Insolvency Update: Contempt of Court

15 February 2018

Further to our Insolvency Update issued on 11 December 2017, a recent High Court case has demonstrated the courts’ willingness to take firm action against litigants acting in defiance of court orders.

In an ex tempore judgment delivered on 12 January 2018 in the matter of Carlisle Mortgages Limited v Costelloe[1], Mr. Justice Twomey found that the defendant was in contempt of court for his breach of previous court orders as well as his own sworn undertaking to the court.  Accordingly, the court made an order for the imprisonment of the defendant for a period of seven days and gave liberty to the plaintiff to apply to the court to commit the defendant to prison for a further period in the event of a further breach.

The background to this case involved a long running and acrimonious dispute between the plaintiff, Carlisle Mortgages Limited, and the defendant, Mr Costello. The defendant had failed to repay borrowings from the plaintiff that he had secured against his farm.  As a result of his default, an order for possession was made against the defendant in favour of the plaintiff who subsequently contracted to sell the farm to a third party.  Prior to the sale completing, the defendant sought to frustrate the plaintiff from realising its security over the farm by permitting his livestock to graze on the property.  The plaintiff applied to attach and commit the defendant as a coercive measure against him and the Court duly made an order for his imprisonment.  The defendant later purged his contempt by arranging for the removal of the animals from the farm and gave an undertaking to the court that no further cattle would be allowed on the property.

However, a number of years later, an almost identical set of circumstances arose leading to the court making an order for the defendant to remove his cattle from the property and to refrain from obstructing the sale of the farm by the plaintiff.

In addition, and in contrast to some of the other cases that have come before the courts where obstructive litigants are not legally represented, the defendant’s solicitors continued to issue correspondence to the plaintiff openly defying the terms of the court orders. On application by the plaintiff, the court concluded that it had no option but to imprison the defendant for punitive contempt of court.

This case serves as a reminder that the court is willing to exercise its discretion to penalise litigants where necessary.  The judgment of Mr Justice Twomey noted that in the circumstances “…Failure by this Court to make an order of punitive contempt would, in this court’s view, simply bring the judicial system and the very rule of law into disrepute since it would mean litigants would not suffer any consequences from their failure to comply with court orders”.

For more information, contact a member of our Insolvency & Restructuring team.

The content of this article is provided for information purposes only and does not constitute legal or other advice. 

[1] [2018] 1 JIC 1202

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