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 , 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.