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Court again highlights 'severe consequences' of deliberately breaching freezing order, says expert

The High Court has again highlighted the "severe consequences" of deliberately breaching a freezing order, imposing a 12-month prison sentence on a woman who failed to comply with two deadlines and later lied to the court, an expert has said.19 Jun 2017

Mr Justice Newey's judgment was also interesting as evidence of the woman's depression supplied to the court was not sufficient to overturn the sentence, according to civil fraud and asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com.

A freezing order was granted by the High Court on 30 March 2017 against Devinder Sandhu in favour of three siblings of hers, in relation to a dispute over their late father's estate. Among other things, the order gave Sandhu until 11 April to inform her siblings' lawyers of all her assets worldwide exceeding £1,000 in value, and until 18 April to inform them of various bank accounts and property interests. Sandhu missed both deadlines.

When the case returned to court, Sandhu sought an adjournment to give her time to seek legal representation. She also supplied an affidavit in which she claimed to provide the information sought, parts of which were found by the judge to be "simply untrue". In his judgment, Mr Justice Newey said that while Sandhu was clearly in breach of the disclosure orders, the breach "would be by no means as serious as it is" if that affidavit had not been "inadequate and, indeed, false in important respects".

"In short, it is abundantly plan and proved beyond reasonable doubt that there was a failure to comply with [the original judge's] order," he said. "More than that, the purported attempt to remedy matters was in fact flawed and deceitful. Mrs Sandhu has since given conflicting explanations of events. Further, even now, there are particular respects in which she can be seen not to have satisfied the terms of [the judge's] order."

The judge acknowledged the evidence supplied to the court of Sandhu's depression and alleged suicidal thoughts. However, he said that it was "not apparent from this or any of the other documents that I have seen that there was a good medical reason" for her failure to comply with the orders "or, indeed, giving false and contradictory evidence".

"Secondly, it seems to me that the as yet rather unexplored reference to being clinically depressed and having suicidal thoughts is not a matter of such weight or importance as to justify me in taking a substantially different approach to sentencing," he said.

"The decision should provide comfort to those who have obtained a freezing order but are concerned as to a respondent's level of cooperation," said Alan Sheeley. "Respondents to any such order should be aware that failure to comply with the disclosure provisions of a freezing order could lead to a significant custodial sentence."

"The English courts are sending an unequivocal message that they will not tolerate attempts to comply with disclosure orders where the evidence in response is found to be deficient, deceitful and containing conflicting explanations. Further, the courts will not have sympathy with attempts to escape a custodial sentence on medical grounds where it is apparent that there is no good medical reason for the failure to comply," he said.

The judgment reflected a recent trend of the English courts "taking a hard line approach to respondents who think they can evade their obligations under a freezing order", Sheeley said.

"The judgment follows a recent decision in which five directors were committed to prison for deliberate breaches of a worldwide freezing order," he said. "The court's approach reflects the bite which a freezing order has and emphasises the importance of freezing orders and disclosure orders as essential tools when tracing and recovering stolen assets."