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Moutreuil v Andreewitch (Contempt: No.2) [2020] EWHC 1301 (Fam)

Mr Justice Cobb conducted a remote re-hearing in contempt proceedings, held in ‘open court’, making a number of findings against the first respondent that he deliberately breached a freezing order.

Background 
The applicant, Ms Moutreuil ("MM"), and the first respondent, Mr Andreewitch ("PA"), lived together for c. 20 years before separating. They had 5 children together but never married.

On 22.3.19, a freezing order was made by DDJ Hodson inter alia preventing the disposal of, dealing with, or diminishing the value of any other income or assets of the second respondent, Pier Investments Company Limited ("PI"), except insofar as necessary for PI to meet its tax or other liabilities. PA was a director of PI.

On 13.2.20, MM issued her application (re-amended on 27.4.20) for an order that PA be 'sanctioned in any manner which the court may think fit' for alleged multiple breaches of the freezing order. The application had been provoked by PA's transfer of the entirety of the shares in PI from MM into the name of their 15-year old son within 48 hours of a letter before action.

MM's application was heard before Lieven J which led to findings which were the subject of an appeal. Leiven J's findings were set aside by the Court of Appeal (reported at [2020] EWCA Civ 382). The appeal succeeded on one fundamental complaint raised by PA, namely that "as an unrepresented litigant he gave evidence without having been informed of his right to silence."

The matter then came before Cobb J by way of a re-hearing on 18.5.20.

Procedural issues 
No procedural points were taken by either party at the hearing. However, Cobb J thought it appropriate to address a number of relevant procedural issues in his judgment.

Open court hearing: Referring to the guidance from the senior judiciary, Cobb J noted that the default arrangement for the conduct of most family hearings during the Covid-19 pandemic is by 'remote' video technology. However, Cobb J highlighted that there is no explicit guidance in relation to the management of contempt or committal hearings. [6] Cobb J conducted the hearing in 'open court' as contempt/committal hearings would usually be, albeit by way of Skype for Business. [7]

Application to commit/application for a variation of the freezing order: The judge highlighted the well-recognised position that if a committal/contempt application is heard at the same time as other issues about which the alleged contemnor needs to give evidence, he is placed in the position where he is effectively deprived of the right to silence. To hear both at the same time would amount to a serious procedural error. The judge therefore declined to hear PA's second application to vary the freezing order at the same time as the contempt hearing. [8]

Particularised complaint: Both PA and Cobb J were satisfied that the allegations of the alleged contempt was sufficiently particularised and set out in accordance with r 37 FPR 2010. [9]

PA's evidence: Cobb J emphasised that an alleged contemnor is entitled but not obliged to give oral evidence and that the right to silence is a core element in criminal proceedings and proceedings of a criminal character. The judge warned of the potential for adverse consequences or inferences being drawn from a party exercising that right to silence. [10] PA was advised as to this and willingly gave oral evidence and was cross-examined. [11]

Self-incrimination: Cobb J also emphasised the principle set down in Blunt v Park Lane Hotels [1942] 2 KB 253 that no one is bound to answer questions which may tend to incriminate him, expose him to any criminal charge, penalty, or forfeiture which is reasonably likely to be preferred or sued for. [12] The advocates were instructed to ensure that PA be reminded of this right prior to answering any question to which the answer may tend to self-incrimination. This did not in fact arise. [12]

Burden and standard of proof: Cobb J reminded himself that the criminal standard of proof is to be applied in contempt proceedings and that the burden is on the party alleging the contempt to prove the allegations. The judge was satisfied that it is not a requirement to demonstrate the alleged contemnor intended to and/or believed that the conduct alleged constituted a breach of an order. Rather, that it would be sufficient for the person alleging the breaches to show that the alleged contemnor deliberately intended to commit the act/omission in question per Pan Petroleum AJE Limited v Yinka Folawiyo Petroleum Co Ltd [2017] EWCA Civ 1525. [14]

Alleged breaches
It was accepted by the parties that PA had withdrawn £28,599.56 from the frozen account, some of which MM accepted had been withdrawn properly to meet company liabilities. [22]

MM alleged the following:

- PA fragrantly breached the order in a "systematic" way without any justification or excuse; [21]

- PA had sole control over the relevant PI bank account and used it as his "personal piggy bank"; [21]

- Within 3 days of the freezing order, PA used the frozen account for personal use; [21]

- Over the course of the following months, PA made 562 further withdrawals and/or payments from the PI account and the vast majority were for his personal use; [21]

- PA knew he was precluded from making these payments by virtue of the freezing order and MM contended that a letter filed on PA's behalf regarding a variation of the order demonstrated his knowledge. [23] The solicitors for MM also wrote to PA drawing his attention to the breaches of the freezing order. [24]

PA denied being in breach of the freezing order. It was argued on behalf of PA that the wording of the freezing order was "unfortunate" in that there was no restriction placed on payment for other liabilities nor was there any requirement to obtain permission before those payments were made. [25]

PA accepted that he withdrew monies from the frozen PI bank account but asserted it was necessary to meet the "other liabilities" of PI. He argued he was entitled to pay himself a director's salary of £8,500 pa, repay himself sums which he had earlier loaned to PI in 2005 and that £12,850 was used to defray legal costs incurred by PI and owed to two law firms. [26]

PA also submitted that even if his use of the frozen account did breach the freezing order, this was "inadvertent". [27]

Findings of Cobb J
In respect of the wording of the freezing order, Cobb J found that the terms were "clear and unambiguous." The judge rejected that PA felt that the terms and the order needed clarification and was satisfied that PA knew that he could have applied to vary the order and did not apply for any "clarification/variation" until December 2019 when his expenditure had been, or was about to be, exposed. [28]

Cobb J found that PA's "firm and unshakeable belief in his own narrative" was "simply implausible". PA's explanations for his use of the frozen account were found to be "contrived and disingenuous". PA was found to be "evasive when challenged" and "prevaricated when asked questions which called for simple answers." [29]

The judge was satisfied that PA deliberately removed sums from the frozen account after the freezing order was made, and at all times intended to use the withdrawn monies for his own benefit and treated the account as his personal account. Cobb J found that PA "deliberately contrived his explanations to fit his behaviour". [30]

In respect of the director's salary Cobb J was satisfied there was no legally recognised obligation or contractual basis for PI to pay PA. The sums PA withdrew exceeded the sum of £8,500 for any salary which is why PA invented the loan. PA knew and understood for some time that the freezing order did not allow him to draw down a salary from the PI account. [31]

Cobb J found that PA conjured up the obligation to repay a loan. [32] Further, even if he had found that the sums taken from the account could legitimately be said to be repayments of a loan, Cobb J was "far from sure" that that repayment was necessary at that point in time to meet the PI's other liabilities. [34]

PA's evidence about the need to repay the legal costs incurred by PI was rejected. The judge found that PA "was in no doubt that he could not use the frozen account for his own personal legal costs", which he had done the day after receiving a letter from MM's explaining that he could not. In fact, all invoices were addressed to PA personally. [35]

Conclusion
Cobb J held that PA breached the freezing order by making/procuring the transfers/payments set out in MM's notice and that such breaches were deliberate, such that PA made the payments knowing that they were in breach of the freezing order. [37]

Sanction and next steps
The judge adjourned the issue of sanction to a later hearing reserved before himself. It was noted that MM did not wish to see PA committed to prison for breach of the order. [38]

Cobb J also directed that PA's renewed application to vary the terms of the freezing order would be dealt with separately, perhaps as an ancillary point once the ownership of the shares in PI had been resolved. [40]

Summary by Yasmin Hughes Pugh, pupil at 29 Bedford Row

Read the full judgment of Moutreuil v Andreewitch (Contempt: No.2) [2020] EWHC 1301 (Fam) on BAILII