4 New Square Chambers take a look at what has gone wrong with the law of contempt in proceedings involving frauds, or those embroiling professional advisers as defendants.  They explain what the Law Commission is proposing to do, and consider how this will improve the present unsatisfactory state of the law.

The threat of proceedings for contempt of court- with the attendant risk of a prison sentence- is one of the most effective ways of encouraging compliance with a court order. However, there are concerns that some claimants are increasingly “weaponising” contempt applications with the main aim of bringing their opponent to their knees without being able to put forward an orderly defence of proceedings. The situation is made worse by the fact that both bringing and defending contempt proceedings involves a myriad of legal and procedural challenges, including a confusing classification system and a lack of guidance as to what will actually happen in court.

Against this backdrop, it is not surprising that the Law Commission has recently announced its Consultation looking at reforming contempt.

Confusing categories

The Law Commission’s Consultation Paper rightly describes the present law of contempt as “unsystematic”, describing it as “resulting in a regime that is often disordered and unclear”.  The headline proposal is therefore to do away with the anachronistic and bewildering distinction between criminal and civil contempt, and to replace it with a new system focusing on three types of contempt. Two of these will be of particular relevance in fraud claims, or claims involving professional advisers, namely:

  • Contempt involving breach of a court order or undertaking to which the respondent was a named party;
  • General contempt, which can encompass both breach of a court order by a person not named in it (such as when a professional adviser assists with a breach) and interfering with the administration of justice (such as by proffering dishonest evidence).

Contempt of the first kind- where a named party to an order or undertaking acts in breach- requires the applicant to show (i) that the respondent knew that the order existed and that they were bound by it, and (ii) that the respondent committed a deliberate act which breached that order. It is not however necessary to prove that the respondent intended to breach the order.  There is good sense in this test: any other approach would incentivise respondents to evade service of the order so as not to know its precise terms. There is no suggestion by the Law Commission that this test should be adapted; merely that the categorisation of this type of case should be clearer.

The new category of “general contempt” will encompass any conduct that interferes with the administration of justice in a non-trivial way (or creates a risk of this). Examples of this type of conduct are broad and varied. They include assisting a defendant to move assets in order to circumvent a freezing injunction, publishing an embargoed judgment, assisting another party to give dishonest witness evidence or behaving inappropriately in court[1].  Some types of conduct therefore involve assisting a primary contemnor (such as the party against whom a freezing order has been made); while others are committed by the respondent in their own right.  What they all have in common is that they interfere with the administration of justice, either by allowing orders to be thwarted or by disrupting the court’s proceedings in some way.

One eye-catching development in the Law Commission’s Consultation Paper  is the decision to reconsider whether recklessness should be enough to satisfy the intention requirement for this type of contempt.

Should recklessness suffice as the fault element for the new “general contempt”?

One feature of some contempt cases, which is unfamiliar to civil practitioners, is the distinction that can be drawn from criminal law between basic intent (which relates to the act itself) and specific intent (which relates to the purpose or consequences of that act).[2]  To take the example of publishing an embargoed judgment, the basic intent relates to the decision to publish. The specific intent relates to whether or not that act will or might interfere with the administration of justice.

The two features can end up being elided together in many contempt cases- with courts not clearly identifying what state of mind a defendant needed to have about the consequences of the act rather than the act itself. [3]

At present, however, an applicant has to prove that a respondent to contempt proceedings actually intended to interfere with the administration of justice.

This point was recently made clear by the 2023 judgment of the Court of Appeal in Norman v Adler[4]. There, the court described an allegation that a defendant had recklessly (rather than intentionally) committed contempt in the form of putting dishonest witness evidence as a “novel concept”. It concluded [at 60] that on the current state of the law, more was required, namely:

“a need for the alleged contemnor to know that what he is saying is not true. It is not sufficient to say that the contemnor did not care whether what he said was true or not. It must first be proved to the requisite standard that he knew that he did not know whether what he said was true or not.

In other words, the Court of Appeal did not regard recklessness enough- although it went on to make clear that against this backdrop, proving the requisite mental element for contempt by a non-party can be a significant challenge.

The Law Commission is considering whether the present test is too exacting and whether recklessness is a more appropriate bar. It proposes that the requisite test could be that set out by the House of Lords in R v. G[5]. This requires a defendant to have been aware of a risk, and that in circumstances known to him, it was unreasonable to take that risk.  In other words, it is a test bound up with what the defendant actually knew and understood.

Such a new test therefore ought not to punish defendants who were oblivious to, or failed to consider, the consequences of their acts.

However, the trouble with recklessness is the concept often gets twisted out of shape. A good example of this problem in action is the criticism of the FCA’s approach to the regulatory proceedings against various employees of Julius Baer arising out of their dealings with the Yukos group of companies[6]. Albeit arising in a different branch of the law, it shows how the concept of recklessness is often misunderstood. In that case, the FCA charged the employees with recklessness on the basis that whether or not the employees actually appreciated the risks they were courting, a reasonable person would have done. The Upper Tribunal [at  49] described this as stretching the concept beyond its proper bounds and emphasised that recklessness includes both subjective and objective elements.

The risk, therefore, is that the Law Commission will suggest substituting a test that some say is too strict with a test that is apt to be made too lax in the hands of over-zealous claimants. By the time appeal courts come to unpick contempt proceedings that have gone awry, respondents can already have spent a period in prison.  The advantage of the current, more stringent approach is that it guards against doubtful penalisation.

Contempt is too blunt an implement

At present, bringing contempt proceedings can feel like wielding a sledgehammer to crack a nut.

The claimant bears the burden of proving the elements of contempt to the criminal standard (i.e. beyond reasonable doubt or so that the judge is sure). Many claimants regard the cost (and time) involved in doing so as disproportionate, particularly if their primary (if not sole) interest lies not in punishing past conduct but in ensuring compliance or increased respect for the administration of justice going forward.

The defendant faces a potential custodial sentence of up to two years. The actual and potential impact of a finding of contempt can make such applications difficult to resolve out of court.

Judges must accommodate what is sometimes called a heightened standard of procedural fairness- although as explained below, the precise method for achieving this can be unclear.[7] One consequence is that contempt proceedings generate more adjournments and longer hearing time estimates than most applications in civil proceedings. Further, and as also discussed below, the contemnor’s automatic right of appeal means that substantial court time is also required at the appellate level.

At times, the court’s sentencing powers following a finding of contempt can feel too blunt to enable a proportionate approach. For instance, the position on the authorities is that a deliberate and substantial breach of a freezing order will normally attract a significant custodial sentence.[8] This may not be the desired outcome for all claimants, particularly if the defendant’s participation is necessary for the efficient continuation of ongoing proceedings.[9] Further, and at the other end of the court’s sanctioning powers, the imposition of a fine payable to the state may be actively detrimental to a claimant taking enforcement steps against a limited pool of assets.

In other cases, the courts have struggled with the consequences of the criminal law principle of autrefois convict (a person cannot be tried again for an offence of which they have already been found guilty). The result is that the court cannot punish a breach of an order or undertaking and impose a further sanction on a later date in the event of continuing non-compliance. Instead, the court must impose a single sanction which performs both a punitive and coercive function.[10] In practice, this means the court will usually indicate what element of the sanction is coercive and may be discharged if the breach is subsequently purged.[11] However, such indications are not binding on a future judge and there is no guarantee that the defendant’s sentence will be reduced.

Against that background, the Law Commission’s proposal that interim remedies be available on proving the elements of contempt by breach of an order or undertaking on the balance of probabilities is welcome. Significantly, the imposition of such interim measures would not involve a finding of contempt (albeit contempt proceedings could follow). The proposal is also focused on interim remedies with an emphasis on coercion (rather than punishment), including payment of a sum of money into court, sequestration of the defendant’s assets or impoundment of a passport or other documents. In each case, the measure would be lifted in the event of (belated) compliance.

The attraction for claimants who are more concerned with coercing future compliance than punishment of past wrongs is obvious. Many claimants will also welcome the opportunity to resolve matters without incurring the additional costs (and time) associated with proving matters beyond reasonable doubt. Conversely, the stakes will be lower for defendants who might otherwise feel unable to admit liability.

Whether the availability of interim coercive measures will reduce the burden on the court is less clear. The possibility that matters might be resolved without recourse to full contempt proceedings is attractive. The risk that interim coercive measures would simply be used as a precursor to full contempt proceedings cannot be discounted. It is also unclear whether the Law Commission has in mind whether applications for interim coercive remedies would be subject to the heightened standard of procedural fairness (and the increased burden on the court which comes with it).

Has contempt been “weaponised”?

The Law Commission’s Consultation Paper records feedback from practitioners and the judiciary which suggests that the law of contempt has become weaponised by some private litigants, particularly in commercial litigation, and now forms an increasingly time-consuming and expensive form of satellite litigation in such proceedings. [12]

Given the high stakes – particularly in committal applications – weaponisation or abuse of the contempt jurisdiction is a significant problem. The Consultation Paper states that contempt proceedings ought to be a last resort[13], and to that end careful consideration of both the severity of the alleged contempt and the merits of an associated application is imperative. Moreover, where the threat of imprisonment is used strategically by better-resourced, more sophisticated legal teams, the problem of the weaponisation of contempt becomes more acute still.

Such concerns are not new, but they remain pertinent. In MBN v McGivern[14] for instance Mr Justice Nicklinson was heavily critical of counsel’s submission that the claimants were “entitled” to bring a contempt application against the defendant [97]:

“Ms Bolton’s final submission was that the Claimants were “entitled” to bring the contempt application against Ms McGivern; “entitled” to spend two days of Court time and resources pursuing an application that, on an objective assessment of the evidence, was only ever likely to end with the imposition of no penalty; and “entitled” to put a solicitor through the ordeal of a potentially career-ending contempt application and all the disruption that it has caused to Ms McGivern’s work and the impact it has had on this litigation. There is no such “entitlement”. The contempt application against Ms McGivern will be dismissed and will be certified as being totally without merit.”

The concern that contempt has become a strategic and blunt instrument for parties to punish litigants for non-compliance with court orders is addressed in part by the proposals discussed above for a regime of interim remedies designed to coerce compliance without having to proceed to a formal finding of contempt. The rationale for doing so is that an interim procedure would serve to mitigate the contempt satellite litigation, providing instead a suite of quicker and cheaper coercive interim remedies.

These proposed interim remedies may be seen as an attempt to redirect litigants away from use of contempt proceedings, and to reset the perception of contempt as a stick with which to beat a defendant.  Indeed, such changes may prompt a reconsideration of the appropriate motivations for bringing committal applications beyond the current emphasis in some cases on protecting “private interests”.[15]

First instance procedure and costs

As already noted above, civil courts generally regard themselves as obliged to apply a heightened standard of procedural fairness in contempt proceedings. However, the precise contours of that standard and the extent to which civil courts should effectively adopt the procedural safeguards in criminal proceedings remain strangely unclear.

The problem is particularly acute when it comes to the contempt hearing itself. Unlike Part 48 of the Criminal Procedure Rules, the Civil Procedure Rules are largely silent on the procedure for the hearing. CPR 81.7(1) simply provides that the court shall give such directions as it thinks fit for the hearing and determination of contempt proceedings. In practice, this leads to individual judges taking markedly different approaches. For instance, some judges hear oral evidence at sentencing hearings where contempt has been admitted,[16] but many (if not most) make findings of fact at such hearings on the basis of written evidence alone.

The privilege against self-incrimination can also cause confusion in civil courts. In McKay v All England Lawn Tennis Club[17], this led to the Court of Appeal criticising the use of leading questions by the judge at first instance.

In some cases, civil courts resolve contempt proceedings in a manner which might be regarded as inconsistent with the heightened standard of procedural fairness. For instance, and in contrast to proceedings under the Criminal Procedure Rules, there is no presumption against the use of hearsay in contempt proceedings under the Civil Procedure Rules.[18] Further, and as the Law Commission observes, the Civil Procedure Rules do not set out an express procedure for enabling a defendant to admit the contempt and apologise to the court.[19]

The Law Commission’s proposed solution to the present lack of  clarity is to suggest a uniform, general procedure in all contempt proceedings, which should nonetheless sufficient flexibility to accommodate any variations that are needed to address potential contempts in different settings. [20]

Another area where the lines between civil and criminal practice can become blurred relates to costs. In criminal courts, costs against a defendant in contempt proceedings will effectively be capped, limited to the amount that the defendant has “the means and ability to pay”. [21] In contempt proceedings under the Civil Procedure Rules, the court may take the defendant’s means into account, but is not required to do so.[22] This can represent something of a hybrid approach, whereby the paying party’s means are not generally taken into account when assessing costs in civil proceedings. Although civil courts must consider whether the combination of any penal measure and any costs order is a proportionate interference with the defendant’s rights under article 10 ECHR,[23] in practice it is unusual to consider how the costs order might impact the substantive order in civil proceedings. The Law Commission has now invited views from consultees on whether the defendant’s means should be taken into account when assessing costs in contempt proceedings without making a provisional proposal either way. [24]

Appeals

Finally  we turn to appeals. The Law Commission’s Consultation Paper rightly sets out that law governing appeals in contempt proceedings can be unclear and complex. One of the key current challenges is identifying the correct route for appeal- a matter which is ripe for reform to remove the current labyrinth.[25]

The other major proposed change is the suggestion that permission to appeal should be required in all circumstances (except from magistrates’ courts) regardless of the route of appeal and including in cases where committal has been ordered. It is arguably a current anomaly of the contempt system that appeals can be made without a permission stage.

Adding such a filter would seek to remove from the system unmeritorious appeals or those lodged to stall matters or for other ancillary motives. This problem was brought to life in Al-Rawas v Khan[26] where Coulson LJ (citing Morris J), said that the contemnors had [26]:

“endeavoured to take advantage of the automatic right to appeal … in order to prolong proceedings and delay payment of the sums due. … [They] never had any genuine intent to advance this appeal in a legitimate fashion. It was a sham from start to finish.”

He added further [at 95] that the contemnors’:

“objective throughout, and over a considerable number of years, has been to disrupt, frustrate and protract proceedings and to avoid compliance with court orders and ultimately to evade payment of the judgment sums properly due.”

Despite the fact that contemnors can be sentenced to imprisonment, the carve-out for contemnors from any permission requirement has been criticised as lacking a logical foundation[27]. Indeed, the fact that a defendant can prolong proceedings to the point of a hearing in the Court of Appeal is currently  a disincentive for claimants even with strong grounds to bring a contempt application.

Conclusion

The Law Commission’s Consultation Paper is a welcome acknowledgment that the law of contempt has gone awry in several regards. Not only is the substantive law confusing, but aspects of the procedure lack rigour or certainty and are therefore apt to be misused by either over-zealous claimants or procrastinating defendants.  It is hoped that the Law Commission’s project will iron out many of the problem areas- and the signs are that the Consultation Paper has effectively identified the core problems.

© Helen Evans KC, William Harman and Samuel Cuthbert, 4 New Square Chambers, July 2024

This article is not intended as a substitute for legal advice. Advice about a given set of facts should always be taken.

Helen Evans KC was called in 2001 and appointed silk in March 2022. Helen specialises in professional liability, regulatory, contempt of court, fraud and insurance coverage work, with a large part of her practice focusing on lawyers’ and accountants’ liability and disciplinary matters. She has acted on contempt matters for both claimants and defendants- including representing a professional indemnity insurer in the Court of Appeal against a solicitor contemnor. Helen is a co-editor of the solicitors and barristers chapters in Jackson & Powell on Professional Liability. She is highly recommended in the directories. Prior to taking silk, in November 2021 Helen was named “Professional Negligence Junior of the Year” and in April 2022 was named “Times Lawyer of the Week.”

William Harman was called in 2016. He specialises in commercial litigation and international arbitration. Many of his cases involve fraud, asset-tracing and injunctive relief. He recently acted in contempt proceedings arising from multiple breaches of a freezing order. The Legal 500 ranks William as a leading junior in two practice areas and most recently described him as “a remarkable barrister”.

Samuel Cuthbert was called in 2018. He specialises in commercial law, sports law, contempt of court, civil fraud, regulatory and disciplinary, professional liability, and private international law. Samuel is acclaimed in the directories as a “real star of the future” and “razor-sharp”. He has provided legal analysis to international media outlets including CNN, the Guardian, and the New York Times.

[1] We do not address general contempt by publication: this is outside the scope of this article.

[2] See para. 3.68 of the Law Commission’s Consultation Paper.

[3] For instance, in Liverpool Victoria v Khan [2018] EWHC 2581 (a case involving solicitors’ involvement in dishonest witness statements) the court referred to the requirement that a defendant needed to have known that what he was saying was “likely to interfere with the course of justice” before commenting that “a statement made by someone who does not care whether it is true or false is liable as if that person knew what was said was false”. The court therefore compressed the basic intent and specific intent together in its explanation of the law.  See also Norman v Adler for a more up-to-date statement of the law.

[4] [2023] EWCA Civ 785.

[5] [2003] UKHL 50 [at 13 and 29].

[6] Seiler & Ors v FCA [2023] UKUT 00133 (TCC).

[7] See, for instance, Navigator Equities Limited v Deripaska [2023] EWHC 788 (Comm) at  [31].

[8] JSC BTA Bank v Solodchenko [2011] EWCA Civ 1241 at [51]       .

[9] For instance, the court took the unusual step of suspending a custodial sentence in Power v Hodges [2015] EWHC 2931 (Ch) to avoid defendant liquidators from participating in an ongoing liquidation in which the claimant had an interest.

[10] In the context of contempt by breach of an order, this follows the Court of Appeal’s decision in JSC BTA Bank v Solodchenko [2011] EWCA Civ 1241 at [56].

[11] The court’s power to discharge a committal order is to be found in CPR 81.10.

[12] See para. 4.58 of the Law Commission’s Consultation Paper.

[13] See para. 4.59 of the Law Commission’s Consultation Paper.

[14] [2022] EWHC 2072.

[15] The Court of Appeal in Navigator Equities v Deripaska [2021] EWHCA Civ 1799 had previously framed the role of claimants in contempt proceedings in the following way [135] (emphasis added):

“A private applicant for civil contempt, even where it is no longer necessary to seek enforcement of an order or undertaking, still has a proper private interest in the outcome of the application. Any private litigant will have an interest in the enforcement of a court order or undertaking which has been made to protect its interests. Apart from having this private interest in principle in the upholding of its rights under the order or undertaking, perhaps the most obvious private interest is that of deterrent for the future.”

[16] See, for instance, Sellers v Podstrshnyy [2019] EWCA Civ 613 at [15] referring to the approach taken by Falk J at first instance.

[17] [2020] EWCA Civ 695 at [57]

[18] Notwithstanding that, as the Law Commission observes at para. 8.123 of its Consultation Paper, reliance on hearsay may create a risk of interference with a defendant’s rights under article 6(3)(d) ECHR.

[19] As the Law Commission’s Consultation Paper points out at para. 8.74, this lacuna in procedure exists despite such matters being relevant to sentencing: CPR 81.4(2)(g).

[20] See para. 8.91 of the Law Commission’s Consultation Paper.

[21] Secretary of State for Transport v Cuciurean [2022] 1 WLR 3847 at [68].

[22] Attorney General v Crosland (costs) [2021] UKSC 15 at [8].

[23] Attorney General v Crosland (costs) [2021] UKSC 15 at [12].

[24] See para. 9.61 of the Law Commission’s Consultation Paper.

[25] Paras. 11.45 to 11.53 of the Law Commission’s Consultation Paper propose two alternative options for reform to clarify the appeals procedure:

  • The first option is a vertical structure in which appeals from first instance contempt decisions in all lower courts, tribunals, other bodies and the Crown Court would be to the High Court. Appeals from High Court appeal decisions would lie to the Civil Division of the Court of Appeal, and then to the Supreme Court. Appeals from first instance decisions of the High Court would be to the Civil Division of the Court of Appeal, and then the Supreme Court. Unlike the current law, this is a simple and accessible structure in which contempt appeals would all follow the same route. Notably appeals heard by the Court of Appeal would be heard in the Civil Division, reflecting the fact of the contempt jurisdiction is not a criminal jurisdiction. The High Court would however take a more central role in the appeal structure, with associated strains on its resources.
  • The second, and alternative, idea that contempt appeals could follow the same well-trodden routes of appeal as typically apply in criminal and civil courts. Appeals from first instance decisions of lower criminal courts would lie to the Crown Court by way of rehearing, and from there to the Criminal Division of the Court of Appeal, and then to the Supreme Court. This option has the clear benefit of reflecting the current routes of appeal in other areas of law, and would not place the same demand on High Court resources as the first option. It may however increase demands on the Crown Court in circumstances where more cases are appealed from magistrates’ courts

[26] Al-Rawas v Hassan Khan & Co [2022] EWCA Civ 671

[27] The court in Deutsche Bank AG v Sebastian Holdings Inc  [2023] EWCA Civ 191 looked at criminal rights of appeal for a parallel, but pointed out at [40] that the “the analogy is not exact as a criminal applicant has a right to renew an application refused on paper to an oral hearing”.

Related People

Helen Evans KC

Call: 2001 Silk: 2022

William Harman

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Samuel Cuthbert

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