Tower Bridge International Services LP v Michael Viney [2025] EWHC 1184 (KB)

[2025] EWHC 1184 (KB)Case No QB-2020-004583
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 16/05/2025
Before
Mr Justice Dexter Dias
Between
MICHAEL VINEYDefendant
Bobby Friedman (instructed by Bryan Cave Leighton Paisner LLP) for ApplicantIan Whitehurst (instructed by Paul Crowley & Co.) for DefendantHearing Hearing date: 14 April 2025(Judgment circulated in draft: 6 May 2025)
JUDGMENTThis judgment was handed down in court at 10.30 am on 16 May 2025. This was preceded by circulation to the parties at 9.30 am via e-mail to their representatives. It was accompanied by simultaneous release to the National Archives.
THE HON MR. JUSTICE DEXTER DIASTable of ContentsI.Introduction 1II.Contempt application 2III.Underlying facts 3IV.Main claim 4V.The contempts 5VI.Legal principles 6VII.Approach to sanctions 9VIII.Mitigation 11IX.Discussion: Stage 1 13X.Discussion: Stage 2 17XI.Discussion: Stage 3 17XII.Discussion: Stage 4 18XIII.Discussion: Stage 5 18XIV.Disposal 20Mr Justice Dexter Dias :
[1]This is the judgment of the court.[2]To assist the parties and the public to follow the main lines of the court’s reasoning, the text is divided into 14 sections, as set out in the table of contents above. The table is hyperlinked to aid swift navigation.

I. Introduction

[4]This is a contempt of court application.[5]The applicant is Tower Bridge International Services L.P. (“TBIS”), represented by Mr Friedman of counsel. The defendant is Michael Viney, represented by Mr Whitehurst of counsel. The court is grateful to both counsel for their focused and helpful submissions. The defendant is one of the defendants in the main underlying action, which involves very serious allegations of fraud perpetrated by the defendant and another amounting to sums in excess of £20 million.[6]The applicant seeks an order that the defendant be committed to prison pursuant to section 14(1) of the Contempt of Court Act 1981. That section materially provides:
“Penalties for contempt and kindred offences 14 Proceedings in England and Wales. (1) In any case where a court has power to commit a person to prison for contempt of court and (apart from this provision) no limitation applies to the period of committal, the committal shall (without prejudice to the power of the court to order his earlier discharge) be for a fixed term, and that term shall not on any occasion exceed two years in the case of committal by a superior court …”
[7]The applicant submits that the defendant’s contempts are so serious that they require a prison committal at or near the statutory maximum.[8]The immediate background is that the applicant applied for and was granted freezing orders and property injunctions in combination with asset disclosure orders imposed on the defendant connected to the main claim. By its application, the applicant alleges that the defendant breached the terms of the injunctions and his obligations thereunder repeatedly and deliberately. He is alleged to have dealt with frozen assets contrary to the prohibition against doing so; he to have also dissipated assets and failed to comply with his court-imposed disclosure obligations. The applicant submits that these contempts of court should be met with a substantial prison committal.[9]The case was listed before me for two days since the defendant disputed liability for the breaches. However, on the last working day before the liability trial, the defendant communicated to the applicant and the court that he would admit the breaches. Thus, the hearing was reduced to one that solely considered sanction.

II. Contempt application

[10]The contempt application notice (N600) against the defendant was filed on 18 June 2024. It relates to three serious contumacious breaches of a freezing and proprietary injunction dated 21 December 2020 (as subsequently continued). The injunction was granted in support of an ultimately successful claim against the defendant for a serious and high-value fraud, involving a significant breach by the defendant of the trust placed in him by TBIS.[11]By its application, TBIS contends that the defendant breached the injunction and should be held in contempt in three respects; specifically that he:(1) Dealt with and disposed of the proceeds of a property in Barcelona, being the apartment “on the first floor, second door” at No 12 Calle Murillo (the “Second Barcelona Property”);(2) Dealt with and disposed of rental income in respect of various properties located in the UK and a property located in Tampa, Florida;(3) Failed to disclose an investment that came to be held by Utmost Wealth Solutions (“UWS”) with a value of approximately £1.26 million (the “Undisclosed Investment”).[12]The application was personally served on the defendant on 18 June 2024. The case originally came on before Freedman J on 11 November 2024.Although he was not required to do so, the defendant did not file any evidence in response to the application, nor did he provide any formal response to the substantive allegations.On 8 November 2024, the defendant applied for an adjournment of the November hearing on the grounds that he had not been able to obtain legal aid for representation. TBIS consented to the adjournment application. The defendant subsequently obtained legal aid and representation by solicitors and counsel.

III. Underlying facts

[13]The essential facts are not in dispute.[14]The court asked the defendant at the outset of the hearing whether any matter of fact asserted by the applicant exists that he wished to dispute for the purposes of sentencing. There was not. Thus, the court provides now a short account of the factual background relevant to sentence based substantially on the applicant’s helpful skeleton argument and associated documentation. There was no skeleton filed on behalf of the defendant.[15]The BGC Group carries on business in the provision of financial services and is one of the world’s largest inter-dealer brokers. TBIS is part of the BGC Group and provides administrative back-office services to other parts of the BGC Group. Prior to his suspension and subsequent dismissal, the defendant was employed by TBIS as an “Employee Tax Advisor” responsible for preparing the tax returns for the partnership entities within the BGC Group and ensuring correct payments were made to HMRC. In this role, he was a senior employee in a position of significant trust. At the time of the fraud, the defendant’s girlfriend was Ms King, the third defendant in the main action. The defendant and Ms King are now married.[16]In late 2020, the BGC Group discovered it had been the victim of a substantial and sophisticated fraud perpetrated by the defendant and another, Xavier Alcan, the second defendant in the main claim. The fraud dated back to January 2015. The latest known fraudulent payment occurred on 17 November 2020 and thus extended over four years. In total, the defendant and Xavier Alcan stole approximately £23.5 million by diverting payments that were due to or from the BGC Group. Primarily, but not exclusively, the payments were received from, or were due to be paid to, HMRC.[17]The defendant therefore exploited his trusted position within the BGC Group to procure and conceal 32 separate fraudulent payments. To perpetrate the fraud, the defendant doctored emails and created false versions of internal documents. The defendant and Xavier Alcan used a wide range of bank accounts in numerous jurisdictions to receive the proceeds of the fraud and conceal their wrongdoing. Ms King received an array of gifts from the defendant, including properties, jewellery and other luxury items all paid for using the proceeds of the fraud. She also received significant amounts of cash.[18]Following the discovery of the fraud, TBIS sought and obtained two separate freezing and proprietary injunctions against the defendant and Xavier Alcan respectively. The injunction against the defendant was originally granted at a without noticehearing on 21 December 2020 before William Davis J (as he then was). The injunction was subsequently varied by consent on eight separate occasions, most recently by the order of Goose J on 2 December 2022.[19]On 22 December 2020, the injunction was personally served on the defendant by a process server, who specifically drew the defendant’s attention to the Penal Notice endorsed on its face.

IV. Main claim

[20]TBIS issued proceedings (both in its own right and as assignee of the claims of other entities in the BGC Group) against the defendant, Xavier Alcan and Ms King claiming damages, equitable compensation and proprietary relief. The claims against the defendant and Xavier Alcan included claims in conspiracy and deceit, unlawful interference, breach of fiduciary duty, knowing receipt and dishonest assistance.[21]The claims against Ms King were limited to proprietary claims, it not being alleged that she was a knowing participant in the fraud. By her Notice of Admission dated 23 April 2021, Ms King admitted the entirety of the claim against her.[22]In his Defence dated 26 May 2021 the defendant admitted that he was liable to reimburse TBIS the sums of £14,261,584.59 and $665,217.52 in relation to misappropriated payments that he admitted receiving directly or indirectly. He also admitted numerous allegations, as set out in the Particulars of Claim, that he had made false representations (including to HMRC), doctored emails and created false documents as part of the fraud.[23]As a matter of law, the defendant was liable for the full amount of the fraud. Therefore, TBIS applied for summary judgment against him on 21 January 2022. On 3 May 2022, shortly before the hearing of TBIS’s summary judgment application, the defendant and Ms King consented to judgment in the terms set out in the Judgment Order of HHJ Walden Smith dated 3 May 2022 (“the Judgment Order”). Of significance, pursuant to the Judgment[24]FRP Advisory (“FRP”), a business advisory firm, was instructed by TBIS to assist with the asset realisation process.

V. The contempts

[25]The breaches of the injunction alleged (the defendant’s contempts) are set out in overview here, before a more detailed discussion of relevant aspects later. Contempt 1[26]This relates to a second property the defendant owned in Barcelona. He sold it in breach of the injunction, receiving €253,800, before dissipating the proceeds. A substantial part of those proceeds has not been recovered. It is now likely that they are unrecoverable. Contempt 2[27]This contumacious breach relates to rental income for diverse properties, the income from which the defendant dealt with and/or disposed of in breach of the injunction. The properties are 12 parking spaces in Leeds and three apartments in Salford. Further, there is a property at 18001 Richmond Place Drive, Tampa, Florida.[28]Prior to the injunction being granted, the defendant purported to transfer the legal title of the UK Properties to Ms King, but the transfer was not registered prior to the injunction grant. However, the transfer did not proceed. His solicitors at the time Enyo also confirmed this on his behalf on 4 May 2022, stating, “The defendant remains the registered owner of each of [the UK] Properties.” Contempt 3[29]This relates to a substantial undisclosed investment held with Utmost Wealth Services, which at 30 September 2023 had an estimated value of approximately £1.26 million. The investment was subsequently realised. In April 2024, TBIS received the sum of £1,325,175.96.

VI. Legal principles

[30]Committal proceedings seeking imprisonment are criminal proceedings within the meaning of Article 6 of the European Convention on Human Rights (JSC BTA Bank v Solodchenko [2011] EWHC 1613 (Ch) at para 13). A concise summary of the applicable principles was provided by the court in XL v IPORS[2021] EWHC 1407 (Comm) (“XL”) at paras 89-92, per Cockerill J. This approach remains unaffected by the introduction of the new Part 81 (Oliver v Shaikh [2020] EWHC 2658 (QB) at para 15). In XL, Cockerill J said: “89. As Eder J noted in Otkrite v Gersamia [2015] EWHC 821 (Comm), contempt sentences are fact specific. There are no formal sentencing guidelines (see Shah v Patel [2008] EWHC 1360 (Ch)). It is clear and well known that deliberate breaches of injunctions are regarded as serious and likely to result in an immediate sentence of imprisonment.90. In Templeton Insurance v Thomas [2013] EWCA Civ 35 the court said this: ‘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.’91. In JSC BTA Bank v Solodchenko & others (No.2) [2011] EWCA 1241 at [55] Jackson LJ set out the following principles: ‘55. … I derive the following propositions concerning sentence for civil contempt, when such contempt consists of non- compliance with the disclosure provisions of a freezing[31]I also have regard to the factors identified by the Supreme Court in Attorney General v. Crosland [2021] UKSC 15 (“Crosland”) at para 44:
“44. General guidance as to the approach to penalty is provided in the Court of Appeal decision in Liverpool Victoria Insurance Co Ltd v Khan [2019] EWCA Civ 392; [2019] 1 WLR 3833, paras 57 to 71. That was a case of criminal contempt consisting in the making of false statements of truth by expert witnesses. The recommended approach may be summarised as follows: 1. The court should adopt an approach analogous to that in criminal cases where the Sentencing Council’s Guidelines require the court to assess the seriousness of the conduct by reference to the offender’s culpability and the harm caused, intended or likely to be caused. 2. In light of its determination of seriousness, the court must first consider whether a fine would be a sufficient penalty. 3. If the contempt is so serious that only a custodial penalty will suffice, the court must impose the shortest period of imprisonment which properly reflects the seriousness of the contempt. 4. Due weight should be given to matters of mitigation, such as genuine remorse, previous positive character and similar matters. 5. Due weight should also be given to the impact of committal on persons other than the contemnor, such as children or vulnerable adults in their care. 6. There should be a reduction for an early admission of the contempt to be calculated consistently with the approach set out in the Sentencing Council’s Guidelines on Reduction in Sentence for a Guilty Plea. 7. Once the appropriate term has been arrived at, consideration should be given to suspending the term of imprisonment. Usually the court will already have taken into account mitigating factors when setting the appropriate term such that there is no powerful factor making suspension appropriate, but a serious effect on others, such as children or vulnerable adults in the contemnor's care, may justify suspension.”
[32]Given the accuracy and comprehensiveness of Cockerill J’s summary and the authoritative exposition by the Supreme Court, it is unnecessary to rehearse the governing law in greater detail. It is not disputed between the parties.

VII. Approach to sanctions

[33]Further, and to clear the ground, and cognizant of the gravity of the contempts, the defendant has not submitted that a financial penalty would sufficiently reflect the seriousness of the breaches (Crosland, proposition 2). He concedes, realistically, that the contempts cross the custody threshold. The credit for the defendant’s admissions of liability is agreed between the parties to be 15 per cent. This is to reflect the late admission at the end of the week before the trial was listed to start. This level of reduction is in line with the sentencing guidelines for reduction in sentence for a guilty plea (Crosland, proposition 6).[34]The issues remaining are individual sentence (sanction) for each contempt, their cumulative effect and how the court should exercise its discretion with regard to suspension of sentence. I therefore make clear how I approach the sentencing in this case. I broadly divide it into five stages:(1) First, an examination of each of the three breaches separately. The level of culpability is assessed and then the degree of harm, resulting in a notional individual sentence for each contempt. (Stage 1: assessment of contempts)(2) Second, I examine the just and appropriate overall sentence by considering at all the breaches together having considered the Totality Guideline. I will follow the general approach in the authorities and impose concurrent sentences. However, that requires the identification of the “lead” breach, that is, the most serious contempt, and then an adjustment, if necessary, to reflect the overall extent of the breaches – what in criminal sentencing (which this is not) is termed the overall criminality to reflect all the culpability and harm. In doing so, the court must remain alive to the risk of double-counting and must make any necessary adjustments for totality to ensure the overall sentence is just and proportionate. The maximum sentence always remains 2 years’ committal to prison. (Stage 2: notional aggregate sentence)(3) Third, once the notional aggregate sentence is determined, any necessary reduction to reflect the defendant’s personal mitigation must be made. (Stage 3: aggregate sentence following mitigation)(4) Fourth, the net sentence is reduced further to give credit for the pre-trial indication of admissions. (Stage 4: final sentence following credit)(5) Fifth, consideration of whether any custodial sentence may properly be suspended.[35]I informed counsel that I intended to approach the sentencing exercise in this way. They agreed with the approach. As to length of sentence, I bear in mind the guidance of the Court of Appeal in McKendrick v. Financial Conduct Authority [2019] EWCA Civ. 524 (“McKendrick”) at para 40: “... because the maximum term is comparatively short, we do not think that the maximum can be reserved for the very worst sort of contempt which can be imagined. Rather, there will be a comparatively broad range of conduct which can fairly be regarded as falling within the most serious category and as therefore justifying a sentence at or near the maximum”.[36]The parties also agreed that the court should not at this stage include an element of the sentence identified as a “coercive element” which could be purged (see, for example, the sentence by Jeremy Johnson J in HM Solicitor General v. Yaxley-Lennon (aka Tommy Robinson) [2024] EWHC 2732 (KB)). There Jeremy Johnson J pertinently observed at para 27:
“In a democratic society underpinned by the rule of law, court injunctions must be obeyed. A party who has lost a case is entitled to appeal, or to disagree with the result, or to criticise the decision. But they are not entitled to disobey a court injunction. Nobody is above the law. Nobody can pick and choose which laws, or injunctions they obey, and which they do not.… It is in the interests of the whole community that court injunctions are obeyed, so that the rights and freedoms that are enjoyed by individuals can be protected and enforced.”
[37]Therefore, I indicated to counsel that I intended to impose a sanction based on my assessment of the overall gravity of the case adjusted for the reductions the defendant is entitled to, rather than focusing on future developments and any future purging of contempt (cf. the same approach by Cockerill J in XL at para 98). Counsel before me agreed that if there was in future a valid basis to adjust the sentence, further application could be made. This is similar to Cockerill J’s observations in XL at para 113:
“Like Rose J in Pugachev [JSC Mezhdunarodniy Promyshelenniy Bank & Another v Sergei Pugachev [2016] EWHC258 (Ch.) (“Pugachev”)] I do not feel myself to be in a position to indicate how much of the sentence should be regarded as punitive and how much as coercive. However if [the defendant] were to do those things he would then be in a position to apply to the Court to purge his contempt and reduce his sentence and the Court hearing that application would be looking at a very different situation to that which now confronts me and might well conclude that some reduction in the overall sentence was appropriate.”
[38]I emphasise that I have had regard to the all the sentencing guidelines mentioned.

VIII. Mitigation

[39]The applicant submits that there is “minimal mitigation” in this case. While there was no skeleton argument filed on behalf of the defendant, in oral submission it was submitted on his behalf that the mitigation is “substantial”, consisting of several elements relating to various aspects of his personal history. Each must be examined. For convenience, I arrange the relevant matters into five groupings.[40]First, the defendant’s previous good character. Prior to starting the admitted fraud in 2015, the defendant was of good character and had worked productively and responsibly as a professional for many years, working for PwC for 12 years and 14 years for the applicant. Indeed, he had contributed to the applicant during his employment there prior to beginning his fraudulent conduct. He initially admitted “a substantial amount of dishonesty” and then accepted joint liability when the applicant sought summary judgment. While this is true, three points should be noted. First, he was able to gain a position from which to execute the fraud successfully over many years due to his standing as a trusted financial professional. Further, as sentencing guidelines repeat across the range of offences, where offending is serious and particularly where good character has facilitated the fraud, such character considerations provide limited mitigation. Third, and most pertinently, the court is sentencing for breach and not the fraud. By the time of the first breach, the defendant was not of “good character” as he had committed a multi-million-pound fraud over many years. Being found out and pursued by the applicant through litigation did not prevent the defendant from disobeying the orders of the court designed to protect the applicant from further harm. Therefore, I judge that the defendant’s previous good character prior to the beginning of the fraud to be of minimal mitigation in the sentencing for breach. I make no observation about fraud sentencing should it ever occur.[41]Second, the impact on the defendant. As to the “strain of proceedings”, it is submitted on the defendant’s behalf that he has been under “considerable strain” due to the substantive proceedings (the main claim) and then the enforcement proceedings. This has affected his judgment and led to him taking “frankly stupid actions”, which were the initial contempt and then the further contempts. This was offered as an explanation for the breaches of the court orders. I am not convinced that this much assists the defendant. I cannot see how the strain of the main claim for recovery of over £20 million lost to his fraud mitigates his subsequent further acts of deliberate and orchestrated dishonesty aimed at concealing or dealing with very significant further sums for his own dishonest benefit. As will be seen, these were acts of significant deliberation and required planning and repeated acts of further deception in the attempt to cover them up. I view his breaches not as “rank stupidity” but grossly dishonest acts directed at providing himself with a secret financial reservoir that would evade recovery in the proceedings. I therefore find that the “strain” of proceedings provides very little tangible mitigation for the defendant.[42]Third, delay. There are of course sentencing guidelines for the effect of delay. These require “undue delay” from “apprehension” to trial and sentencing in a criminal context. The submission is that the defendant has had “a prison sentence hanging over his head for a considerable time.” However, the delay here is not undue in the sense the guidelines and the Court of Appeal have identified. It has been contributed to by the defendant’s request to be legally represented. That was not an unreasonable request for him to make, indeed, it was a prudent course given the gravity of the contempts. I recognise that there were delays in obtaining legal aid and securing the appropriate representation that were not the defendant’s fault. However, a very significant part of the delay resulted from his contesting of the contempts. He only indicated his admissions on the last working day before the trial. An early admission would have substantially reduced the delay. He chose not to take that course. As the Court of Appeal emphasised in the key authority on delay of R v Timson [2023] EWCA Criminal 453 at para 23, “some” reduction for delay may be justified where it is “undue” and “especially” where there has been a “guilty plea”. That latter factor diminishes in value where the admission is immediately before the trial. However, here the delay, from date of filing the contempt application (18 June 2024) to what became the sentencing hearing on 14 April 2025 cannot be deemed undue or unreasonable or beyond the bounds of what would be usually expected particularly when the defendant has intended to contest the contempts almost until trial. The case was listed for a two-day hearing due to the defendant’s intention to contest liability.[43]It is also necessary for a justifiable reduction for undue delay for there to be identifiable “detrimental effect” on the defendant. The submission is that the main proceedings and the enforcement proceedings have had a “dramatic effect” on the defendant and have led to him “abusing substances” and misusing alcohol as a “coping mechanism”. There has been no medical evidence filed to support this submission, but the court is prepared to accept that the combined effect of discovery of the fraud, the main claim and the contempt proceedings are plausibly likely to have impacted the defendant psychologically. While the applicant did not appear to contest those facts, and they may be true, they may be better viewed as a part of the overall deleterious impact of the case on the defendant rather than as the necessary detriment to justify a reduction for delay – but ultimately, the delay was not undue given the defendant’s non-admission over many months and little reduction can legitimately be granted for it, while not being entirely cast aside. However, the psychological impact overall may be granted some weight, which leads onto the fourth factor.[44]Fourth, one must examine the effect on the defendant’s life. There can be no doubt that the discovery of the fraud and the loss of his job and career have resulted in a “tremendous fall from grace”. However, the court must be careful to assess to what extent this provides mitigation connected to the contempts as opposed to the overall fraud. All those factors may form heads of mitigation if being sentenced for fraud. Here the court is sentencing for contempt. That said, I am prepared to accept that the loss of the defendant’s previous life and standing in the community must have had a significant impact upon his life. He is now working in “multiple” low-paid jobs, including in supermarkets, simply to pay the bills, the court was told. However, there are large parts of society who do just that and it is not to be regarded as particularly mitigating because it is work the defendant is not accustomed to. I judge that as disrespectful to the many members of the community who diligently perform such work and are grateful to do so. What can be said positively on the defendant’s behalf, it seems to me, is that despite the far-reaching impact on the defendant of the discovery of the fraud and the litigation, he has not given up and instead has sought employment with some determination. I judge that to be to his credit.[45]Fifth, the court must assess the impact of sanctioning on others (Crosland, proposition 5). The defendant submitted that the case has affected “two innocents”, his daughters, who are 16 and 18 and both sitting public examinations. However, it was later clarified on enquiry from the court that his daughters do not live with him but with their mother and therefore he does not have direct caring responsibilities for them. This factor consequently is of limited effect as he is not the primary caregiver. It is submitted that the uncovering of his dishonesty has had an impact on his relationships with his “extended family”, but it was not explained how or to what extent.[46]As indicated, I divide the discussion into the five identified stages before turning to the disposal of the case overall.

IX. Discussion: Stage 1

[47]Each of the contempts is considered in turn, assessing the culpability and harm. Contempt 1[48]The defendant was required to provide a schedule of assets following the granting of the injunction. He provided his initial account through his solicitors on 24 December 2020. It included a reference to a “Barcelona Property”, but it appeared that two properties were being referred to. This was confirmed on 29 December 2020 in broad terms. The defendant swore an affidavit on 6 January 2021 purporting to have disclosed his assets in accordance with his obligations under the injunction order. The situation in respect of the existence of two properties in Barcelona was maintained over the next two years. In around September 2023, FRP as part of the asset realisation process took steps to sell the Barcelona properties. However, the defendant had covertly sold the Second Barcelona Property. Twice FRP asked Enyo to clarify whether there were two properties (22 and 25 September 2023). Enyo confirmed that it had “raised [the] concerns with the defendant” and he maintained that he only owned one property in Barcelona. Further investigations confirmed there were two distinct property registrations. Ultimately on 5 October 2023, Enyo confirmed that the defendant had sold the second property for €253,800 with net proceeds of €219,944. They were paid into a bank account in the defendant’s name which had not been previously disclosed. It had been set up very shortly before he received the proceeds of sale.[49]The proceeds were then dissipated. Approximately €31,000 was paid to Ms King; €92,000 approximately was paid to a Cypriot property investment company with whom the defendant had entered into a contract to invest £135,000 to build an apartment. The Cypriot company has since disappeared. A further sum of €17,500 approximately was paid allegedly to cover a loan for subsistence costs.[50]TBIS has recovered €85,076.12. Thus, €33,856 of the assets were dissipated to cover the transaction costs and €134,867.88 has not been recovered. Culpability[51]The defendant concedes that the culpability is high. This is an inevitable concession. The applicant only discovered the breach due to its enquiries, not due to a voluntary disclosure by the defendant who sought to conceal his dishonesty. The relevant factors in assessing seriousness are that there was very significant planning and deliberation to conceal the unlawful dealing with and dissipation of a frozen asset. There are further aggravating features of dishonestly misleading the applicant about the number of properties when queried about it, in part by his ambiguous comment that there was “one Barcelona property”, while omitting that he had sold another in contravention of the court order. Further, there is the protracted length of the deception and the asking of the property agent not to reveal the truth (she responded that she was “unable to respond”). I judge culpability to be high. Harm[52]The defendant concedes that the level of harm is high, but submits it is at the “bottom end” of high-level harm. I recognise that some sums have been recovered and repaid in part by his wife. However, in total €165,000 has been lost. I judge that this is not towards the lower reaches of high-level harm, but clearly well within the middle of that upper spectrum, although not at the apex. Conclusion:

Contempt 1

[53]There has been a troubling repetition and replication of the original fraudulent methodology, which involved the use of a new bank account to conceal the defendant’s dishonesty, a matter of significant concern. Here there is a high degree of culpability and high-level harm.[54]I judge that only a prison committal is justified, subject to suspension. No other sanction has been submitted, and correctly so. The appropriate notional term to reflect the culpability and harm is 18 months’ custody. In reaching that figure, I bear in mind the Court of Appeal’s guidance in McKendrick about the range of contempts that may justify a sanction at the maximum of 2 years’ committal or “near” it. I regard this as in the category of being near to the maximum and therefore 18 months’ notional committal is required. Contempt 2 54. Culpability[55]There is no doubt that the properties were included within the terms of the injunction. As para 6 of the order stipulates in respect of the UK properties:
“6. The Properties shall forthwith be sold on the open market and the following conditions shall apply.”
[56]The rental income from the UK properties and the Tampa property were paid into two Revolut bank accounts held in Ms King’s name. The defendant stated in correspondence that he believed the legal title to the UK properties belonged to Ms King. It is implausible that he harboured such an erroneous belief. But even if that were the case, the rental income remained subject to the terms of the injunction. As to the Tampa Property, the defendant has stated through Enyo only that this was an “inadvertent oversight”.That claim must be viewed in light of the wider fraudulent conduct of the defendant, the pattern of deception as seen with the Barcelona property, and the implausibility of his belief about the UK rental income.[57]The applicant submits that there is very high culpability. The defendant submits it should be assessed as “somewhere on the lower to medium spectrum”. I cannot agree with the latter submission. This was once more a studied breach of the terms of the injunction over a significant period of time. I judge that the culpability is high. Harm[58]There has been a dissipation of assets in the sum of £20,897.82. The applicant submits that significant harm has been caused and it only was uncovered by the applicant’s probing rather than the defendant “coming clean”. The latter is true, but the focus here is on the level of harm, not culpability. That said, I do not accept the defendant’s submission that in the context of a multimillion-pound fraud, the dissipation of around £20,000 means that the harm is low and particularly since the defendant has paid back £10.9 million. The real question is how to assess the harm caused by the loss of the dissipated sum. I judge that the harm is greater than low-level, but while in the medium category, it is towards the lower part of that range. Conclusion:

Contempt 2

[59]For the rental income contempt, there is high level culpability and medium level harm towards the lower part of the range. Once more, given the flagrancy of the disobedience of the court’s order and the sum involved, a custodial term is necessary to reflect the seriousness of the breach. The contrary has not been submitted by the defendant. I assess the appropriate notional sentence as being 6 months’ committal to prison. Contempt 3[60]The starting-point is that the Undisclosed Investment was realised with the applicant receiving over £1.3 million. Culpability[61]The applicant submits that this is a very clear case of high culpability due to the violation of the defendant’s disclosure obligations to such a great extent. The defendant submits that culpability is “somewhere along the road from medium to high”.[62]This was to my mind a gross disregard of the defendant’s disclosure obligations and involves a very substantial amount of assets, estimated to be valued around £1.26 million. Once more, the defendant sought to obfuscate the nature of his deception by claiming that the undisclosed investment was part of Citibank investments he disclosed in the asset schedule. This cannot be true. The Citibank investments were valued at £982,778, and following liquidation at £675,706.84. It is incapable of belief that the further investment of £1.26 million could additionally have been included in the Citibank figures. The defendant has a long professional history in financial services and dealing with significant sums was his job on a daily basis. He cannot have been under any misapprehensions about a sum in excess of £1 million. I assess that culpability is high. Harm[63]The defendant submits that there is no financial harm as “the applicant is £1.3 million to the good” following the asset being realised. The applicant argues that the intended loss was the whole of this substantial investment. I am satisfied that this was the defendant’s intention, but this is a matter going to culpability, not to harm.[64]During the oral hearing, I indicated to counsel that I would consider another analogous sentencing guideline, that on breach of disqualification from acting as a director (the maximum sentence is also 2 years’ custody for the Section 13 offence under the Company Directors Disqualification Act 1986). I emphasise that this guideline is not determinative, but I do find it of assistance in the approach to the question of harm. On harm, this guideline requires consideration of not just “actual [serious] financial loss” but also of a breach that involves the “significant risk” of such loss (alternatively styled as harm that “was at risk of being caused”).[65]Risk seems to me a pertinent factor to consider in assessing harm. The court should have regard here to not only there being no financial loss for Contempt 3, but to the existence of the real risk of substantial loss. I judge that there was a significant risk that the applicant would have incurred very serious financial loss if the diligence of the investigations did not reveal the hidden asset. I am left in no doubt that the defendant would have sought unlawfully and in wilful defiance of the court’s order to have enriched himself by dealing with the asset to cause very substantial financial loss to the applicant. He repeatedly checked the asset that had been concealed from the applicant for around three years. The title of his email to the investment company holding the asset was “Cash”. I am satisfied entirely that the defendant intended to put this asset beyond the reach of the applicant. Thus, harm here cannot simply be assessed by the level of actual loss. There was significant risk of a high level of financial loss to the applicant, which would have amounted to in excess of £1 million. Loss of such a sum would be a high level of harm. But I must balance that with the recovery of the asset. Therefore, I judge harm to be medium. Conclusion:

Contempt 3

[66]There has been a high degree of culpability and a medium level of harm. I judge that the notional sentence should be one of 12 months’ custody.

X. Discussion: Stage 2

[67]I identify Contempt 1 as the lead breach. The three sentences are all to run concurrently with one another.[68]However, there must be an upward adjustment of the 18 months’ custodial term assessed for Contempt 1. These are three discrete contempts, each of which merits a custodial term. Breach 3 is also a very serious matter. But I temper the degree of uplift to reflect the question of totality, as understood in criminal sentencing terms (alive to the fact that this is not a criminal sentence, but adapting the idea). I judge that the total aggregate term to reflect all the culpability and harm is a custodial term of 22 months’ custody. That is before any reductions.

XI. Discussion: Stage 3

[69]The court now considers the defendant’s mitigation as previously set out. I am mindful of the precept that where, as here, there has been serious “offending”, personal mitigation is of less assistance to the offender. By the time of the contempts, the defendant was no longer of good character. His very serious fraud had been unmistakably exposed. The court sought to protect the financial interests of the applicant. The defendant over an extended period of time and with persistent dishonesty and ingenuity sought to defy the court’s order and enrich himself at the applicant’s expense. The gravity of such conduct is the proper context in which to assess personal mitigation. However, I do not disregard it entirely, but must adjust its mitigating effect accordingly in line with authority. I judge that for the reasons provided in the analysis of the individual mitigating factors, there should be a reduction of the term imposed of three months. Therefore, the custodial term after mitigation is 19 months’ committal.

XII. Discussion: Stage 4

[70]Next, there must be further reduction to account for the defendant’s admissions, albeit very late in the day. It is agreed between the parties to be 15 per cent. Therefore, the remaining term should be 16.15 months’, which I round down in the defendant’s favour to 16 months’ committal to prison.

XIII. Discussion: Stage 5

[71]It is conceded by the defendant that the custody threshold has been crossed. This concession is inevitable given that the Guideline on Community and Custodial Sentences deems the threshold crossed when the offence or offences are “so serious that neither a fine alone nor a community sentence can be justified for the offence”. The defendant realistically recognises that the question is really whether the custodial sentence should be suspended. The Guideline requires the court to carefully perform a balancing exercise between the factors for and against suspension. This is I do below. Helpfully, the Guideline provides a structure for examining relevant factors, while not limiting on a fact-specific basis what may arise. Factors in favour[72]It is submitted on behalf of the defendant that in his favour are his admissions, his previous pre-fraud good character, the impact on his life, his health and mental health, the impact on his partner, children and his relationship with his extended family, to the extent outlined previously. I consider these along with the three factors identified in the Guideline in favour of suspending sanction (recognising a significant overlap).[73]First, realistic prospect of rehabilitation. I recognise that the defendant has not given up following contempt proceedings and has engaged in a range of low-paid jobs. Against this, and to me a highly significant factor in respect of risk, is that he breached the court’s order in a deliberate, sustained and cynical way after his fraud had been discovered, and with a view to self-enrichment at the expense of the defrauded applicant. Such conduct reduces the prospects for rehabilitation, while not eliminating them.[74]Second, “strong personal mitigation”. As outlined above, I judge that the defendant does have some personal mitigation. However, I am not persuaded that it is strong in the sense identified in the guidelines. There is no clear independent and objective evidence about his mental health deterioration beyond assertion and submission, but I am prepared to accept that the defendant’s “fall from grace”, as counsel graphically put it, is likely to have had a negative impact on his well-being. However, absent clear evidence, it is speculative to quantify it. It was open to the defendant to provide such evidence and none is placed before the court. The strongest mitigation is likely to be his admission of the breaches. But here again, the weight of this factor is reduced by the defendant’s very late plea and the listing for trial right until the last working day. Further, the very late acceptance of his liability limits any suggestion of contrition or remorse, and indeed little focus was placed on this by counsel, concentrating instead on the “stupidity” of the defendant’s behaviour due to “strain”.[75]Third, the court must consider whether “immediate custody will result in significant harmful impact on others”. The defendant is not his children’s prime caregiver, who live apart from him. While he has a partner, she was one of the original defendants in the main proceedings. She has fully admitted her liability under the main action and has received very significant financial benefits historically because of the defendant’s fraud. While I can envisage that an immediate custodial sentence will impact his new wife and his children, I cannot find the basis for deeming that impact “significant”, as required by the Guideline. He is engaged in low-paid employment and thus is providing little financial support. Factors against[76]Against these matters, the Guideline lists three factors indicative of not suspending a custodial sentence.[77]First, whether the defendant “presents a risk/danger to the public”. On this, I judge that the risk of perpetrating a fraud of the type committed has been largely eliminated due to his removal from his finance-related work. However, the nature, gravity and repetitious nature of both fraudulent conduct and wilful and contumacious defiance of court orders indicates that he remains a risk of future dishonest conduct should it be to his advantage. This is not a definitive prediction but risk evaluation, as required by the Guideline. I judge the risk to be real.[78]Second, whether there is a history of “poor compliance with court orders”. The breaches are unequivocal evidence of a willingness to flagrantly disregard the orders of the court persistently and fundamentally.[79]Third, whether “appropriate punishment can only be achieved by immediate custody”. This is a very serious series of contempts. The breaches extended over a prolonged period of time, were carefully planned, sophisticated and deliberate. When challenged about them, the defendant continued to lie in an attempt to conceal his self-enrichment and contumacious dealing with classes of assets which had been made subject to court order to protect the victim of a very substantial fraud. Conclusion: suspending sentence[80]I now balance the competing factors. It was notably observed by the Court of Appeal in R v Middleton [2019] EWCA Crim 663 that one factor in favour of suspension may outweigh the entirety of countervailing factors. I take this to be a recognition that the balancing exercise is not a mere mathematical task, but one that qualitatively examines the factors. Once that is done, it seems to me that the answer is clear.[81]The defendant’s conduct amounts to grave contempt for which the only appropriate punishment is an immediate custodial term. In reaching this conclusion, I weigh all the factors in the defendant’s favour, but remain clear that the factors indicative of immediate custody strongly and decisively outweigh those in his favour. For all the persuasively argued submissions of Mr Whitehurst on behalf of the defendant, I am bound to say that I judge this to be a clear-cut case and not a borderline decision. I cannot accept the submission that the “exceptional course” of suspending sentence should be taken in this case, nor that the prison committal should be suspended “to assist his rehabilitation”. Not only were there repeated contempts in this case, but after he apologised for the rental breach, he proceeded six months later to covertly sell the Second Barcelona Property, the most serious contempt.[82]The defendant’s conduct is far too serious to justify suspending the custodial term. There must be an immediate committal to prison, as Rose J said in Pugachev at para 5, “both to protect the applicant and to punish the defendant.”[83]The term of 16 months’ committal is the shortest term I can pass to properly reflect the combined seriousness of the defendant’s contempts while affording due weight to factors in his favour (Crosland, propositions 3-6).

XIV. Disposal

[84]Summarised shortly, the disposal is as follows: Contempt 1: notional term of 18 months’ committal to prison, uplifted to 22 months’ to reflect the aggravating effect of the associated contempts (2 and 3), reduced to 16 months’ following mitigation and credit for admissions. Contempt 2: 6 months’ committal to prison concurrent to Contempts 1 and 3; Contempt 3: 12 months’ committal to prison concurrent to Contempts 1 and 2. Total sentence: 16 months’ immediate committal to prison.[85]I end by emphasising that the defendant has an automatic right of appeal to the Court of Appeal against the sentence imposed without the need for permission.

Order

(1) By paragraphs 1 to 8, it was declared that numerous properties and assets in the name of the defendant and/or Ms King were held on trust for TBIS, and that those assets were to be sold and the proceeds paid to TBIS in satisfaction of the judgment debt;(2) By paragraph 14, the defendant agreed to pay TBIS the sum of £23,650,010.67 (with credit to be given for sums realised on accounts and inquiries);(3) By paragraph 16, the injunction was continued until further order of the court. order: (i) Freezing orders are made for good reason and in order to prevent the dissipation or spiriting away of assets. Any substantial breach of such an order is a serious matter, which merits condign punishment. (ii) 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. (iii) 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. 56. In the case of continuing breach, out of fairness to the contemnor, 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 the 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. 57. It should also be noted that what the court is passing is a nominal sentence. The actual time spent in prison will be less, because of remission, possible release on tagging and so forth. The court does not have regard to those factors in determining the proper sentence in any case.’ 92. As was noted on behalf of XL, this has been followed in numerous cases since, including in Thursfield v Thursfield [2013] EWCA Civ 840 where the Court of Appeal upheld a 2-year order for committal for breach of the disclosure provisions in a freezing order and held that the judge had not erred in relying on the principles in JSC (No.2). In BG International v Umalia [2015] EWHC 1702 (QB), Spencer J held that the defendant’s “serious, flagrant and persistent breaches” of the disclosure obligations in a freezing injunction demanded an immediate custodial sentence (in the defendant’s absence) to mark the seriousness of the contempt given the importance of such provisions to any freezing order.” ‘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.’ ‘55. … I derive the following propositions concerning sentence for civil contempt, when such contempt consists of non- compliance with the disclosure provisions of a freezing order: (i) Freezing orders are made for good reason and in order to prevent the dissipation or spiriting away of assets. Any substantial breach of such an order is a serious matter, which merits condign punishment. (ii) 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. (iii) 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. 56. In the case of continuing breach, out of fairness to the contemnor, 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 the 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. 57. It should also be noted that what the court is passing is a nominal sentence. The actual time spent in prison will be less, because of remission, possible release on tagging and so forth. The court does not have regard to those factors in determining the proper sentence in any case.’

Cited in 1 later judgment