The Incorporated Owners of Long Mansion v. Good Choice Industrial Ltd and Others

HCMP 2138/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2138 OF 2013

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J U D G M E N T

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1.The Applicant seeks to commit the Respondents for contempt of court in failing to comply with a court order to remove unlawful structures.

Undisputed facts

2.The Applicant (“IO”) is the incorporated owners of Long Mansion, Nos 24 and 24A Caine Road, Hong Kong (“the Building”).

3.R1 (“the Company”) owns a property known as Car Port of Long Mansion (“the Car Port”).  R2 (“Madam Yu”) and R3 are wife and husband and directors of the Company.  R4 (“Mr Wong Ming”) is a property manager handling the Car Port.  Madam Yu has authority to represent the Company and her husband in these proceedings on her own admission on affirmation.

4.As a result of arbitration proceedings, an award (“the Partial Award”) was made on 22 April 2013.

5.By an order dated 3 June 2013 in HCMP 1187/2013 (“the Order”), Au J gave leave to the IO to enforce the Partial Award.  Only 2 paragraphs form the subject matter of these proceedings:

“(1)  The Respondent do forthwith remove and demolish the Relevant Structures and the Signage including without limitation the removal of all anchor bolts, and reinstate the External Walls to their original state and condition according to the building plans ... and rectification of the damage and scratch marks on the External Walls caused by the Respondent’s installation and removal of the Relevant Structures and Signage. (“Order (1)”) (underline added)

...

(3)  The Respondent do within 60 days [ie by 21 June 2013] from the date of this Partial Award (i) remove and demolish the sewage pipes and the three manholes installed by it or its contractor at the Car Port, and replace them with new sewage pipes and manholes in accordance with their original design and specification ... and (ii) produce to the Claimant a certificate issued by an Authorised person confirming that the reinstatement work had been carried out to the satisfaction of the Building Authority and in compliance with the regulations under the Buildings Ordinance. (“Order (3)”) ” (underline added)

6.The Respondents have failed to comply with the Order.  On 21 August 2013, Au J gave leave to the IO to issue committal proceedings.  The present Originating Summons was issued 5 days later.

7.On 25 November 2013, Au J adjourned the proceedings for argument on a matter which is no longer in issue.  That was upon the undertaking that Madam Yu paid $3,000,000 into court for:

“indemnifying the Applicant against all or part of the Applicant’s loss and/or damages including but not limited to any monetary claim and/or legal costs arising from, in respect of, and/or in relation to the illegal structures erected on the external walls of the Carport which are liable to be ... removed and reinstated forthwith pursuant to ... Order (1) ... and, for the avoidance of doubt, the Payment will not and cannot preclude or extinguish the liability(ies) of the Respondents in relation to any legal liabilities arising from the said illegal structures or to comply with the Partial Award and the Order.”

That payment in has been made.

8.On 31 August 2015, the parties entered into a consent summons agreeing to release the $3,000,000 and interest to the Respondents.  This court raised the requisition as to how the Originating Summons was to be dealt with.

9.The Respondents then issued a summons on 17 February 2016 requiring the IO to withdraw the committal proceedings and pay out the $3,000,000 to the Respondents.

Issues

10.There is no dispute that Order (1) and Order (3) have been breached and the Respondents apologized to the court unreservedly.  However, the Respondents say that Order (1) was complied with by 11 April 2016, and Order (3) by 14 April 2015, which the IO does not accept.  The liability of Mr Wong Ming is also disputed. 

Legal principles

11.The legal principles on contempt of court have been recently stated in Bruno Arboit v Koo Siu Ying & anor, HCMP 2749/2012, 8 March 2016, Au-Yeung J at paragraphs 108-118:

(a)  A court order must be complied with strictly in accordance with its terms. 

(b)  The burden is on the plaintiff to prove a defendant’s contempt beyond reasonable doubt.

(c)  The defendant does not have to prove anything affirmatively; at most, there is an evidential burden on him.  If there is a hypothesis which might reasonably be consistent with the defendant’s innocence then he is entitled to be acquitted.

(d)  It is necessary to (i) construe the court’s order to ascertain its meaning and operation; (ii) determine whether the defendant has in fact complied with the order; and (iii) consider whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt.

(e)  The court will not enforce the order in contempt proceedings when it is ambiguous or unclear in a material respect. Any ambiguity in the terms of the order must be resolved in favour of the alleged contemnor.

(f)  It is not enough for a person who has breached a court order to say that he has tried his best unless the court order itself only orders the person concerned “to do his best”. It is the plain and unqualified obligation of every person against, or in respect of whom, an order is made by a court of competent jurisdiction, to obey it unless and until that order is discharged.

(g)  The intention, efforts of the contemnor are only relevant to mitigation.

Order (1)

12.11 April 2016 was the date that the registered structural engineer made a site visit to inspect the parapet wall facing Caine Road and certified that it was in safe condition with no additional attachments.

13.The IO disagrees.  It complains that as of June 2016, there was (i) a new sign board (ii) a new air-conditioner fixed to the outer wall of the Car Port; and (iii) a problem with the fire service pipe.

14.There were other complaints of the IO, such as renovating more manholes than required under the Order, other alteration to a wall, replacement of pipes and works in manholes in the common parts which were only known to the IO after its solicitors had conducted searches against the records of the Buildings Department.

15.With respect, even on the IO’s own case, it believed that the sewage blockage had been resolved and that the contractor confirmed to the IO that other alleged unauthorized works did not affect the sewage/drainage system of the Building. That was why the IO entered into the consent summons dated 31 August 2015.

16.Further, according to Madam Yu, items (i) and (ii) in paragraph 13 were erected by the new tenant after 3 June 2016 without notice to the Respondents. Mr Wong Ming had told the new tenant to remove the sign board.  In any case, the sign board had fallen off on 29 June 2016 and was never erected again.  The air-conditioner was not affixed to the external wall but was placed on the ground of the car park level above the Car Port.  Item (iii) was a new allegation.

17.Accordingly, the complaints in paragraph 13 could not be used as evidence of continuing breach of the Order.  Likewise the complaint in paragraph 14 was not shown beyond reasonable doubt to fall within the Order either.

18.I accept the Respondents’ version that the breach of Order (1) had been purged, at the latest, by 11 April 2016.

19.There are other points in the submission of Ms Lam (counsel for the Applicant) concerning whether and how the Respondents failed to seek the cooperation of the ex-tenant (A S Watson) or accept that ex‑tenant’s terms in order to comply with the Order.  However, those points were more about mitigation (or the lack of it) by the Respondents, and irrelevant to liability for contempt: paragraph 11(g) above.

Order (3)

20.14 April 2015 was the date a certificate (“the Certificate”) from an authorized person (“the AP”) was issued in the following terms:

“I, Poon Ching Ping, being an Authorized Person (Registration No. AP(A)16/02) as defined in the Buildings Ordinance, hereby confirm that the new sewage pipes and three manholes installed under the Reinstatement Works were carried out to my satisfaction and in compliance with the relevant regulations under the Buildings Ordinance.” (underline added)

21.This Certificate failed to comply with Order (3) in that the works were not certified as being to the satisfaction of the Building Authority (“BA”) but only that of the AP.

22.To this, Mr Kan’s (counsel for the Respondents) submission can be summarized as follows:

(a)  Order (3) was ambiguous in its terms;

(b)  Minor works were carried out, to the knowledge of the IO. BA was informed but its practice was not to inspect every site upon completion of the minor works.

23.With regard to item (a), it was never the Respondents’ case that Order (3) was ambiguous in terms, as admitted by Madam Yu in the witness box.  So it is not open to Mr Kan to submit to the contrary.

24.In any case, Order (3) is not ambiguous.  The IO has on numerous instances pointed out to the Respondents how the Certificate has failed to meet Order (3) in this respect.  The Respondents could have no doubt as to what was required.

25.BA’s practice was just to acknowledge receipt of the certificate of completion of minor works but emphasized that it should not be taken as verification of the documents and compliance with the Buildings Ordinance and its subsidiary legislation (“the legislation”).  BA would make random inspection of some of the documents to verify compliance with the legislation. It would take enforcement action on unlawful works or prosecute related persons.  See BA’s letter dated 26 March 2015 to 港消集團有限公司.

26.Even accepting that that was BA’s practice, the AP could have asked BA for a special inspection of the works in question.  The AP’s certificate could be worded to reflect BA’s satisfaction (if that be the case).  And yet the AP has never done that.  It was no defence to say that the Respondents relied on the AP. There was no evidence that they had prompted the AP to do so.  Making telephone calls to BA was not sufficient.  The duty was on the Respondents to obey the court order until it was discharged: paragraph 11(f) above.

27.The deficiency in the Certificate should not be seen as a minor, technical matter.  This was because on 6 July 2015, subsequent to the issue of the Certificate, there was a sewage blockage inside the Car Port with raw sewage overflowing a section of Caine Road in front of the Car Port.  That is why Order (3) required a proper Certificate, as the IO had no way of knowing what had been done to the sewage pipes, manholes and sewage system which are inside the Car Port.

28.The non-compliance or late compliance with the Partial Award and the Order has put the IO at risk in the light of the latter’s statutory duty under the Building Management Ordinance and Deed of Mutual Covenant (“DMC”) in managing the common parts of the Building.

29.I find that Order (3)(ii) has been breached.  The non-compliance was not accidental or casual in view of paragraph 24 above.

Liability of Mr Wong Ming

30.In Excel Noble Development Ltd & ors v Wah Nam Group Ltd & ors [2001] 4 HKC 148, 29 May 2001, at p 157E-G, Rogers VP:

“... Leaving aside the question of aiding and abetting a breach of an injunction by a company, the liability of an officer for a company’s breach of an injunction is thus dependent upon that officer carrying out his own responsibilities as an officer of the company. In that context, it can be seen that the procedural requirements in relation to mandatory injunctions, in particular, reflect the following: first that the officer must be fully aware of the terms of the order with which the company must comply, second that the officer must have that knowledge at a time when he can use his position as an officer to secure compliance and third that the officer should be aware that, if he does not so use his position, steps may be taken against him personally to enforce compliance.”

31.Mr Wong Ming was and is an employee.  There was no dispute that he attended various meetings with the IO.  He has made an affirmation in HCMP 1187/2013 filed on 20 June 2013 in support of the Company’s application to set aside the Order.  He had made allegations against the IO concerning the Order, which showed that he was heavily involved with the Respondents’ non-compliance of the Order.

32.Mr Wong Ming was present during the whole of the 4-day arbitration hearing in 2013.  During the hearing Madam Yu testified that she was not aware of the breaches of the DMC of the Building by the Company and that she had left the management of the Company to her subordinates.  The IO says that one of the subordinates who was more than likely to be in charge of the 1^st Respondent when the breaches of the DMC were committed, or continued to play an active and material role in aiding and abetting such breaches, was Mr Wong Ming.  

33.Mr Wong Ming’s own affirmation stated that he was an employee of the Company.  He said that he and his boss (R3) were “in control of” the Company.  In the witness box, he resiled from these statements.  He said he was an employee of one Chateau Anne Ltd and not the Company. He was a property manager but has no shares in the Company.  He laid the blame on his solicitors for misstating his capacity in his affirmation.

34.Mr Wong Ming was a straightforward witness.  Whilst his explanation as to the mis-statement as to his capacity was far-fetched, the fact remains that he was an employee looking after the Car Port for his employer, whoever that might be.

35.Applying Excel Noble, Mr Wong Ming was aware of the terms of the Order and Partial Award.  Even if one were to take all he said in his affirmations as true, with 2 directors in the picture, it could not be said that it was proved beyond reasonable doubt that he met the requirement of being in a position to secure compliance.  It could not be the law that an employee who industriously assisted his employer to fulfill an order should thus be held personally liable for its breach.  The description of Mr Wong Ming’s role in paragraph 32 simply fell short of the standard of proving beyond reasonable doubt.  I am not satisfied that Mr Wong Ming should be held liable in contempt of court.

Conclusion

36.I find it proved beyond reasonable doubt that R1-3 are guilty of contempt of court in failing to comply with Order (1) but the contempt was purged, latest by 11 April 2016.  They failed to comply with Order (3) until now.  R4 is not liable and the proceedings against him are dismissed.

37.I adjourn the proceedings to 16 November 2016 at 10 am, with 1 hour reserved, for R1-3 to address the court on the appropriate sentence, costs and dispose of the $3,000,000 in court.

38.I make an order nisi that R4’s costs of the proceedings be borne by him subject to production of documents that he personally, instead of R1-3, has paid or is liable for any part of the costs.

39.I thank counsel for their assistance.

Ms Yanky Lam, instructed by Paul K.C. Chan & Partners, for the applicant

Mr Christopher Kan, instructed by Vincent T.K. Cheung, Yap & Co, for the respondents