Jersey Unreported Judgments

Debt - representation seeking a finding that the first, second and third respondents are in contempt of court.

[2013]JRC058

Royal Court

(Samedi)

14 March 2013

Before     :

Sir Michael Birt, Kt., Bailiff, and Jurats Marett-Crosby and Blampied.

 

Advocate P. C. Sinel for the Representor.

Advocate W. A. F. Redgrave for the Second and Third Respondents.

judgment

the bailiff:

1.        This is a Representation by the Representor ("Leeds") seeking a finding that the First Respondent ("Admatch"), the Second Respondent ("Mr Weston") and the Third Respondent ("Mrs Weston") are in contempt of court  by failing to comply with orders of the Court made on 15th August, 2011, and 29th March, 2012. 

2.        The hearing extended over two days and both Mr and Mrs Weston were cross-examined by Advocate Sinel. 

Background

3.        The background to this long-running litigation has been set out in a number of judgments.  For today's purposes we propose to take matters substantially from the judgment of 15th August, 2011, [2011] JRC159. 

4.        Leeds was the second plaintiff in the proceedings which have given rise to this application.  The first plaintiff was Leeds United Association Football Club Limited, an English company which once owned and operated Leeds United Football Club.  Admatch is a Jersey company owned and controlled by Mr Weston.  In August 2004 the first plaintiff and Admatch entered into an agreement for Admatch to act as agent to the first plaintiff for the purpose of selling match and season tickets by credit card.  There has never been any dispute that, subject to the claimed right of set-off referred to below, Admatch owes the first plaintiff £190,400 under that agreement.  

5.        In the course of 2005, control of the first plaintiff was acquired by interests associated with Mr Ken Bates.  Proceedings were issued by the first plaintiff in December 2005 seeking payment from Admatch of the sum of £190,400.  On 4th May, 2007, the first plaintiff went into administration, with net debts reported to be about £40 million.  By an agreement of that date, the administrators transferred the assets of the first plaintiff (including the claim against Admatch) to Leeds, and the shares in Leeds were sold to a consortium led by Mr Bates.  Subsequently, the first plaintiff went into liquidation.  On 26th July, 2007, Leeds was joined to the action against Admatch and became the effective plaintiff.  

6.        As already mentioned, the debt in the sum of £190,400 has always been admitted.  However, in the proceedings, Admatch contended that the agreement between it and the first plaintiff contained at clause 9(f) a set-off clause which entitled Admatch to set-off from any monies it owed to the first plaintiff any sum owed by the first plaintiff (or by any parent, associate or subsidiary company of the first plaintiff) to Admatch (or to any parent, associate or subsidiary company of Admatch).  Admatch alleged in its answer that the sum of £1,439,734 was owed by the first plaintiff or an associate to Cope Industrial Holdings Limited ("Cope"), which was a company in which Mr Weston had a controlling interest and was therefore said to be an associate of Admatch.  It claimed therefore to be entitled to set-off the sum of £190,400 against the sum of £1,439,734. 

7.        After numerous interlocutory hearings the Court ordered on 19th January, 2011, that unless Admatch paid taxed costs in the sum of £63,529 (which had been incurred in respect of an earlier appeal to the Court of Appeal) within five weeks, its answer would be struck out.  On the same occasion the Court made a further 'unless' order to the effect that, unless Admatch filed a re-amended answer and a revised affidavit of discovery within the same five week period, its answer would be struck out.  Leave to appeal against those decisions was subsequently refused by the Court of Appeal. 

8.        Admatch did not comply with either of these unless orders and accordingly on 19th May, 2011, the Court ruled that the answer of Admatch had been struck out and granted judgment in favour of Leeds in the sum of £190,400 together with interest. 

The August 2011 application

9.        Mr Weston has asserted throughout the litigation in Jersey that Admatch is a dormant company with no assets, only liabilities to him or to other members of his group of companies.  Admatch ceased trading in 1999 and, since then, its only activity had been for a few months in 2004/5 when it undertook the activities with the first plaintiff which are the subject of the Jersey proceedings (although it appears from information now provided that Admatch may also have undertaken some credit card facilities for some of Mr Weston's other companies.).  During the 2004/5 period, Admatch received monies in respect of the purchase of tickets by credit card.  It paid most of these sums on to the first plaintiff in accordance with the agreement but, according to a spreadsheet dated 7th August, 2005, prepared by Admatch, it had not accounted for the sum of £190,329.02 (rounded up in the proceedings to £190,400) which accordingly it still retained.  It is that sum for which judgment was given on 19th May, 2011, because the answer of Admatch - which claimed a right of set-off - was struck out. 

10.      Mr Weston has asserted on numerous occasions that the sum in question is no longer held by Admatch.  In particular, he has asserted that, whatever the position may have been before 25th October, 2005, when Admatch gave notice of the exercise of right of set-off, the sum of £190,400 became Admatch's on that date and it was free to do with it as it wished. 

11.      Back in February 2009, Leeds issued a summons seeking information as to what Admatch had done with the sum of £190,400.  The summons was issued on the basis that, although Leeds' claim was pleaded merely as a breach of contract, clause 8 of the agreement between Admatch and the first plaintiff provided that the monies received by Admatch pursuant to the agreement would remain the property of the first plaintiff save for any authorised deductions referred to in clause 9.  It was argued therefore that Leeds did in fact have a proprietary claim to the sum of £190,400.  This was not accepted by Mr Weston who said there had been a subsequent oral variation of that part of the agreement.  During the course of that hearing, Mr Weston stated how Admatch had dealt with the monies it received pursuant to the agreement.  The Court summarised what he said in two passages in the judgment [2009] JRC 023:-

"16. ... The response also stated that Admatch and the group of companies with which it was associated consistently operated their business with the benefit of bank overdraft and loan facilities and that accordingly all funds received by Admatch or its associated companies were almost invariably utilised to reduce group borrowing from banks.  The funds were then re-drawn as necessary.  This was elaborated by Mr Weston during the course of the hearing when he made it clear that, as instalments of the Processed Monies came in, they were utilised for the general benefit of Mr Weston's group of companies, with monies being transferred back to Admatch as and when an instalment had to be paid to the first plaintiff pursuant to the agreement."

"22. [Mr Weston] asserted that the Processed Monies were not held by Admatch, which was now substantially dormant and had a small overdraft.  The monies had been used for general group purposes with the Processed Monies being passed almost immediately after their receipt back and forth between various companies in the group as dictated by the requirement to keep interest charges on overdrafts to a minimum.  He said that, even if it could be done, it would be an enormously time-consuming exercise to try and work out exactly where the Processed Monies had gone and whether they could now be traced because of the frequent inter-company movements.  He fully accepted that, if Admatch lost at trial, he or one of his companies would have to put funds into Admatch so that it could pay the second plaintiff.  He accepted that, if Admatch did not pay, the second plaintiff would no doubt renew the application which had now been brought and would seek personal relief against him, amongst others, as a director of Admatch.  It would therefore be in his interests to ensure that Admatch paid up." [Emphasis added]

The Court did not grant the relief sought at that stage on the ground, inter alia, that the plaintiffs had been content to litigate without such information for several years and there was a risk of the trial date being lost if the order was granted at such a late stage.  However, the Court stated specifically that the situation would change if Leeds were successful at trial and the Court would be willing to reconsider the matter at that stage. 

12.      In the light of the information disclosed by Mr Weston, and given that it had now obtained judgment against Admatch, in August 2011 Leeds sought an order that Admatch file an up to date affidavit in respect of its financial position for the period from 1st January, 2003, to date with such affidavit to include at least certain specified documents.  Leeds' case was simple.  Following judgment, Admatch was obligated to pay £190,400 to Leeds.  Admatch now apparently had no assets although it was in the past in possession of the sum of £190,400 which it had received.  Leeds wished to know what had happened to that sum so as to aid in the enforcement of its judgment.  

13.      Having reviewed the law on the Court's ability to require a judgment debtor to provide information, the Court acceded to Leeds application and summarised the position as follows at paragraph 25 of its judgment:-

"In summary, the case seems to me a straightforward one.  Notwithstanding that there has not been a trial on the merits, the fact is that, following the granting of judgment because of the failure by Admatch to comply with the unless orders, [Leeds] is now entitled as a matter of law to be paid the sum of £190,400.  The situation has therefore changed completely from that which existed before judgment was given on 19th May.  Admatch admits that it had received that sum which, under the agreement, it should have paid over to the first plaintiff but instead it paid the money elsewhere within Mr Weston's group of companies. Admatch now seeks to say that it has no assets and therefore the judgment cannot be enforced.  This is a classic case where a plaintiff is entitled to the assistance of the Court in establishing the financial position of the debtor and what has happened to monies which it had previously, with a view to the plaintiff then being able to take such action as it may be advised in order to enforce its judgment."

14.      The exact form of the order made by the Court on 15th August, 2011, ("the August order") was as follows:-

"Now this day, the Court, for reasons set out in a judgment delivered by the Bailiff:-

i. ordered that a director of the Defendant shall file and serve, within three months from 15th August, 2011, an up-to-date affidavit in respect of the financial position of the Defendant for the period 1st January, 2004, to date, such affidavit to exhibit, at least, the following documents:

(a) all of its accounts and financial statements; and

(b) all statements and records in respect of all bank accounts held in its name or for its benefit; and

(c) all its accounting ledger information including invoices, receipts and vouchers; and

(d) all related correspondence; and

that, should any of the above documents not exist in either paper or electronic form or cannot otherwise be reproduced or obtained from a third party, that this shall be stated in the said affidavit together with such statement as is necessary to explain same."

Events since the August order

15.      In purported compliance with the August order, Mrs Weston served an affidavit on 22nd November, 2011, ("the November affidavit").  It was some seven days late.  She explained in the affidavit that, although Mr Weston had been Admatch's sole director for many years, she was the person who was most conversant with the financial documentation relating to Admatch and accordingly she had been appointed as a director for the day to swear the affidavit pursuant to the August order.  

16.      The affidavit contained a lengthy discourse on the merits or otherwise of the litigation which was not strictly relevant.  So far as the requirements of the August order was concerned, the effect of the affidavit was as follows:-

(i)        Mrs Weston stated that Admatch had no annual accounts or financial statements and no accounting ledgers other than those annexed to the affidavit.  

(ii)       She exhibited the required bank statements which showed the amounts of all the payments into and out of the Admatch bank accounts.  However, the bank statements had been redacted so as to hide the identity of the payer or recipient of a particular payment where that payer or recipient was Mr Weston or one of his companies.  She explained that that was because, if such identification were to be made, the company or person identified was likely to be sued by Leeds in a vexatious attempt to seek redress from them. 

(iii)      She produced a spreadsheet analysis ("the spreadsheet") which she said she had prepared for the purposes of the affidavit from the bank statements.  On the spreadsheet, family members and companies owned by Mr Weston and his family were treated and listed as a single entity.  

(iv)      She also produced the original schedule ("the schedule") which had been produced to Leeds on 7th August, 2005, and which showed the development of the debt to the first plaintiff in the sum of £190,400. 

(v)       As to the current position, she said that Admatch had no assets other than anything it might recover from Leeds in terms of costs awards and she listed the creditors, totalling £1,327,897.50 exclusive of the amount owed to Leeds (which she estimated at £539,000 after allowance for costs, interest etc.).  Of the other creditors, just under £800,000 was shown as due to Mr Weston and just under £460,000 was due to companies within Mr Weston's group.  She exhibited invoices in respect of some of the claims.  These figures were transposed into an estimated balance sheet as at 15th November, 2011, showing a deficit of £1,866,881. 

17.      By letter dated 5th December, 2011, to Admatch, Sinels stated that Mrs Weston's affidavit did not comply with the August order and indicated that all rights were reserved should the matter not be remedied by return. 

18.      On 7th December, 2011, Mr Weston sent an e-mail stating that he and his wife were confident that the affidavit fully complied with the Court's order but asking for clarification of any particular problem which was alleged. 

19.      On 9th December Sinels replied raising a number of matters but referring in particular to the redaction of the bank statements.  The letter went on to state that they were instructed to issue contempt proceedings against Admatch and against Mr and Mrs Weston.  That representation was duly issued a few days later on 15th December. 

20.      The issue of the representation had the consequence that Mr and Mrs Weston belatedly sought legal advice and instructed Baker and Partners to act for them personally, although Admatch remains without legal representation.  The matter came before me for a directions hearing on 6th February, 2012, at which time I directed Leeds to specify within 7 days the exact respects in which it was alleging that the Respondents were in breach of the August order and gave other directions to bring the matter before the Court for hearing on 29th March, 2012.  Advocate Redgrave made it clear that certain advice was being tendered and further disclosure could be expected. 

21.      By letter dated 6th March, 2012, from Baker and Partners to Sinels certain further documents were supplied and it was stated that they would be exhibited to a supplementary affidavit to be sworn by Mrs Weston.  In particular, the bank statements now showed all payments to and from Mr Weston but all payments to and from any of Mr Weston's companies were still redacted so that individual companies could not be identified. 

22.      As already mentioned, the contempt allegation was due to be heard on 29th March, 2012.  On 28th March Mr and Mrs Weston filed affidavits ("Mrs Weston's March affidavit", "Mr Weston's March affidavit", and "the March affidavits" respectively).  The main affidavit was again that of Mrs Weston.  She began by stating that, having now appointed Advocate Redgrave, she was aware that her November affidavit may have been deficient and she said that, if the Court considered this to be so, she and her husband apologised and assured the Court that it was an inadvertent and unintentional mistake.  

23.      Her affidavit then went into great detail as to the complexities of trying to reconstruct Admatch's affairs in the absence of records but the essential differences from the November affidavit were as follows:-

(i)        An amended spreadsheet was produced which Mrs Weston said had resulted from further detailed investigation.  This purported to show that the £190,400 was essentially retained by Mr Weston personally.  The schedule now distinguished between Mr Weston and his companies but there was still no distinction between or naming of the individual companies. 

(ii)       Certain redactions on the bank statements had now been removed so as to show those payments which were to and from Mr Weston.  Payments to or from one of Mr Weston's companies were still redacted with the payee or payor being shown simply as 'family company'. 

(iii)      For the first time the affidavit exhibited some correspondence as envisaged in the August order.  There were some 15 items in all, mostly related to correspondence with the Comptroller of Income Tax or with ICN Toole and Co ("Toole") the accountants to Admatch.  In particular, reference was made to a letter dated 25th September, 1991, from Admatch to the Income Tax Department in which it was stated that the company had so far incurred losses which had been met by loans from Mr Weston totalling £465,000.  The letter asked for confirmation that the company need not incur the expense of preparing annual accounts until profitability was reached.  The Income Tax Department replied on 3rd October, 1991, confirming that, in view of the information provided, the submission of accounts from the date of commencement could be withheld until such time as there appeared to be the likelihood of a trading profit.  That confirmation was repeated in a letter from the Income Tax Department dated 12th December, 2001, although it was stated that Admatch still had to make tax returns reflecting that the company continued to receive no income.  The affidavit also exhibited income tax assessments for all relevant years up to 2008 showing Admatch's income (i.e. profit) as nil and the tax payable as nil. 

24.      The matter came before the Court on 29th March.  Quite understandably, in view of the late filing of the further affidavits by Mr and Mrs Weston, Leeds asked for an adjournment in order to consider whether Admatch was still in default in complying with the August order.  However the Court was requested to clarify the August order because there was disagreement between the parties as to its effect.  In a judgment dated 29th March, 2012, the Court held as follows:-

(i)        It was not open to the Respondents to redact any of the bank statements and they must therefore produce un-redacted statements identifying all the family companies. 

(ii)       Contrary to Leeds' contention, the order did not require the production of bank statements of other companies in the group save in respect of three payments which had been identified as having been made to Leeds by other group companies on behalf of Admatch. 

(iii)      The Court noted that remarkably little correspondence had been disclosed by the Respondents.  The Court stated that the obligation was clear and the Respondents must exhibit correspondence related to the financial position of Admatch or the first three items referred to in the order.  An example was given of a letter of instruction to a bank relating to one of the bank transfers.  That was a related piece of correspondence and must be disclosed. 

(iv)      The Court also directed the swearing of an affidavit exhibiting all the unredacted bank statements of Admatch from 1st January, 1996, explaining the development of the loan between Mr Weston and Admatch and exhibiting anything which supported the assertion that the loan was owed to Mr Weston rather than to the company ("Avancement Ltd") to which it was owed in 1995.  The Court went on to warn the Respondents that non-compliance with the orders would be considered a serious breach.  It was ordered that further information had to be produced by 22nd May, 2012. 

25.      The exact terms of the order ("the March order") were as follows:-

"Now this day, upon hearing advocates for the Representor, the Second and the Third Respondent, the First Respondent not represented this day, the Court, for reasons set out in a judgment delivered by the Bailiff:-

1. adjourned the application in respect of the contempt allegation;

2. ordered, with regard to the clarification in respect of the Original Orders, that by the 22nd May, 2012, the Respondents shall file and serve:

(i)        un-redacted Admatch bank accounts and identify the companies the Respondents have previously identified as a, d (sic), c, d, and e;

(ii)       bank statements in respect of the three identified payments not made directly by the First Respondent, disclosing the relevant page and or pages of the relevant bank account, the name of the account and the account number, save that all other entries on the relevant page are not related to the said payments may be redacted;

(iii)      all correspondence relating to the financial position of Admatch for the period 1st January, 2004, to date, including such correspondence relating to the first three items in the list as set out at paragraphs (a), (b) and (c) above;

(iv)      an affidavit exhibiting all the bank statements of Admatch from the 1st January, 1996, explaining the development of the loan and exhibit anything which supports the assertion that the loan is now owed to the Second Respondent rather than to the company to which it was owed in 1995;

3. warned the Respondents that non-compliance to the orders hereinabove shall be considered a serious breach; and

4. reserved costs to another day."

26.      In compliance with that order, Mr and Mrs Weston filed further affidavits on 7th June ("Mrs Weston's June affidavit", "Mr Weston's June affidavit", "the June affidavits"). 

27.      Mrs Weston's June affidavit exhibited unredacted bank statements and an amended spreadsheet showing the payments to and from individual companies.  The affidavit also exhibited 43 items of correspondence which, for the most part, were related to instructions to and acknowledgments from the bank in relation to payments disclosed in the bank statements.  The affidavit also produced an extract from Avancement Limited's annual accounts for the five year period 1987 - 1991 to demonstrate the transfer of the Admatch loan from Avancement to Mr Weston on 31st December, 1991, (as opposed to 1995 as indicated in her March affidavit). 

28.      On behalf of Leeds, Sinels wrote on 31st July, 2012, indicating certain respects in which they believed that the June affidavits still did not comply with the August order but this was rejected by Baker and Partners by letter dated 29th August.  

29.      On 3rd September Leeds issued a summons to bring the matter back to court for the Court to consider the question of contempt, the Court having adjourned the matter on 29th March.  On 5th September, Advocate Redgrave referred to what the Court had said in February, namely that in a matter of contempt representors must specify exactly the respects in which a respondent is said not to have complied with the court order, and asked for details.  Sinels replied on 11th September giving six broad headings of alleged contempt.  The hearing of the summons was fixed for 20th/21st December, 2012.  On 21st September, Advocate Redgrave wrote seeking confirmation that the letter of 11th September would stand as the notice of the alleged contempt and that no further items would be added without seeking the leave of the Court.  The letter pointed out that there appeared to be no complaints of continuing contempt.  Sinels replied on 24th September saying that they would take instructions.  Despite chasers from Advocate Redgrave, nothing further was heard from Sinels until 29th November when they said they would be producing particulars of contempt; this they did on 3rd December, demanding a response from the Respondents by 6th December.  

30.      On the application of the Respondents, I granted an adjournment on 6th December because of the late delivery of the particulars.  It is in those circumstances that the matter came before the Court on 14th/15th February, 2013. 

Contempt of Court

31.      There was no dispute between the parties as to the applicable law.  As it is put in Borrie & Lowe; the Law of Contempt (3rd edition) ("Borrie") at 555:-

"The administration of justice can obviously only be effective if it has the means to enforce court judgments or orders and it is in part upon the law of contempt that such enforcement depends.  It is a contempt to disobey a judgment or order either to do a specified act within a specified time or to abstain from doing a specified act.  ... Further, it is a contempt not to comply with an order for interrogatories, or discovery, or inspection of documents ..."

32.      A breach of an order does not have to have been done intentionally in order to amount to a contempt.  This was decided in this jurisdiction in Taylor-v-Chief Officer of States of Jersey Police [2004] JLR 494 where the Court said this:-

"30. .... We are in no doubt that Jersey law should adopt the same approach as English law.  It is of the first importance that orders of the court should be obeyed.  This is not for the purpose of upholding the court's dignity.  The court makes orders because it believes them to be in the interests of justice.  If parties are to be able to rely upon the court resolving disputes between them, they must have confidence that orders will be enforced.  If it is open to a party to argue that although he has failed to comply with the court's order he did not mean to breach the order, there would be endless scope for argument and for parties to try and get out of their obligation to obey the order.  .... Far better for there to be an absolute rule that orders must be obeyed with mitigation being available as necessary where the breach was not deliberate.  The policy considerations which have led the English courts to adopt the approach which they have are equally applicable in Jersey. 

31 In summary, the question of whether or not a contempt by reason of a breach of a court order has been committed involves an essentially objective test requiring the determination of whether or not the alleged contemnor has acted in a manner constituting a breach of the order.  If he has then a contempt will be established regardless of whether or not he acted contumaciously or with the intention of breaking the order, although whether any, and if so what, punishment ought to be imposed on him will or may be materially dependent on considerations of this sort."

33.      Because contempt of Court may attract punishment such as imprisonment or a fine, it must be proved to the criminal standard i.e. beyond reasonable doubt.  Skinner-v-Le Main [1990] JLR N13B. 

34.      Furthermore, because contempt involves possible punishment, a person is not to be held in contempt for breaching a court order unless that order is unambiguous as to what is required of him.  See Iberian Trust Limited-v-Founders Trust and Investment Co Limited [1932] 2 KB 87 at 95 and the passage in Borrie at 560 - 561. 

35.      This Court has not previously had to consider the position of directors of a corporate entity which is in breach of an order.  The position in England is described in Halsburys Laws of England Volume 9(1) reissue, Civil Contempt, at para 458 as follows:-

"A judgment or order against a corporate body may be enforced by an order of committal against the directors or other officers of the corporation.  A director or other officer who is aware of the terms of such a judgment  or order (or of an undertaking given by the corporation) may be committed for contempt of court if he wilfully fails to take adequate and continuing steps to ensure compliance, notwithstanding that he did not actively participate in the breach.  ..."

36.      Borrie puts the position as follows at page 571:-

"In the light of these cases the current position seems to be that no action can be taken against a director or officer personally for breach of an order against a company, unless

(i)        the director knows of the order, and

(ii)       he either actively assisted in the breach or wilfully failed to take steps to ensure that the order was obeyed."

In our judgment there is no good reason for Jersey law to take a different course and we hold therefore that these extracts reflect the law of Jersey. 

37.      On the facts of the present case, we are quite satisfied that Mr and Mrs Weston are liable for any contempt that may have been committed by Admatch.  Mr Weston was at all material times the sole director of Admatch and was aware of the order.  He was responsible for ensuring that Admatch complied with the August order.  Mrs Weston was also aware of the order and was the director charged with the primary responsibility of swearing the affidavit in order to comply with the order.  It is perfectly apparent that the requirements for finding a director liable for contempt as described in the two passages referred to above are met in the present case in respect of both Mr and Mrs Weston.  

38.      Advocate Sinel argued that it would also be a contempt of court for the Respondents to adduce false or misleading documents and much of his energy was devoted to showing inconsistency between the documents produced now and things said on other occasions.  No authority was produced in support of this proposition but we are content to assume, for present purposes, that a deliberate lie or the production of a forged document or one which is known to be false would amount to a contempt of court; but of course the Court would have to be satisfied beyond reasonable doubt that the respondent was lying or knowingly producing a forged or false document when purporting to comply with the order.  The mere fact that something said in response to the order was inconsistent with something said on a previous occasion or that a document produced was inconsistent with a document produced on another occasion would be wholly insufficient to prove contempt.  See Re Bramblevale Limited [1970] Ch 128.  The Court would have to be satisfied beyond reasonable doubt that it was the version put forward in response to the order that was a lie or false; a conclusion that one or other of the versions put forward was false would be insufficient.  

39.      With that introduction we turn to consider the specific allegations of contempt which Leeds eventually summarised in its amended particulars dated 6th December, 2012.  We propose to take each of the headings of the particulars in turn and make our findings, which we do with the benefit of having seen and heard Mr and Mrs Weston give evidence and be subject to cross-examination. 

(i) Non-compliance with court imposed deadlines

40.      It is accepted that the November affidavit was only served on 22nd November, 2011, i.e. some seven days after the deadline of 15th November.  However, no complaint is made by Leeds of that short delay.  What is said is that the March affidavits (filed and served on 28th March, 2012,) were over four months late to the extent that they produced information which was new and which should have been in the November affidavit.  Finally, Leeds points out that on 29th March the Court ordered that further affidavits with exhibited documents be filed and served by 22nd May.  The June affidavits were not filed and served until 7th June, which was some two weeks late.  Given that these were meant to be in compliance with the August order, they were nearly seven months late.  It is however the case that all the exhibits to the June affidavits (except one) were served in time on 22nd May although the affidavits themselves and the remaining exhibit were not served until 7th June. 

41.      The Court accepts that the affidavits were late as described in the preceding paragraph but the gravity of such lateness has to be viewed in the context of the remaining allegations of contempt, to which we now turn.  

(ii) Non-compliance with paragraph 1(a) of the August order - accounts and financial statements

42.      Leeds accepts that a person cannot disclose what does not exist and accordingly, if no accounts or financial statements exist, there can be no contempt for failing to produce them.  That is clearly correct.  However, Leeds contends that the Court should find that they do exist.  Advocate Sinel points out that Admatch was required to keep accounts in accordance with Article 103 of the Companies (Jersey) Law 1991 and a failure to keep accounts in relation to a company which becomes insolvent may render a director liable to criminal sanctions as specified in Article 19(6) of the Bankruptcy (Désastre)(Jersey) Law 1990 ("the Désastre Law").  He referred also to the fact that Mr Weston has held a number of directorships in Jersey for many years and would be familiar with the requirements of the law and has employed the services of accountants. 

43.      Mr and Mrs Weston pointed to the exchange of correspondence with the Income Tax Department whereby the Department had agreed that accounts need not be submitted (see para 23(iii) above).  The company had been essentially dormant, apart from the activity in 2004/5 in connection with Leeds.  The fact was, they said, that no accounts had been prepared.  

44.      In the light of the evidence produced to it, the Court cannot possibly be satisfied beyond reasonable doubt that there are accounts and financial statements which exist but have not been produced; on the contrary all the evidence points in the direction of the fact that there are no such accounts.  It follows that the Court does not find contempt of court under this heading.  

45.      Advocate Sinel goes on to argue that, should the Court find that no accounts exist, the Court should take their lack of existence as an 'aggravating factor'.  The Court had some difficulty in following this.  The fact that Mr Weston may be in breach of his duties under the Companies Law or the Désastre Law certainly renders him liable to criticism, but it is hard to see how one can have an aggravating factor of a non-breach of a court order. 

(iii) Non-compliance with paragraph 1(b) of the August order - all statements and records in respect of all bank accounts held in the name of Admatch or for its benefit

46.      The November affidavit exhibited all of the relevant bank statements so that each payment into or out of the account could be identified by amount.  However, the statements were redacted so as to obscure the identity of any payer or recipient where such was either Mr Weston or one of his companies.  The amount could still be seen and it was made clear that the payment was to or from Mr Weston or one of his companies but the redactions meant that one could not identify the particular payer or recipient.  Mrs Weston's March affidavit reduced the redactions to some extent in that payments to or from Mr Weston were now identified; but payments to or from any of his companies were simply listed as that and accordingly the name of the particular company could still not be ascertained. 

47.      Mr and Mrs Weston contended that they did not intend to breach the August order by making these redactions.  They believed it was not necessary to identify these particular payers or recipients.  Their reason for making the redactions was that they believed that identifying the particular companies would inevitably lead to Leeds taking action against those companies; action which the Westons believed to be wholly unjustified and which would simply be part of Leeds' campaign to drive them into submission by weight of litigation.  

48.      The Court was asked to rule on the issue of redactions at the hearing on 29th March, 2012.  The Court said this at paragraph 4 of its judgment:-

"In our judgment it is perfectly apparent that it is not open to the respondents to start concealing some of the information in those bank statements. If they wish to do that they should have applied at the time. In our judgment it is clearly relevant for the purposes for which the Order was made that the identity of entities or persons to whom some of Admatch's monies were paid be identified. Accordingly we make it clear and direct that the respondent's must file unredacted bank accounts and they must in so doing identify the companies they have described as companies A, B, C, D and E."

49.      We remain firmly of that view.  It is quite apparent that the whole purpose of the August order was, amongst other things, to see if it could be ascertained where the £190,400 had gone.  It followed that the identity of the recipients of money from Admatch was clearly relevant.  In evidence, Mrs Weston said that she made the redactions on the instructions of Mr Weston and he agreed that that was so when giving his evidence.  We have no hesitation in concluding that Mr and Mrs Weston breached the August order by redacting the bank statements both in the November affidavit and in the March affidavits.  

50.      However, that contempt was purged upon the filing of the June affidavits, when unredacted bank statements were exhibited.  Furthermore, we accept that the redacted bank statements (even in the November affidavit) identified the sums which had been paid to Mr Weston and/or one of his companies.  There was no attempt to hide the overall benefit which Mr Weston and his companies as a whole had received.  Nevertheless it was a material contempt because it meant that the individual recipients of monies from Admatch could not be identified. 

(iv) Non-compliance with paragraph 1(c) of the August order - all Admatch's accounting ledger information including invoices, receipts and vouchers

51.      Leeds has failed to produce any evidence which satisfies us that there are any contemporaneous book-keeping records or ledgers which exist but have not been disclosed.  Although the inadequacy of the record-keeping by Mr and Mrs Weston may be a ground for criticism, it does not lead to the conclusion that they are in breach of the August order.  We find that the only contemporaneous ledger was the schedule produced in 2005 to show the balance of £190,400 owed to Leeds.  That was disclosed in the November affidavit.  Advocate Sinel was highly critical of the column in that schedule headed "LUFC overnight balance in Admatch bank a/c".  He said that this gave the impression that the monies received by Admatch and due to be paid on to the first plaintiff were held in a bank account in Admatch's name, whereas it was clear from the bank statements that monies had been passed around Mr Weston's group of companies and the balance in the Admatch account was at all material times minimal.  Mr and Mrs Weston accepted in evidence that this was so and that the heading was misleading.  The true position, they said, was that the balance shown in the schedule was available to Admatch in order to pay the first plaintiff and could be called upon at any time.  This was in fact what had happened when Admatch made its various payments of monies to the first plaintiff.  Monies were called back from Mr Weston's other companies so that payments could be made to the first plaintiff.  Indeed, in three cases, the other companies made the payments direct to the first plaintiff on behalf of Admatch. 

52.      In our judgment, whether the heading is misleading or not - and we accept that it is - is beside the point.  Mr and Mrs Weston have supplied the schedule (which was prepared in 2005) in compliance with the order.  Furthermore, the explanation they have given as to how the money was used is consistent with the explanation that Mr Weston gave back in 2009 as summarised in the emphasised passages referred to at paragraph 11 above. 

53.      Subject to what is set out below at paragraph 55(ii), we do not find that the Respondents have failed to disclose accounting ledger information in breach of paragraph 1(c).  

(v) Non-compliance with paragraph 1(d) of the August order - all related correspondence

54.      No correspondence was produced in the November affidavit.  The excuse given by Mr and Mrs Weston is that the word 'relevant' had been used in the judgment of the Court in August and that Mr and Mrs Weston had not noted that the order itself was in slightly different terms and referred to 'related correspondence'.  We are not impressed with this excuse.  On any view, the correspondence to and from the bank relating to payments into and out of the account was relevant.  The reason that it was withheld was because such correspondence might have disclosed the identity of the payees whose identity had been redacted in the bank statements themselves.  We find that the November affidavit was in breach of the order in failing to disclose related correspondence.  However, Leeds has failed to prove that, by the time of the June affidavits, all related correspondence had not been produced.  Any contempt had therefore been purged and Mr and Mrs Weston have apologised in the June affidavit for any previous breach. 

Is there any continuing breach?

55.      During the course of his submissions the Court asked Advocate Sinel to summarise the documents which he contended were still to be produced (setting aside those cases where the Court has found that documents do not exist).  They can be summarised as follows:-

(i)        Minute book - Advocate Sinel contended that the minute book for Admatch should have been disclosed because it must contain minutes which would assist in establishing the financial position of the company.  Mrs Weston was recalled at a late stage to give further evidence about this.  She said that she had inspected the minute book and it contained virtually nothing because minutes had not been kept.  That may be further confirmation of very poor compliance with proper procedures by Mr and Mrs Weston but we cannot possibly on the evidence find beyond reasonable doubt that the Respondents have failed to disclose a document relevant to the financial position of the company by not disclosing the minute book. 

(ii)       Cheque book stubs - In cross-examination, Mrs Weston said that there were cheque stubs of Admatch and that there was some writing on those cheque stubs.  In our judgment, the cheque stubs should have been disclosed.  Where a cheque has been issued, the bank statements show the cheque number but do not show the identity of the payee of the cheque.  A cheque stub would assist in this process.  It is clearly therefore a material document in disclosing the full financial position of Admatch and what has happened to the monies.  

(iii)      Tax returns - Although nil tax assessments by the Income Tax Department have been disclosed for all relevant years, Admatch's tax returns have not been disclosed.  Mr and Mrs Weston assert that they are not in their possession.  We accept that they could have made greater efforts than they did to obtain copies of the returns either from the Comptroller of Income Tax or from Toole; but the question arises as to whether a failure to disclose tax returns is a breach of the order.  Whilst someone who was trying hard to give the maximum amount of information would no doubt have provided these as well if possible, we remind ourselves that contempt is not to be found proved unless the order is unambiguous.  We do not think that a tax return unambiguously falls within the order.  A tax return is a document prepared for the purposes of income tax and it is a consequence of the financial position of the company.  We do not think that it unambiguously falls within paragraphs (a) to (d) or that it unambiguously must be produced in order to show the financial position of the company.  In any event, the Respondents have produced the tax assessments showing nil profit and it can therefore be taken that the returns would show likewise.  We know that the returns would not have annexed any accounts of Admatch because of the exchange of correspondence between the Comptroller and Mr Weston referred to earlier (see paragraph 23(iii)).  

(iv)      Information concerning other group companies - Advocate Sinel protested that the Respondents had not disclosed any book-keeping accounts or bank statements of any of Mr Weston's companies to show the corresponding receipt or payment of monies by such companies, so as to support the claimed payments into or out of Admatch's bank accounts.  In our judgment, by no stretch of the imagination can the August order be taken to require the production of records belonging to other companies owned by Mr Weston. 

(v)       Enquiries of third parties - With reference to the concluding section of the August order, Advocate Sinel contended that Mr and Mrs Weston had not made sufficient enquires of third parties to obtain documents falling within the terms of the order.  We do not find this to be the case.  In relation to tax matters, we have already held that tax returns did not fall within the order and accordingly there was no obligation on Mr and Mrs Weston to obtain these from Toole or from the Comptroller.  Next, Advocate Sinel suggested that Mr Weston should have made enquiries of Cope Industrial Holdings Limited (one of his associated companies) in connection with the payment of £20,000 from Mr Weston's personal account to Cope on 17th October, 2005.  We do not agree.  We do not see how a payment from a personal account of Mr Weston to another company can be said to fall within the category of documents which had to be disclosed under the August order.  Advocate Sinel also submitted that further enquiries should be made of Bartfields and Ford and Warren to justify the amounts shown as outstanding to them as creditors in the November affidavit.  We do not agree.  The basis upon which they were claimed as creditors was described in the affidavits.  Although someone trying to be as helpful as possible might have taken steps to obtain invoices, we are not satisfied that Mr and Mrs Weston are in breach of the order by not approaching Bartfields and Ford and Warren for further information.  Finally, Advocate Sinel argued that Admatch should have disclosed the agreement with Barclays Merchant Services ("BMS") concerning the provision of credit card facilities and that, if Admatch was not in possession of such an agreement, it should have obtained a copy from BMS.  Again, we do not see that this was unambiguously necessary in order to comply with the order.  

(vi)      Provision of false or misleading information - Advocate Sinel devoted considerable energy to seeking to show that Mr and Mrs Weston had made inconsistent statements about Admatch's financial position and the destination of the £190,400 on previous occasions.  He therefore invited us to draw the inference that what was now being put forward was false and misleading.  In our judgment, having listened to the cross-examination, we have to say that Leeds has come nowhere near establishing to the relevant standard that Mr or Mrs Weston are now lying in what they have said to the Court on this occasion or are knowingly putting forward false or misleading documents.  Leeds will no doubt be able to use any alleged inconsistencies during the course of the on-going proceedings in England where Mr Weston personally is being sued by Leeds in respect of the missing £190,400.  But that is quite different from inviting this Court to find beyond reasonable doubt that the information which has been supplied pursuant to the August order is false or misleading.  In that respect, one specific point made by Advocate Sinel was that the list of creditors in the November affidavit is unlikely to withstand scrutiny.  However, the affidavits make it clear that, for example, in relation to Ford and Warren and Bartfield, the amounts claimed to be due are estimates by Mr and Mrs Weston.  Furthermore the basis of the substantial claim from St Helier Investments Limited with supporting invoices for the provision of the services of Mr and Mrs Weston in connection with this litigation is clearly stated and indeed were the subject of comment by the Royal Court and the Court of Appeal in the security for costs application ([2008] JLR 287 at paragraphs 38 - 47 and [2009] JLR 186 at paragraphs 6 and 29).  Whether, should it become necessary, it will be found that St Helier (an associate company of Mr Weston) is in fact owed over £400,000 for the provision of such services is open to question.  But Mr and Mrs Weston assert that that is Admatch's position and the Court cannot possibly hold on the basis of the evidence before it that it is satisfied beyond reasonable doubt that this is a deliberately false statement on their part. 

Summary

56.      For the reasons we have given, we find that Admatch and Mr and Mrs Weston were in contempt of court by redacting the bank statements as produced in the November and March affidavits and by failing to disclose related correspondence.  However, that contempt was purged by production of the June affidavits.  They were also late in filing their affidavits as described at paragraph 41.  Following the filing and serving of the June affidavits, there was no continuing breach of the August or March orders save in the very minor respect of the failure to produce the cheque stubs.  We propose to order that they be disclosed within a specified period, upon which we shall hear the parties. 

57.      Following the formal issue of this judgment, we shall hear the parties on what penalty, if any, should be imposed on Mr and Mrs Weston for the contempt of court which we have found proved.  We shall also hear the parties in relation to the costs of these contempt proceedings and different aspects thereof, bearing in mind our finding that the breaches we have described existed to June 2012 but that thereafter there was (apart from the minor aspect of the cheque stubs) no continuing breach. 

Authorities

Leeds-v-Admatch [2011] JRC 159.

Leeds Utd-v-Admatch [2009] JRC 023.

Borrie & Lowe; the Law of Contempt (3rd edition).

Taylor-v-Chief Officer of States of Jersey Police [2004] JLR 494.

Skinner-v-Le Main [1990] JLR N13B.

Iberian Trust Limited-v-Founders Trust and Investment Co Limited [1932] 2 KB 87.

Halsburys Laws of England Volume 9(1) reissue.

Re Bramblevale Limited [1970] Ch 128.

Companies (Jersey) Law 1991.

Bankruptcy (Désastre) (Jersey) Law 1990.

Leeds Utd-v-Admatch [2008] JLR 287.

Leeds Utd-v-Admatch [2009] JLR 186.