KOT SEE FOR v. CHAN LEONG HANG

HCMP 2323/2020

[2021] HKCFI 2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2323 OF 2020

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REASONS FOR DECISION

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1.  On 7 July 2021, I ordered the sum of $100,000 paid into court by the defendant as bail money (“Bail Money”) to be paid out to the plaintiff to partially satisfy the costs awarded to him in these proceedings and further awarded the costs of and occasioned by the application, summarily assessed at $20,000, to the plaintiff. I now give reasons.

2.  By way of background:

(1)    On 24 February 2021, notwithstanding the defendant’s absence at the hearing, I found him guilty of contempt of court in not complying with the disclosure order (“Disclosure Order”) ancillary to a proprietary/Mareva injunction granted on 26 November 2019 in HCA 2208/2019 regarding 3 sums of money (adding up to $15 million) said to have been defrauded from the plaintiff and paid into the defendant’s bank account.

(2)  A warrant for the defendant’s committal was issued, which led to his apprehension and being brought before this court on 2 March 2021.  Pending sentence, he was released on bail on conditions, one of which was the payment into court of the Bail Money.

(3)  On 6 May 2021, I committed the defendant for a term of imprisonment of 6 months, suspended for 14 days for a last opportunity to the defendant to comply with the Disclosure Order.

(4)  The 14-day suspension expired on 20 May 2021, with the Disclosure Order remained unperformed.

(5)  The defendant did not file an affirmation purportedly to comply with the Disclosure Order until 21 May 2021, without leave of the court.

(6)  In view of his failure to purge his contempt within the stipulated time, this court ordered on 24 May 2021 that the defendant be immediately committed to prison for 6 months from the date of his apprehension.  A second warrant was issued for his arrest.

(7)  The defendant has remained at large.

(8)  By the orders dated 24 February 2021 and 6 May 2021, the defendant is to pay the plaintiff the costs of and occasioned by the originating summons herein up to 24 February 2021 and since 24 February 2021, summarily assessed at $120,000 and $110,000 respectively, within 14 days from 6 May 2021.

(9)  The costs so ordered and assessed against the defendant remains due and unpaid.

3.  The defendant did not appear at the hearing yesterday.  I was, however, satisfied upon reading the second affirmation of Hon Kin Fai dated 23 June 2021 that true copies of the Summons and the supporting second affirmation of Chen Hoi Kei dated 17 June 2021 had been duly served on the defendant on 18 June 2021 by ordinary prepaid post to the address last reported by him as his address in the notice to act in person in HCA 2208/2019[1].

4.  The Summons was issued pursuant to Order 49, rule 9(1) of the Rules of the High Court (Cap 4A), which provides as follows:

“Where money is standing to the credit of the judgment debtor in court, the judgment creditor … may apply to the Court by summons for an order that the money or so much thereof as is sufficient to satisfy the judgment or order sought to be enforced and the costs of the application be paid to the judgment creditor.”

5.  The Bail Money is money standing to the credit of the defendant.  The plaintiff is a judgment creditor for the amounts of the above-mentioned assessed and outstanding costs.  The plaintiff is thus entitled to apply for an order under Order 49, rule 9(1) for the release of the Bail Money to him for the partial settlement of such costs.And the defendant did not file any evidence or, as stated in [3] above, appear at the hearing yesterday to give any reason(s) or raise any argument(s) (and I cannot see any) as to why the Bail Money should not be paid over to the plaintiff who has incurred substantial costs to take proceedings necessitated by the defendant’s contempt of court, which costs he is otherwise unlikely to recover to any or any meaningful extent.  This should be the end of the matter.

6.  For the sake of completeness, in a different context, in Registrar District Court v Li Kai [2006] 2 HKLRD 499, a case concerning the exercise of the court’s power under s 73 of the Criminal Procedure Ordinance (Cap 221)[2] (“CPO”) to make a compensation order out of the bail money paid into court where the accused had purported to assign the bail money to his solicitors for their costs, Ma CJHC (as the former Chief Justice then was) analysed and identified, inter alia, these principles at [27]:

(1)  Any payment made into court for the purpose of bail is, as far as the court is concerned, a payment made by the accused, regardless of who is actually providing him with the money and under what conditions.

(2)  The court does not hold the money paid into court as cash bail on trust for the accused or anyone else.  All that the accused possesses is the right to claim back the money, provided that it is not otherwise legitimately disposed of by the court.

(3)  As far as the court is concerned, the cash bail does not cease to be a payment into court by the accused when he purports to divest himself of his interest in the cash bail. Nothing in the CPO permits a change of ownership or interest in cash bail paid into court.  Any purported divestment of interest must be subject to s 73, which enables the court to retain all the money paid into court by an accused until such time as it becomes clear that such money will not be used to pay compensation to a victim under s 73(3).

(4)  Section 73 does not provide exhaustively of the circumstances in which the court may have the power to retain bail money in court.

7.  Li Kai was applied in YBL v LWC (No 2) [2017] 2 HKLRD 783, in which the petitioner wife sought, under Order 49, rule 9(1), the release of the bail money paid into court by the respondent husband to partially satisfy the arrears in maintenance while the husband contended that the money was held by his father (who provided the money) on a Quistclose trust. 

8.  The Court of Appeal cannot see any reason why the analysis in Li Kai as to the nature of bail money and the court’s obligation in relation to such money should vary when dealing with an application under Order 49, rule 9(1).  The court’s power in disposing of bail money is unfettered by any constraints purportedly imposed by whatever arrangement between the person putting forward the cash bail and his financier.  The court does not hold the money in court on trust for anyone and the person on bail only has a chose in action to seek the return of the bail money after the court has legitimately exercised its power over the money as his money.  Therefore, even assuming that there could be some kind of Quistclose trust in respect of the bail money put up by the husband, it could only be a trust subordinated to the court’s powers to dispose of such money, including the power under Order 49, rule 9(1).  As far as the court was concerned, the bail money was money standing to the credit of the husband and the wife, as judgment creditor, could properly seek an order under Order 49, rule 9(1) in respect of such money.  See, in particular, [23]-[29], per Lam VP.