Hewlett Packard Enterprise Company & Ors v Sage & Anor

Factual and Procedural Background

In November 2016, the Applicants, collectively referred to as "HPE", applied to commit the First Defendant ("Mr Sage") for contempt of a Freezing Order and a Search Order issued by Coulson J on 2nd December 2015. HPE is a global manufacturer and seller of computer networking and storage products. It alleges that Mr Sage and a Second Defendant conspired to defraud HPE by falsely representing ownership of large solar energy facilities through entities collectively called "Space Energy". The claim involves approximately $17.5 million, but the court refrained from reaching conclusions on the underlying claim's merits. The Freezing and Search Orders, served on Mr Sage on 3rd December 2015, had worldwide effect and included non-dissipation and disclosure provisions, as well as permission to search Mr Sage's premises.

Mr Sage operated Space Energy from Dubai until around 2013, after which he established Sage International, a company used for his entrepreneurial and motivational speaking activities, including the "Millionaire Business School" seminar. Mr Sage transferred legal ownership of Sage International to Ms Thorpe in June 2014, prior to their engagement, but retained significant control. Mr Sage left Dubai in early 2015 and moved to the UK with Ms Thorpe, allegedly to avoid creditors and tax authorities. On 3rd December 2015, the day the Orders were served, Mr Sage was searched and payments were made from his bank and Paypal accounts that HPE alleges breached the Freezing Order.

The court considered witness evidence from HPE's representatives and Mr Sage, Ms Thorpe, and Ms Bromige, assessing credibility and control over Sage International. The judgment addresses the engagement ring issue, ownership and control of Sage International, dissipation of assets, and other alleged contempts.

Legal Issues Presented

1. Whether Mr Sage was in contempt of the Freezing Order and Search Order issued on 2nd December 2015.
2. Whether Mr Sage breached obligations regarding disclosure, non-dissipation of assets, and delivery-up of documents and items.
3. Whether the purported transfer of Sage International to Ms Thorpe was a sham and if Mr Sage retained beneficial ownership and control.
4. Whether payments made from Mr Sage's accounts on 3rd December 2015 constituted dissipation in breach of the Freezing Order.
5. Whether Mr Sage knowingly concealed the engagement ring within the scope of the Search Order.
6. The appropriate sanction for any contempt found.

Arguments of the Parties

Applicants' (HPE) Arguments

• Mr Sage and the Second Defendant conspired to defraud HPE via fictitious solar energy facilities.
• Mr Sage breached the Freezing and Search Orders by dissipating assets and failing to disclose company ownership and bank accounts.
• Mr Sage lied about the existence and whereabouts of an expensive engagement ring within the scope of the Search Order.
• The purported transfer of ownership of Sage International to Ms Thorpe was a sham to evade the Freezing Order.
• The payments made on 3rd December 2015 were deliberate breaches designed to dissipate assets.
• Mr Sage’s and Ms Bromige’s evidence was evasive or fabricated, and Mr Sage colluded with Ms Thorpe to mislead the court.

First Defendant's (Mr Sage) Arguments

• Mr Sage denied deliberate breaches, claiming no instructions were given for the payments on 3rd December 2015.
• He asserted Ms Sampson authorized some payments independently.
• He claimed the engagement ring was either not present or had been pledged to a third party to settle debts.
• He argued that some breaches were errors or misunderstandings, not deliberate contempt.
• Mr Sage submitted he was a man of good character who made a "dreadful error" on the day and that committal to prison would hinder preparation for the main trial.
• He later complied with Orders by providing email accounts, passwords, and bank statements.

Table of Precedents Cited

Court's Reasoning and Analysis

The court applied the criminal standard of proof, requiring that each element of contempt be established beyond reasonable doubt: knowledge of the Orders, breach, and knowledge of breach. The court found Mr Sage was aware of the Orders, having been explained their terms by the Supervising Solicitor, and that he deliberately breached them.

Regarding the engagement ring, the court accepted that Mr Sage gave the ring unconditionally to Ms Thorpe but found, on irresistible inference, that the ring was within the scope of the Search Order and that Mr Sage lied about its existence and whereabouts. The purported transfer of the ring to a third party to settle debts was rejected as a fabrication. Although the ring was likely worn by Ms Thorpe and thus not physically on the premises, it was within the scope of the Order, and Mr Sage's lies aggravated the contempt.

On beneficial ownership, the court concluded that despite the legal transfer of Sage International to Ms Thorpe, this was a sham. Mr Sage retained beneficial ownership and control, with Ms Thorpe acting as his nominee. This conclusion was supported by inconsistent and evasive evidence from Mr Sage and Ms Bromige, the lack of commercial rationale for the transfer, and documentation indicating Mr Sage’s ongoing control.

The court found that payments totaling £25,000 from Mr Sage's Lloyd's Bank account and approximately $112,500 from his Paypal account on 3rd December 2015 were made in breach of the Freezing Order. Mr Sage's denial of authorizing these payments was deemed inherently implausible, and evidence that the payments were pre-authorized or made in the ordinary course of business was rejected. The court found Ms Bromige’s evidence fabricated and inferred that Mr Sage instructed the payments to dissipate assets.

Additional contempts included failure to disclose bank accounts and email accounts, denial of access to the Dropbox account, and failure to provide passwords and documents as required. These breaches were deliberate and flagrant.

In assessing sanction, the court considered Mr Sage’s character and submissions but found no remorse and a pattern of deliberate non-compliance. The multiple breaches and lies warranted a custodial sentence. The court rejected the suggestion that the breaches were a "dreadful error" and refused to suspend committal to prison despite the impending main trial.

Holding and Implications

The Court’s final decision was to commit Mr Sage to prison for 18 months for contempt of the Freezing Order and Search Order. The breaches were deliberate, serious, and compounded by dishonesty and attempts to mislead the court.

The direct effect is that Mr Sage is subject to immediate incarceration, emphasizing the Court’s commitment to uphold its Orders and the rule of law. No new legal precedent was established; rather, the decision reaffirmed established principles on contempt, sham transactions, and the criminal standard of proof in contempt proceedings.