Who’d be a Whistle Blower?
Applications in the civil courts for contempt of court are becoming more regular and we have previously written blogs on this topic: It's only a court order, who cares? - Contempt of court & Contempt of court: the prospect of prison, even before proceedings are issued. In this blog, I look at the recent case of Perkier Foods Ltd (Claimant) v (1) Halo Foods Ltd (Defendant) (2) John Patrick Tague (Respondent)  EWHC 3462 (QB) to explain what is required to prove contempt of court.
In the case of Perkier Foods Ltd (Claimant) v (1) Halo Foods Ltd (Defendant) (2) John Patrick Tague (Respondent)  EWHC 3462 (QB), the Claimant and the Defendant entered into a commercial manufacturing agreement under which the Defendant contracted to (1) purchase a machine to produce moulded cereal products and (2) use that machine to manufacture for the Claimant cereal products called “Perkier Bars” and “Perkier Bites” to the Claimant’s recipe and specification. The Defendant purchased the machine and trialled the production of the Claimant’s recipes but after the Claimant placed 2 substantial orders the Respondent, the MD and controlling mind of the Defendant company, told the MD of the Claimant company that the Defendant would no longer produce Bites and would not fulfil four orders placed and he purported to terminate the manufacturing agreement.
The Claimant brought the matter to court and obtained a mandatory injunction requiring the Defendant to abide in full with the terms of the manufacturing agreement, including satisfying the four orders placed. The Court Order setting out the injunction contained a penal notice. A penal notice warns a person on whom a Court Order is served that they may be sent to prison, fined or have their assets seized of they do not comply with that order.
Despite the Court Order, the Defendant still did not comply with orders placed by the Claimant.
The Claimant alleged that the Defendant’s failures to comply with the Court Order amounted to contempt and applied to the Court to commit the Defendant’s MD to prison and/or to sequester the assets of the Defendant.
“Mens rea” is the mental element of a person’s intention (or otherwise) to commit a criminal act. The mens rea required to establish contempt of court arising from the breach of a court order was set out in Masri v Consolidated Contractors Ltd  EWHC 1024 (Comm) - in order to establish that someone is in contempt it is necessary to show that:
It is not necessary to show any direct intention to disobey the order.
It was held in JSC BTA Bank v Ablyazov  EWCA Civ 1411 that in contempt proceedings (even civil contempt proceedings) each of the three elements set out in Masri must be proved to the criminal standard of proof, beyond reasonable doubt. One of the reasons for this is because the potential consequences of being found in contempt include imprisonment.
In Sectorguard plc v Dienne plc  EWHC 2693 (Ch) the Judge stated that the failure to comply with a court order to do something where it was impossible to do so, i.e. the alleged contemnor had no choice, may be a breach of that order but not a contempt of court. This was taken a step further in Westminster City Council v Addbins Ltd EWHC 3716 (QB) in which the Judge said “The reason why a failure to perform the impossible does not constitute contempt is because it involves no element of choice.”
On the Claimant’s application for a finding of contempt of a court, the parties disagreed as to who bore the burden of proof on the question of impossibility. The Judge held that where a defendant says, and provides evidence in support, that compliance was impossible, mens rea is in issue and the burden is on the claimant to prove, to the criminal standard, that compliance was, in fact, possible, i.e. that the defendant had a choice about what to do (not do). Compliance being burdensome, inconvenient or expensive does not make it impossible.
The Defendant argued that it was impossible for it to comply with the Court Order and because of that its failure to comply with the Court Order did not amount to contempt. It was impossible because serious degradation of part of the equipment meant that manufacture of the Bites was not possible without significant modification of the combination of the existing recipe, the manufacturing process and the manufacturing equipment. The Defendant tendered expert evidence in support of this.
The Claimant alleged that there were four contempts committed by the Defendant and the Respondent. Because the Claimant could not prove beyond reasonable doubt that it was possible for the Defendant to comply with two of the orders placed by the Claimant (i.e. comply with the terms of the manufacturing agreement and, therefore, the Court Order) the first two alleged contempts were not proved. However, the Judge held that it would have been possible for the Defendant to fulfil two subsequent orders and the Respondent knew that and knew of the terms of the Court Order, therefore, both he and the Defendant committed contempts of court in respect of the third and fourth orders.
Fiona Simpson is a Partner in our Dispute Resolution team. Fiona specialises in civil fraud litigation, advising clients bringing or defending civil fraud proceedings, often with an international dimension. Fiona regularly advises on freezing orders and asset tracing.
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