CARTIER INTERNATIONAL AG AND OTHERS v. DYNASTY JEWELRY (HONG KONG) LTD AND OTHERS

CACV 232/2021, [2023] HKCA 1002

on appeal from [2021] HKCFI 138 &

[2021] HKCFI 1005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 232 OF 2021

(ON APPEAL FROM HCMP 704 OF 2018)

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J U D G M E N T

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Hon Barma JA (giving the Judgment of the Court):

1.  This was an appeal by the defendants against two judgments of Mimmie Chan J (“the Judge”).

2.  By the first judgment dated 19 January 2021 (“the Contempt Judgment”), the Judge found the defendants guilty of contempt of court by reason of their breach of (i) the provisions of a consent order dated 27 October 2017 (“the Consent Order”) and (ii) the provisions of a consent judgment dated 20 December 2017 (“the Consent Judgment”).  Both the Consent Order and the Consent Judgment were made by DHCJ Marlene Ng (as she then was) in HCA 2449/2017.

3.  By the second judgment dated 16 April 2021 (“the Penalty Judgment”), the Judge sentenced the defendants for their contempt, imposing a fine of HK$250,000 on the 1^st defendant, and sentencing the 2^nd and 3^rd defendants each to a term of 6 weeks’ imprisonment.

4.  On 10 May 2021, the defendants lodged their Notice of Appeal against both judgments. However, it is clear from the Notice of Appeal that their appeal is brought primarily against the Judge’s findings of contempt in the Contempt Judgment, and that their appeal against the Penalty Judgment is predicated on the success of the appeal against the Contempt Judgment, in which those findings were made.  It is not suggested that should the defendants fail in their appeal against the Contempt Judgment, the penalties imposed should nonetheless be set aside or reduced.  However, the defendants do contend that, even if their appeals against the Judge’s findings of contempt are unsuccessful, the costs order made in the Penalty Judgment (by which they were ordered to pay the plaintiffs’ costs of the contempt proceedings on an indemnity basis) should be varied in the light of what they contend were unsatisfactory aspects of the plaintiffs’ prosecution of the contempt proceedings.

5.  On 28 May 2021, the plaintiffs filed a respondents’ notice, by which they sought to uphold the Contempt Judgment on additional grounds and also cross-appealed against both judgments, contending that the Judge should have found additional instances of breach of the Consent Order and Consent Judgment over and above those which she did, and should in consequence have imposed heavier penalties.

6.  We heard the appeal on 17 January 2023.  At the end of the hearing we reserved judgment, which we now give.  We also extended a stay of execution which had been granted in respect of the penalties imposed by the Judge pending the delivery of our judgment.

7.  The background to this matter is as follows.

8.  The plaintiffs are subsidiaries of a Swiss company, Compagnie Financiere Richemont S.A., which produces and trades in luxury goods, in particular jewellery, under various well-known brands including Cartier, Van Cleef & Arpels and Piaget.

9.  The 1^st defendant is a company that produces and deals in jewellery.  Much of the 1^st defendant’s sales are of jewellery of its own design.  The 2^nd and 3^rd defendants who are wife and husband, are the sole directors and shareholders of the 1^st defendant.

10.  Having become suspicious of the defendants, who had contacted the plaintiffs seeking detailed information concerning the sizing and design of the plaintiffs’ jewellery, and believing that the defendants were engaged in the manufacture and sale of counterfeit items of jewellery that were copies of jewellery produced by the plaintiffs under the plaintiffs’ brands and trademarks, the plaintiffs employed private investigators (a Mr Ahmed and a Ms Humphreys) to pose as customers and visit the defendants at jewellery fairs and at the defendants’ offices in Hong Kong, with a view to gathering evidence of such illicit activities.

11.  In the course of such investigations, the investigators (mainly Mr Ahmed) were told by the defendants that they could supply jewellery copied from designs of the plaintiffs, that they had supplied such copied jewellery to customers of theirs, and were shown photographs of and samples of such copies by the defendants.  Both the investigators placed orders for and were supplied by the defendants with items of jewellery that were copies of designs of the plaintiffs.

12.  Thereafter, the plaintiffs commenced these proceedings against the defendants by a writ issued on 24 October 2017 in HCA 2449/2017.  A statement of claim was filed on 20 November 2017 seeking relief for infringement of the plaintiffs’ registered trademarks and copyright, and in respect of passing off of counterfeit products as the products of the plaintiffs.  The claims were not disputed, and, by consent, the Consent Order and the Consent Judgment were made against the defendants on 27 October 2017 and 20 December 2017 respectively.  Both the Consent Order and the Consent Judgment contained injunctions, orders for delivery up of counterfeit jewellery and associated items, and orders for disclosure of information relating to the supply to and sale by the defendants of counterfeit jewellery.  The injunctions granted in the Consent Order were interlocutory, whereas those in the Consent Judgment were final.

13.  For present purposes, it is relevant to note paragraphs 1, 2 and 3 of the Consent Order, and paragraphs 4, 5, 6 and 7 of the Consent Judgment.  These provisions contained orders for delivery up of infringing goods and items, and for disclosure of the identities of suppliers and purchasers of infringing jewellery and for provision of documents relating to such supply and sales.

14.  Dealing first with the Consent Order:

(1)  Paragraph 1 required the defendants to deliver up, within 30 days of the Consent Order, all articles and materials in their possession which, if used by the defendants, would infringe the undertakings the defendants had given.  These articles, which were collectively termed “Infringing Goods”, included jewellery or parts thereof, moulds, tools, dies, plates, templates, drawings, artworks, labels, leaflets, certificates, boxes and packaging, whether in physical or electronic form.

(2)  Paragraph 2 required the defendants to make an affidavit within 30 days disclosing (a) who had supplied and/or provided the defendants with the Infringing Goods, and (b) to whom the defendants had supplied, provided, sold, or distributed Infringing Goods (or offered to do so).  Paragraph 2 also required details to be given of such supply and sales and required supporting documents to be exhibited.

(3)  Paragraph 3 required the defendants to make an affidavit within 35 days, verifying compliance with the delivery up order.

15.  As for the Consent Judgment:

(1)  Paragraph 4 contained an order for delivery up in similar terms to paragraph 1 of the Consent Order, although “Infringing Goods” was limited only to jewellery and parts thereof, while the other items covered by the definition “Infringing Goods” in the Consent Order were termed “Offending Items”.

(2)  Paragraphs 5 and 6 repeated the disclosure order in paragraph 2 of the Consent Order, requiring disclosure of suppliers under sub-paragraph (a) of paragraph 5 and of recipients under sub-paragraph (b) of that paragraph, while paragraph 6 required disclosure of detailed information relating to sales of Infringing Goods (i.e. jewellery) such as quantities sold or remaining unsold, and the amounts received or receivable in respect of such sales, and required the disclosure of all relevant documents.

(3)  Paragraph 7 contained an order requiring the filing of an affidavit to verify compliance with the delivery up order in paragraph 4.

16.  In purported compliance with the Consent Order, the 3^rd defendant filed his 1^st affirmation dated 27 November 2017.  In that affirmation, he stated on behalf of all the defendants that the sole supplier of the Infringing Goods (i.e. both jewellery and other items) was a company in Shenzhen known as “高雅(深圳)公司”, which was referred to as “GY”.  He claimed that the 1^st defendant had ordered and received from GY a total of 20 pieces of jewellery, six packaging boxes and two certificates, and that 17 pieces of jewellery, together with the boxes and certificates, had been sold to four buyers (Mr Ahmed, the company for whom Ms Humphreys purported to act, and two individuals identified as Madam Ma and Madam Chow).  He further stated that the three remaining pieces of jewellery acquired from GY were melted down on 25 October 2017.

17.  On 18 January 2018, the 3^rd defendant filed his 2^nd affirmation in purported compliance with the Consent Judgment.  This affirmation too was made on behalf of all of the defendants.  In it, the 3^rd defendant repeated the information provided in his 1^st affirmation as to GY being the sole supplier of counterfeit jewellery to the 1^st defendant, and as to the number of Infringing Goods and Offending Items supplied, and subsequently sold or melted down.

18.  The plaintiffs were not satisfied with the information provided.  They considered that the defendants were actually themselves manufacturing counterfeit jewellery, and that there were many more items of counterfeit jewellery, over and above the 20 pieces admitted to and disclosed by the defendants, that were or had been in the possession of the defendants, so that there had been a failure on the part of the defendants to properly comply with the delivery up and disclosure orders in the Consent Order and Consent Judgment. 

19.  The plaintiffs therefore sought and obtained leave to commence committal proceedings against the defendants for alleged contempt of court, by reason of the defendants’ failures properly to comply with the delivery up and disclosure orders.  An application for leave to bring committal proceedings, supported by a statement filed pursuant to RHC Order 52 rule 2, was lodged on 3 April 2018, with leave to pursue the proceedings being granted on 7 May 2018.  The Order 52 statement contained a Schedule I, in which some 92 items of alleged Infringing Goods were identified, in respect of which the plaintiffs alleged there had not been proper delivery up or disclosure by the defendants.  Although Schedule I contained some duplication of items, there were a large number of items allegedly not properly dealt with.

20.  The contempt proceedings were heard by the Judge on 9, 10 and 12 November 2020. She delivered the Contempt Judgment on 19 January 2021.

21.  At the hearing before the Judge, it was not disputed that the plaintiffs’ trademarks and copyrights had been infringed.  The question was as to the extent of such infringement – whether it was limited to the instances admitted and disclosed by the defendants in the affirmations of the 3^rd defendant as having been obtained from GY, or whether the defendants were manufacturers of counterfeit jewellery who had dealt in copies of the plaintiffs’ jewellery on a much larger scale.

22.  There was also no dispute as to the applicable legal principles, which the Judge summarized in [11] and [12] of the Contempt Judgment.  Although it was common ground that the proceedings were civil in nature, it was accepted on both sides that the burden was on the plaintiffs to establish that the defendants were guilty of contempt of court, and to do so beyond reasonable doubt.

23.  The plaintiffs’ evidence included affirmations from Mr Ahmed and Ms Humphreys detailing their interactions with the defendants, including the purchases of counterfeit jewellery items from them.  The Judge reviewed this evidence in some detail at [21] to [36] of the Contempt Judgment.  Mr Ahmed in particular met the defendants on several occasions, both at jewellery fairs and at their offices, was shown photographs and physical pieces of jewellery that were of the same design as the plaintiffs’, and was also sent photographs via WhatsApp and was shown catalogues of jewellery which it was said could be supplied by the defendants.  He was also told on a number of different occasions that the defendants had sold items of copied jewellery (which were not disclosed in the affirmations filed in purported compliance with the Consent Order and Consent Judgment) to various customers of the defendants.  There were also other affirmations filed by employees of the plaintiffs dealing with other aspects of the plaintiffs’ case.  Although the plaintiffs offered all of their witnesses for cross-examination, only Mr Ahmed was called upon to give oral evidence, and he was cross-examined by Mr Sarony SC for the defendants.

24.  Although the defendants filed evidence in opposition to the contempt proceedings, they chose not to rely on them at the hearing before the Judge, and elected not to give evidence in their own defence.

25.  In the Contempt Judgment, the Judge identified the key issues dividing the parties as being the extent of the defendants’ infringing activities, and whether or not the defendants were themselves the manufacturers of the Infringing Goods. This latter point was the plaintiffs’ major allegation, and was heavily relied upon in support of their case that there had been breaches of and failure to fully comply with the delivery up order and disclosure orders (both in relation to suppliers and recipients of Infringing Goods).

26.  The Judge’s approach was to deal with the issues with which she was faced in two broad parts. 

27.  In the first part, the Judge dealt with the question of whether the delivery up order had been complied with.  No doubt because the issue of whether or not the defendants were themselves the manufacturers of the Infringing Goods was for practical purposes linked to the delivery up issue (it being suggested by the plaintiffs that as the defendants were the manufacturers, it was all the more likely that there had been significantly less than full disclosure of the number of Infringing Goods, such that there were almost certainly more such items, which not being accounted for should still be in the possession of the defendants, and hence liable to be delivered up), the Judge dealt in the same section of the Contempt Judgment with what she saw as the related issues of whether the defendants were themselves manufacturers (and had not simply ordered the Infringing Goods from GY), and the disclosure of information relating to the suppliers of Infringing Goods to the defendants.

28.  After considering all of the evidence, she concluded that it had not been established beyond a reasonable doubt that the defendants were themselves the manufacturers of Infringing Goods (see [55] to [68] of the Contempt Judgment).  The plaintiffs have not sought to challenge this finding in this appeal.  Having so concluded, the Judge went on to conclude that it could not be established beyond reasonable doubt that the delivery up order had not been properly complied with (see the Contempt Judgment at [69] to [76] and [78]), and that the same applied in respect of the disclosure order relating to suppliers (see paragraphs [77] and [78] of the Contempt Judgment).

29.  Having dealt with the delivery up, manufacturing and supplier disclosure issues, the Judge turned to deal separately with the question of disclosure of recipients of Infringing Goods (at [79] to [94] of the Contempt Judgment).

30.  As to this, she considered six occasions on which the defendants told Ahmed that they had sold or would sell pieces of copied jewellery to other customers, none of which had been disclosed in the 3^rd defendant’s affirmations made in purported compliance with the Consent Order and the Consent Judgment.  While she declined to find any breach of the disclosure order relating to recipients in relation to two such instances, she was satisfied that in relation to the other four instances it had been demonstrated beyond reasonable doubt that there had been further, undisclosed, sales of Infringing Goods, so as to establish that the recipient disclosure order had not been properly complied with, and that the defendants were therefore in contempt of court in respect of such non‑compliance.

31.  The four instances in respect of which the Judge found that the defendants were guilty of breach of the recipient disclosure order were as follows:

(1)  A statement made by the 2^nd defendant to Mr Ahmed on 22 June 2017 to the effect that the defendants had some customers who kept on ordering the Love bracelet from them.

(2)  A statement made by the 2^nd defendant to Mr Ahmed on 18 July 2017 that at the Singapore Jewellery and Gem Fair held the previous week, the defendants had sold all of their Cartier and Van Cleef & Arpels copied items (along with copies of other brands of jewellery such as Bulgari, Tiffany and Chanel) and that a “UK client” had purchased a large quantity of such items.

(3)  A statement made by the 3^rd defendant to Mr Ahmed also on 18 July 2017 by which he invited Mr Ahmed to visit the defendants’ offices two days later so that he could show Mr Ahmed some new Cartier and Van Cleef & Arpels counterfeits which he had just provided for another client.

(4)  An occasion on 18 August 2017 when the 2^nd defendant sent to Mr Ahmed by WhatsApp photographs of three pieces of Cartier jewellery (being a Les Oiseaux Liberes ring, a Panthere de Cartier necklace and a Caresse d’Orchidees necklace) and invited Mr Ahmed to visit the defendants’ offices to look at them before they were delivered the next day.

32.  The two other occasions, which the Judge did not consider established a breach of the recipient disclosure order beyond a reasonable doubt were:

(1)  Mr Ahmed’s account of his having seen the 3^rd defendant greeting a Caucasian man on 22 June 2017 at the Hong Kong jewellery fair, who was later described by the 3^rd defendant to Mr Ahmed as his “number one customer in Europe”.

(2)  A conversation overheard (and recorded) by Mr Ahmed on 22 August 2017, while he was with the 3^rd defendant, in which the 3^rd defendant spoke to someone named Jonathan about a “heart shape for Piaget”.

33.  Essentially, the Judge did not consider that the two occasions referred to in [32] above could prove beyond reasonable doubt that there had been other undisclosed sales of Infringing Goods so as to establish a breach of the recipient disclosure order. In relation to the occasion on 22 June 2017, she pointed out that the man referred to by the 3^rd defendant could have been a customer in respect of the defendants’ legitimate jewellery business (which was large and successful).  In relation to the conversation with “Jonathan” on 22 August 2017, she felt that the mere reference to a “heart shape for Piaget” was not sufficiently clear to enable her to be sure that some specific item of copied jewellery was being referred to so as to justify a finding that there had been a sale of counterfeit jewellery.

34.  However, in relation to the four instances identified in [31] above, the Judge was satisfied that the references to particular brands and models of jewellery were sufficiently specific to be clear admissions by the defendants of sales by them of such jewellery, none of which had been disclosed in the affirmations of the 3^rd defendant, leading to the conclusion that there had, beyond reasonable doubt, been a breach of the recipient disclosure orders.

35.  The Judge therefore held at [94] to [95] of the Contempt Judgment that the defendants were guilty of contempt of court for failing to fully comply with the recipient disclosure orders at paragraph 2(b) of the Consent Order and paragraphs 5(b) and 6 of the Consent Judgment.

36.  Following a further hearing in relation to sentencing, by the Penalty Judgment, the Judge, applying sentencing principles for contempt that were not controversial, sentenced the defendants for their contempts by imposing a fine of HK$250,000 on the 1^st defendant, and sentences of 6 weeks’ imprisonment on each of the 2^nd and 3^rd defendants.

37.  By their Notice of Appeal, the defendants seek to challenge the Judge’s findings of contempt against them in the Contempt Judgment.  They also, as noted in [4] above, seek to set aside or vary the indemnity costs order made against them in the Penalty Judgment.

38.  By their respondents’ notice, the plaintiffs seek to uphold the findings of contempt on additional grounds, contending that the Judge should have additionally found the defendants guilty of more extensive contempts of court by reason of their failure to address and deal with all the additional Infringing Goods identified in Schedule 1 to the respondents’ notice.  They also advance a cross-appeal, seeking findings of contempt in relation to the defendants’ failure to comply with the supplier disclosure orders in respect of sales or disposals in respect of which the Judge found that there had been a breach of the recipient disclosure orders.  Finally, they seek heavier sentences to be imposed at the discretion of this court, depending on the outcome in respect of these matters.

39.  We will deal first with the defendants’ appeal.  The grounds of appeal put forward in the Notice of Appeal are extensive.  However, they were helpfully summarized by Mr Sarony SC in his written submissions as follows:

(1)  (Grounds 1 to 3 of the Notice of Appeal) the Judge’s finding of guilt in respect of the breach of the recipient disclosure order by reference to the four instances of self-confessed dealings in Infringing Goods relied upon by the Judge was inconsistent with the rest of the Judge’s decision, which acquitted the defendants of contempt in respect of the delivery up and supplier disclosure orders and rejected the bulk of the plaintiffs’ case, particularly the main plank which was premised on the allegation that the defendants were themselves manufacturers of counterfeit jewellery.  In particular:

(a)  it was said that the Judge had failed to have regard to the existence or otherwise of recordings of conversations between Mr Ahmed and the 2^nd or 3^rd defendants (as she apparently did in the context of the manufacturing allegation at [60] of the Contempt Judgment);

(b)  it was said that the Judge had failed to have regard to whether or not the statements of the defendants as to additional customers and sales were mere “puffery” or boasting by way of “sales talk” (as she apparently did in the context of the manufacturing allegation at [61] of the Contempt Judgment);

(c)  any adverse inference to be drawn should be the only one that could reasonably be drawn (as the Judge had stated at [62] and [67] of the Contempt Judgment) and that if there was a reasonable inference consistent with innocence, the defendants were entitled to be acquitted;

(d)  evidence of conversations should be considered in their context and in their entirety;

(e)  regard should be had to the existence or otherwise of other facts that would support a finding of guilt beyond reasonable doubt;

(f)    it was also suggested that the findings of contempt in relation to undisclosed sales was inconsistent with the Judge’s earlier acceptance that it was quite possible that the defendants had only obtained 20 items of Infringing Goods from GY (along with some packaging and labels), all of which had been accounted for.

(2)  (Grounds 4, 5 and 7 to 9 of the Notice of Appeal) this was essentially an attack on the Judge’s acceptance of Mr Ahmed’s evidence as to what had been said to him by the defendants, on the basis that Mr Ahmed’s evidence was flawed and unsatisfactory, particularly in relation to his production of a partial recording of one conversation on 22 June 2017, and his failure to record other conversations.  Other general criticisms of Mr Ahmed’s evidence were also made, including a complaint (made in Mr Sarony’s written submissions) that there was no evidence of there having actually been a Singapore fair.  Finally, it was said that the Judge should have been satisfied that documents allegedly not produced were in existence at the time the orders were made, before finding that there had been a breach of the orders, as it could not be a breach not to produce documents which no longer existed.

(3)  (Ground 6 of the Notice of Appeal) it was suggested that the Judge should have taken account of the fact that the defendants had voluntarily disclosed the sales to the company which Ms Humphreys had professed to represent, as showing that the defendants were willing to disclose the sales of Infringing Goods they had effected.

(4)  (Grounds 10 and 11 of the Notice of Appeal) the plaintiffs’ conduct of the contempt proceedings was criticized as being based on selective disclosure and for pitching their case too high (by their pursuit of the allegation that the defendants were manufacturers), this being suggested to be a ground for varying the costs order so as not to order indemnity costs against the defendants.

40.  The first three sets of arguments set out at [39(1)] to [39(3)] above seek to overturn the Judge’s factual findings as to the existence of additional sales to customers of the defendants which had not been disclosed by them, so as to be in breach of the recipient disclosure orders in the Consent Order and Consent Judgment.  This court will only overturn such factual findings if they were plainly wrong, whilst bearing in mind that the allegations must be proved beyond reasonable doubt.  In other words, the defendants must show that the Judge was plainly wrong in concluding that it had been proved beyond reasonable doubt that they had made the additional undisclosed sales.

41.  In our view, the Judge was fully entitled to come to the conclusions that she reached.   We shall first explain why, in our view, the evidence before the Judge was sufficient to justify her in concluding that it had been proven beyond a reasonable doubt that the additional undisclosed sales listed in [91] to [93] of the Contempt Judgment had been made.  We shall then go on to deal with the criticisms made by the defendants, which have been summarized at [39(1)] to [39(3)] above, and explain why we do not consider them to be valid.

42.  We shall deal with the undisclosed sales in the same order as they were set out in [91] to [93] of the Contempt Judgment.

43.  First, in [91] of the Contempt Judgment, the Judge dealt with the three Cartier items (the Les Oiseaux Liberes ring, the Panthere de Cartier necklace and the Caresse d’Orchidees necklace) that the 2^nd defendant informed Mr Ahmed by WhatsApp message dated 18 August 2017 were to be sold to a customer and were to be delivered the following day, and invited Mr Ahmed to visit the defendants’ office to view them.  The Judge concluded that as this was a reference to specific items of jewellery, which were not delivered up and thus must no longer have been in the defendants’ possession, the only reasonable inference was that they were indeed sold as indicated by the 2^nd defendant to Mr Ahmed.  The sale was not disclosed in the 3^rd defendant’s affirmations and no information as to the customer or the sale was provided.

44.  There was, in our view, ample evidence to justify the conclusion reached by the Judge.  This was summarized by Mr Philips Wong, for the plaintiffs, in his written submissions and included the following:

(1)  The statement of the 2^nd defendant to Mr Ahmed, made by WhatsApp message dated 18 August 2017, when she invited Mr Ahmed to visit the defendants’ office to see the Infringing Goods before they were delivered to clients the following day.  This was a message originating from the 2^nd defendant.

(2)  The fact that photographs of these particular Infringing Goods were sent by the 2^nd defendant to Mr Ahmed by WhatsApp messages also dated 18 August 2017.  These messages also originated from the 2^nd defendant.

(3)  Mr Ahmed stated in his evidence that he did in fact visit the defendants’ office on 18 August 2017, and saw the three items and took photographs of them (and other jewellery).  His photographs of the three items were also in evidence before the Judge.

(4)  The foregoing evidence was not challenged by the defendants.  Although Mr Ahmed was cross-examined by Mr Sarony, he was not cross-examined on this episode, and there was no challenge to his evidence in relation to it.

45.  Such evidence was, in our view, clearly sufficient to establish beyond a reasonable doubt that the three items in question existed, were in the possession of the defendants, and being no longer in their possession, were sold by the defendants as the 2^nd defendant had told Mr Ahmed would be done.  It therefore followed that the defendants were obliged to disclose such sale in their affirmations filed in answer to the Consent Order and Consent Judgment, and not having done so, were guilty of a breach of those orders as found by the Judge.

46.  Second, in [92] of the Contempt Judgment, the Judge concluded that the statement by the 2^nd defendant to Mr Ahmed on 18 July 2017, to the effect that she and the 3^rd defendant had attended the Singapore Fair and had sold their Cartier, Van Cleef & Arpels and other branded jewellery at the Fair, was a clear admission of having made sales of jewellery, which again had not been disclosed as required by the recipient disclosure orders, and hence amounted to a breach of the orders.

47.  Again, it seems to us that it was justified for the Judge to be satisfied beyond reasonable doubt that such sales had taken place.  Quite apart from the statement by the 2^nd defendant to Mr Ahmed referred to by the Judge, Mr Wong has pointed out that:

(1)  A statement to the effect that the 3^rd defendant had been to the Singapore Fair had also been made by the 3^rd defendant in a WhatsApp message to Mr Ahmed also dated 18 July 2017.

(2)  A similar statement to that made by the 2^nd defendant was also made by the 3^rd defendant to Mr Ahmed at the defendants’ office the same day.

(3)  None of this evidence was challenged by the defendants despite Mr Ahmed having been cross-examined by the defendants’ counsel.

48.  Such evidence was sufficient to entitle the Judge to come to the conclusion that she reached, and it cannot be said that she was plainly wrong to have done so. This is particularly so as (for the reasons which we explain below) the defendants’ complaints as to the Judge’s findings are without substance.

49.  Third, also in [92] of the Contempt Judgment, the Judge found on the basis of the statement by the 2^nd defendant to Mr Ahmed on 22 June 2017 that the defendants had some customers who ordered Cartier Love bracelets from them, that there had been an admission by the 2^nd defendant of such sales having taken place, which, not having been disclosed as required by the recipient disclosure orders, constituted a further breach of such orders.

50.  As Mr Wong pointed out, this evidence of Mr Ahmed’s was supported by a recording of his conversation with the 2^nd defendant (which was the subject of criticism by the defendants as what was produced does not seem to have been the complete recording).  It was also noted by Mr Wong that it was not put to Mr Ahmed that the statement was not in fact made, nor that it was mere sales talk.

51.  In these circumstances, while the evidence may be slightly less than existed in respect of the first two instances, it was in our view nonetheless sufficient to support the Judge’s finding, being based on the statements of the 2^nd defendant herself.

52.  Finally, in [93] of the Contempt Judgment, the Judge concluded that there had been a further breach of the recipient disclosure orders which was established by the 3^rd defendant’s statement to Mr Ahmed on 18 July 2017 that the defendants had just provided Cartier and Van Cleef & Arpels items to another client.  The Judge considered this to be a further clear reference to the sale or supply by the defendants to their clients of Infringing Goods, which again had not been disclosed as required by the recipient disclosure orders.

53.  As to this instance, Mr Wong drew our attention to the following additional matters:

(1)  That on 18 July 2017, Mr Ahmed had been asked by the 3^rd defendant if he could return to the defendants’ office to view the items in question, which he was told would be available at 4 pm on 20 July 2017.

(2)  There was no challenge to this evidence during the cross-examination of Mr Ahmed.

54.  As with the finding in relation to the sale of Cartier Love bracelets, although this evidence is less than that available in relation to the first and second instances of breach found by the Judge, it was in the same way sufficient to support the Judge’s finding.

55.  Turning to the specific criticisms made in the Notice of Appeal, we do not consider these to be well founded.

56.  We shall deal first with the allegations of inconsistency between the Judge’s findings in relation to the manufacturing and supplier allegations and her findings in relation to the breach of the recipient disclosure orders, which were contained in grounds 1 to 3 of the Notice of Appeal, and summarized in [39(1)] above.

57.  At the outset, it must be pointed out that the position in relation to the allegations of manufacturing and that in relation to the undisclosed recipients were very different.  The manufacturing allegations were allegations by the plaintiffs which the Judge carefully considered and found not to be proved beyond a reasonable doubt.  There was no prior admission on the part of the defendants to having manufactured Infringing Goods.  They maintained that their manufacturing facilities were only for the production of legitimate jewellery. However, the starting point for determining whether or not there had been any breach of the recipient disclosure orders was very different.  The defendants had disclosed some instances of obtaining Infringing Goods from GY and selling them on to the two investigators and two other customers.  This is a highly material consideration when assessing the complaints now made against the Contempt Judgment.

58.  Further, it must be borne in mind that unlike the situation in relation to the manufacturing allegations, the basis for the Judge’s findings as to the breaches of the recipient disclosure orders were statements made by the defendants themselves, some of which were documented, as they were by way of WhatsApp messages.  This self-evidently carries greater weight against the defendants’ protestations of innocence.

59.  The defendants’ complaint that the Judge did not pay the same regard to the absence of recordings of conversations between Mr Ahmed and the defendants as she did in the case of the manufacturing allegation as appears from [60] of the Contempt Judgment is not well founded.  What the Judge was saying in [60] was that there was no clear admission of manufacturing in the conversation between the 3^rd defendant and Mr Ahmed at the Hong Kong Fair that was relied upon as evidence of manufacturing.  That conversation was recorded, albeit not the whole of the recording was produced.  It is not surprising that the Judge noted that had there been a clearer admission, a recording of it might have been expected to have been produced.  However, the admissions in relation to additional recipients related to four separate instances on three different dates.  There was no suggestion that the meetings on 18 July or 18 August were recorded.  In relation to the statement on 22 June 2017 about the Cartier Love bracelets, made at the Hong Kong Fair (the same occasion as mentioned in [60] of the Contempt Judgment), there was a recording (albeit partial) which was produced to support the making of the statement.  As Mr Wong submitted, it was not put to Mr Ahmed that he had made recordings on 18 July or 18 August, but chosen not to produce them.  There is therefore no basis for suggesting that the Judge was somehow inconsistent in her approach to recordings – where there was one, she had regard to it, but where there was not (and no suggestion that one had been made), it was not a factor that needed to be taken into account.

60.  Further, even though there was no recording of the 18 July 2017 and 18 August 2017 conversations or meetings, there were WhatsApp messages emanating from the defendants which supported the Judge’s findings, so the absence of recordings is of little consequence.

61.  Similarly, we do not think that the Judge’s failure to consider that the statements about other customers might be mere sales talk (as the defendants suggest she did in relation to the manufacturing allegation at [61] of the Contempt Judgment) is a valid criticism.  There are a number of reasons for this:

(1)  It is far from clear that the Judge was in fact accepting that the statements of the defendants as to manufacturing were mere sales talk.  For the reasons which she gave, the Judge concluded that the defendants were not proven beyond a reasonable doubt to be engaged in the manufacture of Infringing Goods.  At [61] of the Contempt Judgment, the Judge appears to us to be doing no more than to record a submission made by Mr Sarony, without clearly expressing agreement with it.

(2)  In any event, there was no evidence from the defendants to suggest that their statements (whether in relation to manufacturing or sales to other customers) were mere sales talk.  The defendants elected not to rely on their affirmations made for the purposes of the contempt hearing, and did not offer themselves for cross-examination. Although Mr Sarony submitted that the court should give the defendants the benefit of all reasonable doubts before convicting them of contempt, it seems to us that where a positive case (such as statements being mere sales talk or boasting) is being put forward to explain away statements that might reasonably be accepted as statements of fact, it is necessary for some evidential basis to be laid before the court can be asked to have regard to the explanation.  No such evidential basis was laid here.  In addition, it was not even explored with Mr Ahmed in evidence – it was not put to him that the statements as to other customers were (or might have been) sales talk, or that he understood or should have understood them as such.

62.  Further, given that there had been other disclosed actual sales of Infringing Goods by the defendants (to the investigators, Madam Ma and Madam Chow), there was no reason to think that other admissions of sales of Infringing Goods in the four cases accepted by the Judge as proof of such sales were mere sales talk, as opposed to genuine admissions.

63.  Finally, it is in our view impossible to view the instance on 18 August 2017, when specific items were referred to, photographs of them sent, and Mr Ahmed asked to come and view them (which he did), as being mere sales talk.  That being so, we do not think that the Judge can fairly be criticized for taking the defendants’ statements at face value.

64.  It may also be noted that the “sales talk” allegation was raised in the evidence filed by the defendants for the sentencing hearing, but was rejected by the Judge at [14] of the Penalty Judgment.  There is no reason to think that had it been raised at the contempt hearing, the Judge would have come to any different conclusion.

65.  The allegations that the Judge was inconsistent as to her application of well known principles applicable to proceedings for contempt of court (set out at [39(1)(c) to (e)] above) are equally without merit.  There is simply no basis for thinking that the Judge, who was well aware of such principles and had assiduously applied them when acquitting the defendants in relation to the manufacturing allegation, would have failed to apply them in relation to the question of whether there had been proper compliance with the recipient disclosure orders.

66.  The final point to note is that it was suggested that there was an inconsistency between the findings of contempt in relation to the recipient disclosure order and [69] of the Judgment, where the Judge stated that it was not unbelievable that the defendants had only ordered 20 pieces of Infringing Items from GY.  However, it seems to us that the focus at [69] was on possession of remaining Infringing Goods from GY as at the date of the 3^rd defendant’s 1^st Affirmation and in any event, it seems to us that the relevant question is whether or not the evidence before the Judge was sufficient to justify her findings that there had been additional undisclosed sales and therefore a breach of the recipient disclosure orders.  For the reasons we have explained above, we are firmly of the view that there was such evidence, and that the Judge was entitled to make the findings which she did.

67.  Turning to grounds 4, 5, 7, 8 and 9 of the Notice of Appeal (summarized at [39(2)] above), the main thrust of these grounds was an attack on Mr Ahmed’s evidence. However, it seems to us that it was for the Judge to assess the credibility of that evidence and that she has done so by accepting it as reliable in relation to the statements of the defendants as to the undisclosed sales.  It seems to us that she was entitled to do so, particularly as there was no challenge to his evidence as to the making of the statements, and it was the making of the statements by the defendants that was the foundation of the Judge’s findings that there had been breaches of the recipient disclosure order.  Moreover, as we have previously noted, in two of the instances, there was additional evidence in the form of WhatsApp messages from the defendants, which clearly supported the Judge’s findings.

68.  As to the suggestion in Mr Sarony’s submissions that there was no evidence that there had actually been a Singapore Fair, we do not think that this point is one that is open to him, as it was not taken below (and had not been suggested to Mr Ahmed) and is contrary to the statements of the defendants themselves. It would be unfair to allow it to be raised now, as the plaintiffs might well have been able to obtain evidence to deal with the point had it been raised below.

69.  Finally, there was a suggestion by Mr Sarony that the Judge needed to have been satisfied that documents relating to the undisclosed sales actually existed at the time the orders were made.  We do not think this takes the defendants anywhere as the obligation was not simply to produce documents, but to disclose the fact of the sales.

70.  As for ground 6 of the Notice of Appeal, the fact that the defendants disclosed the sales to Ms Humphrey’s supposed employer has no bearing on whether or not they had failed to disclose the other sales in respect of which the Judge found them guilty of a breach of the recipient disclosure order.

71.  For all of the foregoing reasons, we are satisfied that the Judge was correct to find the defendants guilty of contempt of court on the basis that she did.

72.  Turning finally to grounds 10 and 11 of the Notice of Appeal, these seek to suggest that a different costs order should have been made below.  The Judge ordered the defendants to bear the plaintiffs’ costs of the proceedings on an indemnity basis.  The defendants submit that having regard to the way in which the proceedings were conducted by the plaintiffs a different costs order should be made.  However, no suggested alternative order was put forward by the defendants.  In our view, the question of costs was one which was clearly within the Judge’s discretion.  It is common to impose orders for indemnity costs on a party found guilty of a contumelious breach of a court order.  This may also be regarded as part of the punishment imposed by the court for the contempt. In all of the circumstances, we see no basis for interfering with the costs order that was made.

73.  For all of the foregoing reasons, the defendants’ appeal is dismissed.

74.  Turning to the plaintiffs’ respondents’ notice to affirm and cross-appeal, these can be dealt with relatively briefly.

75.  Insofar as the plaintiffs seek to affirm the judgment on the basis that there were further breaches of the Consent Order and Consent Judgment beyond those found by the Judge, we enquired of Mr Wong at the hearing whether or not the matters now relied upon were the subject of submissions to the Judge at the contempt hearing below.  Mr Wong, who was not involved in the hearings below, very fairly accepted that these matters, although mentioned in the contempt statement, were not in fact expressly raised or developed at the contempt hearing.  That being the case, we do not think that it would be appropriate to go into these matters, which have not been the subject of consideration by the Judge, when she was not invited to deal with them.

76.  As for the cross-appeal, Mr Wong contended that in the light of the Judge’s finding of contempt in relation to the failure to fully comply with the recipient disclosure order, it necessarily followed that there were corresponding failures to comply with the supplier disclosure order in relation to the Infringing Goods under each of the four instances identified by the Judge.  Mr Sarony did not seriously dispute this.  It is clear that having regard to the defendants’ position that they were not manufacturers of Infringing Goods, the goods the subject of the four instances must have been obtained from a supplier, whether GY or someone else.  That supplier has not been disclosed, and there has therefore been a corresponding breach of the supplier disclosure orders, resulting in the defendants being in contempt of court in this regard also.

77.  We shall therefore allow the cross-appeal to this extent.

78.  The cross-appeal also sought to vary the sentence as the court thought fit, in the light of its conclusions as to the respondents’ notice.  Given that the additional breaches relate to the same four instances as found by the Judge, and that the breach of the supplier disclosure orders is the necessary corollary of the breach of the recipient disclosure orders found by the Judge, we do not think it appropriate to increase the sentences passed by the Judge, and we shall leave the sentences undisturbed.

79.  As for the costs of the appeal, the parties are to provide written submissions within 14 days from the date of this Judgment and we shall deal with the issue on paper.