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HCMP 2749/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO2749 OF 2012
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IN THE MATTER of an application on behalf of BRUNO ARBOIT as LIQUIDATOR OF HIGHFIT DEVELOPMENT COMPANY LIMITED (In Liquidation) against KOO SIU YING and LING MENG CHU PEARL for Orders of Committal
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| BETWEEN |
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BRUNO ARBOIT as Sole Liquidator of Highfit Development Company Limited |
Plaintiff |
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and |
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KOO SIU YING |
1st Defendant |
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LING MENG CHU PEARL |
2nd Defendant |
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| Before: Hon Au-Yeung J in Court |
| Date of Hearing: 17 May 2016 |
| Date of Sentence for Contempt: 18 May 2016 |
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SENTENCE FOR CONTEMPT
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Introduction
1. On 8 March 2016, I found Koo and Ling guilty of contempt of court in breaching court orders for disclosure of documents (“the Decision”). This is the occasion for sentence. The abbreviations in the Decision are adopted here.
Legal principles for sentencing for contempt of court
2. The starting-point is to acknowledge that contempt of civil court orders is a serious matter and that court orders are made to be obeyed. A prime consideration of the court in sentencing contempt is to “signal importance of demonstrating to litigants that the orders of these courts are to be obeyed”. By “litigants”, it is clearly referring to litigants in general and not just the contemnor himself. See Questnet Limited v Wilfred Royce Lane, HCA 1475/2006, Chu J (as she then was), 23 June 2008 (on sentence).
3. The object of the sentence is both to punish conduct in defiance of the court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do: Crystal Mews Ltd v Metterick & ors [2006] EWHC 3087, §8, Collins J; re Barrell Enterprises [1973] 1 WLR 19, at 27C-D, English CA. The court has to balance the 2 objects.
4. The sentence for contempt may range from a fine to a term of imprisonment. The UK Contempt of Court Act 1981 imposes a maximum term of 2 years’ imprisonment but Hong Kong does not have that statutory limit.
5. Imprisonment should be regarded as a sanction of the last resort. Any custodial sentence should be as short as possible consistent with the circumstances of the case. Willwin Development (Asia) Co Ltd v Wei Xing, HCMP 2946/2014 (unreported, 16 November 2015), B Chu J, §4(f); CMA CGM v Ng Chip Choi Maurice, HCMP 2988/2014, 12 March 2015, Au-Yeung J,§24(1).
6. The court may suspend a term of imprisonment for such period or on such terms as the court deems fit: CMA CGM v Ng Chip Choi Maurice, §24(2); Order 52, rule 7. This is an “absolute discretion” but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order: Hong Kong Civil Procedure 2016, Vol 1, §52/7/2.
7. The court will consider if there are:
(a) Aggravating factors: Hao Xiaoying v Wong Yiu Lam William & Ors, HCMP 1968/2014, 2 March 2015, Anthony Chan J;
(b) Mitigating factors: Ge Transportation (Shenyang) Co Ltd v Lu Jinxiang, HCMP 1792/2013 (unreported, 22 January 2014) (DHCJ Marlene Ng); and
(c) Acts to purge the contempt, ie acts to atone for a contempt, eradicate it or cleanse it of its previous ill-effect which, in the case of a mandatory order, may be fulfilled if the contemnor thereupon does the act or causes it to be done: CJ v Flintshire BC [2010] EWCA Civ 393, at §6.
8. Relevant factors (which are not exhaustive) include:
(a) The nature of the order and breach in question, and the extent of the breach: Questnet Limited v Wilfred Royce Lane.
(b) Whether the contempt was contumacious or unintentional, the reasons, motives and state of mind: Hong Kong Civil Procedure 2016, Vol 1, §52/9/2.
(c) Whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy: Crystal Mews Ltd v Metterick, §13.
(d) Whether the contemnor appreciates the seriousness of the deliberate breach: Crystal Mews Ltd v Metterick, §13.
(e) Whether the contemnor has cooperated: Crystal Mews Ltd v Metterick, §13.
9. Counsel for Koo and Ling have helpfully compiled a schedule showing the sentences for contempt in Hong Kong in the last 15 years. Cases which Mr Hew, counsel for the Liquidator, has referred me to on matters of principle also contained sentences in the UK.
10. As circumstances of contempt vary greatly, there is little mileage to be gained from the citation of other cases: AXA China Region Insurance Co Ltd & anor v Li Yu Ping Ellen [2002] 3 HKC 339, 362 H-I, Stock JA.
11. The approach I shall adopt is to ascertain the extent of the breach as found by the court, the context in which the contempt had arisen, effect of the breach on the Liquidator, the aggravating factors, the mitigating factors and the personal circumstances of Koo and Ling.
The extent of the breach as found by the court
12. A contemnor should be punished for the substance of his/her contempt and not for what he/she had originally been charged with.
13. There was a wholesale failure to comply with one order, namely, “to produce all books, correspondence and documents in their custody or power relating to the business and affairs of the Company”. There were 25 individual classes of documents formulated under that order but, after trial, the Liquidator was only able to establish 7 of them (Table 2 in §316 of the Decision).
14. In substance, Koo and Ling’s breach was failure to produce the Post-Deadline Documents before the Deadline and to produce Class 5(v) (bank statements of the Company). At the beginning of the hearing, I have clarified with defence counsel that though contempt was established for the “whole class” in respect of Class 2, in fact the failure to produce was similarly limited to the Post-Deadline Documents.
15. In the Decision (§§315 and 320), I held that there was no evidence that there were other documents that had been held back from the Liquidator.
16. As to the state of mind, I found that Koo and Ling’s conduct was contumacious and intentional, not casual or accidental (§321).
Context in which the contempt has arisen
17. Ling perceived the Liquidator’s action as part of a far bigger picture – an inheritance dispute with Lim’s other family members which led to a string of court cases. She took the view that any settlement of the inheritance dispute would necessarily involve settlement of all other actions. She also took the view, based on legal advice and medical evidence, that her challenge to the latest will of her father (Lim) was likely to be upheld.
18. I am not surprised by Ling’s perception. Koo and Ling had cause to feel aggrieved since Lim apparently resiled from his promise made years ago to make a gift of the Property to them. The family battles had commenced by way of litigation as early as 2002.
19. That perception was not, of course, an excuse for their contempt, and defence counsel do not for one moment suggest that was so. Koo and Ling could not be in doubt that the acrimonious family battle had gone on and no settlement was in sight. After the 2011 Order, there was the 2012 Order. However, I do consider that the family battle had temporarily blinded their views.
Effect of the breach on the Liquidator
20. The 2011 Order was made under section 221 of the Companies Ordinance, Cap 32. It is tempting to conclude that the contempt prevented fulfillment of the purposes of section 221. The Liquidator was unable to understand the affairs of the Company and the reason for its failure, to ascertain the Company’s assets, to decide what potential claims the Company had or what report to make to the authorities to enable them to take appropriate action against those guilty of misconduct in relation to the Company’s affairs. See Joint and Several Liquidators of Kong Wah Holdings Ltd v Grande Holdings Ltd [2007] 1 HKLRD 116, at §§25-26.
21. However, it has to be remembered that the Company was wound up on 10 September 2008. It...
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