Darby v Wang: Cryptocurrencies and Contempt in the Court of Appeal

The Court of Appeal has handed down judgment in Darby v Wang in which Helen Pugh acted for the successful appellant.

The Court of Appeal once again emphasised the need to adhere to the procedural and other safeguards enjoyed by defendants in civil claims facing contempt of court proceedings.

The Background

The case of Wang v Darby [2021] EWHC 3054 made waves from the outset when it was taken as authority for the proposition that cryptocurrencies could constitute property subject to a trust. In this latest set of proceedings, cryptocurrencies were again the focus; this time in relation to a defendant’s duty to provide disclosure of assets ancillary to a worldwide freezing order. The claimant issued contempt proceedings on the basis of Mr Darby’s failure to disclose a holding of 100BTC, c.US$4m at the time of the disclosure order and now valued at c.US$10m.

Although Mr Darby had been represented for some time during the main proceedings, including when first made subject to the disclosure obligations, by the time of the contempt proceedings he was a litigant in person. Mr Darby failed initially to engage with the contempt proceedings and was found in contempt of court in his absence on 10 June 2024 ([2024] EWHC 1394 (Comm)). As is the default practice in contempt cases, the sanction hearing was adjourned and took place on 24 July 2024. Mr Darby attended this hearing and stated that he had tried to find legal representation for the sanction hearing but had been unable to do so. Notwithstanding this, the court proceeded to commit Mr Darby to 18 months’ immediate imprisonment.

Having obtained publicly funded legal representation whilst in prison, Mr Darby appealed against his sentence and successfully applied for bail pending his appeal. He had already served 146 days in prison (in excess of 4 months), a sentence equivalent of 292 days.

With the benefit of legal advice in the contempt proceedings, Mr Darby admitted his contempt and apologised to the court. Freshly obtained medical evidence confirmed that Mr Darby had been suffering from some symptoms of poor mental health and the Court of Appeal recorded that Mr Darby had not coped well with the proceedings. In a judgment handed down on 4 February 2025, and in light of the developments, the Court of Appeal reduced his sentence to time served, namely 292 days.

The Importance of Procedural Safeguards

The main argument on appeal was whether the judge had been wrong to proceed without a further adjournment in circumstances where Mr Darby had belatedly started engaging with the proceedings and had expressed a (hitherto unsatisfied) wish to obtain legal representation. The Court of Appeal held that it was not necessary to determine this point for the appeal but nonetheless went on to provide important guidance for future contempt cases.

In obiter Dingemans LJ, with whom Falk LJ agreed, held “It might be said, however, that if a person is facing a sanction of committal to prison for contempt of court and that person belatedly engages with the court process, there are many reasons to grant a short adjournment to ensure that the person in contempt has the benefit of legal representation. This ensures fairness to that person, in circumstances where many contemnors only come to their senses at the 11th hour and 59th minute, see generally Haringey London Borough Council v Brown [2015] EWCA Civ 483; [2017] 1 WLR 542 at paragraphs 41 to 44. In many cases this will also be to the advantage of the side seeking the order for committal. This is because the contemnor’s legal representatives are likely to have more success in persuading the contemnor to purge his contempt and comply with court orders. That will also assist the court in ensuring that there is compliance (albeit on a belated basis) with its orders.”

The case of Darby v Wang was a case in point. Given access to legal representation earlier, there is no reason to doubt that Mr Darby would have belatedly complied and apologised prior to the sanction hearing and consequently would have received a substantially lesser sentence.

Scope of the ancillary disclosure obligation in relation to cryptocurrencies

Mr Darby also appealed against the ‘excessive’ sentence, arguing that the approach to ‘harm’ in the context of cryptocurrencies had to take into account that a claimant could often find out ‘the location’ of the cryptocurrencies from publicly available information on the blockchain (as the respondent had done in this case). This and other interesting issues in relation to the effectiveness of disclosure orders in relation to cryptocurrencies remain issues for future cases.

Helen Pugh acted for the successful appellant, instructed by Marc Livingston of Janes Solicitors.

The full judgment of the case can be found here.

Find out more

Helen specialises in general commercial litigation, civil fraud, contentious insolvency and company law issues, and professional negligence. Helen has a heavyweight and diverse commercial and civil fraud practice, much of which has a cross-border element. She is frequently instructed in cases requiring urgent injunctive and ancillary relief and she has been instructed in many of the leading cases in contempt of court arising out of breach of injunctions and disclosure orders. Helen has a particular interest in disputes involving cryptocurrencies and digital assets and is one of a small number at the Bar with case experience in this area. Helen is ranked as a leading junior in Commercial Litigation, Civil Fraud and Crypto Disputes in Legal 500.

To find out more about Helen, contact Lexie Johnson on + 44 (0) 207 427 0801 or or Dave Lovitt on +44 (0)207 353 6381.

News 4 Feb, 2025