Posted: 25th September 2012

RCJIn a ruling which underlines the gravity of the potential consequences of disobeying court orders, the Court of Appeal has agreed to lift the threat of immediate prison sentences hanging over two businessmen who defied an
asset-freezing injunction.

Sentences imposed in July 2012 on Harbinder Singh Panesar and his father-in-law, Anthony Thomas, for their contempt of court were suspended after their lawyers revealed details of the once wealthy pair’s spectacular fall from grace.

Panesar had been sentenced to nine months’ imprisonment after a judge found that he had established motor insurance firm, Motorcare Elite, in contempt of the freezing injunction. Thomas was given a four-month term for his lesser involvement. Both men were granted bail pending appeal.

Lord Justice Rix, sitting with Lady Justice Black and Lord Justice Lewison, rejected arguments that they had wrongly been found in contempt and emphasised that those who disobey orders of the court can expect to be jailed.

However, referring to a recent stroke suffered by Thomas and the potential impact of imprisonment on Panesar's family, the judge said both men were of previous good character and that ‘the public interest would be sufficiently vindicated’ by suspending the terms.

The men’s lawyers had earlier told the court that Thomas is now living on his state pension and benefits and that Panesar, whose mental health has suffered due to the litigation, ‘has been financially ruined and is now bankrupt’.

Motorcare Elite was set up by Panesar and Thomas despite their previous venture - Motorcare Warranties - having collapsed. The asset-freezing injunction was issued to prevent them transferring the latter company's assets to any new business.

Although no tangible assets were moved to Motorcare Elite, a judge found that the pair had sought to transfer goodwill and other intangibles to their new venture in defiance of the injunction.

Lord Justice Rix said that he was only suspending the men’s sentences due to their ‘exceptional personal mitigation’. The court will give full reasons for its decision at a later date.