CWG v. MH AND OTHERS

HCMP 643/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 643 OF 2012

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REASONS FOR DECISION

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Introduction

1.  The main trial on the financial relief under Part IIA of the Matrimonial Proceedings and Property Ordinance took place between 10 October 2012 and 6 February 2013 and this court handed down a Judgment dated 26 March 2013 (“Main Judgment”) and made an Order dated 26^th March 2013 (“ 26.03.13 Order”).

2.  For ease of reference, for these reasons, I shall adopt the abbreviations in the Main Judgment, unless otherwise indicated.

3.  The 26.03.13 Order contained a costs orders against R2.  I ordered that the husband (“R1”) and his mother R2 shall, jointly and severally, pay all the costs of the applicant wife, of and incidental to her Part IIA application and the dismissal of the Variation Summons.  I further ordered that R1 and R2 shall, jointly and severally, pay those legal costs incurred by those witnesses served with the subpoenae, and that R1 and R2 shall, jointly and severally, pay those costs of R4, R5, and R6.    There be a certificate for two Counsel for all parties.

4.  On 23 April 2013, R1 and R2 both lodged appeals from the Main Judgment, respectively CACV 80/2013 and CACV 83/2013.

5.  R1 had applied for a stay pending the result of his appeal in CACV 80/2013, and R2 sought to be heard to support his stay application.  On 2 August 2013, this court made a Hadkinson Order against R2 for her contempt of a discovery order made on 10 August 2012 by Poon J, as he then was (“Discovery Order”).  R2 applied for leave to appeal from this court’s Hadkinson ruling, which was refused, and she then applied to the Court of Appeal.  Her leave application was also dismissed by the Court of Appeal.

6.  The wife had further applied for a Hadkinson order against R2 in respect of her appeal CACV 83/2013, and subsequently, the Court of Appeal granted the same and dismissed R2’s appeal in CACV 83/2013 with indemnity costs.

7.  So far as R1’s appeal was concerned, I understand that the Court of Appeal will be handing down its judgment on 30 June 2016.

8.  Since all proceedings between the wife and R2 had come to an end, the wife proceeded to tax the costs orders in respect of R2. 

9.  By a consent order dated 30 October 2015 (“Consent Order”), R2 agreed to pay a total of HK$10.8m for the wife’s costs as follows:

(i) R1 and R2 do jointly and severally pay P HK$7m;

(ii) R2 and R3 do jointly and severally pay P HK$0.3m;

(iii) R2 to pay P a sum of HK$3.5m;

(iv) The sums shall be paid on or before 25 November 2015, with interest to accrue on the unpaid sum from 26 November 2015 to date of payment at judgment rate.

10.  Notwithstanding the Consent Order, R2 had failed to pay any sums towards the total amount of outstanding costs , as a result of which P  issued a bankruptcy petition against R2, fixed for hearing on 22 June 2016, to enforce the Consent Order.

11.  R2 then took out a Summons on 7 June 2016 (“Stay Summons”) for the payments of costs in the Consent Order to be stayed pending the result of the R1’s appeal in CACV 80/2013(“R1’s Appeal”).

12.  The Stay Summons was originally fixed before this court for 15 minutes only on Monday 20 June 2016, 2 days before the hearing fixed for the bankruptcy petition (“Bankruptcy Hearing”).

13.  Senior Counsel Ms Audrey Eu appeared for P at the hearing before this court, and Mr Samuel Yip appeared for R2.

14.  Mr Yip said the 15 minutes was for directions only and he applied for the Stay Summons to be adjourned for substantive argument. Ms Eu opposed and submitted that the purpose of R2 issuing the Stay Summons was to try and delay the Bankruptcy Hearing.  She said the arguments would not take more than 15 minutes.  In the end, this court adjourned the hearing to 3:30pm the same day to allow Mr Yip time to prepare his substantive submissions.

15.  At the end of the hearing, this court dismissed R2’s Stay Summons.  I now give my reasons.

The Stay Summons

16.  The Stay Summons was supported by a supporting affidavit of Lo (“Lo’s Affidavit”) filed on 16^th June 2016, and was issued under Order 45 Rule 11 of RHC. 

17.  O.45 r.11 states:-

“Without prejudice to Order 47, rule 1, a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks just.”

(emphasis added)

18.  At the hearing, Mr Yip submitted that R2 also relied on the court’s inherent jurisdiction.

19.  Ms Eu opposed the Stay Summons on two main grounds:

(i) R2 is still subject to the Hadkinson principles and she has not purged her contempt;

(ii) There have been no new matters which have occurred since the date of the Consent Order.

Hadkinson Principles

20.  Mr Yip submitted that Hadkinson orders are extreme measures.  He had referred this court to what was said by the Court of Appeal in its Judgment dated 13 March 2014, in respect of the wife’s applications for Hadkinson orders against R2, namely that :

“… the court retains a discretion to decide whether to hear the person in contempt. In exercising that discretion, the court would take into account matters such as the gravity of the effect of his contempt and whether there were other means available for securing compliance with the order. It has been said that if the contemnor’s ‘disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed’ (Hadkinson p298). The court would consider the proportionality principle in deciding whether or not to bar the contemnor, and what conditions to impose[1].”

21.  It was Mr Yip’s submission that R2’s contempt of her failure to comply with the Disclosure Order only affected the trial and the appeal, and that her disobedience was not such that it would impede the course of justice in relation to the Consent Order.

22.  However, as pointed out by Ms Eu, R2’s previous contempt has not been purged.  Further, R2 herself had consented to the terms of the Consent Order, and she should fully be aware that the sums of a total of HK$10.8m had been agreed by her to be paid on or before 25 November 2015, which was over 6 months ago.  She chose to ignore this and had not made any payment at all.  In my view, not only has she not purged her previous contempt, she has continued to ignore the court’s order, even one that she had consented to.  She is thus still in contempt, in that not only she has not purged her previous contempt, but she has failed to comply with the Consent Order.

23.  The Stay Summons is clearly a last minute attempt to delay the Bankruptcy Hearing, and I am of the view that R2 should not be heard in relation to the Stay Summons by reason of her continuing contempt, and the Stay Summons should be dismissed on this ground alone.

No new Matters

24.  In any event, R2 has not shown any ground under Order 45 rule 11 to support a stay.

25.  In the affidavit of Lo, she alleged that R2 needed to pay expensive legal and medical fees and she could not cause her companies to sell or mortgage the said properties to raise money due to the lis pendens registered against 4 of the properties in R2’s companies.  Further, R2 relies on R1’s appeal in that she believes that R1 has a very good chance of success and that if she makes payment under the Consent Order, P may be unable or unwilling to repay the same to R2.

26.  First of all, the lis pendens have been in place for some time.  Secondly, there is no outstanding appeal by R2, whether against the substance of the Main Judgment, or the costs orders or the Consent Order.  Whether R2 needed to pay expensive legal and medical fees was neither here nor there.  She had not suggested that she did not have sufficient funds or means to satisfy the Consent Order.  She was in fact silent as to her current financial means and resources.

27.  Anyway, the main matters relied on by R2, which according to her, have occurred since the date of the Consent Order were:

(i) The judgment in relation to R1’s appeal against the Main Judgment will be handed down by the Court of Appeal on 30 June 2016;

(ii) The wife has issued the Bankruptcy Petition.

28.  First of all, R1’s appeal was lodged on 23 April 2013, and was heard from 19-26 May 2014, long before the Consent Order was arrived at.  R2 was fully aware of R1’s appeal at the time of the Consent Order, and that the fact that the judgment was already pending at that time.  She was also fully aware that the judgment would be handed down sometime after the Consent Order, and it was only a question of when.  Thus, the mere fact that the judgment of the Court of Appeal is now going to be handed down on 30 June 2016 cannot be said to be a new matter occurring after the date of the Consent Order which affects the validity of the Consent Order.

29.  As for the Bankruptcy Petition, as set out in paragraph 45/11/2 of the Hong Kong Civil Procedure 2016, Volume 1, that in Tam Ho Man v Wing Kwok Tai, unrep. HCA A4736/1985, the defendant’s attempt to rely upon the issue of a bankruptcy order as a “matter occurring” since the date of judgment such as to justify a stay of enforcement was rejected by Hunter J, as he then was.  Hunter J had stated that “matters which have occurred since the date” referred to “matters which went to the validity of the judgment and which, if established before the court, might justify the court in saying that this was a judgment which on the material now before it, it would not allow to be executed”.

30.  Further, Ma CJ had said in Credit Lyonnais v SK Global Hong Kong Ltd CACV 167/2003, that “… the existence of an inherent jurisdiction to stay execution must not, however, be confused with the exercise of it, and the exceptional nature of the jurisdiction to order a stay only arises in circumstances where :

(i) New evidence emerges after the relevant judgment showing that it was not valid…

(ii) In certain circumstances, the judgment debtor has a claim against the judgment creditor yet to be determined this may even include situations in which the corporate veil should be pierced…was emphasized.”

Conclusion

31.  Having considered the affidavit of Lo, I came to the view that R2 had not satisfied this court there were matters occurring after the Consent Order which would affect the validity of the Consent Order.  I was also not satisfied that there were any other reasons that I should exercise the court’s inherent jurisdiction to allow a stay.

32.  I thus dismissed the Stay Summons.  I directed R2 to lodge written submission on costs within 7 days, and that the applicant wife has 7 days thereafter to lodge any reply submissions.