CHAN KA HO ABRAHAM v. TUNG YIN LING CORA AND ANOTHER

HCMP 103/2023

[2023] HKCFI 1170

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 103 OF 2023

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J U D G M E N T

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INTRODUCTION

1.  This is the first hearing of the Originating Summons filed on 19 January 2023 (“the OS”)  seeking an order that the defendants be committed to prison.

2.  On the bases that the defendants have been duly served with all the relevant papers, that they are fully aware of the hearing today and that there is no doubt that they have failed to comply with two court orders intentionally, the plaintiff asked this Court to summarily dispose of the OS in the absence of the defendants and to issue warrants for committal against them.

BACKGROUND

3.  The plaintiff has been the landlord of a flat in Villa Verde of Laguna Verde (“the Premises”). 

4.  The defendants were and are the directors and shareholders of Mass Choice Limited (“Mass Choice”).

5.  By a tenancy agreement made between the plaintiff and Mass Choice, the Premises were let to Mass Choice for a term of 3 years from 15 July 2017 to 14 July 2020 at a rental of $26,000 per month.

6.  In 2018, the plaintiff sued Mass Choice for, inter alia, arrears of rent.

7.  By a Judgment dated 24 June 2021 (“the Judgment”), Master Rebecca Lee granted summary judgment in favour of the plaintiff against Mass Choice.  The total amount of judgment debt was in the sum of $1,140,000.

8.  As Mass Choice failed to satisfy the Judgment, the plaintiff applied for an order of examination of the defendants as the directors of Mass Choice.

9.  By an Order dated 26 November 2021 (“the November 2021 Order”), Master J. Wong granted the application for examination of the defendants pursuant to Order 48 rule 1 of the Rules of the High Court, and directed the defendants to attend before the Court on 21 March 2022 at 11:30am (“the 21 March 2022 Hearing”).  The November 2021 Order was endorsed with a penal notice at the backsheet thereof. 

10.  After obtaining the November 2021 Order, the plaintiff, through his solicitors, attempted to effect personal service of the same (with a penal notice)  at a Japanese restaurant (“the Restaurant”)  in Tsim Sha Tsui, being the last known address of the defendants (“the Last Known Address”).

11.  However, the plaintiff’s solicitors could not personally serve the November 2021 Order on the defendants successfully, despite the facts that:

(1)  Numerous appointment letters had been posted to the Last Known Address;

(2)  A manageress working at the Restaurant confirmed that all the said appointment letters had been passed to the defendants;

(3)  With the assistance of a staff member of the Restaurant, the solicitors’ clerk who was delegated by the plaintiff’s solicitors to serve the court document on the defendants managed to have a telephone conversation with the 2^nd defendant on the phone, and pursuant to which the 2^nd defendant had agreed to meet the clerk at the appointed time to accept service;

(4)  The 2^nd defendant had agreed to contact the 1^st defendant so that she would appear at the Restaurant at the said appointed time so as to accept service.

12.  In the light of the repeated (but failed)  efforts on the part of the plaintiff’s solicitors to serve the court document on the defendants, Master Phoebe Man ordered that the 21 March 2022 Hearing be vacated and be re-fixed to be heard on 16 May 2022 (“the 16 May 2022 Hearing”).  The learned Master further ordered that the service of the November 2021 Order and a notice of adjourned hearing on the defendants may be effected by (i)  advertising in a local newspaper and (ii)  prepaid ordinary post to the Last Known Address (“the March 2022 Substituted Service Order”).  

13.  The service of the November 2021 Order and the said notice of adjourned hearing were then deemed to be effectively served on the defendants pursuant to the March 2022 Substituted Service Order.

14.  Be that as it may, both defendants were absent from the 16 May 2022 Hearing.

15.  On the day of the said hearing, Master Rita So ordered, inter alia, that the examination of the defendants be adjourned to a date to be fixed with 1 day reserved (“the Substantive Hearing for Examination”).  The defendants were further ordered to supply, as far as possible, copies of or make available originals for copying a number of finance documents in relation to Mass Choice (“the May 2022 Order”). 

16.  A warning was included in the May 2022 Order, by which the defendants were warned that they must attend the Substantive Hearing for Examination, failing which they are liable to face Contempt of Court Proceedings.

17.  The Substantive Hearing for Examination was then fixed to be heard on 24 October 2022 at 10am.

18.  The plaintiff then attempted to serve the May 2022 Order on the defendants personally with the assistance of his solicitors.

19.  However, despite repeated attempts, the plaintiff’s solicitors could not effect personal service of the May 2022 Order on the defendants successfully. 

20.  By an order dated 27 September 2022, Master Kot ordered that the service of the May 2022 Order and a notice of the Substantive Hearing for Examination on the defendants may be effected by (i)  advertising in a local newspaper and (ii)  prepaid ordinary post to the Last Known Address (“the September 2022 Substituted Service Order”). 

21.  The service of the May 2022 Order and the said notice of hearing were then deemed to be effectively served on the defendants pursuant to the September 2022 Substituted Service Order.

22.  Despite such service, the defendants were absent from the Substantive Hearing for Examination on 24 October 2022.

23.  By reason of the defendants’ breaches of the November 2021 Order and the May 2022 Order (collectively, “the Examination Orders”), the plaintiff took out the OS pursuant to leave granted by this Court.

24.  As the plaintiff could not effect personal service of the OS and other relevant papers herein on the defendants, the plaintiff applied and was granted another order for substituted service, pursuant to which leave was granted to the plaintiff to serve the OS and other relevant documents herein on the defendants by way of advertisement in a local newspaper and by ordinary post to the Last Known Address (“the March 2023 Substituted Service Order”). 

25.  On 6 April 2023, the plaintiff effected service of the OS and other relevant papers herein on the defendants pursuant to the March 2023 Substituted Service Order.

26.  No acknowledgement of service has been filed by either of the defendants.

PROCEEDING IN THE DEFENDANTS’ ABSENCE

27.  As aforesaid, the plaintiff invited this Court to dispose of the OS summarily today in the absence of the defendants, even though this is supposed to be a direction hearing.

28.  In Navig8 Chemical Pools Inc v Inder Sharma (HCMP 2885/2016, unreported, 14 February 2017), Anthony Chan J had the following to say:

“14. The first hearing of an originating summons is typically for directions as to the further conduct of the proceedings (see Practice Directions 5.8). However, the court’s power under O 28, r 4(1), which allows the court to make an order in favour of a plaintiff as the nature of the case may require, is preserved under PD 5.8, para 2(a).

15. The power under O 28, r 4(1)  allows the court to dispose of the originating summons if there is no triable issue: see Hong Kong Civil Procedure 2017, rubric 28/4/1. Such power of summary disposal can be exercised against an absent defendant and at the first hearing of the originating summon: Mesirow Financial Administrative Corp v Best Link Industrial Co Ltd, unrep., HCMP 1846/2015, 10 September 2015, at §31.

16. The court is also empowered by O 32, r 5(1), made applicable to the hearing of an originating summons by O 28, r 1, to proceed with a summons at its first or any resumed hearing in the absence of a party if, having regard to the nature of the application, the court thinks it expedient to do so: Mesirow, §13.

17. Under O 35, r 5(2), the court may require to be satisfied that the summons or, as the case may be, notice of the time appointed for the adjourned hearing was duly served on a party before proceeding in his absence. This means that r 5(1)  may only be invoked if a party fails to attend the hearing after having being validly served with the summons or notice of the hearing: Mesirow, §14.

18. In similar terms, O 28, r 6 provides that where the court is asked to proceed in the absence of a party who has failed to acknowledge service, it may require to be satisfied that the party has so failed.

[…]

20.  In contempt proceedings, once the court is satisfied as to the service of all necessary documents, it may proceed with the hearing despite the absence of the defendant, as the court’s process should not be frustrated by the recalcitrance of the same: Hong Kong Civil Procedure 2017, rubric 52/6/4.”

29.  I respectfully agree with his Lordship’s view. The question which the Court has to ask is whether the defendants have notice of the hearing.  Once the Court is satisfied that the defendants have been duly informed of the hearing date and time, but have chosen not to attend the hearing, there is no reason why the Court should wait any further, otherwise the court’s process would be frustrated, and those who intentionally flout court procedures would succeed in getting what they want – to delay matters. That cannot be right.

30.  In the present case, I have no doubt that the defendants have been properly served with all the relevant papers and that they are well aware of the hearing today.  I see no reason why the Court should not proceed with the proceedings in their absence today. 

THE CONTEMPT

The complaints

31.  The grounds in support of the present committal proceedings have been set out in the Schedule attached to the OS.  In a gist, it is said that the defendants have breached the Examination Orders, in that they have failed to attend the 16 May 2022 Hearing and the Substantive Hearing for Examination (on 24 October 2022).  They have also failed to furnish any document related to Mass Choice as required by the Examination Orders.

The legal principles

32.  In High Fashion New Media Corporation Limited v Leong Ma Li [2022] HKCFI 2234, this Court referred to the legal principles applicable to civil contempt proceedings as follows at [12]:

“(1)  The approach to committal for civil contempt by reason of a breach of a court order is a three-stage process, namely:

(a)  To construe the relevant court order to ascertain its meaning and operation;

(b)  To determine whether the defendant has in fact complied with the orders as so construed;

(c)  To consider whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt.[1]

(2)  The burden is on the plaintiff to prove a defendant’s contempt beyond reasonable doubt.[2]

(3)  An order should be construed strictly because the court is concerned with an order which has a potentially draconian effect on the commercial and economic freedom of an individual. What must be ascertained is the meaning which the document would convey to a reasonable person having all the background which would reasonably have been available at the time the order was made. This includes the purpose for which the order was made.[3]

(4)  Once a failure to comply with an order is found, there is prima facie contempt. It is for the defendant to show that it has always been impossible of carrying out the terms of the order. Even in those circumstances, the contemnor should have applied to the court for further time at the first practicable opportunity.[4]

(5)  It is normally not sufficient, by way of answer to an allegation that a court order has not been complied with, for the person concerned to say that he “did his best”. The only exception to that proposition is whether the court order itself only orders the person concerned to “do his best”.[5]

(6)  In relation to the mental element, it is not necessary to prove that the defendant’s conduct was contumacious, i.e. he/she deliberately intended to disobey the order. It is sufficient to prove that he/she knew the facts which are said to make his act or omission a contempt and that such act or omission was not accidental.[6]

(7)  To the extent a defendant has appointed an agent to comply with the court order, the agent’s actions and knowledge may be attributed to the defendant, and the defendant may be found to be in civil contempt on the basis of vicarious liability. The principal is guilty of contempt if (a)  the person who did the acts which constituted the contempt was her servant or agent; (b)  the acts were done in the course of that person’s employment or agency; and (c)  she either authorised the acts or could reasonably have foreseen the possibility of such acts and failed to take all reasonable steps to prevent the acts; in particular, it does not suffice for the principal to merely give orders and then wash her hands of the matter and disclaim any further responsibility. The principal must take all reasonable steps to see that her orders are obeyed.[7]

33.  In Jeanny Helena Franslay v Fung Ariel Mei Shan [2021] HKCFI 258, G Lam J (as he then was)  also referred to the evidentiary principles applicable to contempt proceedings as follows at [37]:

“(1)  The burden lies on the plaintiff to prove the alleged contempt beyond reasonable doubt: Kao, Lee & Yip v Donald Koo Hoi Yan (2009)  12 HKCFAR 830, §30.

(2)  Whilst the defendant may bear an evidential burden in relation to particular matters he has raised to exculpate himself, there is no legal burden on him to prove anything affirmatively: Concorde Construction Co Ltd v Colgan Co Ltd (No 2) [1984] HKC 253, 257; Ip Pui Lam Arthur & another v Alan Chung Wah Tang & another (CACV 214/2016, 16 February 2017), §4.3.

(3)  No adverse inference against the defendant may be drawn from his failure to call one or more witnesses or adduce certain evidence: China Metal Recycling (Holdings)  Ltd v Chun Hei Han [2018] 1 HKLRD 455, §§36-37; Kissel v HKSAR (2010)  13 HKCFAR 27, §82.

(4)  If by cross-examination to credit a plaintiff proves that the defendant’s evidence cannot be relied on, and he has testified that he did not do a certain act, the plaintiff does not thereby prove that he did it: Hobbs v Tinling (C T)  and Co Ltd [1929] 2 KB 1, 21. The plaintiff has to prove his case affirmatively, though this may be done by inference.

(5)  For an inference of fact properly to be made: (a)  it must be grounded on clear findings of primary fact; (b)  the inference must be a logical consequence of those facts; (c)  beyond being logical, the inference must be “irresistible”, that is, it must be the only inference that can reasonably be drawn on the basis of those facts: Winnie Lo v HKSAR (2012)  15 HKCFAR 16, §115. The third requirement has also been expressed in other ways, such as that “the inference must be compelling — one (and the only one)  that no reasonable man could fail to draw from the direct facts proved”: Kwan Ping-bong v R [1979] HKLR 1 at 5, or that the facts must be such as to exclude reasonable hypotheses consistent with innocence: Nina Kung v Wang Din Shin (2005)  8 HKCFAR 387, §185.[8]

(6)  In other words, if the court concludes from the evidence that there is more than one reasonable inference to be drawn and at least one of them is inconsistent with a finding of contempt, the plaintiff fails: Daltel Europe Ltd v Makki [2005] EWHC 749 (Ch), §30.

(7)  The standard of proof beyond reasonable doubt does not mean that every piece of evidence that does not by itself establish a fact beyond reasonable doubt should be disregarded. It is sufficient if the body of evidence relied on, viewed as a whole, satisfies the burden: Myers v R [2015] UKPC 40, §46; HKSAR v Lo Hung Kwong [2000] 3 HKC 474, 480.

(8)  In appropriate cases, proof of a fact by inference to the requisite standard may be achieved by taking various pieces of circumstantial evidence together, like cords comprised in a rope,[9] or strands in a cable,[10] or converging rays of light producing a body of illumination,[11] such that “there may be a combination of circumstances, no one of which would raise a reasonable conviction, or more than a mere suspicion, but the whole, taken together, may create a strong conclusion of guilt, that is, with as much certainty as human affairs can require or admit of.[12]”

Discussion

34.  In my view, both the Examination Orders are straight forward and self-explanatory.  I do not think there can be any doubt as to what the defendants were required to do in order to comply with those orders.

35.  It is also evident that service of the Examination Orders has been duly effected on the defendants pursuant to various orders for substituted service.  In my view, the defendants must have been aware of the Examination Orders and the dates of hearings, because I am satisfied that, in the circumstances of the present case, the Examination Orders and the notices of hearings must have been passed to the defendants by the staff members of the Restaurant, which was operated by a company known as Yokukawa Japanese Cuisine Limited (“Yokukawa Limited”).  Both defendants were and are the only directors and in aggregate the majority shareholders of Yokukawa Limited. 

36.  By virtue of the penal notice endorsed on the November 2021 Order and the Warning included in the May 2022 Order, the defendants have been reminded unequivocally that they are liable to face Contempt of Court Proceedings should they fail to comply with the Examination Orders.

37.  Yet, the defendants have failed to attend the hearings on 16 May 2022 and 24 October 2022 respectively. 

38.  They have also failed to produce any document pursuant to the Examination Orders.

39.  I have no doubt that the defendants’ failure to comply with the Examination Orders was intentional.  They had simply chosen to disregard the Examination Orders and the notices of hearings.

40.  I therefore find that the contempt alleged is proved beyond reasonable doubt.

Penalty

41.  It is trite that, in civil contempt, the primary consideration of the Court is to demonstrate to litigants that its orders are to be obeyed. In passing sentencing on a contemnor, the Court takes into account the strong public interest in ensuring that court orders are not to be flouted. 

42.  Whilst imprisonment in civil contempt is a remedy of last resort, it has been indicated by the Court of Appeal in Excel Noble Development Ltd v Wah Nam Group Ltd [2001] 4 HKC 148 at 162E-F that a sentence of imprisonment for a wilful failure to observe a court order can often be appropriate.

43.  Since the defendants are absent today, the appropriate approach, especially in the light of the very serious consequence referred to above, is for the Court to issue a warrant for committal to have the defendants arrested and brought before the Court as soon as possible so that they may make submissions on the penalty to be imposed: Liaoyang Shunfeng Iron and Steel Company Limited & Another v Sunny Growth Enterprises Group Limited & Another (HCMP 667/2013, unreported, 15 May 2013)  at [28] and Navig8 Chemical Pools Inc v Inder Sharma (supra), at [43].

DISPOSITION

44.  For reasons of the aforesaid, I order that a warrant for committal be issued against each of the defendants. 

COSTS

45.  Costs should follow the event. 

46.  Where contempt has been found, the Court would usually order indemnity costs against the contemnors. There is no feature in the present case which justifies any departure from this usual practice.

47.  I therefore order that the costs of and occasioned by these proceedings of the plaintiff be paid by the defendants on indemnity basis.  Such costs are assessed on gross sum basis at $121,263, and shall be paid within 14 days after the sealed order herein is served.