KAO LEE & YIP (a firm) v. DONALD KOO HOI YAN AND OTHERS

HCA8847/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8847 OF 1993

J U D G M E N T

1.  By its judgment of 8 November last year, the Court of Appeal has found you guilty of contempt by virtue of you having failed to comply with three orders of this court, the first by Mayo J, as he then was, on 21 January 1994, the second by Ma CJHC, dated 19 September 2003 and, finally, one by Judge Muttrie, sitting as a Deputy High Court Judge, dated 21 January 2004.

2.  The basis of the Court of Appeal’s findings appear in the judgment of Le Pichon JA’s who has set out in some detail the factual background against which this matter has arisen, the nature of the orders that you were required to comply with and the reasons why, contrary to the order of Reyes J who had dismissed the application for your committal, you should be held in contempt.

3.  The Court of Appeal has now remitted to this court the question of what penalty should be imposed on you.  In imposing that penalty I am bound by the Court of Appeal’s findings as to the basis of your contempt, subject to any legitimate mitigation that has been addressed to me on your behalf by Mr Pow S.C.  Given the plain findings arrived at by the Court of Appeal, it is unnecessary for me to set out again here what was said by the court on that occasion.  This having been said, presently I will have to set out the orders that you have been found to be in contempt of.  Before I do so I ought to start with an important general observation, which is applicable to this case and, in particular, to the orders that you are in breach of. 

4.  This has been bitterly fought litigation between you and your former partners where no quarter has been given on either side.  It started getting on for 14 years ago and still has some distance to go.  Now that you have lost the action, as a result of the judgment of the Chief Judge, on 2 April 2003, the court is primarily concerned with its assessment of the profits that you have made by virtue of your breach of fiduciary duty to your former partners by taking from them a valuable client in the Bank of China Group and setting up a firm of your own. 

5.  When faced with such a task the court needs to have full disclosure from the party against whom the taking of an account has been ordered of the fees earned and the resulting net profit.  As will emerge in a moment,  your contempt involves you having prevented the court from being able to perform its task and to do it in a timely fashion.  This you have done by failing to provide the necessary information that the relevant court orders have required you to provide.  All of this information could and should have been provided, in my view, no later than the spring of 2004.  By your contempt you have frustrated the court’s expectations and its duty to do justice.  Three years on the wronged party has not been able to receive the compensation that is due to it.  Plainly, this is a very serious matter, although it should be recognised that you have provided a substantial amount of information which has enabled the court to make an interim award of damages, which, together with accumulated interest, amounts to some $12 million.  This feature of the evidence serves to mitigate a substantial amount of the seriousness of your case, although that information has been provided incrementally and slowly.

6.  I now turn to the three orders.  The material part of Mayo J’s order on 21 January 1994 required you to maintain an account of all work which was undertaken by Messrs Koo & Partners, that is say, your new firm, in relation to any former client of the plaintiff until trial or further order.  The reasons why that order was made appear in the learned judge’s judgment, which I need not repeat here.  It seems to me that the nature of the obligation was one that was easy to understand and easy to comply with.  It is said on your behalf that you took advice from your then solicitors and were told by them that you need not keep a separate account of such work but that it would be sufficient if you kept the usual account that a solicitor is required to keep of work done on behalf of clients.  I will return to this presently.

7.  Under the principal order, as I judge it, made by the Chief Judge on 19 September 2003 you were, amongst other matters, required to verify the account made under Mayo J’s order, by affirmation, within 28 days.  In respect of that order Deputy Judge Muttrie made a further order on 21 January 2004, expressed to be a final extension of time, to comply with the Chief Judge’s order by 4 pm on 18 February 2004, failing which the plaintiff was to have leave to start committal proceedings against you.  As to Mayo J’s order, the Court of Appeal has held that non-compliance by you had been proved beyond reasonable doubt.  In respect of what you should have done under this order, 68 Bank of China files could not be located, and in relation to 40 of them, you could not provide any information concerning the amount of the fee or the work done.  In relation to 700 of those files, you were unable to provide details in respect of work done on them.  This was an important obligation because the purpose of the order was to enable the plaintiff to assess the worth of its claim in the event that it succeeded against you.  Both Waung J, in assessing for the interim award of damages to which I have already referred, and Deputy Judge Muttrie have been highly critical of you.  Both judges were critical of the fact that you failed to keep timesheets, which, according to Deputy Judge Muttrie, had rendered the accounting process, to use his words, “fraught with difficulty”.

8.  Finally, you were able to verify that account on 4 April 2005 when you filed your sixteenth affirmation, this being 14 months after the expiry of the time limit under the January 2004 order and more than three months after the plaintiff had filed its notice of motion to seek your committal.

9.  In my judgment there has been a catalogue of delay and insufficient compliance with these orders.  The course of justice has been delayed by you.  Mr Pao has, correctly, in the course of a long and detailed plea on your behalf, referred to what you have, in the event, provided, which you have done with professional assistance.  That, undoubtedly, as I have already said, provides mitigation in the sense that you have not sat back and done nothing and I will take this into account in arriving at the appropriate penalty.  Nevertheless you could have done very much more and I am satisfied, given the limited nature of your task, the time frame for these records was not a very long one, that you could and should have fully complied within the time available to you under the 2003 and 2004 orders.  I believe that you have, in part, been actuated by the intense ill-feeling that this litigation has engendered to take a less than conscientious approach to your obligations under these orders.  It is only now at the eleventh-hour that one sees more being produced with a hope that an almost complete record will be provided by you.  I believe that the prospect of an unpleasant outcome to these proceedings for you has brought this about, rather than a sense of duty to the court, which you, as a solicitor, should be acutely aware of.   Even now there is no apology forthcoming.  I am told that you intend to take this matter to the Court of Final Appeal in order to challenge the judgment of the Court of Appeal.  Nevertheless it would have been perfectly open to you to make a sincere apology, even though you may not accept the correctness of the Court of Appeal’s judgment.  The absence of such an apology says much, in my view, about your character and the way in which you have approached your obligations.  You have allowed your hostility and ill-feeling towards your opponents to get in the way of compliance with these orders. 

10.  As a result, you must now suffer the ignominy, in my view, of being sentenced for contempt.  I have decided that I need not sentence you to a term of imprisonment.  What has persuaded me against that course is that you have, over far too long a period of time, provided substantial information and more has recently arrived, with the expectation of yet more to come which should provide enough for the court to perform its task.  I propose therefore to impose a fine, the amount of which will have to be substantial to mark the court’s disapproval of what you have done, and also to underline the gravity of what you have done.  It seems to me that you should pay a fine of $135,000.  I will now ask Mr Pow, your counsel, how long you need to pay that amount, then I will hear from Mr Jin Pao on the question of costs.

(Discussion)