THE INCORPORATED OWNERS OF LONG MANSION v. GOOD CHOICE INDUSTRIAL LTD AND OTHERS

HCMP 2138/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO2138 OF 2013

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SENTENCE  FOR  CONTEMPT

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1.  By a judgment handed down on 26 October 2016, I found the first 3 respondents guilty of contempt of court in failing to comply with Order (1) and Order (3). This hearing is to consider the appropriate sentence and disposal of the $3 million paid by the 2^nd respondent into court.

Legal principles in sentencing for contempt of court

2.  The legal principles in sentencing for contempt of court have been recently summarized in Bruno Arboit v Koo Siu Ying & Ling Meng Chu Pearl (HCMP 2749/2012), §§2-9:

“(i) The starting-point is to acknowledge that contempt of civil Court orders is a serious matter and that Court orders are made to be obeyed.

(ii) The object of the sentence is both to punish conduct in defiance of the Court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do. The Court has to balance the two objects.

(iii) The sentence for contempt may range from a fine to a term of imprisonment, but imprisonment should be regarded as a sanction of the last resort and any custodial sentence should be as short as possible consistent with the circumstances of the case.

(iv) The Court may suspend a term of imprisonment for such period or on such terms as the Court deems fit. This is an “absolute discretion” but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order.

(v) The Court will consider if there are aggravating and/or mitigating factors. The Court will also consider whether there are any acts to purge the contempt, i.e. acts to atone for a contempt, eradicate it or cleanse it of its previous ill-effect which, in the case of a mandatory order, may be fulfilled if the contemnor thereupon does the act or causes it to be done.

(vi) Relevant factors (which are not exhaustive) to be taken into account by the Court include:

(1)  The nature of the order and breach in question, and the extent of the breach;

(2)  Whether the contempt was contumacious or unintentional, the reasons, motive and state of mind;

(3)  Whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy;

(4)  Whether the contemnor appreciates the seriousness of the deliberate breach;

(5)  Whether the contemnor has cooperated.”

Sentence in respect of breach of Order 1

3.  The contempt was purged by 11 April 2016 at the latest.  The 3 respondents were out of time by 2 years and 10 months.  The serious delay was an aggravating factor.

4.  However, it was confirmed at the hearing that the time frame (for both Orders (1) and (3)) was imposed by the arbitrator after trial.  It might have been an under-estimation of time having regard to the extent of remedial works required and the need to obtain the then tenant’s cooperation. 

5.  The 3 respondents had taken a confrontational approach with their former tenant and resorted to misconceived legal action.  They had been too wary about the huge costs involved in compliance instead of placing the proper emphasis on expeditious compliance with Order (1).  For unexplained reasons, the 3 respondents never sought extension of time for compliance despite being legally represented.  However, I note from the correspondence and the affirmations filed by the respondents that they had made conscious efforts to try and comply with Order (1).  I am not satisfied that they had the wilful intention to flout the court order.

6.  The 3 respondents have apologised unreservedly to the court.  There is no possibility of their committing the same breach in respect of Order (1).

7.  The 2^nd and 3^rd respondents have put in evidence as to their past career and charitable donations in mitigation.  It was completely irrelevant in the context of this case.

8.  In my view, a custodial sentence or even suspending it would serve no useful purpose.  Instead, a substantial fine is more appropriate in the circumstances of this case.

9.  There are 3 respondents involved (although it was Madam Yu who all along handled this case). They are all liable for the same breach. I am of the view that any fine imposed by the court should be shared between them equally. I order each of them to pay a fine of $70,000.

Sentence in respect of breach of Order (3)

10.  Order (3) never required BA’s certification, but BA’s satisfaction.  The evidence at the trial did not show BA’s satisfaction.

11.  However even before the judgment was handed down, the 3 respondents, obviously having learnt from questions posed to their witnesses in the box, had requested BA 3 times for a special inspection of the works done.  The need to comply with Order (3) was specifically drawn to BA’s attention. 

12.  In response, BA stated in their letter dated 8 November 2016 that:

“Under the minor works control system, the prescribed registered contractor is required under Building Ordinance sections 9AA(4)(c) and 9AA(6)(c) to comply generally with the Buildings Ordinance. He is also required under sections 9AA(4)(a) and 9AA(6)(a) of that Ordinance to provide continuous supervision to the carrying out of the minor works to ensure that the works are carried out in accordance with the Buildings Ordinance and that the works carried out do not diverge or deviate materially from the prescribed plan submitted to the Building Authority before the commencement of work. Besides, the appointed persons have certified on the specified form that the proposed minor works were carried out under the simplified requirements of the minor works control system and have been completed in accordance with the prescribed plans and details of the works, and in the appointed persons' opinions, structurally safe.”

13.  BA maintained it would only carry out random audit checks minor works submission and refused to inspect the works in question the basis that those have not been selected for audit checks.

14.  Separately, the Authorised Person Mr Poon had issued a letter dated 5 December 2016 explaining the statutory requirements relating to the works in question.  The “simplified requirements” procedures under Part 6 of the Building (Minor Works) Regulations (Cap 123N) was an option open to and taken up by the respondents.  He confirmed the practice of the BA as set out in BA’s letter.  The buildings legislation only required the engagement of prescribed registered contractors to do the minor works and did not require any authorised persons to be engaged.  Mr Poon stated in his letter as follows:

“Nevertheless, by virtue of my appointment to oversee and supervise the carrying out of the minor works at the material time, I confirm that they were carried out in compliance with the Ordinance and Regulations and to my satisfaction, and on this basis, should have been carried out, in my honest belief, to the Building Authority's satisfaction had the Buildings Department asked me to provide a view on the state of the work from its perspective.”

15.  I am satisfied that the 3 respondents had made genuine efforts to try and purge the contempt.  Notwithstanding that the letter of Order (3) has not been complied with at the time of the trial, from the evidence now before the court, the spirit has been complied with, and it is not possible for the 3 respondents to obtain BA’s expression of satisfaction in a better way than it already had.

16.  Taking all circumstances into account, I am of the view that a custodial sentence is not appropriate.  A fine would be sufficient to mark the court’s disapproval of the delay in compliance.  I order that each of the respondents do pay a fine of $10,000.

17.  An overall fine of $240,000 is appropriate in the circumstances to punish the past contempt of the 3 respondents.

Disposal of the payment into court

18.  The parties have reached an agreement for the respondents to bear costs of the applicant in the total sum of $600,000.  The respondents agree for the fines and the costs to be paid out of the $3 million in court, after which, the balance of the money in court together with accrued interest shall be paid out to the 2^nd respondent.

Orders

19.  I order as follows:

(a)  With regard to breach of Order (1), each of the 1^st to 3^rd respondents shall pay a fine of $70,000;

(b)  With regard to breach of Order (3), each of the 1^st to 3^rd respondents shall pay a fine of $10,000;

(c)  Costs of $600,000 shall be paid by the 1^st to 3^rd respondents to the applicant;

(d)  The fines and costs shall be paid out of the money in court; and

(e)  The balance of the money in court together with accrued interest shall be paid out to the 2^nd respondent.

20.  I thank Ms Lam and Mr Mok for their assistance.