EXCEL NOBLE DEVELOPMENT LTD AND OTHERS v. WAH NAM GROUP LTD. AND OTHERS

CACV 576/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 576 OF 2000

(ON APPEAL FROM HCA 12439 OF 1999)

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J U D G M E N T

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Hon Rogers VP:

1. This is an interlocutory appeal in contempt proceedings. The original order that was made on 17 December 1999 was a mareva injunction order against various companies of which the 1st alleged contemnor was one and the 2nd alleged contemnor was a director. The material part of the mareva injunction which is the subject of the contempt proceedings is the Disclosure Order and that read as follows :

"If the total unencumbered value of the 1st Defendant's assets in Hong Kong exceeds HK$61,000,000, the 1st Defendant may remove any of those assets from Hong Kong or may dispose of or deal with them so long as the total unencumbered value of its assets still in Hong Kong remains above HK$61,000,000.

(1) The 1st Defendant must inform the Plaintiffs in writing of all its assets of an individual value of HK$200,000 or more to a total unencumbered value of $61,000,000, whether inside Hong Kong or outside Hong Kong, whether in its own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets. The 1st Defendant may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate it.

(2) This information must be confirmed in an affidavit which must be served on the Plaintiff's solicitors within 28 days after this Order has been served on the 1st Defendant."

2. It is alleged that this order was duly served on both the 1st and 2nd alleged contemnors. There was a stay of that order originally but the stay was lifted on 13 January 2000.

3. There was no affidavit filed by 28 February 2000 but an affidavit by the 2nd alleged contemnor dated 11 March 2000 was filed on the same day. These proceedings were commenced in accordance with the Hong Kong practice which differs somewhat from the older practice, the practice which still pertains in England and Wales. The Hong Kong rules are contained in Order 52. Rule 2 relates to the grant of leave to apply for committal.

"(1) No application for an order of committal against any person may be made unless leave to make such an application has been granted in accordance with this rule.

(2) An application for such leave must be made ex parte to a judge, and must be supported by a statement setting out the name and description of the applicant, the name, description and address of the person sought to be committed and the grounds on which his committal is sought, and by an affidavit, to be filed before the application is made, verifying the facts relied on.

(3) The applicant must give notice of the application for leave not later than the preceding day to the Registrar and must at the same time lodge with the Registrar copies of the statement and affidavit."

At the Order 52 rule 3 provides that :

"(1) When leave has been granted to make an application for an order of committal, the application shall be made by motion to a judge and unless the Court granting leave has otherwise directed, there must be at least 8 clear days between the service of the notice of motion and the day named therein for the hearing.

(3) The notice of motion, accompanied by a copy of the statement and affidavit in support of the application for leave under rule 2, must be served personally on the person sought to be committed."

As was pointed out by Mr Chain, on behalf of the appellant in this case, this rule is somewhat at variance with the rule as it was in England and Wales. Under the previous Order 52 rule 4 in England it was provided that :

"(2) Subject to paragraph (3) the notice of motion, stating the grounds of the application and accompanied by a copy of the affidavit in support of the application, must be served personally on the person sought to be committed."

4. The material distinction is that the words of the English rule "stating the grounds of the application" are not in the Hong Kong Rules. It seems to me that this does not matter. The point of the notice of motion is very much like a charge or an indictment in a criminal case. Contempt cases are very similar to criminal cases. They have to be proved beyond a reasonable doubt. The most important thing at the start is to be absolutely clear what the charge is which is made against the alleged contemnor.

5. In this case it seems to me that there are certain difficulties. In the first place it may well be, and it seems to be the case, that there is a complaint that the affidavit was late. There seems to be a complaint that some of the assets referred to were encumbered whereas in the affidavit they were said to be unencumbered.

6. There seems to be a very vague complaint about some of the other assets. What is said in the statement, for example, is that the status of the other assets put forward by the 2nd intended contemnor, that is the land in Xinhui City, is the subject of unanswered queries on the part of the 1st intended contemnor. It is by no means clear from that statement whether it is alleged that the assets which are there referred to are not of the value stated, are encumbered or what it is. Simply because there are unanswered queries does not in any way, on the face of it, show that there has been any contempt or any alleged contempt.

7. The important thing, however, as far as the 2nd contemnor is concerned is the basis upon which the application is made. As I have already stated the 2nd contemnor is a director of the 1st alleged contemnor. Paragraph 8 of the statement reads :

"8. The grounds upon which relief is sought are further that the 2nd Intended Contemnor, as an executive director of the 1st Intended Contemnor, with full knowledge of the terms of the Disclosure Order, and in contumelious disregard of the Disclosure Order, has wilfully refused and/or failed to inform the Plaintiffs or caused or procured the 1st Intended Contemnor to so inform the Plaintiffs, when it was within his power to do so, in the form required or at all, of the 1st Intended Contemnor's assets, thereby rendering the Mareva Injunction, to which the Disclosure Order was granted as an ancillary, defeasible."

When the notice of motion is considered the conclusion of the final paragraph reads :

"... the 1st and 2nd Contemnors did fail to so inform the Plaintiffs and further failed to serve such affidavit in the time afforded, that is on or before 25th February 2000, and that the 2nd Contemnor, being at all material times an executive director of the 1st Intended Contemnor and the affirmant of an affirmation dated 11th March 2000 affirmed in purported compliance with the Disclosure Order, contumaciously indulged in the 1st Intended Contemnor's failure to obey the said Discloure Order."

8. The final words of the notice of motion and the reference in paragraph 8 to the contumelious disregard of the disclosure order and willfully refusing and failing to inform the plaintiffs or causing or procuring the 1st contemnor to so inform the plaintiff when it was in his power to do so, in my view can only relate to an allegation that the 2nd intended alleged contemnor was aiding and abetting a breach of an injunction. A charge of aiding and abetting a breach of an injunction is quite a different charge from a charge of being a director of a company which has failed to comply with a mandatory order. The difference between the two has been reflected in a number of cases in particular in Cartier v Kaybee [1985] HKLR 127.

9. However, Mr Pat Lun Chan who has appeared on behalf of the plaintiffs, the respondents in this appeal, says that the only allegation which is intended to be made against the 2nd alleged contemnor is in respect of his being a director, under Order 45, and it is not alleged that he has aided and abetted a breach of an injunction.

10. In those circumstances alone, it seems to me that the notice of motion must be changed to make this clear. It is also apparent that the notice of motion must make clear precisely what it is alleged that each alleged contemnor has done which is a breach of the order which has been made. If it is alleged that some or all of the assets are not of the value indicated in the affidavit it must be precisely stated. If it is intended to rely on the fact that the affidavit was late then that must be made clear. In particular in respect of the 2nd alleged contemnor it must be indicated as to what was the basis of his alleged contempt.

11. We were informed that these matters were raised before the learned judge and it was indicated that the basis of alleged contempt was clear. In my view the notice of motion must be amended and the parties should be heard as to what orders should be made in consequence of any order that will be made on this.

12. For completeness, it should be added that, in the course of the argument it became clear that both parties were in agreement that despite the order that alleged contemnors should file evidence if so advised within 14 days, the alleged contemnors must be at liberty to be able to give oral evidence, whether or not they filed affidavit evidence before. That is in accordance with the rules and the matter rests there.

Hon Wong JA:

13. I agree.