Asia Islamic Trade Finance Fund Ltd v Drum Risk Management Ltd & Ors [2015] EWHC 3748 (Comm)

Case No CL-2015-000487[2015] EWHC 3748 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
Venue Rolls BuildingDate Thursday, 17 th December 2015
Before
MR. JUSTICE POPPLEWELL
B E T W E E N:
Between
ASIA ISLAMIC TRADE FINANCE FUND LTDClaimantDRUM RISK MANAGEMENT LIMITEDDefendantAREX LLPDefendantASD ENERJI MADENCILIK PETROL Ürünleri Sanayi ve diş Ticaret Anonim ŞirketiDefendantATILLA DOGANDefendant
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MR. L. AKKA QC and MISS. C. TAN (instructed by Reed Smith LLP) appeared for Claimant. for THE DEFENDANTS did not appear and were not represented.
J U D G M E N T
[1]On 4th December 2015 I found that the second, third and fourth defendants (respectively “Arex”, “ASD” and “Mr. Doğan”) were in contempt of court for failures to comply with the disclosure provisions in a freezing order made by Flaux J on 25th June 2015. I adjourned sentence and penalties until today.[2]The history of the proceedings and the detail of the contempts are set out in my judgment of 4 December which was served on Mr. Doğan together with the order and notice of today’s hearing.[3]Yesterday a woman presented herself at the Rolls Building to file a bundle of papers on behalf of Mr. Doğan. She identified herself as Ms. Çelik of Çelik Law and Consultants, who have acted as Turkish lawyers advising Mr. Doğan. The documents were in part in Turkish. They had not been provided to Reed Smith LLP, the claimant’s solicitors, despite the previous history of admonishment when the same thing had happened on two previous occasions, as I described in my earlier judgment. It must have been clear to Mr. Doğan and to his Turkish advisers that such conduct was unacceptable as made clear as recently as 8 December when Reed Smith served the 4 December judgment and order and drew attention to this hearing, reiterating once again that if any material was to be relied upon at this hearing it had to be served on Reed Smith. I infer that the last-minute production of these documents, and the failure to provide them to the claimant’s solicitors, was intended to derail the present sentencing hearing.[4]It has not been possible for me in the time available to conduct a full analysis of all the new documents, some of which are in Turkish. Some of them appear to refer to some assets in the form of bank accounts of Arex and ASD. It is, however, perfectly clear on a preliminary perusal of the documents that they fall very far short of compliance with paragraphs 11 and 12 of Flaux J’s order. There is no affidavit. Mr. Doğan has not said in terms that he does not know the answers to any of the four questions posed in paragraph 12 of Flaux J’s order. The material does not give, or even purport to give, a full account of the assets of Arex, ASD or Mr. Doğan at the dates required by Flaux J’s order or my order of 9 October 2015, nor does it identify value, location or details of the assets.[5]It is clear that Mr. Doğan is well aware of this hearing and has chosen not to attend or be represented or to make any representations. It is clear that he has still not complied with paragraphs 11 and 12 of Flaux J’s order and remains in contempt. The extent to which there may have been some partial compliance remains unclear as a result of the deliberately late and tactical filing of documents yesterday.[6]In those circumstances, I consider the appropriate course to be to proceed to pass sentence today on the basis of the contempts I found proved on 4 December 2015, without taking any account of the documents filed yesterday. I shall give liberty to the relevant defendants to apply to vary or remit my sentence on the ground that they have either wholly or in part purged their contempt, should they choose to do so. Any such application will have to be made in accordance with the Civil Procedure Rules. It will have to be issued and served on the claimant’s solicitors and there will also have to be served at the same time as the application any evidence which is relied upon, whether or not that evidence has previously been supplied informally to the court. I have no doubt that Mr. Doğan, who has the benefit of advice from Turkish lawyers, will understand this requirement.[7]I was referred to a number of relevant authorities, including Crystal Mews Limited v Metterick & Others [2006] EWHC 3087 (Ch) at paras.8 and 13, Trafigura Pte Ltd v Emirates General Petroleum Corporation [2010] EWHC 3007 (Comm), JSC BTA Bank v Solodchenko [2011] EWHC 2908 (Ch), JSC BTA Bank v Solodchenko (No 2) [2012] 1 WLR 350 at paras.52 to 57 and 66 to 67, Templeton Insurance Limited v Thomas & Panesar [2013] EWCA (Civ) 35 at para.42, JSC VTB Bank v Skurikhin [2014] EWHC 4613 (Comm) and ADM Rice Inc v Corporacion Comercializadora de Granos Basicos SA [2015] EWHC 2448 (QB). From those authorities I derive the following principles which are applicable to the present case:(1) In contempt cases the object of the penalty is to punish conduct in defiance of the court’s order as well as serving a coercive function by holding out the threat of future punishment as a means of securing the protection which the injunction is primarily there to achieve.(2) In all cases it is necessary to consider (a) whether committal to prison is necessary; (b) what is the shortest time necessary for such imprisonment; (c) whether a sentence of imprisonment can be suspended; and (d) that the maximum sentence which can be imposed on any one occasion is two years.(3) A breach of a freezing order, and of the disclosure provisions which attach to a freezing order is an attack on the administration of justice which usually merits an immediate sentence of imprisonment of a not insubstantial amount.(4) Where there is a continuing breach the court should consider imposing a long sentence, possibly even a maximum of two years, in order to encourage future cooperation by the contemnors.(5) In the case of a continuing breach, the court may see fit to indicate (a) what portion of the sentence should be served in any event as punishment for past breaches; and (b) what portion of a sentence the court might consider remitting in the event of prompt and full compliance thereafter. Any such indication would be persuasive but not binding upon a future court. If it does so, the court will keep in mind that the shorter the punitive element of the sentence, the greater the incentive for the contemnor to comply by disclosing the information required. On the other hand, there is also a public interest in requiring contemnors to serve a proper sentence for past non-compliance with court orders, even if those contemnors are in continuing breach. The punitive element of the sentence both punishes the contemnors and deters others from disregarding court orders.(6) The factors which may make the contempt more or less serious include those identified by Lawrence Collins J as he then was, at para.13 of the Crystal Mews case, namely: (a) whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy; (b) the extent to which the contemnor has acted under pressure; (c) whether the breach of the order was deliberate or unintentional; (d) the degree of culpability; (e) whether the contemnor has been placed in breach of the order by reason of the conduct of others; (f) whether the contemnor appreciates the seriousness of the deliberate breach; (g) whether the contemnor has co-operated; to which I would add: (h) whether there has been any acceptance of responsibility, any apology, any remorse or any reasonable excuse put forward.[8]In this case the breaches have been deliberate and serious. Mr. Doğan has deliberately defied the Court’s authority by refusing to comply with the disclosure provisions, of which he is well aware, and which I am satisfied he understands. He has had the advantage of the advice of Turkish lawyers. There is no question of his having been unable to comply by reason of the conduct of others or of acting under pressure.[9]Mr. Doğan can be under no doubt as to the seriousness of the breach. In my judgment of 4th December, I said at para.50:
“The contempts which I have found are serious. It is clear from my judgment, and I wish to make it clear to Mr. Doğan and to the other defendants, that the contempts I have found are so serious that there is a real likelihood of a significant term of imprisonment being imposed, which may be in excess of a year. It is, as it seems to me, desirable that Mr. Doğan should have the opportunity to reflect on that fact, to have the further opportunity to remedy his failures so as to purge his contempt, and or to put before the court any other matters of mitigation before I proceed to a sentence.”
[10]That passage was specifically drawn to Mr. Doğan’s attention by the claimant’s solicitors’ letter of 8 December. Despite that, there has been no attempt to comply properly or fully with the requirements of Flaux J’s order. On the contrary, there has been a delivery of some documents to the court in a tactical attempt to derail this hearing.[11]AITFF has been prejudiced by Mr. Doğan’s contempt of court. It has been unable to get to the bottom of what has happened to the coal or its proceeds; and Mr. Doğan, Arex and ASD, by failing to comply, have been able to avoid the efficacy of the freezing order and to enable themselves to move their assets with impunity by concealing them.[12]In all the circumstances I impose a sentence of 18 months’ imprisonment on Mr. Doğan. I do not propose now to identify what element of that sentence should be served in any event for past breaches should there be full and prompt compliance hereafter with Flaux J’s order. I should, however, make clear that if there were now full and prompt compliance with Flaux J’s order, I would expect that a significant proportion, perhaps a majority of that sentence, would be remitted.[13]As I have already indicated, my sentence is passed on the basis of the contempts I have found proved on 4 December 2015 without reference to the material lodged at court yesterday. It will be open to Mr. Doğan to apply to vary or remit my sentence based on that material or any other material which is said to amount to compliance with Mr. Flaux J’s order. As I have indicated, should he do so the application must be issued and served in accordance with the Civil Procedure Rules and any evidence relied on served at the same time as the application on AITFF’s solicitors; and that is to include any material which has already been supplied informally to the court, whether on 8 October, in early November or yesterday.[14]I would end by urging Mr. Doğan now to comply fully and as soon as possible with paragraphs 11 and 12 of the order of Flaux J. __________

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