CEDAR BASE ELECTRONIC LTD. v. KAM YUEN ELECTRONICS PLASTIC LTD. AND ANOTHER

HCA 755/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 755 OF 1999

____________

_____________

D E C I S I O N

_____________

1. This is an application under O. 45 r. 5 for the committal of the 2nd Respondent, a director of the 1st Respondent, for breach of what has commonly been known as an Anton Piller Order.

2. It is common ground, and I accept that the case against an alleged contemnor must be proved beyond reasonable doubt. The acts of the 2nd Respondent in this case are serious and it is not simply a case where a director is being accused of contempt just because he happened to hold that office and has mere knowledge of the acts of a company, such as in Interlego at p. 191. And I find that this is certainly not a case of a mere technical contempt of a venial nature.

3. I am satisfied on the evidence before me beyond reasonable doubt of the following matters:-

(1) The Order in this case had been served personally on the 2nd Respondent as a director of the 1st Respondent.

(2) It is not disputed that a penal notice had been indorsed on the Order.

(3) I find on the evidence that the 2nd Respondent had the relevant mens rea for the alleged contempt. Whatever motive the 2nd Respondent had is immaterial. I find that what the 2nd Respondent had done was intentionally done in that he knew the facts which rendered them in breach of the Order which he knew to exist, and his acts were not casual or accidental; therefore, it was a knowing or an intentional breach of the Order. As a director, he had the duty to take reasonable steps to ensure that the company complied with the Court Order: see Attorney General for Tuvala referred to at para. 12-99 of Arlidge and Eady on Contempt.

4. I note that throughout the period of time in question, there was no application by the 1st Respondent company to apply for a discharge of the Anton Piller Order. And I note that in relation to the rest of the case, there was no acknowledgement of service on behalf of the 1st Respondent company, there was no discovery or delivery up made under the Anton Piller Order and a judgment in default has been granted by Recorder Kotewall.

5. The evidence shows the following: the executing solicitor in this case was Mr Clement Tang, a partner in a firm other than that of the Plaintiff's solicitors. This was in compliance with the Court Order.

6. Mr Tang was at the 1st Respondent company's premises from 2:00 p.m. - 7:30 p.m. However, he was not permitted to effect the search and nothing was delivered up by the 2nd Respondent, a director of the 1st Respondent.

7. Mr Tang says at para. 8 of his affirmation that after he finished explaining para. 1 of the "Notice to Defendant", Mr Wong (i.e. the 2nd Respondent) said to him (Mr Tang) that unless Mr Wong agreed, the search could not be executed. From that time until 6:30, when the 2nd Respondent left the premises, the 2nd Respondent never gave his consent to effect the search and never delivered up anything in compliance with the Order.

8. At 6:35, the 2nd Respondent left. At 6 o'clock, the 1st Respondent's employee, Ms Ng, had also left. Therefore, in effect, after the 2nd Respondent left, Mr Tang could not execute the Order because the Order had to be executed in the presence of the 1st Respondent company. As it was, the executing solicitor waited for another hour for the return of anyone. That was to no avail.

9. Mr Hectar Pun, counsel for the 2nd Respondent, has said everything that could be said on behalf of the 2nd Respondent. He said that the 2nd Respondent (as per his affirmation) said that he was not able to understand the Order fully. He said that the 2nd Respondent was confused and nervous; that the details of the papers were not explained; that he was confused by what appeared to be inconsistent versions; and that he had no previous experience of being served with an Anton Piller Order.

10. However, it is clear from the evidence (taking even the 2nd Respondent's version) that the 2nd Respondent had the opportunity and did take the opportunity to read the Order which was in both English and Chinese. The Chinese version follows the standard form in the Practice Directions.

11. If he (the 2nd Respondent) says that he did not understand the plain language, it is surprising that he declined Mr Tang's offer to explain the Order. Moreover, some 5 hours elapsed between the executing solicitor's arrival and his departure. In any event, even if one takes the period from 2:18 to 6:30 when the 2nd Respondent was at the scene, he had more than adequate time to read and digest the Order.

12. I place special emphasis on the fact that the 2nd Respondent had contacted his own solicitors. The Order gave the 1st Respondent company 2 hours to take legal advice. Unfortunately, it would appear from the evidence that although solicitors were contacted by the 2nd Respondent on behalf of the 1st Respondent, he did not take the opportunity to deal with the matter properly and in compliance with the Order. It would appear, on the contrary, that he took the opportunity to stall the execution of the Order.

13. Although he had faxed a copy of the Order to his own solicitors, he refused to tell the executing solicitor the name of the solicitors. Furthermore, it would appear that in the course of the afternoon, the 2nd Respondent had 7 telephone conversations with the solicitors. Therefore, it would appear that whatever confusion or whatever misunderstanding or lack of understanding, that could have been dealt with in those conversations.

14. It would further be noted from the evidence that the 2nd Respondent had told Mr Tang that he was waiting for his own solicitors to arrive, but it turned out that the solicitors had no instructions to attend the office. The 2nd Respondent in his own affirmation does not deny that no instructions were given to his solicitors to attend the office.

15. Mr Tang had told the 2nd Respondent on several occasions of the possible implications if he did not allow the search. In his affirmation, the 2nd Respondent said that he was confused by what would appear to be inconsistent statements as to whether his consent was required for the commencement of the search. One would have thought that if indeed the 2nd Respondent had been confused by the allegedly inconsistent statements, he would either inquire with the executing solicitor why his consent was being sought if consent was not needed, or he would instruct his own solicitors to advise him.

16. However, it would appear in para. 26 of the 2nd Respondent's own affirmation that at about 5:00 p.m., he phoned his contact at the solicitors firm again. A clerk there, with whom he had contact said that he (the 2nd Respondent) had better retain the solicitor to come to the scene and the solicitor would then be able to deal with the matter for him properly and everything could be done in the presence of the solicitor. The clerk, in fact, properly advised the 2nd Respondent to think about retaining a solicitor and asked the 2nd Respondent to revert to him.

17. The 2nd Respondent obviously did not retain the solicitor nor did he seek the advice of the solicitor. That belies his allegation now that he had been confused as to his position. And this is in the context of his having told Mr Tang at the start that Mr Tang would not be allowed to start a search without his consent.

18. Taking all those matters into account, I am left with no reasonable doubt that this was an intentional breach of the Order. He had stalled the execution of the Order by saying that he was waiting for solicitors when, in fact, the solicitors had not been instructed to attend.

19. Anton Piller Orders are draconian, and the Court does not grant them lightly. Care is taken to ensure that there is sufficient evidence for them to be granted. They are granted to protect intellectual property rights.

20. Before the Court grants Anton Piller Orders, a number of safeguards are put in place to protect defendants. These safeguards include provision for Chinese versions of the Orders to be served, and also include time given to the defendants to consult their own legal advisers.

21. When Orders are made, the Court expects them to be respected by the recipients. Breaches of these Orders could not be allowed to go unpunished. Otherwise, the authority of the law, and the Court which applies it, would be undermined, and Court Orders would be mere scraps of paper.

22. It gives this Court no pleasure to make this Order but it is clear that what the 2nd Respondent has done in the present case calls for a term of imprisonment. I have taken into account the fact that the 2nd Respondent has no criminal record, and I appreciate that times are hard and people are simply working to make a living. I have also taken into account the fact that this matter has been hanging over the 2nd Respondent's head for some time. Having considered all these matters, I consider that the appropriate term for imprisonment would be 1 month. There will also be an Order that the Plaintiff is to get these costs on an indemnity basis.