CITYBASE PROPERTY MANAGEMENT LTD. v. KAM KYUN TAK AND SIU WAI FONG ANGEL

HCA9676/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.9676 OF 2000

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REASONS FOR DECISION

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The application

1. There is before the court by way of a Notice of Motion dated 9 January 2002, an application by the plaintiff for an order for committal against the 2nd defendant for contempt.

2. On 20 March 2002, after hearing argument from the plaintiff, reading the affirmation evidence placed before me, watching video tape evidence and also listening to oral testimony, I decided that the case for contempt had been made out, but adjourned the hearing on the appropriate punishment to be imposed to a date to be fixed in order to give the 2nd defendant an opportunity to make submissions in this regard. The 2nd defendant did not appear at the 20 March 2002 hearing.

3. I now give the reasons for my decision on the finding of contempt.

The issue

4. The plaintiff is the agent of Prompton Property Management Limited, who in turn is the appointed manager of the development known as Kingswood Villas at Tin Shui Wai, Yuen Long in the New Territories.

5. One of the buildings in the development is Locwood Court. The present proceedings concern Flat C, 35/F, Block 13 in that building ("the Premises"). The Premises was and is owned by the 1st defendants.

6. By a Tenancy Agreement in Chinese dated 9 September 2000, the 2nd defendant rented the Premises from the 1st defendants for a period of two years from 28 September 2000 to 29 September 2002. In September 2001, the 2nd defendant vacated the Premises and moved to Flat B, 18/F, Block 6, Chestwood Court, also at Kingswood Villas ("the New Premises").

7. Being a tenant of the Premises, the 2nd defendant was bound by the Deed of Mutual Covenant applicable to Locwood Court. The relevant Deed of Mutual Covenant is that dated 6 June 1992 ("the Deed"). Under the terms of the Deed, each unit in Locwood Court was to be used only as a residential unit and no part of the Premises was to be used for any business activities or for the storage of goods or other merchandise : see clause 4 of Subsection B of Section V thereof. Furthermore, there was a prohibition against the use of residential units in such a way as would cause nuisance and annoyance to other owners or occupiers of Locwood Court : see clause 15 of Subsection A of Section V.

8. On 26 October 2000, the plaintiff instituted proceedings against the 1st and 2nd defendants for breach of the Deed. The claim is based on the allegation that the Premises were used to operate a fast food manufacturing or processing business. This was said to be a breach of those terms of the Deed I have referred to above.

9. On 29 December 2000, Chung J granted an interim injunction against the 2nd defendant in the following terms :

" IT IS FURTHER ORDERED THAT:-

1. The 2nd Defendant, whether acting by herself or her servants or agents, be restrained, until trial or further order, from using the unit of Flat C on 35th Floor and Roof of Block 13, Locwood Court, Kingswood Villas, Tin Shui Wai, Yuen Long, New Territories, Hong Kong for any Food Manufacturing/Processing or Fast Food or other similar business activities;"

I shall refer to this order as "the 29 December 2000 Order".

10. The 29 December 2000 Order was made after a hearing at which the 2nd defendant was present. She had no legal representation but Chung J made clear to her the terms of the order and also expressly warned her of the consequences of any failure to comply with the terms of the injunction.

11. The issue before the court is this : Has the 2nd defendant knowingly breached the terms of the 29 December 2000 Order and is she in contempt of court?

12. I begin by setting out the matters of which I am required to be satisfied before a finding of contempt can be made.

Civil contempt : the requirements

13. Where, as in the present case, the court is dealing with a disobedience of one of its orders, this is termed a civil contempt. Here, the prime concern of the court is to ensure that orders of the court are to be obeyed.

14. Before considering whether a contempt has been committed where the breach of a court order is involved, the court must be satisfied of the following :

(1) The relevant order, together with an appropriate penal notice, must generally have been personally served on the alleged contemnor : RHC Order 45, rule 7(2)(a), (4). This, however, is the general rule. Personal service will not necessarily required to be shown in relation to an order requiring a person to abstain from doing something, if the person to be served (the alleged contemnor) was present in court when the order was made or that person was notified of the terms of the order whether by telephone, telegram or otherwise : see Order 45, rule 7(6); Hong Kong Civil Procedure 2002 at paragraph 52/2/8. The court however retains a discretion whether or not to enforce an order where it has not been personally served : Order 45, rule 7(6) is in permissive terms.

(2) The relevant order must also contain, as I have said, a penal notice. Where there has been a failure in this regard, the court nevertheless has the power to enforce the order subject of course to the exercise of its discretion : see Order 45, rule 7(6); Hong Kong Civil Procedure 2002 at paragraph 45/7/6. However, it is in my view essential that the alleged contemnor shall have been told, whether by being present in court or by being notified by telephone, telegram or otherwise, that the consequences of breaching any order made is to be held in contempt of court and liable to a process of execution. This I regard as a natural consequence of Order 45, rule 7(4) which requires a penal notice to be endorsed on the relevant order. In my view, whether the penal notice is made in writing or given orally, the alleged contemnor must be made aware of the consequences of a breach of the relevant order. It would be an extremely rare exercise of discretion under Order 45, rule 7(6) for the court to dispense with this requirement and in principle, I cannot conceive of any circumstances in which it would be right to dispense with such a requirement : c.f. Hong Kong Civil Procedure 2002 at paragraph 52/2/9.

(3) Next, the applicant must obtain leave from the court to make an application for committal : Order 52, rule 2(1). The application for leave is made ex parte and must be accompanied by an affidavit and a Statement providing details of the alleged contemnor and the facts of the contempt alleged : see Order 52, rule 2(2).

(4) Where leave is granted, the applicant must apply by motion to a judge and serve the motion together with the affidavit evidence and Statement used for the ex parte application for leave, on the alleged contemnor at least eight clear days before the hearing : Order 52, rule 3. Service should be personal (see Order 52, rule 3(3)) but the court has the discretion to dispense with this if it is just to do so : Order 52, rule 3(4).

15. Once the above requirements are complied with to the satisfaction of the court, the court is then in a position first to determine whether a contempt has occurred and secondly, if so, to make an order for committal or impose some other form of punishment. The final stage of the hearing is the determination of costs.

16. Given the seriousness of a finding of contempt (and the consequences of such a finding), the first stage requires the court to be satisfied beyond reasonable doubt before a finding of contempt can be made even in cases of civil contempt : Re Bramblevale Ltd [1970] Ch 128, at 137A-B; Dean v. Dean [1987] 1 FLR 517, at 521; Hong Kong Civil Procedure 2002 at paragraph 52/1/16; Arlidge, Eady and De Smith on Contempt (2nd Edn) at paragraphs 12-37 to 12-42.

17. Having said that the standard of proof is the criminal one (i.e. beyond reasonable doubt), I should however point out what may possibly regarded as anomalies in this type of proceedings :

(1) Affidavit evidence is invariably used in committal proceedings unless otherwise directed by the court : see Order 38, rule 2(3); Hong Kong Civil Procedure 2002 at paragraph 52/6/3. Furthermore, hearsay evidence is permissible : see Hong Kong Civil Procedure 2002 at paragraph 52/6/3; Savings & Investment Bank Ltd v. Gasco Investments (Netherlands) B.V. No.2 [1988] Ch 422. The court obviously has a discretion whether or not to disregard such evidence and is certainly duty bound to consider carefully the quality of such evidence. I would, however, make this observation : where contempt proceedings are involved, although affidavit evidence is both admissible and normal, it is important that as much first hand evidence of the actual contempt is adduced or if not, an explanation given as to why such evidence is unavailable. This is not to fetter a court's consideration of hearsay evidence where appropriate, but no court would wish to make a finding of contempt unless the evidence to support such a finding was good. It is to be borne in mind that in contempt proceedings, there is no burden on the respondent to prove his innocence : see Concorde Construction Co. Ltd v. Colgan Co. Ltd (No.2) [1984] HKC 253, at 257.

(2) Unlike in criminal proceedings, where mens rea has to be demonstrated, there is no requirement in civil contempt proceedings to show that the alleged contemnor intended to disobey the order (i.e. his conduct was contumacious). It is sufficient to proof (a) that he knew the facts which are said to make his act or omission a contempt and (b) that such act or omission was not accidental : see the cases referred to in Hong Kong Civil Procedure 2002 at paragraph 52/1/6. Of course, the alleged contemnor should be aware of the order and the consequences of breaching it : see paragraphs 14(1) and (2) above.

18. With these principles in mind, I now turn to the facts in the present case to see whether the requirements I have set out have been met.

Service of the 29 December 2000 Order and penal notice

19. Personal service of this order was not effected. The 2nd affirmation of Lum Ming Tak dated 1 February 2002 states that the 29 December 2000 Order was purportedly served on the 2nd defendant only by leaving it at the Premises.

20. However, I am satisfied that in the present case both the effect and the terms of the Order were explained to the 2nd defendant on 30 December 2000 by Chung J. The 2nd defendant was also given a warning by the learned judge as to the consequences of a failure to comply with the Order (in other words, a penal notice). I have listened to the tape of the proceedings that day. It is clear that the 2nd defendant understood what was being said to him by the learned judge. In these circumstances, notwithstanding the failure to effect personal service under Order 45, rule 7(2)(a), this is a suitable case for the exercise of my discretion under Order 45, rule 7(6).

Leave to bring contempt proceedings and service on the 2nd defendant

21. Leave to make an application for committal was granted on 7 January 2002 by Chung J.

22. The Notice of Motion, the Statement and the affirmations in support were served personally on the 2nd defendant on 11 March 2002. Although the 2nd defendant refused to accept the documents from the process server, she was told what they were and they were then left at the New Premises (which was near the place where the 2nd defendant was approached by the process server and informed of the contents of the documents) : see paragraph 5 of the affirmation of Tsang Chun Wai dated 12 March 2002. I am therefore satisfied that personal service was effected. In Kenneth Allison Ltd v. A.E. Limehouse & Co. [1992] 2 AC 105, Lord Bridge of Harwich said at 113E-F, "there is abundant authority for the proposition personal service requires that the document be handed to the person to be served or, if he will not accept it, that he be told what the document contains and the document be left with or near him.".

Is the 2nd defendant guilty of contempt?

23. The 29 December 2000 Order was clear in prohibiting the 2nd defendant from using the Premises for any manufacturing or processing of fast food or other similar business activities. As I have found, the 2nd defendant understood the effect of that order and the consequences were she to breach it.

24. Yet the Premises continued to be used for the purposes of fast food business activities. I have been referred to an affirmation of Chan Wai Keung dated 8 September 2001. Mr Chan is the owner and occupier of Flat A, 35/F, Block 13, Locwood Court, Kingswood Villas, which is on the same floor as the Premises. In that affirmation, Mr Chan deposes to the following facts from his own personal knowledge :

(1) Even after the 29 December 2000 Order was made, the 2nd defendant continued the fast food business at the Premises.

(2) The operation of this business has caused Mr Chan much disturbance. In the early morning rush hour, deliveries would be made of food and bottles of liquid petroleum gas to the Premises blocking the corridor on the 35th floor. Further, disturbance would be caused when delivery persons left the Premises in order to deliver the "countless" food orders everyday. Mr Chan says the whole of the corridor on the 35th floor became sticky and stained because of the smoke which emanated from the Premises. Often, empty oil tanks were left in the stairway of the fire exit as well. Even the lifts in the building became dirty because of oil being leaked from the food carried by the delivery persons from the Premises.

(3) Not only that, Mr Chan and his family were concerned about the safety and security of the building. With so much liquid petroleum gas bottles stored in the Premises and empty oil tanks blocking the fire exit, this caused worries about the likelihood of a fire. Further, with so many different delivery persons going in and out of the Premises, this has caused Mr Chan to feel insecure.

25. Mr Chan made a complaint about the fast food business activities at the Premises to the plaintiff's staff on 9 March 2001. Since receiving this complaint, the plaintiff has instructed its staff to observe the Premises. In the 2nd affirmation of Mr Wong Tai Cheong dated 8 September 2001, the following observations were made :

(1) The plaintiff's staff has observed and recorded delivery persons exiting from the Premises and the building about 23 to 62 times a day.

(2) Following Mr Chan's complaint that there were very often empty oil tanks being placed on the stairway of the fire exit on the 35/F of Block 13, this was confirmed by the plaintiff's staff.

26. The plaintiff has also instructed private investigators to observe the activities carried on at the Premises. I have read a report dated 17 September 2001 compiled by Kroll Fact Finders Limited, in which details are given of the Premises having been observed from 9 to 11 July 2001. Video cameras were used to film the relevant activities on those days from a number of vantage points.

27. The private investigators set up the following scheme and recorded the following events :

(1) Premises located at another flat in the Kingswood Villas development ("the Investigator's Premises") were used by the investigators to telephone orders for fast food from the Premises. The telephone number used by the private investigators was one that appeared in a leaflet enclosing a fast food menu of the Tin Shui Wai Food Express Delivery Centre.

(2) Orders for fast food would be placed by one of the investigating team from the Investigator's Premises by telephone to the Premises. Instructions were given for the fast food to be delivered to the Investigator's Premises.

(3) After the orders were placed, cameras located at the corridor on the 35/F of Locwood Court, just outside the Premises, would film persons coming out of the Premises carrying fast food.

(4) Another set of cameras located in the lift of that building would then film the delivery person go down to the ground floor.

(5) A surveillance camera outside Block 13 would film the same delivery person exit from that building with a box carrying the food.

(6) Finally, at the Investigator's Premises, the same delivery person would be filmed delivering the fast food and being paid.

28. The films from the various video cameras covering the three days I have earlier referred to, have been combined into three tapes, one for each of the days. These tapes were played to me in court.

29. On the evidence before me (the tapes, the said report dated 17 September 2001, the various affirmations dealing with the tapes and what they cover and the oral testimony of Mr Kelvin Ko Chiu (the maker of the said report)), I make the following findings of fact :

(1) On each of the three days in question, a phone call was made from the Investigator's Premises by an investigator to the Premises ordering food to be delivered to her at the Investigator's Premises. The phone number was, as I have already said, that printed on the menu of the Tin Shui Wai Food Express Delivery Centre.

(2) For two of the days in question (9 and 11 July 2001), in the outside corridor to the Premises, soon after the orders were placed, a delivery person would be seen leaving the Premises with what looked like a toolbox. He would then go down the lift and leave the building. After leaving the building, the same delivery person would go to the Investigator's Premises, take out food from the toolbox, enter those premises and then place the food on a table. After being paid, he would leave.

(3) On the other day in question (10 July 2001), again soon after the order had been placed, the 2nd defendant was herself actually seen exiting from the Premises with a toolbox. She would then go down the lift, and, outside the building, hand the toolbox to a delivery person. That delivery person would then go to the Investigator's Premises where he would then deliver the food and take payment.

(4) I would also finally add that on 9 July 2001, a man was seen entering the Premises carrying groceries including vegetables and meat.

30. From these findings as well as the facts contained in the other affirmation evidence placed before me (in particular, the affirmation of Mr Chan Wai Keung) and the other facts I have already referred to, I am satisfied beyond reasonable doubt that :

(1) The 29 December 2000 Order (the terms of which the 2nd defendant was aware) has been breached by her. The breach consisted of the operation of a fast food business at the Premises (and this also included food manufacturing and food processing there).

(2) The 2nd defendant was aware of those activities and indeed even participated in the breach herself. Here I refer specifically to the video recording of the events of 10 July 2001 and the fact that until September 2001, the 2nd defendant was the tenant of the Premises.

(3) The breach by the operation of a fast food business at the Premises was not accidental.

31. By reason of the foregoing, I find that the 2nd defendant is guilty of having committed a civil contempt.

Punishment

32. Having found that a contempt has been committed, I next deal with the question of punishment. Here, as I indicated to Mr Lam (who appeared for the plaintiff) at the hearing, I wanted to give the 2nd defendant a final opportunity to make submissions to me before I arrived at a decision in this regard. Accordingly, I adjourned the motion to a date to be fixed, the actual hearing not to be before the handing down of this judgment. Costs were reserved.