Sage v Hewlett Packard Enterprise Company & Ors [2017] EWCA Civ 973

Case No A2/2017/0725[2017] EWCA Civ 973
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2017] EWHC 66 (QB)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
Mr Justice Jay
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 14/07/2017
LORD JUSTICE KITCHIN
LORD JUSTICE DAVID RICHARDS
and
LORD JUSTICE HENDERSON
Between
(1) HEWLETT PACKARD ENTERPRISE COMPANYClaimants/(2) HEWLETT PACKARD LIMITEDRespondents(3) HEWLETT PACKARD PAKISTAN (PRIVATE) LIMITEDRespondent(4) HEWLETT PACKARD SINGAPORE (SALES) PTE LIMITEDRespondent
Mr Kevin Metzger (instructed by Noble Solicitors) for AppellantMr Anthony Peto QC and Mr Robert Weekes (instructed by Mishcon de Reya LLP) for RespondentsHearing Hearing date: 11 May 2017
Judgment

Introduction

[1]On 11 May 2017 we heard the appeal of Peter Sage from his conviction and sentence on nine grounds of civil contempt of court for which he was found guilty on 20 January 2017 after a three day hearing before Jay J in the Queen’s Bench Division of the High Court on 12, 13 and 16 January 2017. The contempts all concerned failures to comply in specific respects with the terms of(a) a freezing order, and(b) a search order, both originally made by Coulson J on 2 December 2015 and then continued with variations until judgment or further order of the court by Sweeney J on 16 December 2015 (respectively “the Freezing Order” and “the Search Order”).[2]For the contempts of which he was found guilty, Mr Sage was sentenced to an immediate term of 18 months’ imprisonment.[3]Mr Sage’s appeal to this court against both conviction and sentence lies as of right, without any requirement of permission: see CPR 52.3(1)(a)(i), which excepts an appeal against “a committal order” from the usual need to obtain permission to appeal. The relevant order was made by Jay J on 20 January 2017 (“the Committal Order”), after he had handed down his written judgment (“the Judgment”) on the same day.[4]The claimants (and respondents to the appeal) are four companies in the Hewlett Packard group. Nothing turns on their separate identities, and I shall follow the judge in referring to them collectively as “HPE”. They were represented on the appeal, as they were below, by leading and junior counsel (Anthony Peto QC, leading Robert Weekes), instructed by Mishcon de Reya LLP.[5]Mr Sage obtained legal aid and was represented at the hearing of the committal application by junior counsel (Andrew Maguire), instructed by JBR Morgan Solicitors. This representation did not continue after the making of the Committal Order, so he initiated his appeal as a litigant in person from Pentonville Prison, filing his appellant’s notice significantly out of time on 17 March 2017 together with grounds of appeal running to 15 pages and 71 paragraphs. In due course, he obtained public funding for the appeal and (after various late changes, apparently at his instigation) was eventually represented at the hearing before us by Kevin Metzger of counsel, instructed by Noble Solicitors.[6]On 28 March 2017, Master Meacher granted the necessary extension of time for the appeal.[7]At the conclusion of the hearing on 11 May, we were able to state our conclusion, which was that the appeal would be allowed in part (in relation to Mr Sage’s alleged failure to disclose or deliver up an engagement ring, which I will call “the Engagement Ring issue”), and that his sentence would be reduced from 18 to 12 months’ imprisonment. His appeal against all the other findings of contempt was dismissed.[8]We said that we would give our reasons in writing later for reaching these conclusions. In this judgment I explain why I agreed to the disposal of the appeal in the terms which I have summarised.

Background

[9]Much of the relevant background is set out in the Judgment, the neutral citation number of which is [2017] EWHC 66 (QB), at [1] to [11], on which the following summary draws.[10]For several years before 2015, Mr Sage lived in Dubai where he owned and ran a business called Space Energy. HPE manufactures and sells computer networking and storage products on a worldwide basis. HPE claims that Mr Sage and the second defendant, Walter Farfan, conspired between 2010 and 2013 to defraud HPE by holding themselves out as owning, through Space Energy, large solar energy facilities in the Middle East and Asia. HPE alleges that these facilities were a fiction, contrived for the purpose of obtaining substantial “big deal” discounts from HPE. The amount of the claim is approximately US$ 17.5 million. Proceedings were begun on that basis against Mr Sage and Mr Farfan in England by issue of a claim form on 3 December 2015.[11]On 2 December 2015, HPE had made a without notice application to Coulson J for a freezing order against both defendants, and for a search order relating to a residential house in Leicester to which Mr Sage had returned in April 2015. This was the hearing at which the Freezing Order and the Search Order were first made. According to the judge, who had read the papers for the without notice hearing and the transcript of the proceedings, “Coulson J was satisfied that HPE had demonstrated a strong prima facie case that a fraud, or series of frauds, had been perpetrated”.[12]Before Mr Sage’s departure from Dubai in January 2015, a number of relevant developments had taken place in the United Arab Emirates. In about 2011, Mr Sage began a friendship with his future fiancée, Thea Thorpe, who herself moved to Dubai in early 2013. In April 2013, Mr Sage established another company in Dubai, Sage International FZE (“Sage International”), which became the corporate vehicle for his activities as an entrepreneur and motivational speaker in the world of business. The judge described Sage International as “Mr Sage’s outfit or alter ego”, and Mr Sage as “the promoter and speaker, the engine and public face of the company”. Behind the scenes, the financial side of the business was run by Ms Beverley Jill Bromige, who had been the partner of Mr Sage’s late father for almost 30 years, and had worked on and off for Mr Sage and his companies since 1997. In her affidavit in the committal proceedings, Ms Bromige said that during this period she had held several roles and positions, mainly centred on the management of both his personal and his business finances. In addition, she had spent several years as his personal assistant. She described herself as “a qualified bookkeeper and experienced administrator”.[13]In March 2014, Mr Sage was subject to some form of freezing order in Dubai. Shortly afterwards, in June 2014, Mr Sage transferred, or purported to transfer, the whole of his interest in Sage International to Ms Thorpe. The judge dealt with this transaction in some detail at [43] to [59] of the Judgment, finding (in brief) that the legal interest in Sage International was indeed transferred by Mr Sage to Ms Thorpe, but that Mr Sage remained the beneficial owner of the company which continued to function as his “corporate alter ego”.[14]On 31 December 2014, Mr Sage became engaged to Ms Thorpe. A day or two later, he gave her a diamond and sapphire engagement ring for which he paid the sterling equivalent of between £22,000 and £23,000. This is the ring which became the subject of the Engagement Ring issue at the committal hearing.[15]In January 2015, a Ms Carolyn Sampson, who lives in Colorado, became the new CEO of Sage International. She visited Dubai for a period of time in order to promote the business. Meanwhile, Mr Sage had decided to leave Dubai with his fiancée, and after travelling for about three months they came to the UK in April 2015, when Mr Sage’s house in Leicester was vacated by tenants. According to the judge, Mr Sage agreed that his reason for leaving Dubai was that he had lost his appeal against the freezing order imposed in March 2014. Upon his return to the Leicester property, Mr Sage immediately put the utilities in Ms Thorpe’s name. The judge inferred that his purpose in doing so was to keep himself “off the radar”, or “less metaphorically … to conceal himself from creditors and the tax authorities”.[16]Sage International continued its business activities outside Dubai. Mr Sage and Ms Thorpe were in Leicester; Ms Sampson in Colorado; and Ms Bromige in Spain. On 22 November 2015, Mr Sage spoke at his “Millionaire Business School” in London. The event was apparently successful, and money came into the company over the following weeks, although no financial details were disclosed to the judge.[17]Less than a fortnight later, HPE obtained the Freezing Order and the Search Order. The judge noted that both of these orders were “in fairly standard form”. The Freezing Order was in worldwide form, with an upper limit of US$ 10 million. It applied to all of Mr Sage’s “assets”, broadly defined, and included disclosure obligations requiring Mr Sage to give details of all his assets worldwide exceeding £1,000 in value. There were also wide-ranging orders for the preservation and delivery up of documents, including Mr Sage’s passports. The order contained standard exceptions for expenditure on ordinary living expenses and up to £20,000 on legal advice and representation, and for “dealing with or disposing of any of his assets in the ordinary, lawful and proper course of business”.[18]The Search Order authorised a search to be carried out at the Leicester property between 8 am and 5 pm on a weekday, under the supervision of a supervising solicitor (from a different firm than HPE’s own solicitors). The order extended to, and required the delivery up of, all of the documents and articles listed in Schedule C to the order, defined as “the listed items”. These included “asset documents” (broadly defined), eight specified watches, any item of jewellery in the possession, power or control of Mr Sage exceeding £1,000 in value, and any amount of cash exceeding £3,000 in value. Mr Sage was also ordered to provide keys and codes to enable access to the listed items, to permit an independent computer specialist named in the order to make electronic copies of electronic storage devices etc, and to provide relevant information to the applicants’ solicitors, to be verified subsequently by affidavit.[19]The execution of the Freezing Order and the Search Order was described as follows by the judge:
“10. The Freezing Order and the Search Order were served on Mr Sage on 3 December 2015, at 8 am. There is very little dispute as to what happened over the course of the day. Mr Sage was able to obtain legal advice at around 9.25 am. The Supervising Solicitor gave Mr Sage generous opportunity to consider his position, reflect on the terms of the Order, and obtain further advice upon it. The search commenced at about 11.30 am and was carried out by Mr Jeremy Hertzog, partner at Mishcon de Reya LLP, Ms Caroline Zabeti-Targhi, a Managing Associate, Ms Melissa Donn, an Associate, and Mr John Young, an independent computer specialist. 11. … it is not in dispute that Mr Sage and Miss Thorpe were polite and courteous throughout, and exhibited no hostility or lack of grace and manners. This is altogether consistent with their presentation in the witness box. Mr Young took images of their mobile phones and these were returned at about midday. Ms Thorpe left the premises to attend a pre-arranged lunch engagement, and was certainly away from it between 1 and 2 pm. During that period a substantial number of payments were made out of Mr Sage’s Lloyds’ Bank Account in Guernsey (aggregating £25,000) and his Paypal account (aggregating approximately $112,500, in two currencies). HPE contends that these payments were carried out in flagrant breach of the Freezing Order. I mention these matters at this introductory stage because potentially they are the most serious.”

The evidence of the witnesses

[20]The judge gave his assessment of the evidence of the witnesses at the committal hearing at [18] to [24] of the Judgment. He had no reservations in accepting the evidence of the members of the search party on 3 December 2015, and where the evidence of Ms Zabeti-Targhi conflicted with that of Ms Thorpe, he had no hesitation in preferring the former’s account.[21]The three key witnesses who gave oral evidence were Mr Sage, Ms Bromige and Ms Thorpe. The judge described Mr Sage as “an extremely charming, charismatic and polished individual”, although not “intellectually sophisticated”. He was unimpressed by Mr Sage’s evidence, and accepted Mr Peto’s submission that “Mr Sage hoped to use the tools of his motivational speaking career in order to deceive the court”. Mr Sage “was not a truthful witness”, and “was prepared to lie in order to keep himself out of trouble”. The judge also found that, contrary to the instructions he had given, Mr Sage did discuss his evidence with Ms Thorpe in relation to the engagement ring.[22]The judge found Ms Bromige “a more difficult witness to evaluate”. She appeared to be “a more direct and less evasive witness than Mr Sage”, and possessed “a quick, sharp mind”. Reflecting on the transcript of her evidence over the weekend, however, the judge was struck by a number of points which, taken cumulatively, had driven him to conclude that she was not a witness of truth, but rather “an accomplished purveyor of untruths”. He rejected her evidence that Mr Sage was not in control of Sage International after June 2014; and he also rejected her evidence that there was a Skype conversation between her and Ms Sampson between 1 and 2 pm GMT on 3 December 2015. The judge found that she lied about that conversation, which in turn served to undermine other contentious aspects of her evidence.[23]The judge found that Ms Thorpe “was not a remotely convincing witness”, for a number of reasons which I need not elaborate. He rejected her evidence about the pledging of her engagement ring to a gentleman of unsavoury reputation called Clifford Harper, who had himself put in an affidavit but was unable to give oral evidence because he was currently serving a term of 33 months’ imprisonment for fraud. In those circumstances, the judge unsurprisingly found that he could give “only very limited weight” to Mr Harper’s affidavit.

The Engagement Ring issue

[24]The Committal Order recorded that the court was satisfied that Mr Sage had been guilty of contempt of court in failing to comply (relevantly) with the following provisions of the Search[25]This formulation reflected paragraph [27] of the Judgment, where the judge (having found in [26] that the ring was given to Ms Thorpe by Mr Sage unconditionally on 2 January 2015) identified the following provisions of the Search Order as relevant to the further findings of fact which he proceeded to make:
“(i) paragraph 20: the obligation to deliver up to HPE’s solicitors (to be held to the Order of the Court) any items of jewellery “located upon the premises” exceeding £1,000 in value; (ii) paragraph 21(d): the concomitant obligation to give information to HPE’s solicitors as to the location of any item of jewellery within the scope of the Order; (iii) paragraph 22: the additional concomitant obligation to swear an affidavit to that effect.”
The judge clearly identified these provisions of the Search Order as relevant on the footing that, as he then found, the ring was the property of Ms Thorpe, and was not under the control of Mr Sage, but was located on the premises when the Search Order was executed, and had then been hidden there by Ms Thorpe at some convenient moment during the morning of 3 December.[26]The judge concluded that the ring had been hidden on the premises by Ms Thorpe after considering, and rejecting, three conflicting versions of events which had been put forward by Mr Sage, with corroboration (save as to the first version) from Mr Harper and Ms Thorpe herself. The question arose because, during the search of the property on 3 December, Mr Hertzog found a valuation certificate for a diamond and pink sapphire ring and an empty ring box in Mr Sage’s safe. The valuation had been given in June 2015 for insurance purposes by a jeweller in Nottingham. Mr Sage initially told Mr Hertzog that there was no ring, and that he had the certificate only because he intended to have a copy of the ring described in the certificate made in Dubai. The judge rejected this first version of events as “so obviously false as to be ludicrous”: see the Judgment at [29]. Apart from the inherent implausibility of the explanation, its falsity was established as soon as Mishcon made enquiries of the jeweller.[27]The second version of events, put forward in Mr Sage’s affidavit of 14 December 2015, was that Ms Thorpe gave the ring to Mr Harper (also known as Mr Newby Smith) to settle outstanding debts to him of around £7,000. The judge rejected this account, too, as “an obvious fabrication”: see [31]. The third, and final, version was a refinement of the second, namely that the ring was pledged to Mr Harper on terms that it would be returned on payment of the sum of £7,000. There was evidence that, in August 2016, Mr Harper received the sum of £7,500 from Ms Thorpe in relation to the ring, and there was a letter from Mr Harper confirming receipt of the money. Mr Harper said he went to Mr Sage’s property and handed over the ring in the lounge, where it was promptly replaced on Ms Thorpe’s finger. This version, like its predecessors, was rejected by the judge, who felt driven to conclude that Mr Sage had colluded with Ms Thorpe “to confect a ludicrous account which has no credibility whatsoever”: see [37]. As to Mr Harper, the judge was satisfied that he was given £7,500, but found that “he was doing a favour for an old friend”.

The judge then said, at [39]:

“Thus, I conclude that the engagement ring was never in the possession of Mr Newby Smith. Mr Maguire submitted that it had not been proven to the criminal standard that the ring was “on the premises” on 3 December 2015. In my judgment, it has: as a matter of irresistible inference. If the ring was not in the clutches of Mr Newby Smith, it could only have been in the possession of its rightful owner, Ms Thorpe. It was not, of course, in the safe, but that was because Ms Thorpe likes to wear it. She hid it at some convenient moment during the course of the morning of 3 December. 40. It follows that I do find the contempts proved in relation to the obligations specifically identified by me at paragraph 27 above. I do not find that Mr Sage was in breach on the basis that he controlled the ring.”
[29]The judge’s findings of fact on this issue were in my judgment clearly open to him on the evidence, and subject to one point Mr Metzger did not contend otherwise. He argued, however, that the ring could not be said to have been located on the premises if it were either being worn by Ms Thorpe or had been provided to another person, other than Mr Sage, for whatever purpose. The ring was hers to deal with as she pleased, and it therefore could not have fallen within the terms of paragraph 20 of the Search Order, which stipulated that:
“In the event that there is located upon the premises any amount of cash exceeding £3,000 or any items of jewellery or watches which in the opinion of the Supervising Solicitor may exceed £1,000 in value, [Mr Sage] must deliver it up to the Applicants’ Solicitors to be held to the order of the Court.”
[30]A difficulty which this submission faces is the judge’s express finding that Ms Thorpe hid the ring, by inference somewhere on the premises, during the morning of 3 December. The judge further found that she had ample opportunity to do so, because the initial interaction of the supervising solicitor (Mr Oakley) was with Mr Sage, and no solicitor noticed the ring on Ms Thorpe’s finger when they entered the premises around 11.30 am: see the Judgment at [34]. If the ring was hidden by Ms Thorpe somewhere on the premises, it was clearly “located upon the premises” within the meaning of paragraph 20 of the Search Order. Moreover, the ring clearly exceeded £1,000 in value, so Mr Sage was prima facie obliged to deliver it up to Mishcon to be held to the order of the court.[31]Nevertheless, the difficulty which I have mentioned may not be insurmountable. Even on the basis of the judge’s findings, there is surely room for an argument that paragraph 20 only required Mr Sage to deliver up items of jewellery which were at least under his control, and not ones which were in the unconditional ownership of a third party. As I have already noted, the judge expressly found that Mr Sage was not in control of the ring. It might also be argued that, on its true construction, paragraph 20 only applies to items which are actually found upon the premises during the search, and in respect of which the supervising solicitor could form an opinion about their value. I do not need to pursue these thoughts any further, however, because there is in my judgment a far more fundamental objection to the way in which the judge dealt with this issue. In identifying paragraphs 20, 21(d) and 22 of the Search Order as relevant to the issue, he must presumably have thought that breaches of these provisions were alleged against Mr Sage in the amended grounds of committal, dated 22 November 2016. But that was not the case.[32]The relevant amended grounds were as follows:
“Failure to disclose or deliver up an engagement ring 6. In breach of paragraphs 8(1) and 9 of the Freezing Order, [Mr Sage] failed to disclose his ownership and/or proprietary interest in an engagement ring worth more than £1,000, the ring being an asset within the meaning of paragraphs 5 and/or 22A of the Freezing Order. 7. In breach of paragraph 21(a) of the Search Order, [Mr Sage] failed immediately to inform the Claimants’ Solicitors of the location of the engagement ring which, being an item of jewellery in the possession, power, or control of [Mr Sage] worth more than £1,000, was a listed item within the meaning of paragraph 7 of Schedule C of the Order, the location of which he was obliged to disclose to the Claimants’ Solicitors. 8. In breach of paragraph 15 of the Search Order, [Mr Sage] has failed to deliver up to the Claimants’ Solicitors the engagement ring, being a listed item in his possession or under his control within the meaning of paragraph 7 of Schedule C of the Search Order.”
[33]It can be seen that none of the provisions of the Freezing Order and the Search Order of which Mr Sage was alleged to be in breach in the amended grounds is included in the list of relevant provisions in paragraph [27] of the Judgment. Yet it is the latter provisions, alone, which the judge found Mr Sage to have breached, and which are reflected in the relevant part of the Committal[34]This objection cannot in my opinion be dismissed as a mere technicality. On the contrary, committal proceedings based on alleged disobedience to court orders are of a quasi-criminal nature, and it is of cardinal importance that the alleged contemnor should have full notice of the charges which he has to face, and should not be at risk of being found guilty on any other grounds with which he has not been charged. For this reason, CPR 81.10(3) provides, in mandatory terms, that in cases of committal for breach of a judgment, order or undertaking to do or abstain from doing an act:
“The application notice must – (a) set out in full the grounds on which the committal application is made and must identify, separately and numerically, each alleged act of contempt including, if known, the date of each of the alleged acts; and (b) be supported by one or more affidavits containing all the evidence relied upon.”
Rule 81.10(4) then provides that the application notice and the evidence in support must be served personally on the respondent, subject to the power of the court to dispense with such service if it considers it just to do so, or to make an order for substituted service by an alternative method or at an alternative place.[35]The notes to CPR 81.10 in the White Book (2017 edition, volume I, at paragraph 81.10.2) refer to a recent unreported decision of this court (Inplayer Ltd v Thorogood [2014] EWCA Civ 1511, 25 November 2014) where Jackson LJ, with whom Lewison and Treacy LJJ agreed, said at [39]:
“A judge hearing a committal application should confine himself or herself to the contempts which are alleged in the application notice. If the judge considers that other alleged contempts require consideration, the correct course is to invite amendment of the application notice and then provide any necessary adjournment so that the respondent can prepare to deal with those new matters.”
I would respectfully repeat and endorse that guidance. I would also add that it is in my view a salutary discipline for any judge who is delivering or writing a judgment on a committal application to set out each relevant ground of committal before proceeding to consider whether it is made out on the evidence to the criminal standard of proof. For whatever reason, the judge in the present case omitted this precaution and instead prefaced his consideration of the Engagement Ring issue by setting out provisions of the Search Order of which no breach was alleged in the committal grounds.[36]We were taken to relevant passages in the transcript of the hearing below, from which it appears that the procedural defect which I have identified was not explained to the judge by counsel on either side, nor did he notice it himself. There was some discussion, in the course of Mr Peto’s closing submissions, about provisions of the Search Order which might apply if the judge concluded that the ring belonged to Ms Thorpe and was on the premises when the search took place; but no attempt was made to relate this discussion to the alleged grounds of committal, and no application to amend the grounds was made. Indeed, the point seems to have escaped the notice of all concerned until we raised it with counsel at an early stage of the appeal hearing.[37]When he made his oral submissions to us, Mr Peto accepted that there had been a procedural irregularity, but submitted that it was purely technical and had caused no injustice to Mr Sage. He argued that Mr Sage clearly understood the terms of the Search Order, which were explained to him by the supervising solicitor, and he must have realised that the ring had to be delivered up because he falsely informed Mr Hertzog that the ring did not exist, and he did not correct the position in his affidavit of assets sworn on 8 December 2015. Furthermore, after the falsity of his first version had been exposed, Mr Sage then concocted the equally false second and third versions of what had occurred in relation to the ring. The judge had heard all the evidence, said Mr Peto, and on the basis of his careful findings of fact there could be no real doubt that Mr Sage was guilty of breaching the provisions of the Search Order referred to by the judge. Accordingly, Mr Peto belatedly sought permission from us to re-amend the application notice. He adopted a suggestion from the court that he might wish to rely on PD 81 paragraph 16.2, which provides that:
“The court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect.”
[38]This application was opposed by Mr Metzger, who argued that it was far too late for such an amendment to be allowed. Had such an application been made at the hearing below, as it should have been, it could not be said that the conduct of Mr Sage’s defence would have been unaffected, and an adjournment might well have been necessary. Mr Metzger pointed out that there was no direct evidence about the location of the ring on 3 December 2015, and he said it would be wrong for this court to speculate about what the evidence would have been if the allegation that the ring, although it belonged to Ms Thorpe, was physically on the premises when the search took place, had been squarely put to Mr Sage as an allegation which he had to answer.[39]We said at the end of the hearing that we would refuse the application to amend. The application should have been made, if at all, at the hearing below, and I agree that it would be wrong for us to speculate whether permission would have been granted, and (if so) whether there would have been an adjournment or whether there would have been any difference to the way in which Mr Sage’s defence on this issue was conducted. On a question of this nature, arising at such a late stage, the benefit of any reasonable doubt must be given to the respondent. Furthermore, as I have indicated, I think there may have been other tenable arguments open to Mr Sage on the construction of paragraph 20 of the Search Order, had he been properly accused of breaching it: see [31] above.[40]For all these reasons, I was satisfied that Mr Sage’s appeal on the Engagement Ring issue had to be allowed.

The other grounds of appeal on liability

[41]I will deal briefly with the other grounds of appeal on liability, because I am satisfied that they have no merit. Mr Metzger concentrated his submissions on two topics which he distilled from Mr Sage’s grounds of appeal: the beneficial ownership of Sage International, and the dissipation of assets.[42]I begin with the beneficial ownership of Sage International.

(a) and 22B(k) of the Freezing Order, he had failed to disclose:

“(a) His ownership of or proprietary interest in or control over Sage International FZE and/or its property; (b) Details of his ownership of or proprietary interest in Sage International FZE and/or its property;”
It was then alleged that his ownership of or interest in Sage International fell within the wide definition of “assets” and “details of assets” in the Freezing Order.[43]The judge heard detailed evidence about the transfer of the legal ownership of Sage International to Ms Thorpe in 2014, and concluded (as I have already said) that the company remained under the control of Mr Sage, and Ms Thorpe held the shares to his order, as his nominee. It is unnecessary to review the evidence which led the judge to this conclusion: it is set out in the Judgment at [45] to [58]. In my judgment, Mr Metzger came nowhere near being able to demonstrate any error of principle which might enable this court to interfere with a finding of fact of this nature. At one stage, he seemed to argue that the issue of Mr Sage’s continuing beneficial interest in the company could only fairly be determined at trial. I disagree. There is no reason why such an issue cannot fairly be determined on a committal application, after the court has received detailed written and oral evidence directed to the issue. The difference is that the question has to be determined to the criminal, not the civil, standard of proof; but this higher burden was accepted by HPE, and discharged to the satisfaction of the judge who said in [56] that he was “conscious always of the rigours of the criminal standard of proof”.[44]It followed from the judge’s findings on the main issue of beneficial ownership that Mr Sage was also in contempt of related asset disclosure obligations as alleged in the grounds of committal, and reflected in paragraphs (4) and (5) of the findings of contempt recorded in the Committal Order.[45]I now turn to the alleged dissipation of assets. The relevant allegations in the grounds of committal are that in breach of paragraph 5(2) of the Freezing Order, and after service of it upon him, Mr Sage on 3 December 2015 dealt with and/or disposed of:(a) the aggregate sum of £25,000 by making or causing to be made payments in three separate tranches out of his Lloyds Bank account in Guernsey (to Ms Bromige, Amex Centurion and Barclays Platinum); and(b) the aggregate sums of US $75,000 and £25,000 by making or causing to be made four payments from his PayPal account to Carolyn Sampson. The judge dealt with these allegations in paragraphs [60] to [70] of the Judgment. It was not in dispute that the relevant payments had been made as alleged, out of accounts which were held in Mr Sage’s name and under his control. Thus the real issues were whether the payments were made on Mr Sage’s instructions, and whether they were made in the ordinary course of business.[46]Mr Sage’s case was that he never gave instructions to anyone on 3 December 2015 to make the payments, and that Ms Sampson had authorised them. There was no evidence from Ms Sampson to corroborate this, however, and as the judge observed at [65], Mr Sage’s case was “both inherently implausible and based on an amazing coincidence”. The payments were in round numbers, and made over a period of 15 minutes some five hours after the Freezing Order had been served on Mr Sage. Furthermore, neither Mr Sage nor Ms Thorpe were told that the payments were about to be made, or that they had been authorised by Ms Sampson. The judge said that these factors, taken alone, were not quite sufficient to discharge the criminal standard of proof, but for two additional reasons he was satisfied to the necessary standard.[47]First, the judge referred to the “chaotic” state of the evidence on the question of authorisation of the payments. In particular, there had been a volte face by Ms Bromige, whose written evidence was to the clear effect that the payments had been authorised by Ms Sampson during a lengthy Skype conversation between them on 2 December, whereas in the witness box:
“Ms Bromige had a crystal-clear recollection of a Skype conversation she had with Carolyn Sampson on 3 December (approximately 2:40 pm Spanish time, 6:40 am for Ms Sampson in Colorado) during which she discussed the payments at the same time as effecting the transfers over the internet.”
The judge rejected this evidence in [67], saying the only reasonable inference was that “Ms Bromige has fabricated this whole story in order to avail her step-son”. He further inferred that Mr Sage “got a message out to Ms Bromige to make these payments on the very day they were made”.[48]Secondly, the judge was “not remotely satisfied that the payments were made in the ordinary course of business”. He then gave his reasons for forming this view, including the lack of any contemporaneous documentary evidence to show that these were bona fide business debts of Sage International.[49]In my view these were again findings of facts which the judge was fully entitled to make, and there is no proper basis on which this court could interfere with them. Indeed, the timing, nature and quantum of the payments all but speak for themselves, quite apart from the fabricated evidence of Ms Bromige and the absence of any evidence at all from Ms Sampson.[50]The judge therefore found these contempts to be established, and they are reflected in paragraph (6) of the findings of contempt in the Committal Order.[51]The remaining grounds which the judge found to be established were of lesser significance. They related to a change of the password for Mr Sage’s “dropbox” account, and his failure to disclose certain email addresses. The former contempt was admitted by Mr Sage, although its seriousness was not: see the judgment at [73]. For the reasons given in [74] to [75], the judge declined to infer that Mr Sage had deleted items in the Dropbox account during the period when access to it was denied by his change of password. The breach was therefore less serious than it would have been had such conduct occurred. As to the email account, the judge was satisfied that Mr Sage had failed to disclose ten accounts, although he did give details of four on 3 December 2015. The judge found that all these accounts were associated with Mr Sage’s business activities in Sage International: see [78].

Sentence

[52]The judge passed an immediate sentence of 18 months’ imprisonment for the contempts which he found to be established. Section 14(1) of the Contempt of Court Act 1981 provides that the period of committal to prison for contempt of court shall be a fixed term not exceeding two years, so the term imposed by the judge was towards the upper end of the available bracket. By virtue of section 258(2) of the Criminal Justice Act 2003, a person committed to prison for contempt of court must be released unconditionally once he has served one half of the term for which he was committed.[53]The judge directed himself, correctly, at [80] that the sanction of committal to prison “is reserved for cases of serious, contumacious flouting of orders of the court”: see per Lord Phillips MR in Gulf Azoz Shipping Company Ltd v Idisi [2001] EWCA Civ 21 at [72]. The judge also had regard to the helpful guidelines stated by Eder J in Otkritie International Investment Management Ltd v Gersamia [2015] EWHC 821 (Comm), in appendix 1 to his judgment, at paragraphs 7 to 14. Those guidelines include, in relation to breaches of freezing injunctions that consist of the dissipation of assets, the following guidance given by Rix LJ (with whom Black and Lewison LJJ agreed) in Templeton Insurance Ltd v Thomas [2013] EWCA Civ 35, at [42]:
“In my judgment, whereas it will always remain appropriate to consider in individual cases whether committal is necessary, and what is the shortest time necessary for such imprisonment, and whether a sentence of imprisonment can be suspended, or dispensed with altogether: nevertheless, it must now be accepted that the attack on the administration of justice which is made when a freezing order is breached usually merits an immediate sentence of imprisonment of some not insubstantial amount.”
[54]In the light of that guidance, and the judge’s findings about the dissipation of assets in breach of the Freezing Order, it seems to me that the judge was clearly right to conclude that an immediate sentence of imprisonment was called for. In those circumstances, this court will not lightly interfere with his assessment of the appropriate length of the sentence, and indeed should not do so unless satisfied that it was wrong in principle or manifestly excessive. There is, however, a material difference from the position when the judge imposed his sentence, in that we have now allowed Mr Sage’s appeal on the Engagement Ring issue. In my judgment, this entitles us to reconsider the term of imprisonment passed by the judge, while having due regard to his assessment of the gravity of the findings of contempt which we have upheld.[55]The Engagement Ring issue clearly weighed significantly with the judge, partly for its intrinsic gravity, but also for the light which it threw on Mr Sage’s other attempts to thwart the orders of the court. The judge devoted a considerable part of his judgment to the issue, and when considering sentence he said, at [87]:
“In terms of the breach of the Search Order, and the disclosure elements of both orders, Mr Sage’s failures have been deliberate, extensive and flagrant. His “evolving context” [i.e. his differing versions of events] as regards the engagement ring contains elements of farce, were not the matter so serious in terms of the magnitude of disrespect shown to this Court.”
[56]I do therefore feel considerable doubt whether the judge would still have imposed a sentence of 18 months if he had not found Mr Sage guilty in relation to the ring. I must also say that in my opinion the sentence which he passed, if not manifestly excessive, was very much at the upper end of the appropriate bracket, bearing in mind that the maximum sentence is usually reserved for cases of large scale and continued disobedience to court orders, whereas the dissipation of assets by Mr Sage all took place within a short time on the day when the orders were executed, and there is no evidence of any repetition by him of such conduct. His behaviour was flagrant and inexcusable, but it fell a long way short of the most serious cases of the flouting of freezing and search orders with which the courts have regrettably become familiar in recent years. Nor is this a case where, on the available evidence, a significant non-punitive element of the sentence could be justified as a spur to future compliance: compare the observations of Jackson LJ (with whom the other members of the court agreed) in JSC BTA Bank v Solodchenko (No. 2) [2011] EWCA Civ 1241, [2012] 1 WLR 350, at [56] and [66] to [69].[57]Taking all these matters into consideration, the conclusion which I reached was that the term of imprisonment imposed on Mr Sage should be reduced from 18 to 12 months.[58]I agree.[59]I also agree.

Order

“(1) Paragraph 20 of the Search Order, by failing to deliver up to the Applicants’ Solicitors a diamond ring exceeding £1,000 in value (the “Ring”); (2) Paragraph 21(d) of the Search Order, by failing to inform the Applicants’ Solicitors as to the location of the Ring on his premises; (3) Paragraph 22 of the Search Order, by swearing an affidavit in which he failed to inform the Applicants’ Solicitors as to the location of the Ring on his premises; …” Order: see [24] above. Furthermore, the breaches actually alleged in the amended grounds were clearly unsustainable on the basis of the judge’s findings of fact, because they were all predicated on the ring being in the ownership, possession, power or control of Mr Sage. It follows that Mr Sage was not guilty of the breaches relating to the ring with which he was charged.

Cited in 12 later judgments

and 3 more of the most senior