Background
Proceedings
Comment
In The Lord Mayor and the Citizens of the City of Westminster v Addbins Limited ([2012] EWHC 3716 (QB)) two corporate defendants and a director of both companies were found to be in contempt of court and were fined after the companies failed to comply with an injunction concerning the removal of cigarette bins from certain properties within the City of Westminster.(1)
Westminster City Council brought the action against the two corporate defendants and their mutual director following a criminal case in which the fixing of the cigarette bins, displaying an advertisement for the second corporate defendant, was an offence under Section 224 of the Town and Country Planning Act 1990. Despite pressure from Westminster through correspondence with the defendants' solicitors, the defendants failed to remove bins after conclusion of the criminal proceedings. Westminster applied to the civil courts for an injunction requiring the defendants to remove all bins within 14 days, the defendants having indicated that they would not oppose such application.
Westminster was granted an injunction on June 15 2012, requiring the bins to be removed by June 29 2012. The injunction was not opposed by the defendants, although some representations were made as to costs. In particular, the defendants did not ask for additional time beyond the 14 days referred to in the order and did not suggest that it would be impossible or difficult to comply with that deadline.
By June 29 2012 several thousand bins displaying advertisements remained in place.
On July 10 2012 Westminster wrote to the defendants' solicitors, referring to the defendants' failure to comply with the order even though more than three weeks had passed since it was made, and stating that it intended to commence committal proceedings.
On July 11 and 12 2012 Westminster carried out an inspection to determine the extent to which the defendants had failed to comply with the order. It did not investigate the position in every street. Rather, it investigated a selected area and took photographs of the bins in streets where they were present in large numbers.
On July 12 2012 the defendants' solicitors responded to Westminster's July 10 letter, confirming that their clients had commenced the "major task" of removing the bins. A schedule attached to the letter stated that 83 (of 3,000) had been removed to date, so it was obvious that only a very small proportion of the total exercise had thus far been completed. The letter gave no indication of what steps, if any, had been taken to comply with the order within the stipulated deadline, stating only that the defendants expected it to take some time to complete given the number of bins involved. There was also no indication of when the defendants expected compliance to be complete.
Westminster's reply on July 19 2012 was that committal proceedings would be commenced, as it did not consider the reasons given by the defendants for failing to comply with the order to be reasonable. The application to commit the corporate defendants and their director was issued on July 24 2012.
Westminster submitted that the defendants had failed to comply with the terms of the injunction and should therefore be held in contempt. It also requested that the director in question be committed.
The application notice (on a continuation sheet) particularised the sample inspection that Westminster had undertaken in July 2012. In addition, the Westminster employee who had carried out the inspection provided an affidavit setting out background and other details of the inspections undertaken in July 2012.
On July 25 2012 the defendants' solicitors acknowledged receipt of the application notice. This was followed by a letter dated August 8 2012, enclosing an updated schedule of the locations from which bins had been removed by the defendants since the previous schedule sent on July 12 2012. A further updated schedule was provided on September 12 2012 and on November 8 2012 the defendants' solicitors reported that all of the bins had been removed.
At the hearing on December 11 2012 the defendants submitted that:
- Westminster's application notice was too vague and general, because it failed to provide sufficient particulars of what the defendants had done or failed to do which constituted contempt, so that they had not been given proper information as to the case which they had to meet;
- Westminster had produced no evidence that the defendants' failure to comply with the order was deliberate, and that it had in fact been unintentional and inevitable; in this regard, that compliance had been impossible, bearing in mind the large number of bins in Westminster and that the defendants did not know the location of all of them, and the fact that the bins were attached to the premises of third parties whose cooperation and understanding the defendants would have wanted to ensure; and
- the application to commit was disproportionate and an abuse of process, because they had informed Westminster that they intended to comply and were in the process of complying with the order.
In addition, the director submitted that as the order had not been made against him personally or served on him, the application to commit him should be struck out for failure to comply with this procedural requirement.
Application notice
The court recognised that the power to commit for contempt must be exercised only where the court is sure that the alleged contemnor is in breach of an unambiguous order. The burden of proof is on the applicant and the application must make clear the allegations with sufficient particularity.
In assessing whether the application in this case provided sufficient particularity, the court considered various authorities on the point.(2) The court concluded that the application notice must contain "sufficient detail of what is alleged to enable the alleged contemnor to meet the case against him, but that requirement must be applied sensibly". The level of detail required to be included in order to satisfy this test will depend on the circumstances of the particular case.
The court concluded that the particulars of the allegation must be found in the application notice itself. However, the court also noted that the notice, including the continuation sheet, must be read sensibly and as a whole in light of the background as it was known to the parties. Reading it in this way, the question was whether the notice gave the defendants enough information to meet the charge against them or, in other words, whether it was sufficiently clear to tell them what Westminster was complaining that they had done or failed to do. Although there was a reference to an affidavit in a continuation sheet attached to the notice, the court found that the allegations made against the defendants were sufficiently clear; the defendants would know, or could reasonably be expected to know, where they had erected cigarette bins on those streets and whether they had taken steps to remove them.
The court also considered the position regarding the director of the corporate defendants, finding that in light of his considerable personal involvement with both companies, sufficient details were given to enable him to know the case that Westminster sought to advance – that is, that he, as a director of both companies, was personally responsible for ensuring compliance with the order and that he had deliberately or recklessly failed to do so. Westminster could not reasonably be expected to give details of precisely what the director had done or failed to do to ensure compliance. Those were matters entirely within the corporate defendants' and director's knowledge. Accordingly, the application notice was found to be acceptable.
Did the non-compliance amount to contempt?
Despite knowing well in advance that the application for an injunction was to be made and, as they had indicated that they would not oppose it, that it would inevitably be granted, the defendants acknowledged in evidence that nothing was done, and not a single bin was removed, before the order was made on June 15 2012.
The court also found it to be apparent from the whole course of the defendants' conduct during the committal proceedings, beginning with their solicitors' letter of July 12 2012, that the defendants (including the director personally) never expected to comply with the order by June 29 2012. In particular, during that same period the director in question knew that the order would not be complied with and that there would not be substantial compliance. However, he did nothing to speed things up, either by ensuring that the process of compliance was treated with greater urgency or by committing greater resources to the task. In these circumstances the court concluded that the defendants were dragging their feet in complying with the order.
The defendants submitted that given the scale of the task, it was impossible for them to comply with the order. Noting that "defendants who made no serious attempt to ensure compliance within the deadline are not in a strong position to persuade the court that such compliance would have been impossible", the court did not accept their submission. Rather, the court concluded that compliance would have been possible with the provision of much greater resources than the defendants committed, or were willing to commit, to the task. As such, it was not inevitable that the defendants would fail to comply with the order; they chose not to. Further, the defendants could have applied to the court at any point to request further time and given the court the opportunity to decide what extension of time, if any, was appropriate.
In light of these findings, the court considered that the elements of contempt set out in Masri(3) were all present in this case:
- There was an admitted failure to comply with the order by failing to remove the advertisements in the streets identified in the application notice.
- The defendants and director personally knew the terms of the order and knew that they had acted or failed to act in a manner which meant that the order would not be complied with.
- The defendants therefore knew of the facts which made their conduct a breach.
The court accepted that the defendants may not have positively intended to breach the order, but nonetheless found that they knew that this was the probable consequence of their failure to ensure a more determined effort to comply.
In these circumstances the court did not consider that the defendants' conduct could be rightly regarded as "casual or accidental or unintentional".(4) Accordingly, the court found all three defendants to be in contempt.
Abuse of process
The power to commit has previously been described as "the court's ultimate weapon in securing compliance with its orders".(5) It follows that such applications must be made only for a proper purpose, and that applications made for an illegitimate purpose or which are pointless will be struck out.
The position of a director in these circumstances was initially set out in Tuvalu(6) and refined by the judge in Sectorguard:(7)
"I consider that the effect of the Tuvalu case is that an applicant for the committal of a company director who relies upon a breach by the company of an order or an undertaking must disclose in the committal application a case for the establishment of responsibility on the part of that director, either on the grounds of aiding and abetting or wilful failure to take reasonable steps to ensure that the order or undertaking is obeyed." (emphasis added)
Given the evidence presented in this case in relation to the inaction of the defendants' director, the court did not consider that this current application constituted an abuse of process. It noted that this had been a long and drawn-out attempt to achieve the removal of advertisements, the display of which constituted a criminal offence. That attempt had involved criminal proceedings in which the defendants were convicted, but which did not result in the removal of the advertisements, followed by an injunction with which the defendants appeared to be making no serious attempt to comply. Given that the pace of removal of the advertisements quickened notably after the committal proceedings were commenced, the court suggested that this would support Westminster's argument that the proceedings were not an abuse of process.
Regarding the defendants' arguments on personal service, while the court recognised that the requirement for personal service on a director was an important safeguard, it also noted that it had "wide and unfettered discretion"(8) to dispense with the requirement for service. In this case it was clear to the court that the director had been aware of the terms of the order immediately when it was made and had the benefit of legal advice from experienced solicitors acting for him who were thoroughly conversant with the dispute and able to advise him as to his responsibilities. Accordingly, it was not suggested that he was in any way prejudiced by the fact that the order was not served on him personally. The court therefore concluded that it was appropriate to dispense with the requirement of service in this case.
This case is a useful reminder that where injunctions are not complied with, proceedings for civil contempt may be appropriate. The judgment given in this case did not state the penalties imposed on the defendants. However, it is understood that all three were fined and the director avoided committal.
The decision also highlights useful points for parties that are subject to injunctions. First, it is a reminder of potential penal consequences for directors of companies who do not comply with injunctions. It may not matter if the director was not personally served with the injunction, as long as he or she had sufficient knowledge of its terms and access to legal advice.
Second, the lengths to which the court expected the defendants to go to comply with the injunction in this case demonstrates the importance of having adequate systems and controls within companies to deal with the service of urgent legal proceedings – particularly, injunctions with short deadlines for performance or cessation. If it becomes clear that compliance with an injunction will be impossible in the time given, parties should be proactive in applying to the court for extra time, ensuring that the reasons for any delays are known and can be supported by evidence.
For further information on this topic please contact Laura Martin at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected]).
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Endnotes
(1) At the time this case was instigated the relevant provisions regarding contempt were set out in the Rules of the Supreme Court Order 52 and County Court Rules Order 29. Following the Civil Procedure Rules amendments of October 1 2012 the current provisions regarding contempt can be found at Civil Procedure Rule 81.
(2) Re B (JA) (an Infant) [1965] Ch 1112 at 1117; Harmsworth v Harmsworth [1987] 1 WLR 1676, 42; Chiltern District Council v Keane [1985] 1 WLR 1401; Tankaria v Morgan [2005] EWHC 3282 (Ch).
(3) Masri v Consolidated Contractors Intl Co SARL [2011] EWHC 1024 (Comm) at [150].
(5) JSC BTA Bank v Solodchenko [2010] EWHC 2404 (Comm) at [15].
(6) Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR.
(7) Sectorguard Plc v Dienne Plc [2009] EWHC 2693 (Ch).
(8) Bell v Tuohy [2002] EWCA Civ 423, [2002] 1 WLR 2703 at [41].
