Sage v Hewlett Packard Enterprise Company & Ors

Factual and Procedural Background

The appeal concerns the conviction and sentence of the Appellant for nine counts of civil contempt of court related to breaches of a freezing order and a search order initially made by Coulson J on 2 December 2015 and subsequently continued with variations by Sweeney J on 16 December 2015. The contempt findings arose from failures to comply with these orders, specifically concerning asset disclosure and conduct during a search of the Appellant's residence. The Appellant was sentenced to 18 months' imprisonment on 20 January 2017 by Jay J after a three-day hearing. The Appellant appealed both conviction and sentence, a right granted without permission under CPR 52.3(1)(a)(i).

The claimants, collectively referred to as "HPE," are four companies within the Hewlett Packard group. The Appellant initially represented himself on appeal after filing a late notice but later obtained public funding and counsel representation. The appeal was heard on 11 May 2017, resulting in a partial allowance of the appeal concerning the alleged failure to disclose or deliver up an engagement ring (the "Engagement Ring issue") and a reduction of the sentence from 18 to 12 months. The appeal against other contempt findings was dismissed.

Background facts include the Appellant's prior residence and business activities in Dubai, where he owned a company called Space Energy. HPE alleged that the Appellant and a co-defendant conspired to defraud HPE by fabricating ownership of solar energy facilities to obtain discounts. Proceedings were initiated in England in December 2015. The freezing and search orders were made without notice based on a strong prima facie case of fraud.

The Appellant had transferred legal ownership of another company, Sage International, to a third party (referred to as Ms Thorpe), but the court found he retained beneficial ownership and control. The engagement ring at issue was given by the Appellant to Ms Thorpe in late 2014. The search order authorized a search of the Appellant's Leicester property, including delivery up of valuable jewellery and documents. The search was executed on 3 December 2015, during which payments were made from the Appellant’s bank accounts that HPE alleged breached the freezing order.

The judge accepted the evidence of the search party and disbelieved the Appellant and his associates on key points. The judge found the Appellant to be untruthful and prepared to lie to avoid consequences. The judge found Ms Thorpe was not a convincing witness and rejected her evidence about the engagement ring’s disposition.

Legal Issues Presented

1. Whether the Appellant was guilty of contempt for failing to comply with specific provisions of the freezing order and search order, including failure to disclose or deliver up the engagement ring.
2. Whether the Appellant’s conviction on the Engagement Ring issue was properly founded given the discrepancies between the grounds of committal and the judge’s findings.
3. The appropriate sentence for the contempt found, particularly considering the gravity of the breaches and the Appellant’s conduct.
4. Whether the Appellant’s beneficial ownership and control of Sage International could be determined at the committal hearing to the criminal standard of proof.
5. Whether payments made from the Appellant’s accounts after service of the freezing order constituted dissipation of assets in breach of the order.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that he was not in control or possession of the engagement ring at the time of the search, as it belonged unconditionally to Ms Thorpe.
• He argued that the ring was not located on the premises within the meaning of the search order if it was worn or held by a third party.
• The Appellant denied authorizing the payments made from his accounts on the day of the search, attributing them instead to Ms Thorpe or others.
• He challenged the finding of beneficial ownership of Sage International, suggesting this issue should be determined at trial rather than on committal proceedings.
• He argued that the alleged breaches related to the engagement ring were not properly pleaded in the committal grounds, constituting a procedural irregularity.

Respondents' (HPE's) Arguments

• HPE submitted that the Appellant breached the freezing and search orders by failing to disclose or deliver up the engagement ring and making payments from frozen accounts.
• They contended that the ring was located on the premises and that the Appellant was responsible for its concealment or nondisclosure.
• HPE relied on the evidence of the search party and other witnesses to establish the Appellant’s control over Sage International and his involvement in dissipation of assets.
• They argued that procedural irregularities regarding the engagement ring grounds did not cause injustice and that the Appellant was aware of his obligations under the orders.
• HPE opposed any late amendment to the grounds of committal to include breaches not originally alleged.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined the grounds of committal and the judge's findings, identifying a procedural irregularity regarding the Engagement Ring issue. The judge found breaches of certain provisions of the search order not pleaded in the amended grounds. The court emphasized that committal proceedings are quasi-criminal and require the contemnor to have clear notice of the charges. The failure to plead the specific breaches found by the judge meant that the Appellant could not be properly convicted on those grounds.

The court reviewed the evidence about the ring's ownership and location, noting the judge's findings that the ring was hidden on the premises by a third party but was not under the Appellant's control. The court acknowledged possible arguments about the construction of the search order but did not need to resolve them due to the procedural defect.

Regarding the other grounds of contempt, the court upheld the judge’s findings that the Appellant retained beneficial ownership and control of Sage International and had breached disclosure obligations. The court accepted the judge's rejection of the Appellant’s denials about authorizing payments and found that the dissipation of assets was not in the ordinary course of business. The court found no basis to interfere with these factual findings.

On sentencing, the court recognized the judge’s reliance on established legal principles and sentencing guidelines for freezing order breaches. However, the court reduced the sentence due to the disallowance of the Engagement Ring-related contempt, which had significantly influenced the original sentence’s length. The court concluded that a 12-month custodial sentence was appropriate in light of the upheld contempts.

Holding and Implications

The court allowed the appeal in part by quashing the conviction related to the Engagement Ring issue due to procedural irregularity and lack of proper pleading. The sentence was reduced from 18 months to 12 months' imprisonment accordingly. The appeal against all other findings of contempt was dismissed, thereby affirming the remaining convictions and the Appellant’s liability for those breaches.

The direct effect of this decision is to shorten the Appellant’s custodial sentence and to clarify procedural requirements in committal proceedings, emphasizing the necessity for clear and precise pleading of contempt charges. No new precedent was established beyond the application of existing procedural safeguards and sentencing principles.