ZQA AND OTHERS v. SCC AND ANOTHER

[2019] HKFC 149

FCMP 129/2018

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 129 OF 2018

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BETWEEN

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D E C I S I O N

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Introduction

1.  These proceedings are brought by the 1^st, 2^nd and 3^rd Applicants (“the Applicants”) for an Order for Committal of the 1^st and 2^nd Respondents (“the Respondents”) for contempt of Court.

2.  The Respondents are also named as the 1^st and 2^nd Respondents in another set of proceedings in FCMP No.63/2017 whereby the Applicants (also as 1^st, 2^nd and 3^rd Applicants in that proceedings) are claiming financial reliefs under the Inheritance (Provision for Family Dependants) Ordinance, Cap.481 (“Inheritance Proceedings”).

3.  By an Order dated 16/11/2017 (“2017 Order”) in the Inheritance Proceedings, the 1^st and 2^nd Respondents were ordered to file and serve an affirmation to answer the interrogatories contained in the Interrogatories for Examination of the Respondents in the Inheritance Proceedings.  The time stipulated in the said 2017 Order was 28 days which expired on 14/12/2017.

4.  The Respondents had not filed any affirmation so ordered. Leave was granted on 19/6/2018 in the Inheritance Proceedings to issue committal proceedings against the Respondents upon which these proceedings were started.  The reliefs sought in these proceedings set out in the Originating Summons dated 28/6/2018 (“OS”) read as follows :-

“(a) that the 1^st and 2^nd Respondents be committed to prison and/or fined for contempt of this Honourable Court for refusing or neglecting to obey paragraph 3 of the Order of His Honour Judge G. Own made on 16 November 2017 within the time specified therein;

(b) that such further or other Orders be made as the Court may deem just; and

(c) that the 1^st and 2^nd Respondents do pay to the Applicants the costs of and occasioned by these proceedings on an indemnity basis.”

5.  By an Order dated 20/2/2019, leave was granted to amend paragraph (a) of the OS and also adding 2 paragraphs to the Statement of Facts dated 16/5/2018 filed in the Inheritance Proceedings upon which leave was granted for issuing the present committal proceedings. 

6.  With the amendments (which are underlined below), paragraph (a) of the OS now read as follows :-

“(a) That the 1^st and 2^nd Respondents be committed to prison and/or fined for contempt of this Honourable Court for refusing or neglecting to obey paragraph 3 of the Order of His Honour Judge G. Own made on 16 November 2017 within the time specified therein; and for refusing or neglecting to answer the Amended Interrogatories filed on 31 July 2018;”

7.  The 2 additional paragraphs made to the Statement of Facts are numbered as (c) and (d) which read as follows :-

“(c) On 31 July 2018, His Honour Judge George Own granted leave to amend paragraph 3 of the Interrogatories for the Examination of the 1^st and 2^nd Respondents filed on 23 November 2017, in the manner as shown and underlined in red as below :

“3. What is the total amount of provision (whether the same consists of money, securities or other properties) that the Deceased had left by will to the 4^th, 5^th and 6^th and 7^th Respondents according to the most recent valuation ?”

(d) The Amended Interrogatories dated 31 July 2018 was served on Solicitors for the Respondents on 1 August 2018 and the Order of His Honour Judge George Own dated 30 July 2018 was served on Solicitors for the Respondents on 6 August 2018. The 1^st and 2^nd Respondents have neglected to file and serve an affirmation to answer the interrogatories at any time thereafter.”

The Respondents’ contentions

8.  The Respondents were represented by Counsel Miss Janine Cheung for this hearing.  Both Respondents chose not to give evidence at this trial.

9.  Counsel Miss Cheung in her written submissions sought dismissal of the present committal proceedings with costs on various grounds.  The grounds are as follows :-

(a) There was compliance by the Respondents by the filing of the 1^st Respondent’s Affirmation on 15/5/2018, albeit late, which by its contents had provided the answers to the Applicants’ interrogatories;

(b) The said Affirmation of the 1^st Respondent had exhibited the Executors’ Account and Schedule of Assets and Liabilities which had also provided answers to the Applicants’ interrogatories;

(c) Even if there was further or outstanding information required, the Applicants could well have applied for leave to file further interrogatories. Application for committal for contempt is only a remedy of last resort, particularly in family proceedings, and ought not to have been sought if there were alternative applications available;

(d) The Statement of Facts, though having been amended, is wholly deficient in that it failed to state with any degree of particularity how and/or in what manner the Order in question had been breached so as to enable the Respondents to properly meet the charge and defend themselves;

(e) There is nothing in the Statement of Facts (as amended) on what information the Respondents have failed to provide, such that it is clear as to what additional matters the Respondents need to be dealt with, in order to comply with the Order in question, or to purge the contempt;

(f) The Applicants had failed to establish a case of wilful and contumacious contempt of the Respondents;

(g) No penal notice had been filed or served.  No explanation had been given or exceptional circumstances shown as to why a penal notice ought to be dispensed with.

10.  Miss Cheung referred me to 2 cases, namely, Kao, Lee & Yip v. Donald Koo (2009) HKCFAR 830 and CKF v. LHL [2016] HKFC 129 whereby the other case of LPK v. HSH [2012] 2 HKLRD 1031 of this Court was considered. 

The Applicant’s Reply

11.  In reply, Counsel Miss Christine Yu for the Applicants first submitted that the 1^st Respondent’s Affirmation filed on 15/5/2018 (which was dated 2/5/2018) expressly stated at paragraph 1 therein that it was filed in opposition to the Applicants’ claims in the Inheritance Proceedings.  Hence, it could not be said that there was compliance with the 2017 Order.

12.  In any event, such Affirmation in opposition was filed grossly out of time despite the fact that it should be filed within 28 days from the date of another Order of this Court dated 25/7/2017, that is to say, before 22/8/2017.  It turns out that such Affirmation in opposition was not only some 9 months late and was also “filed” without first seeking leave of the Court to do so out of time. 

13.  As to the Respondents’ submissions that the exhibits produced under the 1^st Respondent’s Affirmation filed on 15/5/2018 (which was dated 2/5/2018) already contained the answers to the interrogatories, the Applicants contended that they should not be expected to rummage through the exhibits in order to look for answers to the Interrogatories.

14.  For the submission that there was non-disclosure of material facts when obtaining leave to issue these committal proceedings, the Applicants denied and submitted that no Summons had been issued by the Respondents to set aside the leave granted or to challenge the contents of the Statement of Facts (as amended) if the Respondents wanted to raise this as an issue.

The relevant procedural rules

15.  It is trite that the purpose behind the law of contempt is to prevent interference with the due process and administration of justice.  It is essential to demonstrate to parties in litigation that orders of the courts are to be strictly obeyed and complied with. 

16.  Since the alleged contempt touched upon non-compliance of orders made under Order 26 rule 6 of the Rules of the District Court (“RDC”), it is necessary to set out those relevant provisions.

17.  Order 26 rule 6 of the RDC provides :-

“(1) If a party against whom an order is made under rule 1 of 5(2) fails to comply with it, the Court may make such order as it thinks just including, in particular, an order that the action be dismissed or, as the case may be, an order that the defence be struck out and judgment be entered accordingly.

(2) If a party against whom an order is made under rule 1 or 5(2) fails to comply with it, without prejudice to paragraph (1), he shall be liable to committal.

(3) Service on a party’s solicitor of an order to answer interrogatories made against the party shall be sufficient service to found an application for committal of the party disobeying the order, but the party may show in answer to the application that he had no notice or knowledge of the order.

(4) A solicitor on whom an order to answer interrogatories made against his client is served and who fails without reasonable excuse to give notice thereof to his client shall be liable to committal.

18.  Further, Order 26 rule 5 of the RDC provides :-

“(1) Where a person objects to answering any interrogatory on the ground of privilege he may take the objection in his answer.

(2) Where any person on whom ordered interrogatories have been served answers any of them insufficiently, the Court may make an order requiring him to make a further answer, either by affidavit or on oral examination as the Court may direct.”

19.  Since the Respondents had also raised as one of their objections to committal in that penal notice not having been endorsed or served or otherwise dispensed with, I would also set forth those relevant provisions governing service of orders prerequisite to enforcement proceedings, which include committal proceedings.   

20.  Order 45 rule 7(2), (4), (6) and (7) of the RDC provides :-

“7. Service of copy of judgment, etc., prerequisite to enforcement under r.5 (O.45, r.7)

(1) ……

(2) Subject to Order 24, rule 16(3), Order 26, rule 6(3) and paragraphs (6) and (7) of this rule, an order shall not be enforced under rule 5 unless –

(a) a copy of the order has been served personally on the person required to do or abstain from doing the act in question; and

(b) in the case of an order requiring a person to do an act, the copy has been so served before the expiration of the time within which he was required to do the act.

(3) ……

(4) There must be indorsed on the copy of an order served under this rule a notice informing the person on whom the copy is served –

(a)   in the case of service under paragraph (2) that if he neglects to obey the order within the time specified therein, or, if the order is to abstain from doing an act, that if he disobeys the order, he is liable to process of execution to compel him to obey it; and

(b)   in the case of service under paragraph (3) that if the corporation neglects to obey the order within the time so specified or, if the order is to abstain from doing an act, that if it disobeys the order, he is liable to process of execution to compel the corporation to obey it.

(5) ……

(6) An order requiring a person to abstain from doing an act may be enforced under rule 5 notwithstanding that service of a copy of the order has not been effected in accordance with this rule if the Court is satisfied that, pending such service, the person against whom or against whose property it is sought to enforce the order has had notice thereof either –

(a) by being present when the order was made; or

(b) by being notified of the terms of the order, whether by telephone, telegram or otherwise.

(7) Without prejudice to its powers under Order 65, rule 4, the Court may dispense with service of a copy of an order under this rule if it thinks it just to do so.”

21.  Further, Order 45 rule 5 of the RDC provides :-

“5. Enforcement of judgment to do or abstain from doing any act (O.45, r.5)

(1) Where –

(a) a person required by a judgment or order to do an act within a time specified in the judgment or order refuses or neglects to do it within that time or, as the case may be, within that time as extended or abridged under Order 3, rule 5; or

(b) a person disobeys a judgment or order requiring him to abstain from doing an act,

then, subject to the provisions of these Rules, the judgment or order may be enforced by one or more of the following means, that is to say,

(i) with the leave of the Court, a writ of sequestration against the property of that person;

(ii) where that person is a corporation, with the leave of the Court, a writ of sequestration against the property of any director or other officer of the corporation;

(iii) an order of committal against that person o, where that person is a corporation, against any such officer.

(2) Where a judgment or order requires a person to do an act within a time therein specified and an order is subsequently made under rule 6 requiring the act to be done within some other time, references in paragraph (1) of this rule to a judgment or order shall be construed as references to the order made under rule 6.

(3) Where under any judgment or order requiring the delivery of any goods the person liable to execution has the alternative of paying the assessed value of the goods, the judgment or order shall not be enforceable by order of committal under paragraph (1), but the Court may, on the application of the person entitled to enforce the judgment or order, make an order requiring the first-mentioned person to deliver the goods to the applicant within a time specified in the order, and that order may be so enforced.”

Discussion and Analysis

22.  It is common ground that the burden of proving contempt always lies with the Applicants to the requisite standard of beyond reasonable doubt. 

23.  I noticed that the 2017 Order in the Inheritance Proceedings was a consent order made at the time when the Respondents were legally represented by Messrs. C.W. Chan & Co., who are also representing the Respondents in these proceedings.

24.  Pursuant to paragraph 3 of the 2017 Order, the 1^st and 2^nd Respondents shall file an affirmation to answer the interrogatories raised by the Applicants.  Undisputedly, the interrogatories were subsequently amended with leave of the Court granted on 30/7/2018 in the Inheritance Proceedings also with the consent of the Respondents.  Having said, this does not alter the original terms of the 2017 Order insofar as to the filing of affirmations by the 1^st and 2^nd Respondents is concerned.

25.  From reading all the documents filed with this Court in the Inheritance Proceedings, there was only the 1^st Affirmation filed by the 1^st Respondent on 15/5/2018. This is the Affirmation referred to by Counsel Miss Cheung in her written submissions that there was compliance by the Respondents in answering the Applicants’ interrogatories.  The 2^nd Affirmation of the 1^st Respondent was marked under the Inheritance Proceedings bearing the date of 10/9/2018 at the signing page was not filed with the Court even at the date of this trial.  It only came about in one of the hearing bundles (Bundle G) prepared by Respondents’ lawyers[1] with the filing date at the back sheet[2] of it left blanked.  Undisputedly, this Bundle G was only served upon Applicants’ lawyers the day before this trial within which this 2^nd Affirmation of the 1^st Respondent was included or inserted.

26.  At paragraph 1 of the 1^st Affirmation, it clearly stated that it was filed in opposition to the Applicants’ claims.  There is no reference anywhere that it was filed or intended to be filed as the affirmation to answer interrogatories pursuant to the 2017 Order.  Furthermore, the 1^st Respondent had not stated in this 1^st Affirmation that it was filed also on behalf of the 2^nd Respondent who was supposed to file an affirmation under the 2017 Order.  I do not agree with Counsel Miss Cheung’s submission that there was compliance by the Respondents by the filing of the 1^st Affirmation.  Moreover, as rightly pointed out by Counsel Miss Yu, the 1^st Affirmation was “filed” without any leave to do so out of time being sought from this Court.

27.  Given my finding against the Respondents’ contention of compliance by the filing of the 1^st Affirmation on 15/5/2018, it follows that the other submissions that the contents of the said Affirmation and the exhibits produced thereunder had provided answers to the Interrogatories becomes a non-starter. 

28.  I wish to say a few words on the 2^nd Affirmation of the 1^st Respondent dated 10/9/2018 (which does not appear in the Court file for the fact that it had never been filed).  Since the 2^nd Affirmation was neither filed with the Court nor properly served on the Applicants, it could not be accepted as evidence to prove compliance with the 2017 Order although, for this time, it was said to be made in answer to the Applicants’ Interrogatories[3].  As it was Respondents’ case that no contempt had ever been committed, I could not even consider such 2^nd Affirmation as an act to purge any contempt that this Court might have found against the Respondents at the end of the day.  In any event, there is no expression anywhere in this 2^nd Affirmation that it was made for the purpose of purging any contempt or any intend to do so. 

29.  The date of this 2^nd Affirmation (that is, 10/9/2018) is long after the 1^st Affirmation filed on 15/5/2018 (but was dated 2/5/2018) and contained an express paragraph that it was made to answer the Applicants’ Interrogatories (as amended).  As such, it renders the earlier contention that the filing of the 1^st Affirmation had achieved compliance wholly unsustainable for obvious reasons.  Had there been compliance by the filing of the 1^st Affirmation (which I do not agree), why there is a need to do the 2^nd Affirmation for the same purpose ?  The 2^nd Affirmation does not even say that it was made to supplement any answers already provided in the 1^st Affirmation which the Respondents are entitled to so supplement, even without a Court order, as provided for in Order 26 rule 5(2) of the RDC. 

30.  To complete my decision on this contention, I agree with Counsel Miss Yu that the Applicants should not be expected to rummage into Respondents’ documents and exhibits for answers to their Interrogatories, even if the 1^st Affirmation was to be accepted as properly filed for the purpose of answering interrogatories (of which there is no such finding).  This is not the way how Interrogatories in litigation were to be administered and responded. 

31.  For the Respondents’ contention over the Statement of Facts (as amended), namely, that it lacked particulars or information to enable the Respondents to meet the alleged charge or to purge the contempt is a red herring. 

32.  First, the Respondents were all along legally represented by the same firm of lawyers when the 2017 Order was made in the Inheritance Proceedings and also in the present committal proceedings.  As a matter of fact, the 2017 Order was a consent order of which the Respondents’ lawyers must have properly advised them before they gave instructions to their lawyers to consent to it.  There is no room for the Respondents now to try and argue on lack of information as to what need to be dealt with in order for them to comply with the 2017 Order.  Had there been any lack of information or particulars, the Respondents would not have consented to it.

33.  Secondly, the Statement of Facts which had been amended set forth the facts upon which the Respondents should be found liable for contempt are clear and straightforward, namely :-

(a) the refusal or neglect to file affirmation to answer interrogatories as directed under paragraph 3 of the 2017 Order; and

(b) the refusal or neglect to answer the Interrogatories (as amended) filed on 31/7/2018.

34.  In my decision, there is no room for debate as to what was required of from the Respondents when they had failed to do so.  Thus, the contention that the Statement of Facts, though having been amended, is wholly deficient without any degree of particularity simply could not stand. 

35.  The other contention that the Statement of Facts did not specify what information the Respondents had failed to provide so as to enable them to deal with in order to comply with the 2017 Order or to purge the contempt is, in my decision, a sham wholly devoid of merits.  How could the Applicants “specify” or “dictate” for the Respondents as to what information they need to provide in the contents of the affirmation required of from them or in the answers to be given by them to the Interrogatories ? 

36.  For these reasons, I find the contention that the Statement of Facts (as amended) is fundamentally flawed and defective for lack of information or particulars must fail.  The OS issued based upon the Statement of Facts (as amended) stands.  In passing, I would like to add that any contention over leave being granted upon “defective” Statement of Facts could have been the subject of debate only upon proper application being taken out rather than through Counsel’s submissions tendered at trial.  As Counsel Miss Yu rightly submitted, no such Summons had ever been issued by the Respondents.  

37.  Counsel Miss Yu referred me to the “3-stage test” established in Kao, Lee & Yip v. Donald Koo (2009) HKCFAR 830, as summarized in 52/1/16 of the Hong Kong Civil Procedure for approaching committal for civil contempt by reason of breach of a court order.  First, the Court has to construe the relevant court order to ascertain its meaning and operation.  Secondly, to determine whether the defendant has in fact complied with the order as so construed.  Thirdly, to consider any failure to comply was accompanied by a state of mind necessary to establish punishable contempt.

38.  In the present case, the 2017 Order simply requires the Respondents to file an affirmation to answer the interrogatories raised.  The meaning and operation of the terms of the 2017 Order are plain and clear, namely, to file an affirmation.  This had not been done.  As to the state of mind factor, I find against the Respondents.  They had all along been legally represented who must have the benefit of legal advice as to the need to comply with court orders and also the consequences of flouting court orders.  Nonetheless, they had failed to comply with the 2017 Order without any justifiable reasons being shown.  I unreservedly find the Respondents’ failure to comply the 2017 Order was wilful, contumacious and accompanied by a state of mind sufficient to establish punishable contempt.  

39.  Now I will deal with the contention as to the lack of penal notice in the 2017 Order.

40.  Counsel Miss Yu submitted that O.45 r.7(2) of the RDC for service of orders prerequisite to enforcement is subject to Order 26 rule 6(3) in respect of orders to answer interrogatories.  Thus penal notice is not required for the 2017 Order which is an order requiring the Respondents to answer interrogatories and therefore falls squarely under Order 26 rule 6(3).  As a fallback position, Miss Yu submitted that this Court has the power to dispense with the requirements of a penal notice even though no formal summons and affirmation had been taken out (Kao, Lee & Yip v. Donald Koo Hoi Yan (2009) 12 HKCFAR 830).

41.  I accept Miss Yu’s interpretation of Order 45 r.7(2) is correct.

42.  As to her fallback position so submitted, in the case of LPK v. HSH [2012] 2 HKLRD 1031 where this Court set aside leave granted for commencement of committal proceedings and dismissed the originating summons issued thereupon, had considered the court’s discretionary powers under Order 45 r.7(6) and 7(7) to dispense with service of orders whereupon enforcement proceedings were brought.  This Court cited the decision of Hon Chung J in the case of Chou Yi Feng v. Chou Yi Chen (unreported, HCA 4393/2001) where His Lordship at paragraph 28 of the Judgment had said:

“[28] The following propositions can be distilled from the above observations and/or conclusions of the Hong Kong court of appeal (in Excel Noble) and the English court of appeal (in Davy International, Turner and Hill Samuel & Co Ltd):

(a) Order 45 r.7(6) applies to prohibitory orders and the discretion thereunder is only available when the conditions prescribed by it are met;

(b) Order 45 r.7(7) however confers an unfettered discretionary power and can be exercised whenever it is just to do so;

(c) the old authorities before the changes to the Rules (made in England in the mid-1960’s) can no longer be relid upon to fetter the court’s discretion under O.45 r.7(7)”

43.  I noted that Respondents’ Counsel Miss Cheung in her written submissions did not take any issue as to the interpretation of Order 45 rule 7(2) submitted by Counsel Miss Yu.  This is fair and correct.

44.  Apart from Order 26 rule 6(3) which provides for service on a party’s solicitors of an order to answer interrogatories shall be sufficient service to found committal against the disobedient party, subject to whether that party is able to show that he or she had no notice or knowledge of the order, Order 45 rule 7(2) is also subject to rules (6) and (7) of the same Order.  The court’s discretion as to dispensing with service of the order depends upon the nature of the order in question, whether it is prohibitory or otherwise (see Chou Yi Feng v. Chou Yi Chen, supra).  

45.  In the present case, the 2017 Order directed the Respondents to file and serve affirmation to answer interrogatories.  This is clearly not prohibitory by nature.  Thus this Court’s discretion to dispense with service of the 2017 Order is within the scope of Order 45 rule 7(7) which would be unfettered.

46.  The Respondents have had knowledge of, and indeed had consented to, the terms of the 2017 Order as they had all along been legally represented by the same firm of lawyers upon whom the 2017 Order (without penal notice) was served.  Should the lack of penal notice on the 2017 Order be an issue for commencement of the present committal proceedings, it is my decision that since this Court has unfettered discretion to dispense with service of the 2017 Order (see Chou Yi Feng v. Chou Yi Chen, supra), such issue simply does not exist.   

47.  I find the contention of lack of penal notice fails.

48.  The Respondents’ other contention is that committal proceedings should only be taken as a remedy of the last resort.  The Applicants should and could have sought for further interrogatories or take out any other alternative applications or even sought for an unless order. 

49.  With my finding that the 1^st Respondent’s affirmation filed on 15/5/2018 (but dated 2/5/2018) not be accepted as an affirmation filed pursuant to the 2017 Order, there is simply no basis for the Applicants to seek further interrogatories when no answer had ever been provided.  This is not a case of insufficient answers were provided.  This is a case of no answer was provided. It is unscrupulous for the Respondents who are legally represented throughout in the Inheritance Proceedings to first consent to the terms of the 2017 Order and, having acted in breach of it without any remorse or regret, then sought to argue that an unless order or other alternative applications should have been made by the Applicants to compel their compliance.  Such contumacious conduct simply flies in the face of the Court.

50.  I find the Respondents’ contention of further interrogatories or other alternative applications or unless orders should be obtained prior to seeking committal for contempt completely devoid of merits and must fail.   

Conclusion

51.  I am satisfied that the Applicants have successfully proved to the requisite standard of beyond reasonable doubt that the 1^st and 2^nd Respondents’ failure to comply with the 2017 Order to file an affirmation to answer the Interrogatories (as amended) was wilful, deliberate and contumacious conduct sufficient for this Court to find each of them to be in contempt of Court. 

52.  I will reserve sentence to a date to be fixed after the 1^st and 2^nd Respondents have filed and served written submissions on mitigation within 21 days from the date of this Decision.  The Applicants do have leave to file and serve their written submissions in reply (if so advised) within 21 days thereafter.

53.  Given the outcome of these proceedings, I ordered that the 1^st and 2^nd Respondents do pay the Applicants’ costs of and occasioned by these committal proceedings, including all costs reserved, on indemnity basis to be taxed if not agreed.

54.  This is a costs order nisi which will become absolute if no application is filed to vary the same within 14 days from the date of this Decision.