Thursfield v Thursfield [2012] EWHC 3621 (Ch)

Case No 1BM30278

[2012] EWHC 3621 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Birmingham Civil Justice Centre

Date Friday, 9 th November 2012

Before

HIS HONOUR JUDGE PURLE QC

B E T W E E N:

Between

LINDA THURSFIELDClaimant

DAVID THURSFIELDDefendant

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MR. L. ASHWORTH QC (instructed by SGH Martineau LLP) appeared for Claimant.

MR. A. MAGUIRE (instructed by Bircham Dyson Bell LLP) appeared for Defendant.

J U D G M E N T

[1]This is an application for committal for contempt of court bought by the claimant against the defendant. The parties are former partners in marriage. The claimant is the former wife. The defendant is the former husband. The defendant has now remarried and there are references in the evidence to assets belonging to his wife, which are references to his present wife.

[2]I gave a number of judgments on 6th December last year resulting in an order, which is said to have been breached in material respects. I shall read the most relevant parts of the order. Paragraph 4 provided:

“The defendant shall, by 4pm on 9th January 2012, swear and serve on the claimant’s solicitors an affidavit providing the information set out in the schedule hereto.”

The schedule consists of eight paragraphs calculated to track down assets which either are or are known formerly to have been the husband’s assets. I will come to individual paragraphs later. Paragraph 5 of the same order provided:

“The defendant shall, by 4pm on 9th January 2012, file and serve a witness statement setting out the means by which his representation in this matter is being funded, identifying the party or parties who are providing the funds, the terms on which such funds are being provided and, so far as the same is within his knowledge, the source of that party or parties’ funds.”

[3]I can deal with paragraph 5 first; there is no schedule to which it relates. However, before I do so, I shall just expand a little on the history.

[4]Following the making of that order, there was a proposed appeal for which Lord Justice Lewison gave permission to appeal on 15th February of this year. The husband also sought a stay. Lord Justice Lewison adjourned that aspect into court and the matter came on before Lord Justice Etherton on 24th May 2012. In the meantime, the parts of my order of 6th December requiring the provision of information had not been complied with.

[5]On 24th May, Lord Justice Etherton ordered security for costs of the husband’s appeal to be provided by 7th June failing which the appeal would be dismissed. The security for costs was not provided and therefore the appeal was automatically dismissed on 7th June. Lord Justice Etherton also refused a stay of my previous order.

[6]As from 24th May, therefore, the defendant husband can have been under no illusion as to what his obligations were. That is confirmed by his own evidence, which reveals that on 25th May he was warned by his then solicitors that it was likely that a contempt application would be made in respect of his non-compliance.

[7]It will be noted that by that time, 24th May 2012, the defendant husband had had several months to gather in the information that was requested. The husband was, even at that date, technically (though perhaps excusably) in breach of the order in not providing that information, notwithstanding the application for a stay and the grant of permission to appeal.

[8]After 24th May and the husband’s receipt of Clinton’s letter of 25th May, there was not even a scintilla of an excuse for continuing non-compliance.

[9]The anticipated contempt application in due course emerged - after the appeal had been dismissed for failure to provide security for costs - by an application notice dated 25th July, which came before me on that day for directions as to service, which I gave. By that stage, disclosure was six and a half months late. It will be recalled the disclosure should have been made by 9th January 2012. By that stage also, it was two months since the defendant husband had been warned by his solicitors of the likelihood of a committal application.

[10]Eventually, on 22nd August of this year, I gave directions for the further conduct of the committal application and directions as to service of evidence. Mr Maguire appeared on that occasion for the husband. By paragraph 5 of that order, I provided:

“The defendant shall attend the hearing on 9th November 2012 [that is today’s hearing].”

Paragraph 6 also provided that neither party should be entitled to rely on the evidence of any deponent unless that deponent attended this hearing or was not required to be cross examined. Mr. Ashworth QC, who appears for the former wife, came here today fully prepared to cross examine the husband.

[11]By the date of that order, on 22nd August, the husband had provided some evidence. There was an affidavit of 21st August 2012 running to eleven paragraphs, which purported to deal with all matters. This included, in particular, the question of legal fees, which he dealt with in para.11 where he said:

“The answer to the question of how my legal fees have been funded is simply that they have been funded by my wife, Rachel.”

This ties in with the claimant’s suspicion that what the former husband may have done is hide all his assets behind his new wife or a trust of which that new wife is a beneficiary allowing him to carry on his former lifestyle without the need to comply with court orders.

[12]As will be evident from my previous judgments, the proceedings in this jurisdiction seek to enforce an award of the Court of Michigan granting substantial sums in favour of the claimant wife. That order is under appeal in Michigan. No date for the appeal has been fixed. It is hoped that there will be an oral hearing early in the New Year. The appeal will not eliminate any order against the husband, but may (if successful) reduce the amount of his liability.

[13]On the husband’s case as presented before me in December last year, and as still presented to me, he is virtually penniless having only pension funds, one of which he cannot access because it is in the United States and tied up there at the suit of the claimant wife, and the other of which is subject to a freezing order here and also cannot be accessed, at all events without the consent of the claimant wife. The substantial wealth that he previously enjoyed - which, on his own case, ran into many millions of dollars (transactions as a rule being expressed in US dollars in the US proceedings) appears to have vanished in the sense that it is no longer (or at least is presented as no longer) within his control.

[14]I have read the paragraph relating to the funding of legal fees. That is the full extent of the defendant husband’s disclosure on that issue, even though he has subsequently sworn other affidavits, including one as recently as 22nd October. It is manifestly not in compliance with the order I made: The terms upon which the funds are being provided to him are not specified and, more importantly, the source of his current wife’s funds is not identified. He does not say that the source of the funds is unknown to him. Were he to say that it would not prima facie be credible especially as it is known from other evidence that assets available to the wife, in particular a condominium in the Bahamas, have, according to the husband’s evidence, derived from his former assets and are now held in a trust of which she is, or may be, a beneficiary. It seems to me, therefore, that the failure to provide a full answer to paragraph 5 of my order is plain and manifest and must be regarded as deliberate.

[15]I say that without placing any reliance upon paragraph 6 of my order of 22nd August under which neither party was entitled to rely on the evidence of deponents who were not produced for cross examination. Mr. Ashworth QC fairly acknowledged that, despite the terms of that order, it would be wrong of me to approach this contempt application without giving proper consideration to what the husband has in fact disclosed by way of affidavit evidence. What he has disclosed on the issue of the funding of his litigation is, as I have said, wholly inadequate and that must be as obvious to him as it is to me. The inference is that he is trying to protect his second wife’s (and therefore his) current wealth, he being dependent on his second wife.

[16]I turn then to consider the breach of paragraph 4 that is alleged. It is clear that the first affidavit, having been sworn on 21st August, was inexcusably late, even allowing for some tolerance pending the appeal, which had been dismissed finally in early June. The deficiencies in that affidavit are evident to anyone who reads it. The husband acknowledges in a later affidavit that he is hampered by the absence of documentation and does in fact offer to provide authorities to the claimant wife to enable her to obtain further information herself. That later affidavit (sworn on 22nd October) says that he has made further enquiries and is able to give further information, though exactly what the enquiries were is not disclosed.

[17]Turning now to the schedule to the order of 6th December 2011, I can ignore paragraph 1 (requiring the disclosure of shares) because Mr. Ashworth QC accepted before me that on the material presently before the court I could not conclude that the defendant husband had not made proper disclosure of any shares held by him. Mr. Ashworth also made it plain that further investigations may subsequently justify him in making a different submission, but, for the purposes of today, that is his position.

[18]Question 2 required the defendant husband to “provide an account together with evidence in support showing how you have dealt with the $5.7 million paid by Cerberus Capital Management between April 2005 and January 2007”. That has been answered largely with obfuscation and without supporting evidence, whether in the form of documents (which is the obvious form of evidence) or otherwise. The phrase “together with evidence in support” is a phrase which appears in a number of paragraphs of this order, namely paragraphs 2, 3 and 4. There is also reference in paragraph 5(b) to “documents in support” and in paragraph 7 to “documentary evidence”. There can have been no doubt in the defendant’s mind that he was required to provide, not just answers, but answers with documentary and other evidential support where available (as must be the case).

[19]The defendant has on a number of occasions provided some documents, but states in paragraph 4 of his fourth affidavit that “the substantial amount of the information and documentation that the claimant seeks has already been provided to her US lawyers within the American proceedings and presumably, therefore, passed on to her English solicitors”. This, it seems to me, is an inadequate explanation for the failure to provide documentary evidence in relation to the specific questions which he was required to answer. That paragraph goes on to give an example by reference to exhibit EWT/2 and a court order and copy letter referred to therein. The exhibit does not, however, live up to promise. There is no such documentary evidence.

[20]Mr. Ashworth QC had prepared for this hearing a bundle of additional documents for use in cross examination. However, the defendant has not turned up to be cross examined.

[21]By a letter bearing yesterday’s date, 8th November 2012, the defendant’s current solicitors, Bircham Dyson Bell, wrote as follows to Mr. Ashworth’s instructing solicitors:

“Dear Sirs, Our client has sworn several affidavits pursuant to the direction contained in the order made on 6th December 2011. In the circumstances, it is considered that the ongoing committal proceedings are inappropriate. However, in the event that it is your client’s intention to proceed with the committal application tomorrow then counsel will be instructed to seek an adjournment of the hearing. It is not our client’s intention to attend court tomorrow. In addition to an application for an adjournment, Mr. Maguire will seek permission for our client to adduce evidence by videolink at a further hearing.”

Mr. Maguire made the application for an adjournment this morning, which was declined for the reasons I then gave. It seems to me that the letter of 8th November 2012, written against the background of the order I made in August requiring the defendant’s attendance, is breathtaking in its audacity and is reflective of a couldn’t-care-less attitude on the part of the defendant to orders of this court. I should mention that he has also been unco-operative in complying with the orders of the Michigan Court since he attended for private examination in August 2009.

[22]Returning to paragraph 4 of the fourth affidavit, there was included in the cross examination bundle material which Mr. Ashworth told me would have squared with the description of the examples in paragraph 4. Mr. Maguire, as he was entitled to do, objected to my looking at material which was not prepared for the purpose of the committal application as such and therefore I did not look at it. However, it means that I can, especially given the defendant’s non-co-operation in the Michigan proceedings since August 2009, place no weight on his assertion that the claimant has already received much of the information she seeks through her US lawyers.

[23]A similar point was made in relation to tax returns where, in paragraph 6 of the same affidavit, there is said to be a copy letter from HMRC (which is not in fact part of the exhibit) confirming that they would no longer be receiving tax returns. In the same affidavit, he offers to sign suitable letters of authority to various parties to provide information. This wholly overlooks the fact that he was required to provide this information himself. There is no explanation as to why, despite the considerable length of time since the order was made and since the appeal was dismissed, he has not obtained this information himself. Moreover, in one case where the claimant was directed towards a Mr. Middleton at Willans Solicitors to provide a copy of the completion statements relating to the purchase and sale of a particular property, the defendant’s solicitors have now confirmed in writing that Willans in fact received their instructions from a Bahamian Trust.

[24]The latest attempt of Mr. Thursfield to deal with the scheduled items in my order of 6th December 2011 is contained in exhibit DW/2 to his affidavit of 22nd October 2012. As I have said, no breach of paragraph 1 of the schedule is proved. My attention is now focused on paragraph 2. The $5.7 million there referred to was paid by Cerberus Capital Management to the defendant as to $1.7 million in 2005 and as to $4 million in the beginning of 2007. The answer that is given by the defendant is that he did not specifically segregate the monies that he received from Cerberus Capital Management in a separate account. That answer is clearly untrue. I have seen a transcript of parts of the defendant’s examination in the Michigan Court in August 2009 from which it is plain that the defendant accepts that, on 26th January 2007, the $4 million (being the second element of the $5.7 million) was received in a separate account in Switzerland and for a particular reason, namely that the defendant wished to protect those funds from the advances of the claimant. He also said that, as of August 2009, the sums remained there. It is possible that those answers were lies and that the current answers are true. However, that does not square with the bank records to which reference is expressly made in the transcript of the examination which the defendant said he stood by.

[25]He also said in his affidavit that various payments (which he detailed) effectively came from the Cerberus monies, as he had “no other resources” out of which to make them. That statement is also manifestly untrue.

[26]I have been shown his 2006 tax return. This shows substantial sums of interest, which must represent underlying capital, and substantial amounts of income that could not include either the $1.7 million or the $4 million for two reasons:(1) he has always said that that is not income, it is a loan; and

(2) the payments amounting to $5.7 million fall outside the period January to December 2006. In the same answer, he explains that he purchased a property in the Bahamas held in an irrevocable trust in 2005. That, it will be recalled, is what he effectively says was paid for out of the unsegregated monies, he claiming to have no other resources out of which to make payment. But in 2005 he had not received all of the $5.7 million; $4 million came later. He goes on to explain that “This trust was created to provide my wife with financial support and security in the event of my death”. It may well do that, amongst other things; but, given that the creation of the trust appears to have coincided with the settlement of the US proceedings brought by his former wife, the strong inference is that the establishment of that trust was (or may have been) a device to defeat his former wife’s claims. The costs, he said, of that property, including legal fees, taxes and furnishing, was approximately $2.4 million. That is why I highlighted that the $4 million did not come in until 2007. Whilst it is possible that some of the £1.7 million may have been used for that purpose, that clearly was not enough if those were his only resources.

[27]There is no underlying documentary or other evidence to support this statement and the reference to a Bahamian Trust is new and was not the story he was putting forward before the court in August 2009 in Michigan.

[28]The defendant also refers to the $1.8 million cash that the claimant was awarded in the initial divorce settlement in 2005, but, he cannot attribute that to the $5.7 million, given that he has already attributed such part of it as had by then been received to the establishment of the Bahamian Trust. He also refers to $350,000 received by his wife additionally in 2006/7. His evidence in the Michigan Court was that the whole of the $4 million remained untouched in 2009, so it is difficult to see how the two differing explanations tie in. The $350,000 cannot have come from the $4 million remaining untouched in 2009, and, on his evidence, there was nothing left unspent of the original $1.7 million.

[29]He then goes on, optimistically, to remind the court that he dealt with all this in the course of his creditors’ examination in 2009 and refers to the examination transcript. Without dealing with the contradictions between the transcript and his present evidence, he does produce some documents in what he calls “the defendant’s bundle” (that was a bundle of documents that was forwarded by his solicitors at the same time). But there are no documents concerning the establishment of the Bahamian Trust of which he must have been the settlor and which, on the evidence I have seen, appears to dance to his tune.

[30]The property to which he was closely connected in England, Prospect House, which was owned by a BVI Company ostensibly with an address in Switzerland, is the property to which his bank statements were sent, even after the sale of that property. In relation to Prospect House, the defendant’s solicitors have said that, when the property was sold, the client of the solicitors was a Bahamian Trust. A mortgage in respect of that property was taken out directly, not by the BVI Company nor by the Bahamian Trust, but by the defendant himself with ostensibly the BVI Company providing third party security. He gives some explanation of that in paragraph 3(b) of his schedule, which follows the same paragraph numbering as the schedule to my order, but without disclosing any underlying documentation.

[31]It seems to me that the details that he has given as to what has happened to the $5.7 million, are wholly inadequate and do not comply with my order because the underlying evidence is not there. This is made all the more acute by the contradictions between what he now says and what he formerly said to the court in the United States in August 2009.

[32]He also refers in the same paragraph to school fees, university fees and other living expenses of his daughter, Charlotte. Much of this must have occurred before August 2009 and, again, there is no underlying documentation which either verifies the amount of the expenditure (said to be $190,000) or which ties it in in any way with the $5.7 million which is being asked about. Given his evidence in Michigan that the money (or at least a substantial part of it) was extant in August 2009, that deficiency is not a mere technicality. It is serious and, in my judgment, I must regard it as deliberate.

[33]He also says that he invested $1.5 million in a Barclays Swiss Investment Product in 2007 before the financial crash incurring losses of $900,000. No support of any kind by way of underlying evidence is provided though there is an offer to contact Barclays directly about this, which is frankly not good enough.

[34]Moreover, the acquisition of that product in 2007 must have pre-dated August 2009 when the claimant said (in his Michigan examination) he could get his hands on $5.7 million if he sold everything.

[35]He also relies upon payment of the running costs of the property in the Bahamas between 2005 and 2010 totalling some $320,000. Again, one would expect to find evidential support for that, but there is none. In addition, he refers to the rent of a condominium and he does produce underlying evidence that there was rent of $13,000 per month plus the utility bills. It is evident from such detail as has been provided that a substantial part of the alleged $320,000 must have been referable to the period down to August 2009 when the defendant said in Michigan the monies he was being asked about (or a substantial part of them) were intact. This cannot on that footing be an answer to what has now happened to that money.

[36]Moreover, the fact that he claims to have been spending monies on the property in the Bahamas suggests strongly that that property - though he now says that it was held in trust for the benefit of his current wife - was in fact, in substance, his.

[37]He also explains that for the last two years his pension has been frozen, but he has had living expenses of about $20,000 per month resulting in a spend of $375,000. He gives no explanation as to where those monies came from. The organisation of the affidavit suggests that it is has come out of the $5.7 million. In addition, he refers to the payment of $1 million to the IRS in the United States in 2005/6, which appears to be unconnected to the $5.75 million if his answers given in Michigan (and the other answers explaining how that money was spent) were correct. He also relies on the costs of his wedding to his wife, Rachel, in 2007, which cost $50,000. That cannot be connected to the $4 million, which, as we know, was placed in an account in Barclays and remained there. As to the other $1.7 million, the remaining expenditure already mentioned by him dwarfs that. In addition, as I have said, his evidence in Michigan in August 2009 was that he could have raised $5.7 million maximum out of his resources.

[38]It seems to me that there has been wholesale inadequate compliance with my order and, as I have said, obfuscatory explanations so far as the 2 payments totalling $5.7 million are concerned. I am satisfied that the husband is deliberately refusing to reveal what has happened to the $5.7 million, and the lack of proper supporting evidence is obvious. The claimant and the court are in no better position (indeed are in a worse position) in understanding what has happened to those monies than the claimant was following the Michigan hearing in August 2009. It seems to me, therefore, that under this head as well the contempt is proved.

[39]Under paragraph 3 of the schedule, the defendant was ordered to provide an account together with evidence in support showing how he had dealt with the sale proceeds of each of two properties: Lion House in Cheltenham and Prospect House in Cheltenham. The defendant points out correctly that Lion House was awarded to him as part of the divorce settlement. It was sold, he says, for £1.6 million and the proceeds were used to buy Prospect House. That cannot be true. The sale of Lion House was in April 2008. Prospect House was purchased in December 2007. The proceeds might have been used to discharge indebtedness incurred for the purchase of Prospect House, but that is not what the defendant is saying and there is no indication that there ever was (in December 2007, when Prosect House was purchased) a mortgage. There was a later mortgage on 6th November 2009 and then there was a sale in 2010 for £2.35 million. It is clear from documentary evidence which has been disclosed that approximately £1.55 million was remitted to the lender, the mortgagee.

[40]However, the defendant says that Prospect House was renovated at a cost of £900,000, so that there was an overall loss of £215,000 after payment of the mortgage. He says he is content for Mr. Middleton of Willans to provide a copy of the completion statement and that has been provided. However, there are no details of the renovation costs and the impression that is given is that the surplus of £800,000 after payment of the mortgage would have been paid in respect of those renovation costs. A moment’s thought demonstrates that that is inherently unlikely because the renovation costs were incurred before sale and must have been paid for, if they existed, as the transaction proceeded. Not a single invoice or other supporting evidence is provided in respect of the renovation costs of £900,000. It is said that the builder has gone bust, but that seems to be largely irrelevant and even that is only stated as a belief. It does not appear that the defendant has made any serious effort to nail that figure down, which, given that it is a huge amount, £900,000, is astonishing. One would not expect it to be one of those transactions that jobbing builders often do for cash in hand; £900,000 cash in hand is more than most of us would ever dream to see, though perhaps not Mr. Thursfield. It seems to me that, analysing paragraph 3, there has been desultory compliance and deliberate failure to explain, as the question clearly required, how the defendant had dealt with the sale proceeds of each of those properties. Lion House, having been sold in April 2008 is simply not answered in a way which attracts any confidence that one is getting the truth. The Prospect House answers are obviously deficient in the respects I have indicated.

[41]Paragraph 4 of the schedule requires an account together with evidence in support showing how the defendant dealt with the sum of approximately £240,000 in a particular account and then transferred into another account in October 2010. The question goes on to say:

“Your bank statements [which the questioner had clearly seen, but which are not actually all in the bundle] indicate that four payments of £50,000 were made from this account to other accounts in your name and a total of £40,000 was paid to your wife. Please account, together with evidence in support, how these sums were subsequently dealt with.” “These sums” is clearly a reference to the four payments of £50,000 paid into other accounts, which the claimant has not seen, and the £40,000 paid to the new wife. What was required was subsequent dealings. The answer is as follows: “The transfers of £50,000 were made over the telephone with Barclays; £50,000 was the limit they would transfer at that time over the telephone. In the absence of my US pension, this money was used to maintain my life and pay my debts.”

That is a hopelessly inadequate answer. One would expect there to be produced underlying evidence to demonstrate that those substantial sums have been spent in the way indicated. There must be bank statements available for the other accounts and invoices in respect of the expenditure. He is silent about the monies which were paid to his current wife. He does not say what efforts he has made to ask his wife and whether or not she is willing to answer. In any harmonious relationship, one would expect a positive response. I should mention parenthetically that there is evidence that his relationship with his new wife also went through some strains and that they were, for a short while, estranged. They are now reconciled and appear to have a harmonious relationship. However that may be, this is not explained and the supporting evidence which is specifically required by the order is simply not given. It seems to me that that must be deliberate. Moreover, £200,000 (just looking at the sums dealt with by the defendant and ignoring his wife’s element) is a substantial amount of money to get through over a period of approximately two years. Elsewhere, in his answers under paragraph 2, he has inferentially attributed his living expenses to the $5.7 million. As to the £40,000, this has just been ignored. I am sure that that must be deliberate to protect his current wife. “The transfers of £50,000 were made over the telephone with Barclays; £50,000 was the limit they would transfer at that time over the telephone. In the absence of my US pension, this money was used to maintain my life and pay my debts.” That is a hopelessly inadequate answer. One would expect there to be produced underlying evidence to demonstrate that those substantial sums have been spent in the way indicated. There must be bank statements available for the other accounts and invoices in respect of the expenditure. He is silent about the monies which were paid to his current wife. He does not say what efforts he has made to ask his wife and whether or not she is willing to answer. In any harmonious relationship, one would expect a positive response. I should mention parenthetically that there is evidence that his relationship with his new wife also went through some strains and that they were, for a short while, estranged. They are now reconciled and appear to have a harmonious relationship. However that may be, this is not explained and the supporting evidence which is specifically required by the order is simply not given. It seems to me that that must be deliberate. Moreover, £200,000 (just looking at the sums dealt with by the defendant and ignoring his wife’s element) is a substantial amount of money to get through over a period of approximately two years. Elsewhere, in his answers under paragraph 2, he has inferentially attributed his living expenses to the $5.7 million. As to the £40,000, this has just been ignored. I am sure that that must be deliberate to protect his current wife.

[42]I need not consider paragraphs 5 and 6; Mr. Ashworth did not press them upon me today as representing examples of contempt.

[43]As regards paragraph 7, which asked the defendant to confirm whether he had a beneficial interest in any property and/or assets, to which the answer was that the only beneficial interest he had was in his two pensions, Mr. Ashworth’s riposte was “who knows”? He did not however rely upon anything in addition to what I have already discussed, which might or would have the effect of concealing assets. Accordingly, I leave paragraph 7 out of account on this application, as it adds nothing.

[44]Paragraph 8 required the defendant to provide details of all his bank accounts, specifying them. The answer was:

“The only bank account I have is with Barclays Jersey, details of which the claimant’s lawyers already have. The current balance on this account is $4,496.99 as evidenced by the email at page 97 of the defendant’s bundle. My longstanding account with Sherwin Misty, Smith Barney and Bloomfield Hill, Michigan was closed more than twelve months ago due to inactivity.”

Mr. Ashworth pointed to various parts of the transcript of the August 2009 Michigan proceedings suggesting that Sherwin Misty, who I understand to be a bank officer, had previously been with UBS. The defendant’s answer is silent as to the UBS connection as such, but that may be because Sherwin Misty moved on to Smith Barney. There is no documentary evidence supporting the closure of the account or other confirmatory evidence, so to that extent this complaint may technically be made out. I do not consider however that there is any serious or contumacious breach of this paragraph on the material before the court, adding anything to the respects in which I have found the contempt proved. I will therefore leave paragraph 8 out of account, so far as the contempt application is concerned.

[45]I do, however, find that there is contempt of court in the failure to deal adequately with the source of funding under paragraph 4 and the failures I have highlighted in relation to the answers given to the following questions in the schedule: 2, 3, and 4.

[46]I now turn to consider the question of penalty. There has been recent guidance on this, given by the Court of Appeal in JSC BTA Bank and Solodchenko & Ors (No.2)

[2012] 1 WLR 350

and, more recently, by the Court of Appeal in JSC BTA Bank v. Ablyazov

[2012] EWCA Civ. 1411

. I have had regard to the factors referred to by Lord Justice Jackson in the law section in the first of those cases starting at paragraph 45 and, in particular, to the examples of sentencing that are given starting at paragraph 50. The key principles are summarised in paragraph 55 and the relevant parts for my purposes are those under subparagraphs (2) and (3):

“(2) Condign punishment for such contempt normally means a prison sentence. However, there may be circumstances in which a substantial fine is sufficient: for example, if the contempt has been purged and the relevant assets recovered. (3) Where there is a continuing failure to disclose relevant information, the court should consider imposing a long sentence, possibly even the maximum of two years, in order to encourage future co-operation by the contemnor.”

The same case also confirms that the court might, in an appropriate case, explain what portion of the sentence is regarded as punishment for past breaches and what portion of the sentence the court might consider remitting in the event of prompt and full compliance thereafter.

[47]On the Ablyazov decision, I was directed in particular to paragraph 107 in which the court considered that an aggravated feature was the failure of Mr. Ablyazov to attend the judgment. Mr. Justice Teare had apparently asked for an undertaking that he would do so and his counsel confirmed that he would be present. The Judge gave Mr. Ablyazov, the report records, the benefit of a forensic doubt as to whether a formal undertaking had been given of which Mr. Ablyazov was in breach. Even so, the Court of Appeal concluded this was undoubtedly an aggravating feature of his contempt, made worse in that case by his failure in response to a court order to surrender himself to the Tipstaff and make proper disclosure.

[48]It seems to me that this is a case where the punishment ought to be at the higher end of the scale. It was suggested on the defendant’s behalf that what I should do was give the defendant one last opportunity to provide an up to date affidavit complying fully with the previous order within six weeks. It was also suggested that any sentence I should give might be suspended. In my judgment, none of that would adequately reflect the gravity of the breaches in this case.

[49]Mr. Maguire, who appeared for the defendant, acknowledged that there were gaps in the disclosure. To my mind, that was an inevitable concession that had to be made. Mr. Maguire also acknowledged that interspersed throughout the order was the requirement of “supporting evidence” and did not demur from the description that the supporting evidence given was notably lacking on critical points.

[50]In those circumstances, it seems to me that a punitive sentence of twelve months is appropriate and that, in addition, I shall impose the remainder of the full sentence of two years as a coercive measure in order to encourage full and prompt compliance hereafter.

[51]That, therefore, is my decision. How it comes to be enforced is a matter for the claimant to consider, who has some hope - I do not know whether it is justified or not - of engaging the European Arrest Warrant provisions. ______________________