YEE SANG METAL & BUILDING SUPPLIES CO. LTD. AND ANOTHER v. YIP YEUK PING

HCMP2493/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.2493 OF 2002

---------------------------

---------------------------

----------------------

J U D G M E N T

----------------------

1) This is an application by the 1st applicant to commit five individuals to prison for contempt of court. The individuals are either directors or former directors and employees of Kwan On Building Company Ltd ("KOBCL"). The matter has a long and fairly complex history. Its starts with a construction contract in 1983 between KOBCL and the 2nd applicant. After various related legal proceedings, the 1st applicant in May 2001 won a judgment against KOBCL for approximately $6 million. Efforts to enforce that judgment have so far been unsuccessful and I am told it is likely that they will remain unsuccessful.

2) Mr Wong Yan Leung SC on behalf of the 3rd to 5th respondents has issued a cross-motion seeking, firstly, a strike out of the applicants' motion for contempt, alternatively an order that certain recent affirmations filed by the 1st applicant be ruled inadmissible and in the third alternative, an adjournment to respond to the recent affirmations. The contempt motion was set down for two days, the preliminary strike out cross-motion has taken two and a half days. This decision is therefore confined to Mr Wong's cross-motion to strike out.

THE ALLEGATIONS AGAINST THE 3RD TO 5TH RESPONDENTS

3) In all the cases against the 3rd to 5th respondents, Mr Jat Sew Tong SC for the applicants contends that they are in contempt of court because they have committed perjury either in affirmation or witness statements or in evidence in court. He accepts that in order to succeed in these contempt proceedings he must prove, to the criminal standard that the alleged perjury was committed. I will set out the words relied on in each case.

(1) Against the 3rd respondent, Mr Lai Yu Ting

4) Firstly, in an affirmation in March 1994, he said :

"The Defendant has attempted, but has not been able, to locate those employees of the Defendant who dealt with the Plaintiff in respect of the contract dated May 1984."

In short, the complaint is that eight years ago he affirmed that he could not locate employees who dealt with a contract 10 years before that.

5) This is said to be perjury because in fact the deponent himself had some dealings in the contract. Also, the 5th respondent in these proceedings, Mr Tse, also had some dealings in it.

6) Secondly, in an affirmation in July 1999, he stated :

"All the three Banks confirmed that they do not retain any relevant records or copy of the cheques requested for, due to long lapse of time."

Although this is an accurate statement of what the Banks had indeed said, the 1st applicant submits it is perjury because subsequent investigations revealed that the Daiwa Bank (one of three banks involved) may have had relevant documents on microfilm.

(2) Against the 4th respondent, Mr Chan Kin Ning

7) In an affirmation in April 1992, Mr Chan affirmed as follows :

"The documents in CKN-2 were photocopies from original documents exhibited as JN-10 to the affidavit of Ng Hin Man, Joseph filed on 21 October 1985 ..."

It is here being said that Mr Chan committed perjury when he stated that the exhibits in his affirmation, 10 years ago, were photocopies from original documents taken from an earlier affidavit sworn by someone else seven years before that. In fact, the exhibits to the 1985 affidavit were also photocopies, not originals.

(3) Against the 5th respondent, Mr Tse Cho Tseung

8) Firstly, in a written statement dated May 2001, prepared for the enforcement proceedings he said :

"I was an assistant general manager of the Defendant for the period from about April 1984 to November 1984 when I left the employ of the Defendant."

Although it is correct that he was the assistant general manager between these dates, it is said to be perjury because there is evidence that he was also the company secretary at an earlier date and did not in fact leave the defendant's employ in November 1984. He was giving this evidence 17 years after the material time.

9) Secondly, in the same affirmation in 2001, he said :

"... after checking the invoices I would then cause my subordinates to issue payment vouchers and the cheques relevant to the invoices for the signature of the directors and/or authorized officers of the Defendant in order to effect payment."

10) It is submitted by the applicant that Mr Tse again permitted perjury by his use of the plural in the words "directors" and "officers". In fact, KOBCL had only one authorized signatory on its account with the Daiwa Bank, namely a Mr Charles Chan, at the material time in 1984/85.

LAW

(1) Perjury as a contempt of court

11) Mr Jat acknowledges that the contempt of which he complains, in each case, is a complaint of perjury and that in each case he must demonstrate an arguable case of perjury capable of being proved to the criminal standard. These are not cases where the alleged contempt is a refusal to answer questions, these are clear allegations that false testimony was actually given.

12) It is Mr Jat's submission that in contempt proceedings in order to have his day or week in court (by defeating Mr Wong's cross-motion to strike out) it is sufficient to establish an arguable case of the existence of the false statement and no more. Mr Wong, on the other hand, submits that a false statement simpliciter, without more, does not satisfy the test. He relies on a passage from Borrie & Lowe, The Law of Contempt, 3rd Edn (for which Mr Jat submits there is no authority). It states :

"... The difficult lies in distinguishing false testimony only amounting to perjury from that amounting to contempt. It is clear that the mere falsity of evidence is not enough to justify a contempt charge and that some additional element is necessary. That additional element must be related to the interference with justice since all contempts are in some respect an obstruction of justice. Although it could be argued that any false testimony involves to some extent an obstruction of justice and could therefore be treated as contempt, the law does not go that far. Indeed there is some authority for the view that it is only false testimony amounting to no answer at all that can be prosecuted as a contempt."

13) Both counsel, in their familiar thorough way, helpfully referred the court to a number of contempt cases from various jurisdictions. It was not surprising that because of the unusual circumstances of this case, none were directly on all fours. Nonetheless, I have had no difficulty in concluding that Mr Wong's submissions must be right. To be guilty of a contempt of court a person must want to disrupt or interfere with the proper administration of justice in some, albeit slight, way. It follows therefore that Mr Wong's strike out motion will succeed if the applicants fail to establish an arguable case provable to the criminal standard that a false statement was made with an intention to deflect the listener or the reader from the true path of justice. In Keeley v. Mr Justice Brooking (1979) 143 CLR 162, the High Court of Australia gave lengthy consideration to the issue of perjury as a contempt of court. I agree with the following statement which can be gleaned form the judgments. It must be shown beyond reasonable doubt that the false swearing was with the actual or inevitable intent or consequence of frustrating or obstructing the proceedings (per Barwick CJ) or that it is apparent that the false testimony amounts to an obstruction of the administration of justice (per Mason and Aickin JJ).

14) I proceed therefore on this basis. However, before I turn, briefly, to the law relating to the proper test to be applied in striking out applications I should add one further observation. As will be seen from what follows in this decision, I have concluded that the respondents' (the 3rd to 5th respondents) application to strike out should succeed in respect of all of the allegations. I add that, having applied the striking out test (infra) to the evidence before the court at this hearing, I would have come to the same decision even if Mr Jat's submissions on the law relating to what constitutes perjury as a contempt had found favour with this court.

(2) Striking out applications

15) A court may strike out a case at an early stage if it has "no just or reasonable cause of action". It may also strike out cases which are frivolous and vexatious. "Frivolous" is defined as being incapable of reasoned argument, without foundation or whether it cannot possibly succeed. "Vexatious" is defined as being oppressive or lacking in bona fides. It is for the defendant to establish that the case falls within one or more of these grounds.

16) For the reasons which follow, I have come to the conclusion that, in each case, there is no realistic prospect of the applicants being able to satisfy a court that the complaints alleged against the 3rd to 5th respondents are separate instances of contempt of court. In addition, I have concluded that it cannot be regarded as a reasonable cause of action and also that it has become oppressive.

17) In coming to these conclusions, I have given weight to the following matters of principle :

(a) To succeed all the elements of the criminal offence of perjury would have to be proved beyond a reasonable doubt. In addition, the extra element peculiar to the offence of perjury as a contempt (already referred to) would require proof.

(b) The applicant must prove the specific allegations in the notice. The particulars of the alleged contempt are confined to those in the notice. They cannot be expanded in affirmations which, as in this case, go beyond the specific complaints.

(c) In this case, the applicants have filed recent affirmations which plainly go beyond the scope of the contempt allegations. Had it been necessary to do so, I would have excluded much of the contents of these affirmations. Such a ruling has been rendered unnecessary by my decision on the strike out motion.

(d) Delay. As already indicated, these allegations relate to matters that are between 8 and 18 years old. They relate to matters in which documentation no longer exists and in which recollections of events have either faded beyond recognition or disappeared altogether. There is obvious prejudice in subjecting an individual to proceedings which could result in loss of liberty in such circumstances. In serious criminal cases, this prejudice has to be balanced against the gravity of the allegation and public policy. In our case, the prejudice which inevitably flows from delay, once the balancing act is both realistically and fairly done, must weigh heavily in the respondents' favour.

(e) Oppression. These proceedings have been prompted by the appellant's frustration caused by the difficulties encountered in enforcing the judgment it has against KOBCL. The enforcement proceedings are continuing but, on its own admission in these proceedings, it does not expect them to result in any benefit to the plaintiff. Whilst not forgetting that it was M&L who were not paid for goods supplied 17 years ago and whilst encouraging all lawful means of ensuring that valid debts are paid, there comes a time when no more can be done. In my judgment, seeking the imprisonment of former directors, when all other attempts to be paid for goods delivered have either failed or are likely to fail, on what I have judged to be flimsy grounds, is obsessive conduct. The "recent" affirmations of Yu Der Yee (the "supplementary" and "2nd supplementary" affirmations) could only have been prepared after very time consuming investigations and research, often about peripheral, or unrelated matters. On any objective view it is an example of frustration descending into obsession and thus oppressive conduct.

THE FACTS

18) With all the above in mind, I now finally turn to the specific allegations against each respondent. Each can be dealt with, with relative brevity. I will not repeat the allegations in full, as I have already set them out at paragraphs 3 to 10 supra. The matters I now refer to are primarily confined to weaknesses in the factual complaints which I have considered together with the matters of principle hitherto outlined.

AGAINST LAI YU TING, THE 3RD RESPONDENT

19) Firstly, it is complained he committed perjury when he stated that the defendant could not locate "those employees" who dealt with M&L's 1984 contract. The statement was made in 1994. The statement plainly means "those employees other than himself". It is correct that he himself was involved in the 1984 contract but his failure to say "those employees other than myself" could hardly be construed as a lie.

20) In so far as it relates to other employees, Mr Jat submits that the purpose of the lie was to advance KOBCL's argument on prejudice as a ground for striking out the claim in 1994. This is not the only inference that can be drawn from the bare statement. It would therefore be wrong and unsafe to draw that inference. Moreover, the affirmation itself was not adduced in connection with the striking out application (but in connection with a different summons, namely to set aside an order renewing the writ). Thus, the plaintiff is in truth, not able to prove the reason for the alleged lie.

21) The second complaint against the 3rd respondent is, Mr Jat concedes, even weaker. The 3rd respondent merely repeated what he had been told by Daiwa Bank. To submit it was dishonest because they should have realized the Bank did in fact have relevant material because subsequent events proved that to be the case is, in my judgment, an untenable argument.

AGAINST CHAN KING NIN, THE 4TH RESPONDENT

22) There is just one complaint against the 4th respondent, namely that in 1992, he stated that documents in a 1985 affirmation were originals, when in fact they were photocopies.

23) It is not suggested that the photocopies in the 1992 affirmation were false copies, just that the document copied was in fact also a photocopy and not an original, as stated.

24) The complaint is, as I understand it, that the statement implies that the documents were genuine, uncontestable and therefore it strengthens KOBCL's case. This inference cannot be drawn. As evidence of genuineness, whether a document is an original or an accurate copy is neither here nor there. Even if the documents photocopied had been originals, the issue as to whether they were genuine, honest, unforged or unaltered documents remains the same. Moreover, it was never an issue at the time that such documents were forged or in some way dishonest. It is thus difficult to understand how it can be seriously argued that by saying "originals" rather than "photocopies" the deponent could ever be convicted of perjury and thus be in contempt of court. That it was an innocent oversight is an equally reasonable inference to draw.

AGAINST TSE CHO TSEUNG, THE 5TH RESPONDENT

25) There are two allegations against the 5th respondent.

26) The wording of the first allegation as stated in the motion was amended at the hearing. Originally, it had stated :

"..... at trial, Tse testified before the court that he held no other positions in KOBCL between April 1984 and November 1984 other than being the assistant general manager ...."

Mr Jat recognized that this statement was correct and unobjectionable. It was amended to :

".... at trial, Tse testified before the court that he held no other positions in KOBCL other than being the assistant general manager between April 1984 and November 1984."

A subtle but significant amendment. It enables the plaintiff to complain (which was not possible on the unamended motion) that the 5th respondent was in fact the company secretary in 1983 and thereafter.

27) In my judgment, this complaint against the 5th respondent must be struck out now because I consider there to be no realistic prospects of proving it to be a deliberate lie designed to deceive the tribunal. The plaintiff has produced a document which suggests the 5th respondent was the company secretary in 1983. There is no evidence, however (and neither was the matter investigated at trial), that he was the company secretary between April and November 1984, 15 years before the testimony was given.

28) The adverse inference which the plaintiff seeks to draw from this mis-statement is that Mr Tse was more involved and knew more than he was saying. This invites the court to conclude that the only inference that could properly be drawn from the statement made is that the maker was dishonestly attempting to minimize his role and, by the same token and the same statement, conceal other important evidence about his role. I have no doubt that this is asking far too much.

29) Further, it is difficult to understand why the statement is so significant. Without descending into the details of the trial at which he gave evidence, it can be fairly stated that his secretaryship of KOBCL and the timing of it, was not an important or material issue. Mr Jat, at this hearing, has expanded the complaint by referring to the 5th respondent's involvement at the material time with another connected company, Kuen Lee Construction Company. Again, without descending into detail, I find this to be inadmissible because the amended motion makes no reference to this. It cannot be relevant to the complaint as particularized in the notice of motion.

30) The second allegation against Mr Tse is that by his use of the plural "directors", he implied that there were at least two signatories when in fact there was only one, a Mr Charles Chan. The first question to ask is - why is this mis-statement so sinister, what is the mischief behind it? The notice of motion merely says it was false and misleading because in fact there was only one signatory. At the hearing, however, Mr Jat attempted to explain why this was perjury with a purpose. He submitted the purpose was to downplay the role of Mr Charles Chan. I find it impossible to accept that the statement ".... for the signature of the directors ...." which on the face of it is entirely innocent, could be interpreted as an attempt to conceal activities of a particular director. The next question is - what activities? Mr Jat attempted to rely on the 2nd supplementary affirmation, a very lengthy document, of Yu Der Yee, which set out a virtual life history of Mr Charles Chan's involvement in other companies and other transactions at the material time. Many of the allegations were vague, sweeping and unsubstantiated. Because of its lateness and because it went so beyond the parametres of the notice of motion, had it been necessary for me to do so, I would have ruled it inadmissible.

31) In short, I have not hesitated to conclude that the allegations of contempt against Mr Tse Cho Tseung are bound to fail and should, as with the others, be struck out now.

32) I make an order in the terms sought by the respondents (the 3rd to 5th respondents inclusive) with a costs order nisi in their favour.