15/01/2024

The interpretation, modification and variation of committal orders

In the latest turn of events in the long-running dispute between Deutsche Bank and Alex Vik and Sebastian Holdings Inc, on 11 January 2024, the Court of Appeal refused Deutsche Bank’s application for permission to appeal against the judgment of Mr Justice Henshaw handed down in October 2023 ([2023] EWHC 2563 (Comm)).

Tony Beswetherick KC, Rupert Hamilton and Andrew Feld appeared for the successful respondent, Mr Vik.

Deutsche Bank had applied to the Commercial Court to either correct or amend the committal order made by Mrs Justice Moulder on 15 July 2022, following an application by Deutsche Bank to have Mr Vik committed for contempt of court ([2022] EWHC 1599 (Comm) and [2022] EWHC 2057 (Comm)). The 2022 committal order had imposed a sentence that was suspended for a period of six months from the determination of any appeal – which appeal was determined on 24 February 2023 ([2023] EWCA Civ 191) with conditions providing for Mr Vik to produce documents and to attend for examination. The terms of the committal order provided that it would be automatically discharged if the bank did not make any application to activate the sentence, on the basis of any alleged failure to comply with the conditions of the suspension, during the period for which the sentence remained suspended.

An issue arose as to whether it was too late for Deutsche Bank to seek to allege that Mr Vik had breached the conditions attached to the committal order and seek to activate the suspended sentence after the expiry of the six-month period.

The bank applied for a declaration that the true meaning of the order was that the period of the suspension was not limited to the period of six months but continued until the conditions of the suspension had in fact been complied with. In the alternative it sought an amendment to the committal order to extend the period of suspension – and thus the period during which Mr Vik was required to comply with the conditions and the bank was able to apply to activate the sentence for any failure to comply.

The bank also sought to argue that an earlier decision by Mr Justice Bryan, refusing Mr Vik permission to attend for any further questioning via video link ([2023] EWHC 2234 (Comm)), had the effect of imposing a freestanding obligation on Mr Vik to attend at court, notwithstanding that he was no longer required to attend for further questioning.

Following a two-day hearing of Deutsche Bank’s application, Mr Justice Henshaw, in a very careful judgment, rejected the numerous arguments advanced by the bank. In summary:

1. The terms of the committal order could not be interpreted as meaning that the suspension and the conditions continued to apply beyond the stated six-month period.
2. The committal order could not be corrected under the “slip rule” (CPR 40.12) as the order and its conditions had been workable and ostensibly gave effect to the court’s intention. The bank had simply failed to implement the order in accordance with its terms.
3. The committal order could not be varied to increase the period of the suspension as this would be contrary to the rule that sentences can only be varied so as to make the penalty less severe.
4. If the suspended sentence had in fact expired then the bank could not ask the court to ignore that fact and treat the suspension as continuing on the basis that it constituted some kind of abuse of process for Mr Vik to rely on the terms of the committal order or that he was estopped from doing so.
5. The bank’s argument that the parties had agreed to extend the period of the suspension could not succeed because only the court could vary a custodial sentence (and then only to reduce it).
6. Mr Justice Bryan had not made a freestanding order requiring Mr Vik to attend at court but only an order requiring that if he did attend then he must do so in person rather than by video link.

In refusing permission to appeal, Lord Justice Males endorsed the reasoning of Mr Justice Henshaw.

The judgment contains a useful exposition of the law relating to the interpretation of court orders and the application of the slip rule, and also useful guidance on the Court’s powers to vary committal orders. It offers a salutary lesson to those drafting or seeking to enforce committal orders to pay careful attention to the terms and wording of the order.

Tony Beswetherick KC, Rupert Hamilton and Andrew Feld were instructed by James Clarke at Brecher LLP.

See also: Ancillary orders, double jeopardy and the limits of the court’s inherent jurisdiction (February 2025)