EFFISCIENT LTD v. EDWARD EUGENE LEHMAN

CACV 177/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 177 OF 2012

(ON APPEAL FROM HCMP NO. 2524 OF 2011)

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REASONS FOR JUDGMENT

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Hon Fok JA (giving the Reasons for Judgment of the Court):

Introduction

1. By his judgment dated 12 July 2012, Harris J found the appellant, Mr Edward Eugene Lehman, guilty of contempt of court and sentenced him to a term of 6 months’ imprisonment suspended for 2 years.  By an order dated 13 July 2012, Harris J also ordered the appellant to pay the costs of the contempt proceedings on an indemnity basis which were summarily assessed in the sum of HK$800,000.  This was appellant’s appeal against that judgment and costs order.

2. At the conclusion of the hearing of the appeal, we allowed the appeal and set aside the Judge’s contempt order and costs order indicating that we would hand down our reasons for doing so in due course.  We ordered the respondent to pay the appellant the costs of the appeal, to be taxed if not agreed.  In substitution for the Judge’s order in respect of the costs below, we ordered that there be no order as to costs.

3. These are the reasons for our judgment and the costs orders we made.

The background facts

4. The contempt proceedings had, as their background, two sets of civil proceedings involving Mr Lehman.

5. The first proceeding in time was a defamation action.  By a writ issued on 28 June 2010 (HCA 959/2010), Mr Russell Peter Brown, his wife Mrs Zhou Han Brown and a company owned by them Effiscient Ltd (Effiscient) sued Mr Lehman for defamation.  The claim included a claim for malicious falsehood against a company named LehmanBrown Ltd, in which Effiscient was a 50% shareholder.  Effiscient is the respondent to this appeal and was applicant in the contempt proceedings below.  On 2 July 2010, leave was granted to serve the writ out of the jurisdiction on Mr Lehman in Beijing (where he is resident) and, on 7 July 2010, the concurrent writ was served on him there.

6. On 23 July 2010, the plaintiffs in the action obtained an ex parte interlocutory injunction restraining Mr Lehman from publishing or republishing any of the statements alleged to be defamatory.  The operative parts of the order provided:

“(1) The Defendant be restrained from doing the following acts until after the trial of this action, or until further order:-

(a) publishing/republishing, causing the publication/ republication of and/or howsoever participating in the publication/republication (either orally, or in writing) of the defamatory statements referred to in the attached letter from Richards Butler to the Defendant dated 21 June 2010, or any similar defamatory words concerning any of the 1^st Plaintiff, the 2^nd Plaintiff, the 3^rd Plaintiff, LehmanBrown Limited (‘the Company’), or any of the employees of the Company; and

(b) making untrue slanderous statements referred to in the attached letter from Richards Butler to the Defendant dated 21 June 2010, or any similar slanderous words concerning any of the 1^st Plaintiff, the 2^nd Plaintiff, the 3^rd Plaintiff, the Company, or any of the employees of the Company to third parties.

(2)  The Defendant does within 7 days file and serve an affidavit disclosing a complete list of the identity of the recipients of the emails and letters referred to at paragraph 1(a) above, from 1 January 2010 until the date of this Order, including all addresses, email addresses and other contact details and of the identity of the individuals to whom the Defendant made the slanderous comments referred to at paragraph 1(b) above from 1 January 2010 until the date of this Order.”

7. On 3 December 2010, in default of acknowledgment of service from Mr Lehman, the plaintiffs entered default judgment in these terms:

“No Notice of intention to defend having been given by the Defendant herein IT IS THIS DAY ADJUDGED that the Defendant do pay the Plaintiffs damages to be assessed and costs to be taxed.”

8. Mr Lehman took out a summons to set aside the default judgment on 20 January 2011 as being irregular (by reason of alleged non-service of the writ) but that was withdrawn, with leave, on 21 February 2011.

9. On 19 April 2011, To J committed Mr Lehman for contempt of the 23 July 2010 injunction order for causing to be published approximately 9,000 emails in breach of the order.  Mr Lehman admitted contempt and apologised unreservedly.  To J imposed a fine of HK$200,000 and ordered Mr Lehman to pay indemnity costs assessed at HK$400,000.

10. The second proceedings were company proceedings.  First, by a winding-up petition issued on 17 September 2010 (HCCW 377/2010), Lehman & Co Management Ltd, the other 50% shareholder in LehmanBrown Ltd, sought a compulsory buy out order against Effiscient under s. 168A of the Companies Ordinance (Cap. 32).  Secondly, on 22 September 2010, Effiscient issued its own s. 168A petition (HCCW 383/2010) seeking a corresponding buy out order against Lehman & Co Management Ltd.

11. The two petitions were tried by Harris J in October 2011 and he gave judgment on 15 November 2011 dismissing Lehman & Co Management Ltd’s petition and granting relief on Effiscient’s cross-petition.  Subsequently, Harris J gave judgment on 28 November 2012 on the consequential remedies.  Both those judgments were appealed by Lehman & Co Management Ltd (CACV 272/2011) and the Court of Appeal recently gave judgment on 13 March 2013 allowing the appeal to a limited extent.

The contempt proceedings below

12. On 28 November 2011, Harris J granted Effiscient leave to apply for the committal of Mr Lehman for contempt of court.  Pursuant to such leave, Effiscient issued an originating summons (HCMP 2524/2011) setting out the allegations of contempt against Mr Lehman.  Broadly, these allegations were that Mr Lehman had (i) in breach of the injunction order, sent out various emails (the offending emails) and also, (ii) in breach of directions given by the judge hearing the company proceedings, discussed his evidence and sent out the offending emails whilst he was in the course of giving oral evidence in court.

13. The contempt proceedings were heard on 11 and 12 July 2012.  For the reasons set out in his Judgment dated 12 July 2012 (i.e. the judgment under appeal), the Judge committed Mr Lehman for contempt of court in respect of the alleged contempt constituted by the matters referred to in point (i) of the preceding paragraph.  However, the Judge acceded to an application by Mr Lehman that there was no case to answer in respect of the alleged contempt constituted by the matters referred to in point (ii) and he explained his reasons for that decision in his Reasons for Judgment dated 24 July 2012.

The relevant principles governing committal for civil contempt

14. There was no dispute that the proper approach in committal for civil contempt by reason of breach of a court order is essentially a three-stage test, namely: (1) first, the relevant court order must be construed to ascertain its meaning and operation; (2) secondly, it must be determined whether the defendant has in fact complied with the order as so construed; and (3) thirdly, it must be determined whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt. See, Kao, Lee & Yip v Koo Hoi Yan (2009) 12 HKCFAR 830 at §21.

The appeal

15. On this appeal, the first point taken on behalf of Mr Lehman was that, at the time he sent the offending emails, the injunction order was no longer in force because it had merged in the default judgment.  It will be recalled that the injunction order restrained Mr Lehman from doing certain acts “until after the trial of this action, or until further order”. However, on 3 December 2010 interlocutory default judgment was entered by Effiscient against Mr Lehman for damages to be assessed and costs.

16. The second and third grounds of appeal were points that were not taken below.  The second ground of appeal was that the injunction order, even if still in force at the time Mr Lehman sent the offending emails, could not found a contempt.  Various arguments were advanced in support of this ground.

17. The third ground of appeal was that Effiscient does not have standing to apply for committal of Mr Lehman for the alleged contempt. The basis for this argument was essentially that Effiscient did not advance any claim in the defamation action that it had been defamed and was only a party to that action by reason of its shareholding in LehmanBrown Ltd.

Did the interlocutory injunction lapse pursuant to the doctrine of merger?

18. This question (addressed in Grounds 1 to 4 of the Notice of Appeal) is a prior question to the normal three-stage inquiry (see above) on a committal for contempt.  It formed one of the bases of a submission on behalf of Mr Lehman below that there was no case to answer.

19. The doctrine of merger is a form of estoppel per rem judicatam. As explained in Thoday v Thoday [1964] P. 181 per Diplock LJ at pp. 197-198:

“The particular type of estoppel relied upon by the husband is estoppel per rem judicatam. This is a generic term which in modern law includes two species. The first species, which I will call ‘cause of action estoppels,’ is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e., judgment was given upon it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam. This is simply an application of the rule of public policy expressed in the Latin maxim ‘Nemo debet bis vexari pro una et eadem causa.’ In this application of the maxim ‘causa’ bears its literal Latin meaning. The second species, which I will call ‘issue estoppel,’ is an extension of the same rule of public policy. …”

20. The effect of this type of estoppel has a twofold effect: it prevents the parties disputing the decision and bars a party who obtained relief from seeking it again (see Spencer Bower & Handley: Res Judicata (4^th Ed.) at §19.01).

21. Mr Barrie Barlow SC, counsel for Mr Lehman, submitted that, by virtue of the doctrine of merger, the injunction order, along with the causes of action in defamation and all other actual or potential remedies arising within those causes of action, merged with the 3 December 2010 default judgment and, save for the damages remedy, which was part of the default judgment, they lapsed by virtue of the terms of the default judgment, which contained no permanent injunction.

22. The Judge was drawn into considering authorities cited to him by Mr Lehman’s counsel below (not Mr Barlow) which addressed the question of whether there was power to continue an interlocutory injunction after judgment.  Two of the cases involved the court’s inherent jurisdiction to grant a post-judgment Mareva injunction in aid of execution of the judgment that had been entered.

23. It is, however, not necessary in this appeal to consider the propositions for which those cases might be cited in support because, in our view, there is a short and complete answer to Mr Lehman’s merger point.  That is that the doctrine of merger, being a form of estoppel per rem judicatam, requires a final judgment: see Spencer Bower & Handley (supra) at §§5.01, 19.03 and 20.08.  As the latter reference succinctly states:

“The former recovery must be a final judgment capable of supporting an action.”

24. The footnote to that proposition cross-refers to §5.08 which states:

“An action cannot be based on a judgment for payment of an amount to be judicially determined by the tribunal or some person acting with its authority such as an interlocutory judgment for damages to be assessed”.

25. A judgment for damages to be assessed is not final before the assessment: see Marston v Phillips (1863) 9 LT 289, Electricity Commission (NSW) v Lapthorne (1971) 124 CLR 177 at 184 and Thomas v Bunn [1991] 1 AC 362 at 374.

26. In the present case, the default judgment entered on 3 December 2010 was an interlocutory judgment.  It was not a judgment on the merits of the action and was susceptible, upon it being demonstrated there was a meritorious defence, to being set aside under O.13 r.9.  Although the earlier application to set aside the judgment was withdrawn, it will be recalled that the basis of that application was that the judgment was irregular; not that it was regular but that there was a defence on the merits.  The interlocutory judgment was clearly not a final judgment.

27. The Judge was also drawn into examining whether the language of the injunction order, being expressed to remain “until after the trial of this action, or until further order”, should be construed as meaning that the injunction order continued in force.  In this context, he considered In the matter of Cantor Index Ltd v Alan John Lister [2002] CP Rep 25, where Neuberger J (as Lord Neuberger then was) said:

“Did the Freezing Order lapse when judgment was obtained? A Freezing Order, like most interlocutory orders, is frequently made ‘until trial or further order’ or ‘until judgment or further order’. If that is how the order had been phrased in this case then the Freezing Order would have lapsed when final judgment was obtained on 20^th September in favour of the claimant. However, Pumfrey J’s Freezing Order is not expressed in that way. I do not think that the reference to ‘further order’ is an indication that the Freezing Order is to expire when final judgment is obtained. If it had that meaning, then it would be a reference to any order made in the proceedings, so an order, for instance, extending time for the service of a defence, would have the effect of causing the Freezing Order to lapse. It seems to me that the reference to ‘further order’ in the Freezing Order must be a reference to an order which expressly or (unusually, but possibly) impliedly discharges the Freezing Order.”

(Emphasis added)

28. Again, and for the same reason, it is not necessary to construe the wording of the injunction order in this context because there was no final judgment by reason of which the injunction order would have lapsed: cf. the passage highlighted in the judgment of Neuberger J cited above.

29. Mr Barlow placed reliance on the fact that in the court below it was conceded on behalf of Effiscient by its counsel that “by entering the default judgment the Plaintiffs forwent the right to a permanent injunction, which could not be entered by default” (Judgment §11).  That concession was no doubt correct insofar as the default judgment for damages was not set aside. However, as we have said, the possibility existed that the interlocutory judgment might be set aside and, at a trial of the action on the merits, the injunction pursued.  Even if it was not then pursued, perhaps in the light of the stance reflected in the concession, it does not alter the fact that the default judgment was not final and there was no merger of any cause of action into that judgment.

30. There being no merger, the injunction order remained in force, albeit that it might have been open to Mr Lehman to apply to have it set aside once the default judgment had been entered on the ground that it was no longer necessary.  But the important point, for the purposes of this appeal, is that the injunction order remained in force and was thus capable of being breached by Mr Lehman.

Should the appellant be permitted to raise new points on appeal?

31. The second and third grounds of appeal were not arguments considered by the Judge below for the simple reason that Mr Lehman’s counsel “accepted that if the order was in force in October 2011 that the emails contained statements that were in breach of it” (Judgment §2).  It was not disputed that two of the offending emails (described by the Judge as the two longer emails of 5 and 6 October 2011) breached the terms of the order if it was in force at the time (Judgment §10).

32. The concession made on behalf of Mr Lehman was in plain terms and was made with the benefit of legal representation (Mr Lehman being represented below by Mr John McNamara).  The taking of the new points now sought to be advanced would therefore seem to be a clear example of approbating and reprobating.  It should be recalled that, not only did his counsel make that concession before Harris J, Mr Lehman (who was then represented by Mr Clive Grossman SC) had already admitted breach of the injunction order before To J in April 2011 and did not argue the points he now sought to advance, some of which would clearly have been relevant to the question of whether he was guilty of contempt on that previous occasion.

33. Although the Court does, as a general rule, discourage such an approach to litigation, it was material that this appeal arose in relation to contempt proceedings which resulted in a sentence of imprisonment (albeit suspended) and some latitude is therefore permissible in the raising of new points.  It is telling, in this context, that the Court of Final Appeal held that, since proceedings for civil contempt have criminal consequences, the restriction on the admission of fresh evidence on appeal is relaxed on an allegation of civil contempt: see Kao, Lee & Yip v Koo Hoi Yan at §§6 and 20.  We therefore permitted Mr Barlow to argue the new points sought to be raised in the notice of appeal, although we took the view that the Court was entitled to view those points with some circumspection in view of what had gone before.  Moreover, the change of tack by Mr Lehman would, in any event, be relevant to the question of costs.

Was the injunction order capable of founding a contempt?

34. Mr Barlow sought to advance various points in support of the ground of appeal that the injunction order could not found a contempt.  These were: (i) that the injunction order had not been properly served and was not endorsed with a penal notice (Ground 7 of the Notice of Appeal); (ii) that the injunction order was ambiguous and not sufficiently clear; (iii) that the injunction order was not breached because the offending emails were published outside the jurisdiction (Ground 5 of the Notice of Appeal).

35. First, Mr Barlow suggested that there was insufficient proof of guilt on the part of Mr Lehman by reason of the lack of evidence of service of the injunction order on him and by reason of the absence of a penal notice indorsed on the injunction order.

36. This, in our view, was a point without substance.  Mr Barlow sought to rely on the requirement of personal service in O.45 r.5(1)(b)(iii) and O.45 r.7(2)(a) and the requirement for a penal notice to be endorsed on the order in O.45 r.7(4). However, the Court may dispense with personal service pursuant to O.45 r.7(7) and it is clear that personal service and the need for a penal notice can be dispensed with if the Court is satisfied that the person against whom enforcement of an order is sought has been notified of its terms: see Hong Kong Civil Procedure 2013 Vol. 1 at Notes 45/7/6 (p. 873), 45/7/7 (p. 874), 52/2/8 (pp. 962-963) and 52/2/9 (pp. 963-964).

37. It was clear from the evidence filed that a copy of the injunction order endorsed with a penal notice was served on Mr Lehman by post.  It was also clear that Mr Lehman was fully aware of the injunction order and its terms as evidenced by his admissions in the contempt proceedings before To J.  He was also therefore well aware that a breach of its terms could give rise to proceedings against him for contempt of court.  In the circumstances, it would have been open to the Judge to dispense with personal service (in which case the requirement for a penal notice would fall away, see AXA China Region Insurance Co Ltd v Li Yu Ping Ellen [2002] 3 HKC 339 at §36) and it would have been open to this Court to do so.  On the facts of this case, there could be no doubt that Mr Lehman was aware of the terms of the injunction order and that a breach of its terms would expose him to committal for contempt of court.

38. Secondly, Mr Barlow submitted that the injunction order was not expressed in clear, certain and unambiguous language because it was expressed to take its meaning from the letter from Richards Butler to Mr Lehman dated 21 June 2010.  He made various criticisms of the scope of that letter and contended that it did not clearly, precisely or unambiguously tell the reader what Mr Lehman was restrained from doing under the injunction order.

39. This was not a ground raised in the Notice of Appeal.  But, in any event, we would reject this contention.  We would accept the submission of Mr Charles Manzoni SC, counsel for Effiscient, that the injunction order was sufficiently clear in its terms and prevented publication of (1) the defamatory statements referred to in Richards Butler’s letter and (2) any similar defamatory words.  The defamatory meanings were set out clearly in that letter and the injunction order was therefore clear and unambiguous in restraining the publication of any words having those defamatory meanings.[1]

40. As to whether the offending emails breached the injunction order, in the originating summons in these proceedings, Effiscient identified the following parts of the offending emails[2] as constituting material defamatory of Mr Brown:

“I am a lawyer who has been resident in mainland China for the past 25 years. I am in the very painful process of litigating against a UK subject by the name of Russell Brown for what I believe have been blatant dishonesty and malfeasance … In 2004, he essentially hijacked the company and I have not been paid a penny an[d] been frozen out of the business since 2006.

…

My point is he has done this to me and I think he may have done this to others in the past.”

(Email dated 5 October 2011)

“… he has abused my trust and ‘hijacked’ the company, he has added his wife as director of the company, set his own salary, bonus, wife’s salary and has not revealed where he has put the company reserves”.

(Email dated 6 October 2011)

41. We were satisfied that, on a plain reading of those passages, the offending emails did contain statements defamatory of Mr Brown (the 1^st plaintiff in the defamation action) in one or more of the senses stated in Richards Butler’s letter.

42. Thirdly, Mr Barlow argued that the injunction order only prohibited publication in Hong Kong.  This argument was based on the ambit of the Court’s jurisdiction in the defamation action and the construction of the injunction order in that context.  It was also partly based on the wording of the Richards Butler letter referred to in the injunction order, specifically the statements in that letter which threatened “to commence proceedings against you (in Hong Kong and/or in any other jurisdiction in which your defamatory statements have been published)” and which asserted that Mr Lehman’s conduct had constituted “a criminal offence under section 5 of the Defamation Ordinance (Cap. 21)”.

43. We considered that this was a point with substance.  The writ in the defamation action was served on Mr Lehman out of the jurisdiction pursuant to leave granted under O.11.  The application for leave to serve out was made on the basis that the plaintiffs’ claims against Mr Lehman fell within the scope of O.11 r.1(1)(b) and O.11 r.1(1)(f).  Sub-rule (1)(b) relates to a claim for “an injunction … ordering the defendant to do or refrain from doing anything within the jurisdiction”;  sub-rule (1)(f) is applicable where “the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction” (emphasis added).

44. As the editors of Gatley on Libel and Slander (11^th Ed.) state at §26.21 (p. 910):

“Damage is presumed in libel, and the damage is sustained and the act resulting in the damage is committed at the place or places of publication. Publication occurs at the place where the statement is seen or received by another person, a rule which has particular importance for internet publication.”

45. Thus, it is clear that the defamation action was an action brought in Hong Kong in respect of publications of defamatory statements in Hong Kong or damage to reputation sustained in Hong Kong and that the plaintiffs were seeking injunctive relief against Mr Lehman to restrain further publication in Hong Kong.  It was on that basis that jurisdiction was founded here against Mr Lehman.

46. Given the context of the action, it would be surprising, to say the least, if the injunction order, which was granted on an interlocutory basis pending the trial of the action, prohibited any act which the final injunction that might be granted in the action would not and could not prohibit.  We considered that Mr Barlow was right in saying that the injunction order was not intended to prohibit any publication outside Hong Kong.

47. Since it was accepted by Effiscient that the offending emails were sent to England, it would follow that the publication of any defamatory statement contained in them and the sustaining of any damage from them occurred in that jurisdiction and not in Hong Kong.  It would therefore also follow that the sending of the offending emails by Mr Lehman did not constitute an act in breach of the injunction order.

48. Mr Manzoni argued that, on its proper construction, the injunction order was wide enough to prohibit Mr Lehman from causing or participating in the publication of defamatory material while he was in Hong Kong regardless of the place of publication of the defamatory material.  Since he wrote the offending emails in Hong Kong and sent them from here to England, Mr Lehman was at least participating in the publication of the offending emails and he was doing so while in Hong Kong.  Mr Manzoni submitted that the injunction order was seeking to control Mr Lehman’s behaviour while in Hong Kong and to stop the further dissemination of material defamatory of the plaintiffs.

49. We did not accept that argument.  The fact that the injunction order prohibited Mr Lehman from “causing … or howsoever participating in the publication” does not affect the fact that the injunction order is directed to prohibiting the publication of defamatory material in Hong Kong and is not concerned with defamatory materials published outside the jurisdiction.  What Mr Lehman is only prohibited from causing or participating in is the publication of defamatory material and the fact that Mr Lehman might be in Hong Kong when he caused or participated in the act of publication does not alter the fact that the relevant act that was the target of the prohibition is the publication of defamatory material.  It may be that the repetition of the defamatory statements by Mr Lehman by publication outside the jurisdiction would be relevant to the quantum of damages (in that such repetition after the commencement of the action might be an aggravating factor) but that does not affect our conclusion on the ambit of the prohibition in the injunction order.

50. Mr Manzoni also argued that a tort in England was actionable in Hong Kong under the rule of double actionability adumbrated in Phillips v Eyre (1870) LR 6 QB 1 and confirmed in Boys v Chaplin [1971] AC 356.  However, the question is not whether an action might be brought against Mr Lehman, if he were within the jurisdiction of Hong Kong, in respect of defamatory statements published by him in England.  Rather, the question is what is the ambit of the injunction order?  That order was obtained to hold the ring pending the determination of whether a final injunction order should be granted in the defamation action.  As we have said, that action was concerned only with the publication of defamatory statements in Hong Kong and therefore the injunction can only have been directed towards prohibiting publication of defamatory statements here.

51. In any event, it was apparent from the arguments addressed to us on this point that it was far from clear, certain and unambiguous that the injunction order should be read not only as prohibiting Mr Lehman’s publication of defamatory statements in Hong Kong but also his causing or participating in the publication of such statements whether in Hong Kong or out of the jurisdiction.  For that reason alone, we do not think the Judge could have been satisfied beyond reasonable doubt that Mr Lehman had acted in breach of the injunction order: see Kao Lee & Yip v Koo Hoi Yan (supra) at §§23 and 30.

Did Effiscient have standing to apply for the committal of Mr Lehman?

52. In light of our conclusion on the question of whether the injunction order prohibited participation in publication outside the jurisdiction, we did not invite the parties to address us orally on this third ground of appeal raised by Mr Lehman as it was strictly unnecessary to our decision to resolve it.

53. The argument was that, since the application to commit for contempt was based on defamatory statements contained in the offending emails concerning Mr Brown only and not Effiscient, the latter had no standing to seek to have Mr Lehman committed for contempt of court (Ground 6 of the Notice of Appeal).

54. We would not have been inclined to accept this point for the following reasons.  The injunction order was made in the defamation action in which Effiscient was a named party (as 3^rd plaintiff).  Effiscient was therefore a party to the injunction order and one for whose benefit it was made.  It is true that the party most affected by the offending emails is Mr Brown but that does not mean that Effiscient did not have an interest, albeit lesser, in seeing that the injunction order was not breached such that it would have standing to apply for the committal.  Furthermore, we are inclined to agree with Mr Manzoni that, if standing were an issue, it is a point that should more appropriately have been taken on an application to set aside the leave granted by Harris J to move for contempt and certainly not on an appeal against a finding of contempt when it was not taken at first instance at the committal hearing.

Conclusion and costs

55. As will be apparent, we reached the conclusion that the injunction order prohibited Mr Lehman’s participation in the publication of statements defamatory of the plaintiffs in the defamation action only where such statements were published in Hong Kong and not elsewhere. Since the committal for contempt was based on the publication of the offending emails in England, the Judge could not have been satisfied of Mr Lehman’s guilt beyond a reasonable doubt.  At the very least, there was reasonable doubt that Mr Lehman had breached the injunction order as properly construed.  That the Judge reached a different conclusion is, of course, understandable because it was conceded below that Mr Lehman was in breach of the injunction order.

56. Since we allowed the appeal and set aside the Judge’s order for committal and his costs order, we considered that the costs of the appeal should follow the event.

57. We considered that, in substitution for the Judge’s costs order, there should be no order for costs in respect of the costs below because the only point which Mr Lehman argued below was one which, in our view, the Judge rightly rejected and the appeal only succeeded on a new point not argued below.  This outcome was advanced by Mr Lehman as an alternative to a reversal of the costs order below (Grounds 8 and 9 of the Notice of Appeal).

58. Finally, we ordered the return to Mr Lehman of the sum paid into court by way of security for costs of the appeal.

[1]  The Judge reproduced the relevant part of the letter in §4 of the Judgment.

[2]  The Judge reproduced the offending emails in §9 of the Judgment.