SUZANNE RUTH HENDERSON v. SCOTT HENDERSON

HCMP 2016/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO2016 OF 2014

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D E C I S I O N
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1.  By a judgment dated 15 July 2015, I found the respondent guilty of contempt of court in that knowing the effect of a Mareva injunction order freezing his assets (“the Mareva injunction”), he had deliberately opened 2 bank accounts. Out of 11 withdrawals from those bank accounts, 10 were in breach of the Mareva injunction. The breach has caused US$205,446.64 of his assets to be siphoned off.

2.  The applicant asked that the respondent be sentenced to imprisonment or fined, and that he do repatriate the sum dissipated.

3.  I now have to consider the sentence to be imposed.  I shall not repeat what I have stated in the judgment.

4.  This decision is delivered together with another related application between the parties in HCMP 1780/2013.  I wanted to see if there were other matters in that case that would be relevant to mitigation.

Legal principles on sentencing

5.  Contempt of civil court orders is a serious matter.  A prime consideration of the court in sentencing contempt is to signal importance of demonstrating to litigants that orders of the court are to be obeyed.  “Litigants” refer to litigants in general and not just the contemnor himself.  The nature of the order and breach in question, as well as the extent of the breach, are highly relevant considerations.  The sentence may range from a fine to a term of imprisonment.  See Questnet Ltd v Wilfred Royce Lane, HCA 1475/2006, 23 June 2008, at §4, Chu J (as she then was).

6.  In respect of a Mareva injunction, deliberate breaches should be met with an immediate term of imprisonment, which is measured in months rather than weeks.  This is because:

(i) Freezing orders are made for good reason and in order to protect the dissipation or spiriting away of assets. Any substantial breach of such an order is a serious matter, which merits condign punishment.

(ii) Condign punishment for such content normally means a prison sentence. However, there may be circumstances in which a substantial fine is sufficient: for example, if the contempt has been purged and the relevant assets recovered.

AO Smith Holdings (Barbados) SRL v Zhang Dacheng, also known as, Zhang Kaiming, Cheung Hoi Ming, Zhang Xianming [2012] HKCU 1173,§§58-59, Au J, following JSC BTA Bank v Solodchenko [2012] 1 WLR 350, Jackson LJ at §§51 and 55.

Application of the legal principles

7.  In the present case, the respondent obviously knew about the Mareva injunction.  The breaches were deliberate.  He tried to keep them from his then lawyers.  The breaches directly deprived the applicant and the children of the parties of maintenance monies.

8.  A strong message should be sent to payors under a maintenance order that they should not flout a court order, thereby harming the payee and other beneficiaries.

9.  I have considered if there were mitigating factors.

10.  The funds removed have not been recovered till now.  It was virtually impossible for the respondent to purge the contempt because all his funds have been frozen.  Even the funds that had been subsequently released to him by uplifting the Mareva injunction could hardly be applied to purge the contempt as he needed money to live on.

11.  The Mareva injunction was procured by material non-disclosure, intentional misrepresentation and lies of the applicant.  (See Sections  H  and J of the judgment dated 14 April 2016 in HCMP 1780/2013).  I have set aside the Mareva injunction and declined to regrant it.  I also observed that the respondent has never had the opportunity for reviewing his income which formed the basis of the Ontairo maintenance orders.  However, those are not mitigating factors.  At the time when he committed the acts in contempt, the Mareva injunction was valid.  The respondent has had the opportunity to challenge the ex parte order but failed.

12.  On the other hand I can hardly see the respondent breaching the Mareva injunction again.  All his assets have been frozen.  All his income have to be deposited into a designated bank account.  He has been compliant with Hong Kong court orders since the acts in contempt were committed. 

13.  A conviction for contempt would have tarnished the reputation of the respondent already. A sentence of imprisonment might cause him to lose his job as a pilot.

14.  A fine would be impractical because it was impossible for him to pay. Moreover, it would have depleted his assets more so as to harm the applicant, the children and his current wife.  In any case, a fine would be wrong in principle in view of the seriousness of the breaches.

15.  Taking all circumstances into account, I impose a sentence of 3 months’ imprisonment.

Suspension of imprisonment

16.  Mr Ng, counsel for the applicant, has suggested that the respondent be punished with a suspended term of imprisonment on the following conditions:

(i) Payment of the siphoned off sums into court forthwith;

(ii) full compliance with the execution of the Payment Mechanism which Deputy Judge Hartmann suggested in his order dated 4 October 2013 in HCMP 1780/2013;

(iii) payment of costs on indemnity basis forthwith;

(iv) surrender of the respondent’s travel documents to the court and undertaking not to leave Hong Kong except with leave of the court;

(v) filing of an affidavit of compliance; and

(vi) not to make an application for discharge until the other 5 conditions have been complied with.

17.  The court of course has power to suspend a sentence.  However, quite apart from the fact that suspension of imprisonment was not appropriate as a matter of principle in the circumstances of this case, the conditions suggested by Mr Ng were not practical.

18.  With regard to condition (i), I repeat paragraph 10 above.

19.  With regard to condition (ii), the Payment Mechanism has not even been set up, partly due to the change of solicitors of the applicant.

20.  With regard to condition (iii), the monthly income of the respondent has to be applied to meet the Ontario AR orders and the respondent’s own living expenses.  It might take a few months for the respondent to meet an indemnity costs order under this judgment.

21.  With regard to condition (iv), there is no reason in principle why the court should impose such a restraint on travel when the respondent’s home is not in Hong Kong.  The period of restraint could be for months in view of the concerns in the preceding paragraph.

22.  With regard to conditions (v) and (vi), they fall together with conditions (i) to (iv).

Conclusion

23.  I sentence the respondent to 3 months’ imprisonment and decline to suspend it.

24.  As for costs, I see no reason why an order for indemnity costs should not be imposed on the respondent.

25.  This matter for sentencing was heard together with another matter. I do an apportionment.  I award costs of the contempt proceedings (inclusive of the application for leave) to the applicant on indemnity basis and summarily assess the amount at $200,000.