WONG YUK TUNG v. WONG PO LING (also known as WONG PO LING CLARA)

HCMP 129/2019

[2020] HKCFI 2953

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 129 OF 2019

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J U D G M E N T

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Introduction

1.  Before the court is an originating summons issued on 28 January 2019 by the abovenamed plaintiff, Mr Wong Yuk Tung, under Order 52 rule 3 of the Rules of the High Court (Cap 4A), seeking an order that the abovenamed defendant, Ms Wong Po Ling, be committed to prison for the breach of or failure to comply with paragraphs 1(a) and 2(a) of the order made by this court on 27 June 2018 in HCA 899/2012.

2.  Leave to commence these proceedings was granted by this court on 23 January 2019 in an ex parte application by the plaintiff.

Background

3.  For present purposes, the material background facts can be summarised as follows.

4.  The defendant (“Clara”) is the daughter of the plaintiff (“Father”).

5.  On 28 May 2012, Father commenced HCA 899/2012 against Clara as the 1^st defendant and Wonggenos Enterprises Company Limited (“Company”, of which Clara has always been the sole shareholder and director) as the 2^nd defendant in respect of:

(1)     what is left of the proceeds of sale of Apartment B on the 4^th Floor with Laundry Space No 8 on the Roof and Car Parking Space No 8 on the Lower Ground Floor Garage, Kam Fai Mansion, 68A MacDonnell Road, Hong Kong (“Kam Fai Properties”) of which Clara was one of the registered owners;

(2)     the proceeds of sale of Flat D, 1/F, St Louis Mansion, 20 MacDonnell Road (“St Louis Flat 1D”) of which the Company was the registered owner; and

(3)     Flat C, 25/F, St Louis Mansion (“St Louis Flat 25C”) of which the Company is the registered owner.

6.  The trial of HCA 899/2012 took place on 1, 2, 4, 7 and 8 September 2015.  On 30 September 2016, I handed down judgment (“Judgment”), finding in favour of Father[1].

7.  Pursuant to the sealed Judgment dated 30 September 2016 and filed on 11 October 2016, judgment was entered for Father on, inter alia, the following terms:

(1)     that Clara do account for the proceeds of sale of the Kam Fai Properties, pursuant to the 2 sets of sale and purchase agreement in respect thereof both dated 4 December 2006;

(2)     that Clara and the Company do account for the proceeds of sale of St Louis Flat 1D, pursuant to the sale and purchase agreement in respect thereof dated 21 January 2011;

(3)     that Clara and the Company do pay Father the sums found to be due on the taking of such accounts; and

(4)     that the Company do execute an assignment of all its rights and interests in St Louis Flat 25C to Father absolutely.

8.  On 27 June 2018, upon Father’s application by summons issued on 27 April 2018, and upon hearing the parties (Clara and the Company were acting in person, with the latter being represented by Clara), I ordered inter alia that (“Order”):

In respect of the Kam Fai Properties

(1)     Clara shall file with the court and serve on Father’s solicitors an account of the proceeds of sale of the Kam Fai Properties, as well as an affirmation verifying the account and exhibiting supporting documents within 60 days from 27 June 2018 (paragraph 1(a) of the Order);

(2)     Father shall file with the court and serve on Clara his list of objections to the account and the grounds therefor by affirmation with supporting documents within 28 days thereafter;

(3)     Clara shall file and serve her response to the list of objections by affirmation with supporting documents within 28 days thereafter;

(4)     The account shall be taken before a master; and

(5)     Any application for further directions should be made to the master.

In respect of St Louis Flat 1D

(6)     Clara and the Company shall file with the court and serve on Father’s solicitors an account of the proceeds of sale of St Louis Flat 1D as well as an affirmation verifying the account and exhibiting supporting documents within 60 days from 27 June 2018 (paragraph 2(a) of the Order);

(7)     Father shall file with the court and serve on Clara and the Company his list of objections to the account and the grounds therefor by affirmation with supporting documents within 28 days thereafter;

(8)     Clara and the Company shall file and serve their response to the list of objections by affirmation with supporting documents within 28 days thereafter;

(9)     The account shall be taken before a master; and

(10)    Any application for further directions should be made to the master.

9.  Under the Order, the time for Clara to comply with the same expired on 27 August 2018, which was a Monday.

10.  The Order was sealed on 23 August 2018, with penal notices indorsed thereon in the following terms:

“TAKE NOTICE that unless you, the within-named WONG PO LING (黃寶齡) (also known as WONG PO LING CLARA (黃寶齡)) obey the directions contained in this Order, you will be guilty of contempt of Court and will be liable to be committed to prison.”

“TAKE NOTICE that unless you, WONG PO LING (黃寶齡) (also known as WONG PO LING CLARA (黃寶齡)), being the director of the 2^nd Defendant WONGGENOS ENTERPRISES CONPANY LIMITED (黃振諾企業有限公司), obey this Order, you may be held to be in contempt of Court and liable to process of execution for the purpose of compelling you to obey the same.”

11.  According to the 2^nd Affirmation of Father dated 11 January 2019, under cover of letters from his solicitors (Messrs Edmund Cheung & Co) dated 23 August 2018 (which was a Thursday), a sealed copy of the Order (indorsed with penal notices) was served on each of: (1) Clara by post at her address[2] stated in her Notice to Act in Person; and (2) the Company by post at its address[3] stated in its Notice to Act in Person (“23/8/2018 Letters”), with reminders that the 60-day period for complying with paragraphs 1(a) and 2(a) of the Order would expire on 27 August 2018.

12.  Neither Clara nor the Company complied with the Order on or before 27 August 2018 or at all.

13.  On 3 December 2018, a sealed copy of the Order (indorsed with penal notices) was personally served on Clara at the main entrance of Wanchai Tower, 12 Harbour Road, when Clara attended the court proceedings in DCMP 878/2018 commenced by the mortgagee in respect of St Louis Flat 25C.

14.  On 29 March 2019, Clara took out a summons seeking to stay the execution of the Judgment.  According to her affirmations in support, the Judgment cannot be executed without the court’s clarification and direction, and she therefore requested the court to answer a number of questions set out in her affirmations.  The application was dismissed by Master Lui on 17 April 2019.  By a notice of appeal filed on 30 April 2019, Clara appealed against Master Lui’s decision.

15.  On 8 August 2019, Deputy High Court Judge Leung dismissed Clara’s appeal.  In the learned judge’s written decision, he explained:

“38.   The order for account under the Judgment is simple and clear. The defendants have to account for what had become of the relevant proceeds of sale at all material times up to the present. I have also referred to the transcript of the hearing on 27 June 2018, which reveals that Lisa Wong J also explained to the 1^st defendant what is expected to be included in such account. Other than that, it is not for the court to give legal advice, as some of the 1^st defendant’s questions seem to be seeking. Some of the questions are effectively queries about the findings or reasoning of the learned judge in the Judgment, which are neither for the 1^st defendant to raise under the guise of request for clarification nor for this court to take the findings further.

39.       Lisa Wong J has already given what are normally expected to be the necessary directions for the taking of account before the master.  The logistic is clear.  The defendants have to form their own judgment on what to produce for the purpose of full account in compliance with the Judgment and in accordance with the logistic set out in the directions. Whether they have done so will be a matter before the master upon hearing both sides.  Attributing their inability to do so to the alleged difficulty in compliance as mentioned in the 1^st defendant’s affirmations is both unsound and unacceptable.”

16.  To date, Clara has not accounted for the proceeds of sale of the Kam Fai Properties or St Louis Flat 1D pursuant to the Judgment.

Discussion

Service of the Order said to be breached

17.  It is an established principle that a “person cannot be held guilty of contempt in infringing an order of the court of which he knows nothing”: Husson v Husson [1962] 1 WLR 1434, 1435 (Lyell J).

18.  The absence of any provision in the court’s order fixing a time for compliance is fatal to an application for committal: Temporal v Temporal [1990] 2 FLR 98, 102 (Russell LJ). Thus, in the present case, Father rightly applied to fix a time for compliance with the Judgment by summons issued on 27 April 2018, which resulted in the Order.

19.  As provided for in Order 45 rule 7(2) of the Rules of the High Court (Cap 4A), in the case of an order requiring a person to do an act, it cannot be enforced under rule 5 (which provides for enforcement by, inter alia, an order of committal) unless a copy of the order has been served personally on the person required to do the act before the expiration of the time within which he was required to do the act.

20.  In light of the express requirement in O 45 r 7(2), where the time limit for doing an act ordered by the court has expired before effective personal service of the order, it has been held by the Court of Appeal that an application for committal is “doomed to fail”: The Incorporated Owners of Kwung Tong Lap Shing Building v Lee Yuet Yuen, CACV 306/2004, unreported, 13 January 2005, [9]-[10] (Yeung JA as he then was).  This is because “there can be no default in compliance with an order ordering something to be done within a certain time when the order was not served until after the time within which the act was to be done has expired”: Iberian Trust Ltd v Founders Trust and Investment Co Ltd [1932] 2 KB 87, 96 (Luxmoore J).

21.  Thus, if an order cannot be served before the time limit for doing an act expires, a supplemental order extending the time fixed must be obtained: The Incorporated Owners of Kwung Tong Lap Shing Building, supra, [8]; Re Seal[1903] 1 Ch 87, 89 (Byrne J).

22.  Here, there can be no dispute that personal service of the Order was not effected on or before 27 August 2018.

23.  Mr Paul H M Leung, Counsel for Father, however submitted that under O 45 r 7(7), the court has the discretion to dispense with service if it thinks it just to do so.  And counsel invited the court to exercise the discretion to dispense with service of the Order retrospectively if it accepts that the 23/8/2018 Letters enclosing the Order (indorsed with penal notices) were received by Clara on or before 27 August 2018.

24.  It is well-established that an order dispensing with service of the order with penal notice under O 45 r 7(7) is an extraordinary order.  The Court of Appeal has warned in AXA China Region Insurance Co Ltd v Li Yu Ping Ellen [2002] HKC 339, [43] (Stock JA as he then was) that the power to dispense with service should not be exercised too readily, lest what should be a dispensing power for use in exceptional cases may gradually undermine the express requirements of Order 45 rule 7(2) and (4).

25.  Such power to dispense should only be used if the plaintiff can satisfy the Court beyond reasonable doubt that:

(1)     the alleged contemnor knew the terms of the orders relied on;

(2)     he was aware of the consequence of disobedience; and

(3)     he was aware of the grounds relied on as a breach with sufficient particularity to be able to answer the charge.

See, for example, Benson v Richards [2002] EWCA Civ 1402, [29] (Carnwath LJ); Lau Yee Ching v Wong Tak Kwong, HCCW 807/2004, unreported, 6 October 2005, [39] (Kwan J as she then was); and Lucky Sun Development Ltd v Gainsmate International Ltd [2007] 4 HKC 301, [28] (Deputy High Court Judge L Chan as he then was).

26.  In the present case, the first and the third requirements are not controversial.

27.  As to the first requirement, during cross-examination, Clara accepted that she received my written decision dated 27 June 2018 shortly after the hearing on that date and she was aware of the terms of the Order from [21] of the said written decision.

28.  As to the third requirement, since Clara has not produced any account at all, there can be no doubt that she was aware of the grounds relied on as a breach of the Order.

29.  However, in my judgment, Father has failed to satisfy the second requirement described in [25] above beyond reasonable doubt.

(1)     Clara said in her affirmation dated 27 May 2019 that she was only aware of the penal notices and the contents thereof for the first time on 3 December 2018 (when she was personally served with the Order), and no updated information was provided to her between 27 June 2018 and 3 December 2018.

(2)     When cross-examined by Mr Leung, Clara was adamant that she did not receive the 23/8/2018 Letters and steadfastly maintained that she was not aware of the consequence of disobedience of the Order, namely contempt of court and potential imprisonment, until 3 December 2018.

(3)     Mr Leung submitted that Clara’s evidence is incredible and that she must have been received the 23/8/2018 Letters prior to 27 August 2018, thereby becoming aware of the consequence of disobedience of the Order before the deadline.

(4)     The 23/8/2018 Letters were posted by ordinary post.  It is Father’s case that they were not returned through the dead letter service of the Hong Kong Post.[4]  But, in my judgment, the possibility that the 23/8/2018 Letters did not reach Clara cannot be eliminated.  There is bound to be a chance that a letter is misdelivered to another addressee or lost in transmission when posted by ordinary post and therefore does not reach the intended recipient.  This is precisely the reason why ordinary post is not regarded by the law as a viable means to effect personal service.

(5)     It may understandably be thought that it was too much of a coincidence that both copies of the 23/8/2018 Letters were lost in the post.  However, it should be noted that the 23/8/2018 Letter addressed to the Company was sent to the address of its company secretary.  There is no evidence, and it cannot be assumed, that the company secretary had forwarded or otherwise delivered the letter to Clara on or before 27 August 2018.

(6)     Mr Leung justifiably mounted criticism on Clara’s general credibility in light of her various excuses for not preparing the accounts.  While I saw the need to approach Clara’s evidence with careful circumspection, I note that her case on her lack of awareness of the penal notices has been consistent throughout, whilst she fairly conceded that she was aware of the terms of the Order.  In view of the high standard of proof, I have to give the benefit of the doubt to Clara.  

(7)     Although there was mention of indorsement of penal notice during the hearing on 27 June 2018, it was made in the context of Father having sought in the summons dated 27 April 2018 a direction for the indorsement of a penal notice on the order to be made and of my advising counsel that a party does not require the court’s order or direction to indorse a penal notice.  The contents of the penal notice were not explained, whether directly or indirectly, to Clara in the course of such exchange between the Bar and the Bench at the hearing.

(8)     Furthermore, even if I reject Clara’s evidence that she never received the 23/8/2018 Letters, the burden remains on Father to satisfy the Court beyond reasonable doubt that they were received by Clara on or before 27 August 2018.  Regrettably, there is no actual evidence as to when the 23/8/2013 Letters were posted, although they were dated 23 August 2018.  It is not unusual and it is entirely possible that whilst a letter is dated a certain date, it is not posted until the date thereafter or even some later dates.  In this respect, there is no evidence of when the 23/8/2018 Letters were actually posted.  Taking into account the fact that 26 August 2018 was a Sunday, I am not satisfied beyond reasonable doubt that the 23/8/2018 Letters as a matter of fact reached Clara on or before 27 August 2018.

30.  Accordingly, I am not satisfied that Father has shown beyond reasonable doubt that Clara was aware of the consequence of disobedience of the Order on or before 27 August 2018, and I decline to exercise my discretion to dispense with service of the Order.

31.  Since no personal service of the Order was effected on or before 27 August 2018, the committal application of Father fails.

Whether Clara was in contempt of court if there was valid service or if service of the Order is dispensed with

32.  If I were wrong on the issue of service, I would hold that Clara was in contempt of court.  Given my conclusion reached above, I shall explain this only briefly.

33.  In hearing a committal application for civil contempt, the Court adopts a three-stage test, namely:

(1)     The relevant court order must be construed to ascertain its meaning and operation;

(2)     It must be determined whether the defendant has in fact complied with the order as so construed; and

(3)     It must be determined whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt.

See Kao Lee & Yip v Donald Koo Hoi Yan (2009) 12 HKCFAR 830, [21] (Sir Gerard Brennan NPJ).

34.  Contempt proceedings are quasi criminal in character because the liberty of the alleged contemnor is at stake.  The burden is on the applicant to prove his case beyond reasonable doubt: see again Kao Lee & Yip, supra, [30].

35.  In order to establish the necessary state of mind, it is not necessary to prove that the alleged contemnor’s conduct was contumacious (i.e. with an intention to disobey the order).  It is sufficient to prove that the act constituting the breach was intentional (in the sense that it was conscious and voluntary) instead of casual or accidental, and he knew of all the facts which made it a breach of the order: see again Kao Lee & Yip, supra, [45] and [54].

36.  Absence of contumacious intent to disobey the order does not affect liability but is relevant to penalty: Kao Lee & Yip,supra, [46].

37.  In my judgment, the terms of the Order are clear and unambiguous.  As Clara herself admitted, she has not complied with the Order by preparing the accounts within time or at all.

38.  As to whether the act constituting the breach was intentional, Clara’s defence is that she has encountered various difficulties in the preparation of the accounts and it is not feasible for the accounts to be rendered before her queries to the court (made in the context of the application to stay the execution of the Judgment, referred to in [14] and [15] above) are answered.

39.  I am not convinced by Clara’s general and vague reference to any alleged difficulties in preparing the accounts.  There is also no evidence (apart from her bare assertions during cross-examination) as to what actual steps she had taken between 27 June 2018 and 27 August 2018 in preparing the accounts.  The correspondence with the accountant produced by Clara does not show that she did anything meaningful in the relevant time period.  Further, I would gratefully adopt the reasoning of Deputy High Court Judge Leung referred to in [15] above in rejecting Clara’s suggestion that her queries to the court would prevent her from complying with the Order.  

40.  In my judgment, the fact that Clara had still failed to produce the accounts or adequately explain the steps she had taken in relation to the preparation of the same by the time of the hearing of Father’s application in August 2019 (which was about 3 years after the Judgment and 1 year after the deadline for complying with the Order) indicates that it was her conscious and voluntary decision not to comply with the Order.

41.  In the premises, had I been wrong on the issue of service, I would have held that Clara was in contempt of court.  

42.  I further agree with Mr Leung’s submission that the present case justifies the consideration of a suspended sentence of imprisonment in order to give Clara a real incentive to purge her contempt.  Accordingly, had I found Clara in contempt of court, I would have sentenced Clara to 4 months’ imprisonment, but such sentence needs not be served if she purges her contempt within 60 days.

Disposition

43.  By reason of the aforesaid, I dismiss the committal application made by Father.  I also make a costs order nisi that there be no order as to costs.  Father’s own costs should be taxed in accordance with the Legal Aid Regulations.

44.  Nearly 2½ years have lapsed since the date of the Order, without any compliance.  More than 4 years have passed since the date of the Judgment, without any real progress in execution.  This is unacceptable.  In line with the underlying objectives of the Civil Justice Reform, to save the time and costs of an application by Father for a supplemental order, I hereby make an order (which is to be treated as having been made under HCA 899/2012), extending the time for compliance with the Order by 60 days from today.  Those representing Father should have such order drawn up and submitted to the court for approval as soon as possible.