RE WINNER FOOD PRODUCTS LIMITED

1988 No, M.P. 1814

IN THE HIGH COURT OF HONG KONG

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HEADNOTE

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An order embodying both positive and negative undertakings was served on the Respondent: but the copy served on him was not endorsed with the penal notice provided for in Order 45 rule 7(4) of the Rules of the Supreme Court. On an application for his committal for breach of the undertakings, the Respondent accepted that he was aware of the undertakings but took the preliminary point that in the circumstances the application was technically defective:

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JUDGMENT

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1. This is an application by the Applicant Winner Food Products Limited to commit the Respondent Chung Yat Ming for his contempt of the Court in disobeying (as the applicant alleges) an order of 26th January 1988 made by Mr. Justice Duffy in High Court Action No. 5199 of 1987, an action against a company of which the Respondent was a director, and in failing to comply with undertakings given by the Respondent personally in an order of 15th July 1988 made by Mr, Justice Duffy in Miscellaneous Proceedings No. 900 of 1988.

2. The latter order is an order which contains a number of positive and negative undertakings and it is of these undertakings that it is said the Respondent is in breach. The order was served on the Respondent but it was not endorsed with the "penal notice" to which reference is made in Order 45 rule 7(4) of the Rules of the Supreme Court.

3. The preliminary point is taken on behalf of the Respondent that, because of the failure to serve upon the Respondent an order endorsed with a penal notice, this application in so far as it is concerned with the Respondent's undertakings is technically defective and accordingly must fail. There is no question but the Respondent knew of the terms of his own undertakings both positive and negative. The objection is purely technical; but it is none the worse for that, at any rate in this field, where the court is concerned with the liberty of the subject and must scrutinize with great care any attempt to deprive the subject of that liberty. It is for this reason that, in applications for committal for contempt, it is a basic and salutary rule that all the requirements prescribed by the Rules of the Supreme Court in this connexion should be demonstrated to have been strictly observed.

4. I have not considered the merits of the application at this stage and I shall say nothing about the merits in the course of this judgment.

5. I shall start with Order 45 of the Rules of the Supreme Court, which is concerned with the enforcement of judgments and orders, particularly Order 45 rule 5, which is concerned with the enforcement of judgments to do or abstain from doing any act. (This is of course a reference to judgments which are on the one hand positive and on the other hand negative in character.)

6. Order 45 rule 5 provides, so far as material, as follows:

                "5(1) Where---

7. Order 45 rule 7 provides so far as material, as follows:

8. It is to be noted that Order 45 rule 7(6) (the provision for enforcing an order under rule 5 in the absence of service of a copy of the order) is applicable only in the case of an order requiring a person to abstain from doing an act, and not in the case of an order requiring him to do an act.

9. The point I have to decide is this : Can the positive and negative undertakings contained in the order of 26th January 1988 be enforced notwithstanding that the copy of the order served on the Respondent did not bear a penal notice? I have not found this an easy question. The authorities are perhaps not entirely clear.

10. The first authority (in point of time) cited to me was Halford v. Hardy [1899] WN 243. The report states as follows:

"By a judgment of 6th July 1899, the plaintiff undertook forthwith to execute an indenture according to the terms of the draft of the same approved by the solicitors for the defendants. The defendants by their counsel undertook forthwith to execute such indenture. On that footing all further proceedings in the action were stayed and liberty to apply was given. The plaintiff executed an engrossment of a deed in accordance with the draft and tendered it to the defendants for execution, but they refused or neglected to execute it. The plaintiff moved for the defendants' committal to prison."

11. Objection was taken on behalf of the defendants because the copy of the order served on them did not bear upon it the penal notice.

12. The judge pointed out that since no time was specified in the undertaking a "four-day order" was necessary (that is to say, the sort of order made in the Chancery Division to supplement an earlier order in which no time is specified for the performance of the act required).

13. The judge said that it was remarkable that the question what service was necessary in the case of the enforcement of a positive undertaking to do an act had never, so far as he was aware, arisen in practice. The point was one of some general importance and he would consult some of his brother judges on it. After the mid-day adjournment, the judge said that having had an opportunity of consulting all (but one) of the judges in the Chancery Division, he thought he might say that there was a consensus of opinion, more or less strong, that in the case of an undertaking of this kind there ought either to be service in accordance with the rules, that is to say, in accordance with the provisions  requiring the endorsement of the penal notice, or an order in the nature of a four-day order. Admittedly, no one had ever had the point before him in his experience. He then made an order that the defendants should, on or before a specified date, or subsequently within four days of the service of the order, execute the engrossment. So, in that case, the judge made a four-day order instead of committing the defendants for a breach of their positive undertaking. That case has at least this merit, that it is the one case cited to me which is directly in point, in that the facts and the objection were almost exactly the same as in the present case.

14. In Callow v. Young (1886) 5.5 LT 543, Mr. Justice Chitty observed, in relation to an undertaking, that it was not necessary to show that the person sought to be attached had knowledge of the undertaking. He must be presumed to have known that he had given his undertaking.

15. In D v. A & Co. [1900] 1 Ch. 484, it appeared, on a motion for liberty to issue a writ of attachment against solicitors for breach of an undertaking given by them and embodied in an order of the Court, that the order had not been served upon them. It was held that service of the order was not necessary but that undertakings, whether positive or negative, must be enforced by committal and not by attachment. The Court there had to consider a positive undertaking, and it was objected by the defendants who were alleged to have been in breach of their undertakings that the motion should be refused because the order was not served on the defendants and that it was now settled that orders containing undertakings of an affirmative character must be served on the person who gave the undertakings, Halford v. Hardy, above, was cited in support of that submission.

16. Mr. Justice Cozens-Hardy in a reserved judgment held that the objection was not well founded. He Said this: "It is settled law that an order granting an injunction may be enforced by committal, although the order has not been served. It is sufficient if it be shown that the defendant had notice of the order. Service of the order is a convenient mode of giving notice, but that is all. Notice may be given by telegram or otherwise [and he cites an authority]. If this holds good where a hostile order has been made, it must equally hold good where the defendant has voluntarily given an undertaking. Indeed, in such a case, I think no notice at all is requisite [and he cites the passage to which I have already referred from the judgment of Mr. Justice Chitty in Callow v. Young above]. Having regard to the settled practice of giving an undertaking in the terms of a notice of motion, it would be highly dangerous to hold that a defendant who had given an undertaking could disregard it unless and until the order was served. I do not think Mr. Justice Kekewich intended to intimate a contrary opinion in Halford v. Hardy."

17. In Ronson Products Ltd. v. Ronson Furniture Ltd. [1996] 1 Ch. 603, the plaintiffs applied for the committal of the directors of a company in respect of breaches of undertakings given by the company to the court (in the present case, they were given by the Respondent personally). The directors had known of the undertakings and had procured a breach of them. It was held that they had made themselves liable in proceedings for contempt, notwithstanding that they had not been served with the order containing the undertakings, since they were not of a positive but a negative character and the directors knew of them. Mr, Justice Stamp observed (at p. 615) "The practical difference between an order under which a positive act is to be done and one where an act is prohibited must lead to the conclusion that the former class of order ought not to be enforced against the director unless he has been served with it so that he, like the company, knows precisely what is to be done and the period during which it has to be done."

18. There is however no real or logical distinction, for the purposes of the point I have to decide, between a positive and a negative undertaking. The person giving the undertaking must be presumed, whether his undertaking was positive or negative, to have known what it was. Neither service of a copy of the order embodying the terms of the undertaking, nor the endorsement on it of the penal notice, are necessary for his protection. (I would add only this, that if he were not present in court when the undertaking was given the court would require to be satisfied that the contents of his undertaking had been made known to him by his solicitors or counsel after the conclusion of the hearing. In the present case, it is accepted on behalf of the Respondent that he was aware of the terms of his own undertaking, although he was absent when it was given.)

19. The only other case to which I need to refer is Hussain v. Hussain [1986] 1 All ER 961, to which I drew the attention of Counsel during the hearing. A husband gave an undertaking of a negative character, that is to say, an undertaking not to molest his wife. The undertaking was recited in the formal order. The order was not endorsed with a penal notice and was never served on the husband. Subsequently, the wife applied to commit the husband for breach of the undertaking. The question arose whether the provision in the rules for enforcing orders of the Court applied to undertakings given to the Court. It was held that, notwithstanding that the undertaking had been recorded in the formal order of the Court, it was the undertaking itself, and not the order, which required the person giving the undertaking to comply with its terms, and consequently failure to comply with the terms of the undertaking did not constitute neglect of or disobedience of the order as such. Furthermore, although an undertaking was as binding and effective as an order, it differed in that an undertaking was volunteered rather than imposed and therefore the person giving the undertaking was presumed to know of it so that proof of service was not required prior to enforcement. The procedural requirements for the enforcement of an undertaking were therefore not as strict as those applying to the enforcement of a judgment or order. Since the court was satisfied that the husband knew and understood the effect of the undertaking it was not necessary that a copy of the order recording it should have been either served on him or endorsed with a penal notice.

20. Sir John Donaldson, Master of the Rolls, put the matter (at page 963) in this way : "Let it be stated in the clearest possible terms that an undertaking to the Court is as solemn, binding and effective as an order of the Court in the like terms and the contrary has never been suggested. What has been suggested ........is that the procedural requirements for enforcement are not as strict in the case of an undertaking as in the case of an order ........ because [the rules] have no direct application to committal for breach of an undertaking. Having now been referred to the authorities I have no doubt that this submission is well founded. Undertakings may be recorded in an order of the court, as occurred in this case, but it is the undertaking and not the order which requires the giver of the undertaking to act in accordance with its terms."

21. He concluded that it followed, from the absence of any strict requirement that a record of the undertaking be served on the person giving the undertaking, that there is no requirement for a penal notice in such cases. (He did add, and I would support this, that nevertheless as a matter of general practice an order containing an undertaking should be served, and endorsed with a penal notice.)

22. Since the person giving the undertaking must be presumed to know what he was doing, then, even if, as in this case, the copy of the order embodying his undertaking is served on him without the endorsement of a penal notice, there is no good ground for refusing to enterain an application for his committal based on an the alleged breach of the terms of his undertakings (whether they were positive or negative). Accordingly, I reject this preliminary point, and the application will be adjourned to be dealt with on its merits at a date and time to be fixed.