Contempt proceedings against directors for alleged breach of a freezing order made against a company

The claimants obtained a worldwide freezing order against two companies. This provided that, by a  certain deadline, the companies must “and to the best of their ability (having made proper enquiry  of all directors and responsible corporate officers), inform the claimants’ solicitors of all their  assets worldwide exceeding USD 5,000 in value….”

It is an established principle of law that a director of a company which is ordered to do something  must take reasonable steps to ensure the order is obeyed, and if he fails to take those steps, and  the order is breached, he can be punished for contempt. Hamblen J considered the issue of whether  it is contempt if a director wilfully fails to take reasonable steps to comply with an order but it  would have made no difference if such steps had been taken. In Sectorguard v Dienne [2009], Briggs J held that failure to comply with an order “where the doing of  it is impossible” may be a breach of the order but it is not contempt of court. Hamblen J said the  position was the same where it was not impossible to comply with the order at all but it was  impossible to comply more fully with the order.

The judge said that a requirement to act “to the best of their ability” was not an absolute  obligation and, moreover, there was no duty to continue to search for information to disclose after  the deadline had passed (although such a duty could have been spelt out in the order). Here, the  directors of one   of the companies had no knowledge of its day to day affairs and were reliant on others to provide them with information. They had made inquiries and hence had  acted to the best of their ability within the relevant timeframe. Furthermore, even if further  steps had been taken, they would not have yielded further information within that timeframe and  hence no finding of contempt was made against them.