SUN MING WAH HOLDINGS LTD. v. DATACOM WIRE & CABLE CO. LTD.

1999, No. A9000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. I am concerned with a notice of motion seeking an order of committal against Mr Chi Shi Jer (Mr Chi), one of the directors of the defendant.

2. The background to the matter is that, on 26 July 1999, the plaintiff obtained a Mareva injunction against the defendant. On 6 August 1999, I heard an application to continue the injunction. On that occasion, Mr Chi sought to represent the defendant; the defendant's solicitors having earlier obtained leave to withdrawn. Mr Chi wanted to seek further legal advice. I adjourned the matter, confirming with Mr Chi that he understood that the order freezing the assets of the defendant would continue.

3. At that hearing, Mr Watson-Brown told me that the defendant had made some attempt to export some goods to the mainland. At Mr Watson-Brown's request, I made it abundantly clear to Mr Chi that this was not permissible, and that, if he were a party to this, he risked punishment for contempt. Mr Chi said that he understood this. He did not say that he knew nothing about such attempt to export the assets.

4. On 12 August 1999, the plaintiff applied for leave to issue this notice of motion. The basis for this was that Mr Chi had, on 6 August 1999, been instrumental in allowing some assets of the defendant to removed from the jurisdiction. I granted leave.

5. The evidence is that a self-employed driver, Mr Chan Yuk Yau, received instructions from Mr Chan Sze Lok, of the defendant, to collect some goods and deliver them to a Sum Chun factory. He packed the goods at about 9-15pm, collected the manifest from the defendant at about 12-15pm, cleared customs at the border at about 1-45pm and delivered the goods to the factory at about 2-30pm.

6. On 31 August 1999, the notion of motion came before me. Mr Chi was not present. He was said to be ill in hospital on the mainland. I adjourned the matter to allow Mr Chi to appear.

7. On 10 September 1999, the wife of Mr Chi, Mdm. Chi Man Li filed an affirmation. She says nothing of any great importance to the matter before me; what she does not say is more important. She says nothing about she and Mr Chi making attempts to telephone Mr Chan Sze Lok on 6 August 1999 to stop the assets being exported.

8. Mr Chan Sze Lok filed an affirmation on 17 September 1999. He says that, in early August, he learnt from Mr Chi that the plaintiff had obtained an injunction against the defendant. He says that he and Mr Chi mistakenly believed that the order related only to money in the bank. He does not say why they believed that. Mr Chan says he arranged for the export of the goods concerned. He did not tell Mr Chi about this because he believed that they were not covered by the injunction. He says he became aware that the order applied to all assets only after Mr Chi had been to court on 6 August. He says - "When I aware of the true effect of the said injunction order in the afternoon on 6 August 1999, the accessories had already been delivered to the factory in Shen Zhen.".

9. On 20 September, the matter came before me again. Mr Chi was then present, and he was presented by solicitors and Mr Peter Ip. Mr Ip, on behalf of his client, admitted the contempt and apologised on his client's behalf. I said I needed more than that. I had no evidence from Mr Chi. I wanted an explanation from Mr Chi on oath and I wanted him to give evidence, subject to cross-examination. During the course of this hearing, Mr Watson-Brown said that, after the warning I had given Mr Chi on 6 August, he should have stopped the goods from being exported. Mr Watson-Brown specially mentioned the possibility of Mr Chi could have telephoned to do this. No one then said that attempts had been made to telephone. Mr Chi was in court and he heard Mr Watson-Brown mention the possibility of telephoning. At this hearing, there was not the slightest hint of anything from Mr Chi's side to indicate that he had not committed a contempt because he had tried to stop the export of the goods. In fact, when I said to Mr Ip that, in particular, I wanted an explanation for Mr Chi's failure to stop the goods leaving Hong Kong, the response was, not that indeed Mr Chi had attempted to do so, but that he had a great number of things on his mind; the implication being that this was the reason why he had not attempted to stop the exportation. If, indeed, Mr Chi had made attempts to stop the exportation, it is inconceivable, in the context, that this would not have been the first thing he would have told his legal advisers, and, of course, this would have been the first thing that his advisers would have asked him - "After the judge spoke to you on 6 August, what did you do to stop the goods leaving Hong Kong?"

10. So, it was with surprise that I read Mr Chi's affirmation dated 30 September 1999. The effect of this is that Mr Chi did nothing wrong, had no reason to admit a contempt and had nothing for which to apologise. He says he knew nothing about the export of the goods to the mainland. In any event, before 6 August, he did not know that such an export would be a breach of the order. He says that, after the hearing on 6 August, he took a train to Shen Zhen with his wife. He and his wife made attempts to telephone Mr Chan Sze Lok, but could not do so until about 2-30pm.

11. Mr Chi gave evidence and was subject to cross-examination by Mr Watson-Brown and re-examination by Mr Grossman.

12. Mr Chi was an extraordinarily poor witness. He admitted that the injunction order had been explained to him by his former solicitors, and that he read it himself. He is able to read English. He did not explain why, this being the case, he thought that the order only applied to money in the bank. It clearly does not, and the most cursory reading of it makes that obvious. He could offer no explanation for his failure to say that he knew nothing about the export of the goods when Mr Watson-Brown raised this accusation on 6 August. Neither could he explain why his story about he and his wife trying to telephone Mr Chan Sze Lok was not mentioned by him or his advisers on 20 September, especially in the light of this possibility being specifically raised by Mr Watson-Brown. More generally, Mr Chi was evasive and failed to answer simple questions directly. I have no hesitation in rejecting his evidence that he did not know the effect of the order, that he did not know about the export of the goods, that he did not think this was in breach of the order and that he tried to stop the export as being false beyond a reasonable doubt. I find, beyond a reasonable doubt, that Mr Chi knew about the export and knew it was a breach of the order.

13. Mr Grossman says that the contempt, if there was one, was trivial. It may be that the value of the goods was small, but the disrespect shown to this court's order was by no means trivial. If it were not for the fact that Mr Chi is, apparently, a sick man, I would find myself in the unfortunate position of considering committal to prison. But, I accept, for these purposes, that he is not well, and also that he might well consider himself justly aggrieved by this litigation. In these circumstances, I propose to impose a monetary penalty. Mr Chi will pay the sum of $50,000 to court within 14 days.

14. The matter of costs of the contempt proceedings has not been argued, but I can see no obvious reason why Mr Chi should not pay these. I make an order nisi that Mr Chi pay the costs of these proceedings.