High Court Finds Mr. Cooper in Contempt for Breaches in Ignite International Brands Case

Introduction

The case of Ignite International Brands (UK) Limited & Anor v Inpero Limited & Anor before the High Court of Justice involves an application to commit Mr. Cooper, the second defendant, for contempt of court for failing to comply with previous court orders. The key topics discussed pertain to the accurate accounting of inventory, the legal requirements of compliance with court orders, and the standard of proof in contempt proceedings.

Key Facts

Ignite, an international company producing various nicotine, alcohol, CBD, energy drinks, and apparel products, had agreements with Inpero, directed by Mr. Cooper, for warehousing, sales, and marketing functions in the UK. Issues arose regarding discrepancies between physical stock and inventory reports. Subsequently, Ignite alleged that Mr. Cooper and his companies committed fraud resulting in significant financial losses and retained proceeds from sales after termination of the agreements.

Two contempt applications were presented before the court, identifying breaches by Mr. Cooper of court orders requiring the delivery of stock, provision of information about disposed or missing stock, and provision of a detailed affidavit of assets.

Legal Principals

The court applied several legal principles, primarily those outlined by Marcus Smith J in Absolute Living Developments Ltd v DS7 Limited [2018] EWHC 1717 (Ch). The principles stated that for committal of contempt, the order must be clear, bear a penal notice, and be served personally; the breach must be deliberate; and the standard of proof is the criminal standard, namely beyond a reasonable doubt.

In addressing the issues of impossibility of compliance and the mental element of contempt, the court referenced Sectorguard PLC v Dienne PLC [2009] EWHC 2693 (Ch) and Perkier Foods Limited v Halo Foods Limited [2019] EWHC 3462 (QB) to establish that failure to comply with an order due to impossibility doesn’t amount to contempt. The obligation is on the applicants to prove that compliance was possible, whereas failure arising from impossibility presupposes no choice implicated in the act of breaching the order.

The concept of ‘the game not being worth the candle’, derived from Jameel v Dow Jones and Co [2005] EWCA Civ 75; [2005] Q.B. 946, was considered in the context of committal proceedings. This principle suggests that litigation may be abusive if it leads to disproportionate pursuit over a minor technical breach.

Outcomes

The court found Mr. Cooper in contempt of court for breaches pertaining to both applications. Despite Mr. Cooper’s arguments, the court was satisfied that he did not comply with the requirement to deliver up stock or properly account for discrepancies or missing inventory. Furthermore, Mr. Cooper failed to submit a required affidavit setting out his and his company’s assets. Both failures were deemed more than technical breaches and deliberate actions to circumvent court orders. The court suggested Mr. Cooper take actions to remedy his contempts.

Conclusion

In Ignite International Brands (UK) Limited & Anor v Inpero Limited & Anor, the High Court of Justice reinforced the significance of compliance with court orders, the gravity of the mental element in committing a contempt of court, and upheld the criminal standard of proof in such proceedings. The outcome indicates the courts’ low tolerance for evasive or incomplete responses to court orders and highlights the importance of transparency and adherence to judicial instructions. The decision emphasizes that substantial or continued failure to comply with court orders will not merely be perceived as a technical oversight but a serious violation that may lead to substantial legal consequences, including imprisonment, fines, and seizure of assets.