RE WING FAI CONSTRUCTION CO LTD

HCCW 735/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 735 OF 2002

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R U L I N G

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1. I am asked to give a ruling on a point of procedure in an application by Kelly Cheng Kit Yin and Robert Yip Kwong to commit David John Kennedy for contempt.

2. Ms Cheng and Mr Yip are former directors of Wing Fai Construction Company Limited ("the Company"). Mr Kennedy is a joint and several liquidator of the Company. The point of procedure involved is whether Mr Kennedy has an absolute right to withhold his evidence until after making his submission of no case to answer, or whether the court should have a discretion to put Mr Kennedy to his election whether to adduce evidence before ruling on his submission of no case.

3. These are the two alternatives posed before Knox J in Barclays de Zoete Wedd Securities Limited v Nadir, 27 February 1992 Lexis transcript. It was not suggested in Barclays, nor has it been suggested in the present case, that a respondent in contempt proceedings is in all cases bound to be put to his election before a ruling is given on the question whether or not there is a case to answer.

4. It has not been finally resolved in England if a respondent in this situation is entitled, without being put to his election, to make a submission of no case. In In re B (A Minor)(Contempt of Court: Affidavit Evidence) [1996] 1 WLR 627 at 638H, Wall J expressed the view on an obiter basis that a respondent has such a right, but given the conflicting authorities on the point, this would need to be resolved by a higher court. See also Arlidge, Eady and Smith on Contempt, second edition, para 15-39.

5. The state of the English authorities may be summarised as follows.

6. In In re W (Wards)(Publication of Information) [1989] 1 FLR 246, a submission of no case was made by various respondents. Sir Stephen Brown P ruled there was no case to answer in respect of some and ruled that there was a case to answer in respect of other respondents. The latter class of respondents then called evidence. The judge did not apply the rule in civil proceedings that the court will decline to rule on a submission of no case unless the defendant or respondent makes it clear he will not call evidence. There was no discussion in In re W why the respondents were entitled to withhold their evidence until after a ruling was made on the submission of no case.

7. There were then two decisions of Scott J (as he then was), neither decision was reported in full and I take the extracts of these decisions from In re B and Barclays.

8. In Savings and Investment Bank Limited v Gasco Investments (Netherlands) BV (No. 2)(1986) 136 NLJ 657, Scott J said that a respondent to a committal application for contempt is:

"entitled, without being put to election, to make a submission of no case at the end of the plaintiff's evidence. In ordinary civil cases a defendant cannot make a submission of no case to answer except on being put to his election himself to call no evidence. In criminal cases, on the other hand, a submission of no case can be made at the end of the evidence for the prosecution without the defendant being put to any such election. The criminal rule has been adopted for the purposes of committal applications."

9. It was observed by Wall J in In re B that although Savings and Investment Bank went on appeal, the Court of Appeal did not comment in terms upon the passage cited above.

10. The other decision is Bhimji v Chatwani, reported in [1991] 1WLR 989 but not on this point. The relevant passages in Scott J's judgment quoted in Barclays read as follows:

"Applications for committal for contempt of court have, it is plain, a quasi-criminal character. The respondents are at peril of punishment, whether by imprisonment, or by fine, or merely by condemnation in costs (see In re Bramblevale [1970] Ch 128). But the present proceedings, whatever their quasi-criminal character may be, are not criminal proceedings; they are civil proceedings (see Savings and Investment Bank Limited v Gasco NV)(No 2) [1988] Ch 422).

Some of the rules that apply to criminal trials, designed for the protection of defendants and to ensure that the innocent are not convicted, have been imported into proceedings for contempt. For example, the criminal standard of proof, beyond all reasonable doubt, is required to establish contempt. The right of a respondent to a committal application to submit no case to answer without being put to his election as to whether he will or will not call evidence applies too, but there is no need in my opinion to commit for contempt rigorously to follow as if by rote every single rule of procedure and practice applicable to criminal trials."

"Adverse comment on the absence of explanation cannot be made at a stage before the opportunity to give evidence has arrived. The defendants are entitled to submit no case to answer without being put to their election. In many cases the evidence in support of the application might be insufficient to justify allowing the application to proceed any further, but in a case where the inference to be drawn from the absence of explanation might be sufficient to turn the scale, in my judgment a no case to answer submission should not be accepted."

11. As pointed out by Knox J in Barclays, these explicit statements of Scott J, that a respondent to a committal motion is entitled to submit no case to answer without being put to his election, were made without giving any reason or citing any authority in support. They are nevertheless statements of law which command respect.

12. The next decision is Barclays, in which Knox J declined to follow the approach of Scott J. It was held whether a respondent should be put to election on a submission of no case is a matter of discretion for the judge. The proceeding before Knox J was one of civil contempt. He took the view that in proceedings for civil contempt, and as these are civil proceedings, where there is justification for importing protections devised by the criminal law for the benefit of the accused, they will be imported. He distinguished between two sets of circumstances under which a respondent may submit he has no case to answer. The first is where it is argued that even accepting the applicant's evidence at face value, no case has been established in law. The second is where the evidence led by the applicant is so unsatisfactory or unreliable that the court should find the burden of proof has not been discharged. Knox J went on to say as follows:

"On balance I have reached the conclusion that the civil procedure is adequate to give a respondent all proper protection. The procedures of striking out and preliminary points of law cover the category of case where it is submitted that even if the applicant's evidence is accepted, still in law there is no case to answer. It is only in regard to those cases where what is said is that the evidence is not strong enough that the respondent runs a risk of having to decide whether or not to give evidence before submitting there is no case to answer. But it is notable that even if the criminal procedure is adopted what is involved is not a balancing exercise of the evidential strength, but an assessment whether there is any evidence upon which the court, properly directing itself, could find that a contempt has been established.

The risk of causing an injustice by requiring a defendant either to take a preliminary point by way of striking out or preliminary issue, or to have all the evidence on both sides heard at once, if he wishes to give evidence, if one takes into account the residual judicial discretion is in my view very slight indeed. Effectively, what the respondent is being asked to do is to challenge the validity of factual evidence against him if there is to be such a challenge in one stage and not in two. The disadvantages of the two stage process discerned in Alexander v Rayson do apply to contempt proceedings and are not, in my judgment, outweighed by such risk as there is involved in putting a respondent to his election."

13. The last case is In re B. Wall J reviewed all the authorities referred to above. He followed the approach in In re W and the two decisions of Scott J. The reasons for doing so were given only briefly, no doubt because the point did not arise directly in the instant case, and he said as follows at 638H:

"In my judgment, a respondent's right to make a submission of no case without being put to an election seems to me to follow logically both from Comet Products UK Limited v Hawkex Plastics Limited [1971] 2 QB 67 and from the unqualified terms of RSC, Order 52 rule 6 (4)."

14. The extracts in the judgment of Comet Products cited earlier by Wall J are to the effect that a respondent to a motion to commit for contempt is not a compellable witness and cannot be compelled to submit to cross-examination on an affidavit he has filed until such affidavit has been deployed in evidence.

15. Order 52 rule 6 (4) then found in the English Rules of the Supreme Court (the provision in Hong Kong is the same), read as follows:

"If on the hearing of the application the person sought to be committed express a wish to give oral evidence on his own behalf, he shall be entitled to do so."

16. I gather that the underlying rationale of Wall J is probably encapsulated in this statement expressed earlier at 638A:

"In committal proceedings it is clear that the court must always permit but cannot compel a respondent to give evidence: RSC Order 52 rule 6(4); Comet Products UK Limited v Hawkex Plastics Limited [1971] 2 QB 67."

17. Mr Whitehead, SC who appeared for the applicants, submitted that the approach in Barclays should be followed. Mr Yu, SC, who appeared for Mr Kennedy, naturally relied on In re B. In the alternative, Mr Yu submitted take that if it should be held that the court has a discretion whether to put Mr Kennedy to his election, the discretion should be exercised against putting him to such an election. Three reasons were advanced for this.

18. Firstly, the present application is a motion to commit for criminal contempt, not a case of civil contempt, so Barclays is distinguishable on that basis. Secondly, Mr Yu informed the court that in his submission of no case, he is not asking the court to form a view on the quality of the evidence such as that the applicants' evidence is unsatisfactory or unreliable and that the burden of proof has not been discharged. His primary contention would be, as a matter of law, no case for contempt has been made out. He would also submit that no evidence has been adduced to prove the essential elements in the alleged charges, and both the actus reus and mens rea have not been established. Thirdly, there is no possible prejudice to the applicants if the respondent is not put to such an election.

19. Here, the choice is between an absolute right of the respondent in withholding evidence on his submission of no case or a discretion in the court whether to put the respondent to his election on a submission of no case.

20. I am more inclined to agree with the reasoning in Barclays, although I recognize that Barclays is not directly applicable as it is a case of civil contempt. I am also mindful of the decision of Gall J in Secretary for Justice v Apply Daily Limited and Another [2002] 2 HKC 739. In that case, Gall J dismissed an application for a Norwich Pharmacal type of order in proceedings for criminal contempt, holding at 748G that the distinction between civil and criminal contempt exists and that the criminal law should prevail as to the procedure to be applied in respect of criminal contempt.

21. I would have liked more time to reflect on this point, which I do not find to be an easy one. For present purpose, I propose to resolve the matter in this way: I rule that Mr Kennedy is not required to elect whether to give evidence on a submission of no case. It is unnecessary to form a definite view if that is because he has an absolute right to withhold evidence in that situation or whether it is because of the exercise of the discretion of the court in his favour.

22. Assuming against Mr Yu that Mr Kennedy would have no absolute right to withhold evidence on a submission of no case, I would still have exercised my discretion in favour of not requiring him to make an election whether to adduce evidence.

23. I think there is a lot to be said of the undesirability of asking the court to express an interim view on the quality of the evidence where a submission of no case is made on the basis that the evidence adduced by the applicant is unsatisfactory or unreliable. If that is the basis for submission of no case, the assessment of the quality of the evidence should be done in a one-stage process instead of in two stages. That may be a reason for the exercise of the court's discretion to require a respondent to make an election whether to give evidence. Here, that is not the basis for Mr Yu's submission of no case. So much of the objection that may be taken if the respondent is not required to make an election is not present.

24. As a result of this ruling, the court would be inconvenienced to some extent in that these proceedings may have to be adjourned pending the outcome of the submission of no case, but I do not consider that to be a factor to influence the exercise of the discretion against the interest of Mr Kennedy. I also do not think it relevant in the exercise of my discretion that Mr Kennedy has not resorted to other avenues that may be open to him, such as a striking out application or an application to set aside the ex parte order or taking a preliminary point of law.