IP SUK CHING v. LUK KAM HEUNG

CACV 381/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 381 OF 2008

(ON APPEAL FROM HCA NO. 1215 OF 2006)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a judgment of Master Hui given on 10 December 2008.  The master had ordered that the judgment debtor, the appellant in this court, be imprisoned for one month under the provisions of Order 49 rule 1B(2)(a) of the Rules of the High Court, and that the judgment debtor should satisfy the judgment by monthly instalments of $9,000 commencing on 15 January 2009.  There was a stay of execution of the order for imprisonment pending this appeal.

2.  At the conclusion of the hearing of this appeal, the appeal was dismissed with reasons to be given in writing.  This court made an immediate ‘gross sum’ assessment of costs of the appeal of $100,000.

Background

3.  Judgment was entered against the appellant on 1 December 2006 for the sum of $1.13 million.  There then followed an order, made on 12 February 2007, for examination of the appellant.  The examination took place on 8 May and 23 August 2007.  Following that, the matter was adjourned for further submissions in respect of the powers of the court under Order 49 rule 1B of the Rules of the High Court.

4.  The plaintiff sought orders for imprisonment of the appellant on the basis of wilful failure to make the disclosures that had been ordered.  In particular there was the order of Master Lung of 12 February 2007, which related to a number of matters including the disclosure of all documents relating to the appellant’s assets, liabilities, income and expenditure for the last 5 years, passbook and bank statements for the last 5 years and documents relating to the life and other insurance policies.  In addition deeds or Land Registry entries for all property held in the appellant’s name, or jointly with others, for the last 5 years and all documents showing any debts owed by the appellant were required to be produced.  As the judge recorded, after the first hearing of the examination he made an order by consent on 16 July 2007 that:

“1.  The Defendant (Judgment Debtor) is required to produce the particulars (including but without limitation to the name of payer, the name of payee, the purpose of the transaction) in respect of any transaction in the amount of HK$20,000 or above in all the bank accounts of the Defendant (Judgment Debtor) during the last 5 years together with supporting documents by way of affirmation within 14 days from the date of this order

2.  The Defendant (Judgment Debtor) is required to produce the outstanding documents as set out in the Schedule annexed hereto in pursuance of the Order made by Master Lung dated 12 February 2007 and verified by an affirmation within 14 days from the date of this Order”

5.  The list of outstanding documents in the Schedule ran to 2 pages and 16 numbered paragraphs.

6.  The further course which the proceedings took is set out in the opening paragraphs of the judgment below.  The next hearing was on 12 December 2007, and thereafter the matter was heard and adjourned from time to time with the final hearing taking place on 13 October 2008.  The appellant was given permission to file her 10^th affirmation on 17 October 2008.  Judgment was given on 10 December 2008, which was the first date upon which the parties were available to attend court.

7.  The judge dealt first with the failure of the appellant to disclose any documentation or information as to the liabilities owing to the Bank of China secured by a property in Shatin.  The judge considered that although more than a year had elapsed since the consent order, the appellant had wilfully failed to disclose the liabilities secured by that property.

8.  The next item was the requirement to disclose and to provide particulars of transactions in the amount of $20,000 or above.  This court’s attention was drawn to various schedules that had been prepared showing transactions which had been put through the different bank accounts held by the defendant.  Some of the matters went back to the year 2000.  On the other hand, there are some transactions that were effected in much more recent periods, for example in 2005 and 2006.  In respect of many of those no details have been provided at all and, in respect of others, details of the payee and payer were provided but the purposes of the transactions have not been disclosed.  This court’s attention was drawn, for example, to a number of the entries in bank account number 064-796-0-001779-1 with the Bank of China.  It would appear that there were a series of entries, many of which relate to deposits and withdrawals of similar amounts made in close proximity to each other.  In the early period, it would appear that amounts were deposited a day or so before, or sometimes on the same day as, a withdrawal of a similar amount.  From November 2005 to February 2006 it would appear that on many occasions sums were withdrawn a few days before an equivalent amount was deposited back into the account.  Although many of those transactions were of amounts such as $25,600, there were also substantial transactions of $550,000 and $300,000.  The judge said paragraphs 45-47:

“45.  In the said Letter, the solicitors for the Judgment Creditor had pointed out that the Judgment Debtor had failed to provide full particulars.  A table identifying over 200 transactions was enclosed for the easy reference of the Judgment Debtor.  Notwithstanding this, the Judgment Debtor paid no heed to the said Letter.

46.  There was no explanation, whether from the Judgment Debtor or from her legal advisers, as to why the Judgment Debtor failed to provide all the particulars as ordered.

47.  Once again, the only conclusion that I can draw is that the Judgment Debtor willfully failed to disclose the particulars.”

9.  The judge also made reference to the appellant's failure to disclose a number of other categories of documents.

This appeal

10.  Notice of appeal was filed on behalf of the appellant on 23 December 2008 by her former solicitors.  The date of the hearing was fixed on 9 March; on 22 June the appellant filed a notice of intention to act in person.  However, we were informed that the papers in the matter were passed to another firm of solicitors, Messrs Littlewoods, on 30 June and a notice of change of solicitors was then filed on 2 July.  At the hearing of this appeal, counsel, Mr Alex Ng, appeared on behalf of the appellant and sought an adjournment.  The application was not supported by any evidence.  Counsel simply stating that an adjournment was sought because instructions only had been given on 30 June.  After listening to the submissions of both sides, this court came to the conclusion that grounds for an adjournment had not been made out and gave an indication that the appeal should proceed.  At that juncture, counsel indicated to this court that instructions to himself and his solicitors had been withdrawn.  This court then heard the appellant in person.

11.  The appellant’s submissions amounted, first of all, to a request that this court should give the appellant time in order to request members of her family to assist her in paying the judgment debt.  When it was pointed out that the cause of the order for imprisonment concerned the appellant’s failure to provide information, in particular information relating to the dealing in the large sums shown in the schedules, where the information had been extracted from the bank statements, the appellant’s argument was that she could no longer remember such matters.

12.  When the appellant was asked in relation to some of the specific items, it was clear that she could remember a particularly large item in 2001 which had been a deposit of money which the appellant said had been made as a result of a horse betting.  On the other hand, there were, as indicated above, a very substantial number of entries involving, particularly in some cases, large sums of money, about which the appellant said that she could not remember any relevant details.  The transactions had taken place little more than a year before the consent order in July 2007.  Whereas it is understandable that a person may not be able to recall transactions that had taken place some years earlier, it is difficult to accept that he or she may have no recall of very substantial transactions which had taken place comparatively recently.  That is all the more the case where, as indicated above, there were a substantial number of seemingly similar withdrawals followed by deposits of identical amounts.  The appellant disavowed any suggestion that the bank account had been manipulated by others.  It is simply untenable that the appellant did not know what the series of transactions were about.

13.  In my view the judge below quite clearly gave the defendant every opportunity to comply with the disclosure orders which had been made.  Particularly in respect of the appellant’s failure to comply with paragraph 1 of the consent order of July 2007, I consider that he was entirely justified to come to the conclusion which he did.  It may be that in respect of some transactions which had taken place many years earlier, the appellant may have had difficulty in recollecting details.  It may be also that the judge might have been prepared to accept evidence that documentary records relating to early years might have been unavailable.  But there had been no attempt to give any such evidence.

14.  In those circumstances I consider that the judge was fully justified in coming to the conclusion that he did, and it was for those reasons that I considered that this appeal inevitably fell to be dismissed.

Hon Le Pichon JA:

15.  I agree.

Hon Stone J:

16.  I agree.