Contempt is not a crime

A Supreme Court has for the first time spelt out the difference between civil and criminal contempt in English and Welsh law

Serious Fraud Office v O’Brien [2014] is a massive, landmark legal victory for the Serious Fraud Office (SFO). 

The case is important for two reasons. First, for the first time, the Supreme Court has spelt out the difference between civil and criminal contempt in English and Welsh law.

Second, of immediate practical importance, had the SFO lost the case it would have been necessary to extradite:

1) a defendant in criminal proceedings who was outside the jurisdiction before he could face contempt proceedings for breaching a restraint order; and

2) a party to civil proceedings before contempt proceedings could be brought against him for the breach of a freezing order, property freezing order, search order, disclosure order, and so on. 

Brian O’Brien was investigated by the SFO for a boiler room fraud – a substantial scheme to defraud investors. A restraint order was made against him by the Central Criminal Court under s.41 of the Proceeds of Crime Act 2002. It froze his assets, compelled him to make disclosure of his assets and compelled him to repatriate assets outside the jurisdiction.

O’Brien failed to comply with the order.  The SFO applied to commit him to prison for contempt.  The common serjeant found O’Brien to be in contempt.  The court adjourned the imposition of a penalty.

O’Brien was arrested in Chicago and extradited in respect of the boiler room fraud. Consequently the rule of specialty applied: he could only be dealt with by criminal courts in respect of the boiler room fraud.

The SFO submitted to the court that committal proceedings were civil, not criminal, and commenced proceedings.  The common serjeant agreed.  He ruled that specialty did not apply to contempt and committed O’Brien to prison for 15 months.

O’Brien appealed to the Court of Appeal, which agreed with the SFO and the common serjeant.

The Supreme Court found this week that the SFO was right that disobedience of a pre-trial criminal restraint order is a civil contempt of court. It is not a criminal offence. Furthermore, the Supreme Court found that civil contempt is not extraditable – even though it attracts a two-year sentence. 

O’Brien’s lawyers had argued that because contempt attracts a two-year imprisonment penalty, it was a criminal offence within the meaning of the Extradition Act 2003 and the UK-US Extradition Treaty.

Had they been right, the implications in civil – commercial cases in particular – would have been monumental.  Parties to civil claims would have had to seek the extradition of other parties who refused to comply with court orders.

As matters now stand a breach of an order to which a penal notice is attached is a civil contempt whether in the criminal or civil courts.  There is no need to extradite an alleged contemnor in committal proceedings for breaching an order.

Ben Douglas-Jones, specialist fraud and regulatory barrister, 5 Paper Buildings and Stuart Miller, managing partner Miller Rosenfalck