China Metal Recycling (Holdings) Limited (in Compulsory Liquidation) and Another v. Chun Hei Man and Others
Read the full judgment text of HCMP 3396/2015 on BabelCite. This High Court CFI judgment was delivered on 18 November 2016.
1. These contempt proceedings arose out of undertakings given by the defendants to the court and a disclosure order made against the defendants in the main action HCA 1412 of 2013 (“ Main Action ”).
Cited by 2 cases · Cites 12 cases
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HCMP 3396/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 3396 OF 2015 ______________________
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____________________ J U D G M E N T ____________________ Introduction 1.These contempt proceedings arose out of undertakings given by the defendants to the court and a disclosure order made against the defendants in the main action HCA 1412 of 2013 (“Main Action”). The Main Action 2.The Main Action was issued on 31 July 2013 by the then provisional liquidators of two companies, a company publicly listed in Hong Kong called China Metal Recycling (Holdings) Limited (in liquidation) (“China Metal”) and its main subsidiary Central Steel (Macao Commercial Offshore) Limited (“Central Steel”) (in liquidation) (“collectively Ps”). The two companies are now in compulsory liquidation and the liquidators are Mr Cosimo Borelli and Ms Chi Lai Man Jocelyn (“Liquidators”)[1]. There are altogether 13 defendants in the Main Action, including in particular the 1st defendant Mr Chun Chi Wai (“Mr Chun”), the former Chairman, CEO, and majority shareholder of the two companies, and the 2nd defendant Ms Lai Wun Yun (“Mrs Chun”). Mr Chun and Mrs Chun are respectively the father and mother of the defendants in the present contempt proceedings (collectively “Ds”). 3.Mr Chun is also the sole director and sole shareholder of the 13th defendant in the Main Action, a BVI company known as Wellrun Limited (“Wellrun”) which is the registered holder of about 52.1% of the issued share capital of China Metal. Background 4.In brief, Ps’ claim against Mr and Mrs Chun is essentially for loss and damage to China Metal and Central Steel, arising out of alleged fraud and dissipation of the funds of the two companies through a series of fictitious transactions and “round robin” fund flows involving the other defendants/companies in the Main Action. 5.Ps had obtained Mareva injunctions against Mr Chun and Wellrun to the extent of some HK$1.68 billion at the commencement of the Main Action (“Mareva Orders”) and the Mareva Orders included ancillary disclosure orders on Mr Chun and Wellrun which they were said to have repeatedly failed to comply. This had led to a further disclosure order made by L Chan J against Mr Chun and Wellrun on 9 April 2014 which required, among other things, Mr Chun and Wellrun to provide full information in respect of a sum of HK$738m in cash received by them[2] (“Chan Order”). 6.The sum of HK$738m included a sum of HK$636m (or net amount of about HK$613m) received by Wellrun from its disposal of 60m shares in China Metal on 27 April 2011. 7.Mr Chun and Wellrun purported to provide the disclosure required under the Chan Order by Mr Chun’s 10th affirmation filed on 22 April 2014 in the Main Action[3]. 8.According to Mr Chun, between 27 June 2011 and 30 March 2012, he had caused US$82m cash to be transferred from Wellrun to a company Chung Shing Finance (Holdings) Limited (“Chung Shing HK”), which sum was subsequently injected into two PRC subsidiaries of Chung Shing HK, namely US$30m was transferred to Zhongjin Goldman (Tianjin) Financing Lease Co Ltd (“Tianjin Company”) and the balance of US$52m was transferred to Zhongjin Goldman (Jiangsu) Investment Co Ltd (“Jiangsu Company”) . 9.In his 10th affirmation, Mr Chun further disclosed that on 29 August 2012, he had executed on behalf of Wellrun a deed of gift (“Deed of Gift”) [4]to transfer Wellrun’s 100% interest in Chung Shing HK to a Singapore company Chung Shing Investment Pte Limited (“Chung Shing Singapore”). 10.Chung Shing Singapore is in turn wholly owned by a Belize company, Chung Shing Finance Holdings Ltd (“Chung Shing Belize”), and Ds are the sole registered shareholders of Chung Shing Belize. 11.It was Ps’ case that it was only in Mr Chun’s 10th affirmation that he disclosed for the first time the transfer of US$82m from Wellrun to Chung Shing HK and the subsequent transfers to the two PRC companies, and that he had “gifted” Wellrun’s entire shareholding interest in Chung Shing HK ultimately to Ds in August 2012 (“Gift”). 12.It was further Ps’ case that at the time of the Gift, Mr Chun was aware that China Metal was the subject of an investigation by the Securities and Futures Commission (“SFC”) and that he himself was named a “person under investigation” and that Mr Chun was interviewed by SFC 28 days prior to the Gift[5]. 13.At the time of the execution of the Deed of Gift, the sole director of Chung Shing HK, Chung Shing Singapore, and Chung Shing Belize was a PRC citizen Mr Li JinQuan (“Mr Li”). Mr Li was said to be related to or closely associated with a friend of Mr Chun and Mrs Chun[6]. Mr Li had signed on behalf of Chung Shing Singapore as “donee” on the Deed of Gift. 14.Mr Chun was the Chairman, legal representative and director of the Jiangsu Company and the Tianjin Company respectively until 1 July 2013 and 15 July 2013. Mrs Chun was a director of the Jiangsu Company and Tianjin Company respectively until 1 July 2013 and 15 July 2013. 15.Thereafter, Mr Chun’s relatives and/or friends were said to be appointed to the management of the two PRC companies. Mr Chun’s brother-in-law Mr Xie Haoliang, Mr Chun’s Niece Ms Qin Jinxin and another became directors of the Jiangsu Company on 1 July 2013, on which date Mr Xie also took over from Mr Chun to be the Chairman, legal representative and general manager. On 1 August 2013, Mr Xie, Ms Qin and another became directors of the Tianjin Company on 1 August 2013, on which date, Mr Xie also became the Chairman and general manager of the Tianjin Company on 1 August 2013[7]. 16.On 2 June 2015, Ps issued a summons, based on the Chabra principles, seeking a further Mareva injunction freezing Ds’ shareholdings in Chung Shing Belize and assets of 8 companies set out in Schedule 1 of their summons (“8 Companies”) and an ancillary disclosure order in relation to the above mentioned two specific sums injected into the Tianjin Company and the Jiangsu Company respectively[8] (“P’s Summons”). 17.P’s Summons came before Ng J on 12 June 2015 who adjourned the summons to be argued at a substantive hearing (“Ng Order”), upon Ds undertaking to the effect that they would not in any way, until judgment or further order, dispose of, deal with or diminish the value of their shareholdings in Chung Shing Belize, or the direct or indirect assets of the 8 Companies, whether held in their names or nor and whether solely or jointly owned (“Undertaking”). 18.Thereafter, on 31 July 2015, Ds issued a summons seeking leave to transfer the legal title of their shares in Chung Shing Belize to a professional accountant, Mr Fung Kwok Leung/Andy Fung (“Mr Fung”), and for Mr Fung to be joined in the Main Action either in replacement of Ds or as a 4th respondent (“Ds’ Summons”). 19.Both P’s Summons and Ds’ Summons came before this court for argument on 17 August 2015. Ds’ Summons was dismissed by this court. 20.An order was further made the same day by this court against Ds to disclose, among other things, as to what had become of the two sums injected into the Jiangsu Company and the Tianjin Company, and the current value and all assets of the 8 Companies (“17.08.15 Order”). The Undertaking was repeated and recorded in the 17.08.15 Order. This court later handed down written reasons on 21 August 2015 for dismissing Ds’ Summons (“Reasons”)[9]. 21.After the 17.08.15 Order, Ds through their mother appointed Mr Fung to assist in complying with their disclosure obligations in the 17.08.15 Order (“Disclosure Obligations”). On 10 September 2015, a report was prepared by Mr Fung (“Fung Report”), and this was exhibited in the 2nd affirmation of the 1st defendant, namely Chun Hei Man, Judy (“Judy”) filed in the Main Action on 16 September 2015, purportedly in compliance with the 17.08.15 Order. 22.Ps found the Fung Report inadequate and they sought leave to issue contempt proceedings against Ds. Upon leave being granted based on their statement dated 1 December 2015 find pursuant to Order 52 rule 2(2) of the Rules of the High Court, and based on Ds’ breach of their Disclosure Obligations, Ps issued the originating summons herein on 22 December 2015. 23.In preparation for the first hearing on 4 February 2016, the Liquidators conducted updated company searches of the 8 Companies in January 2016 and discovered that the Jiangsu Company was put into liquidation in March 2015, with its assets totaling some RMB216m distributed to Chung Shing HK in August 2015, and furthermore, the Jiangsu Company was deregistered in November 2015. This was said to be in plain breach of the Undertaking, which was not disclosed by Ds or Mr Fung. The whereabouts of the distributed sum of some RMB216m were unknown. 24.Ps then sought leave to amend the originating summons and the accompanying Order 52 statement to include the Ds’ breach of the Undertaking. Ds had opposed this application and their then Counsel had argued that as a new “charge” was being added, Ps should start afresh to seek leave for issue of contempt proceedings based on the new “charge”. Leave was however granted by this court on 15 February 2016, and an amended originating summons and an amended Order 52 statement were filed on 16 February 2016 (“Amended Statement”). 25.Under the amended originating summons, Ps sought an order that Ds be committed to prison for their contempt in breaching the Undertaking and the Disclosure Obligations. 26.After discovering the deregistration of the Jiangsu Company, Ps had also made two applications in the Main Action for interim receivers to be appointed. 27.The 1st application was for appointment of interim receivers over the assets of 5 companies, namely Chung Shing Singapore, Chung Shing HK, a HK company called Chung Shing Finance Corporation Limited (“Chung Shing Finance”), a Tianjin Company called Zhongjin Goldman (Tianjin) Equity Investment Management Co Ltd (“Tianjin Equity”), and also the Tianjian Company (“1st Receivership Application”). This came before DHCJ Keith who on 5 February 2016 adjourned the 1st Receivership Application upon various personal undertakings of Mr Fung (“Keith Order”)[10]. Under the Keith Order and pursuant to his undertakings, Mr Fung had to report the status of his dealings with the former management of the 5 companies on the 1st day of each month commencing from 1 March 2016. DHCJ Keith had handed down a judgment on 5 February 2016 giving reasons for his decision (“Keith Judgment”)[11]. 28.Subsequently, on 19 February 2016, Ps made another ex parte application for interim receivers to be appointed, but this time over the assets of Mr Chun and Wellrun (“2nd Receivership Application”). 29.On the same day, DHCJ Yee granted the 2nd Receivership Application and ordered that Mr JH Batchelor and Mr RJ Sutton of FTI Consulting be appointed joint and several interim receivers (“Receivers”) over the entire assets and undertakings of Mr Chun and Wellrun (“Receivership Order”)[12]. Such assets included Mr Chun’s and Wellrun’s interests in a list of companies set out in schedule 2 of the Receivership Order (“Schedule 2 Companies”)[13]. 30.The Schedule 2 Companies included 5 of the 8 Companies, which were Chung Shing Belize, another company in Singapore and 3 PRC companies, namely the Tianjin Company, Tianjin Equity and the deregistered Jiangsu Company. This was amended on 11 August 2016 to include Chung Shing HK, Chung Shing Singapore and Chung Shing Finance. 31.Ms Eva Sit and Mr Martin Ho appeared for Ps during the trial in the present proceedings. Mr Mok SC and Mr Alexander Tang appeared for Ds, but so far as the 3rd defendant Chun Ka Man, Carmen (“Carmen”) was concerned, their appearance/instructions were only limited to seeking a stay of the proceedings on her behalf. 32.I will first deal with the arguments put forward on behalf of Carmen. Carmen 33.At the commencement of the trial, Mr Mok pointed out to the court that Carmen was still a minor and was thus a person under disability at the time when the Undertaking was offered, at the date of the Disclosure Order, and further when the present proceedings were issued against her, and that the provisions under Order 80 (2) and/or (3) of the Rules of the High Court had not been complied with. 34.Carmen was born on 20 February 1998, and was 17 years old at the time when the Undertaking was offered by Ds. She only reached the age of majority on 20 February 2016. 35.No one had raised this issue at the time when the Undertaking was offered on behalf of Ds when the Ng Order was made or at the time the 17.08.15 Order was made, notwithstanding the same firm of solicitors had acted for Ds throughout, and Ds had been represented by their then Counsel at both the hearings. 36.Ds’ solicitors had filed the acknowledgment of service of the originating summons in the present proceedings on behalf of Ds including Carmen on 7 January 2016. There had been two further hearings before this court prior to the commencement of the trial, on 15 February 2016 and on 26 July 2016, when Counsel including Senior Counsel (not Mr Mok) had appeared for Ds. The issue regarding Carmen’s disability was again not raised. 37.The issue was in fact only raised in Mr Mok’s opening submissions of 8 August 2016, lodged the day before the commencement of the trial. According to Carmen’s solicitor’s affirmation, new Counsel were appointed in late June 2016 (sic) but it was only in the afternoon of 7 August 2016 at a meeting with Counsel that her attention was drawn to the issue concerning Carmen’s disability and the provisions of Order 80[14]. 38.Mr Mok submitted that there should be a stay of the present proceedings against Carmen, and he further informed this court that he only had instructions to apply for a stay and had no instructions to appear for Carmen in the event that no stay was allowed. 39.However, even if Carmen had only received advice on 7 August 2016, there should be sufficient time for her to seek independent legal advice on 8 August 2016, and yet there was no proper summons issued on her behalf, whether to set aside the Undertaking or to set aside the 17.08.15 Order, or to apply for a stay of the present proceedings against her. 40.The oral stay application was strongly opposed by Ps. In the end, this court did not grant any stay and only adjourned the trial in so far as Carmen was concerned to the following day, to allow Carmen further time to obtain independent advice. 41.On 10 August 2016, the same firm of solicitors acting for Ds continued to act for Carmen, but they instructed separate Counsel, Mr Anson Wong SC and Mr Ross Li, to appear on behalf of Carmen. 42.Mr Wong submitted that the contempt proceedings against Carmen should be adjourned pending the determination of her application relating to the validity of these proceedings and the proceedings against her in the Main Action. 43.Ms Sit did not in the end object to the trial against Carmen to be adjourned to a direction hearing upon Carmen’s undertaking to issue proper summonses and to file all supporting evidence by the deadline imposed. 44.The present trial thus proceeded only against the 1st and the 2nd defendants namely Judy and Chun Sin Wa, Kristy (“Kristy”), (collectively “Daughters”). Order of Closing Speeches 45.Another issue raised by Mr Mok during the trial concerned the order of closing speeches. 46.It was Mr Mok’s submission that the Daughters should have the right to the last word in closing submissions. Ms Sit strongly opposed this. At the hearing for closing submissions, I decided against Mr Mok. The reasons are set out hereunder. 47.Order 35 rule 7 of the Rules of the High Court sets out the “Order of Speeches”. Order 35 rule 7(1) provides that the judge before whom an action is tried may give directions as to the party to begin and the order of speeches at the trial, and, subject to any such directions, the party to begin and the order of speeches shall be that as provided in the rule 7. Order 35 rule 7(4) then provides as follows:
48.Mr Mok submitted that as contempt proceedings are quasi-criminal in nature and criminal procedural safeguards should be provided. Mr Mok relied on the following said by Brennan NPJ in Kao, Lee & Yip:-
49.Mr Mok further relied on s56(2)(b) of the Criminal Procedure Ordinance, Cap 221, which states as follows:
50.Ms Sit on the other hand referred this court to a recent Court of Appeal decision, Secretary for Justice v Cheung Kai Yin, CACV 69/2016, unrep, 1.8.2016 which involved a case of criminal contempt in the context of the “Occupy Central” movement. The Court of Appeal held that even insofar as committal proceedings for criminal contempt are concerned:
51.Although what was said above was in the context of criminal contempt, I am satisfied that similarly in cases of civil contempt, the Rules of the High Court are generally applicable. 52.Order 52 of RHC applies to committal proceedings but there is no provision therein on the order of speeches. In the circumstances, I agree with Ms Sit’s submission that one should look to the general provisions in Order 35, and that normally the default position as prescribed in Order 35 rule 7(4) should apply, which is the plaintiff will have the last word. 53.The only reason put forward by Mr Mok that the court should direct otherwise in the present trial was that these are contempt proceedings and that the Daughters should be given procedural safeguards characteristic of proceedings for a criminal offence. 54.I was of the view that this of itself would not be a sufficient reason, in particular when the parties agreed to exchange their written closing submissions well in advance of the hearing for closing submissions so that the Daughters could be fully aware of Ps’ submissions against them. Having considered this and what was said by the Court of Appeal in the Cheung Kai Yin case, I saw no reason why the usual default position in civil proceedings should not apply in the present trial. I therefore decided against the Daughters on this issue. The Legal Principles 55.Under Order 52 of RHC, this court has the power to punish for contempt of court by an order of committal. 56.Kao, Lee & Yip v Koo Hoi Yan (2009) 12 HKCFAR 830 is the leading authority in relation to general applicable principles in contempt proceedings. 57.Ms Sit had elicited and summarised 8 general legal principles from various authorities as follows:
58.Mr Mok added further principles as follows:
59.There was no real dispute between the parties on the above broad legal principles, and I turn to consider the issues in the present case. Issues 60.Ms Sit submitted that the issues were:
61.The Daughters did not take any issues in relation to service, whether of the Ng Order, or the 17.09.15 Order or of these proceedings. 62.On the Undertaking, the Daughters relied on mainly the following:
63.On the Disclosure Obligations,
64.Mr Mok further argued that :
Evidence 65.Ps’ case was supported by the 18th affidavit of Mr Cosimo Borelli (“Mr Borelli”) filed in the Main Action, and also three affirmations of Ms Chi Lai Man Joyce (“Ms Chi”) filed in the present proceedings respectively on 4 February 2016, 5 April 2016 and 4 August 2016. 66.Judy, being the eldest, had made her affirmations on behalf of all Ds. There was no separate affirmation made by Kristy. Judy made a total of 3 affirmations:
67.Kristy had not disputed any part of Judy’s evidence whether given in her affirmations or during the trial and there was no submission that Kristy should not be bound by Judy’s evidence. 68.Mr Fung had made 2 affirmations on behalf of all Ds, respectively on 29 January 2016 and 14 March 2016, and Ds’ mother Mrs Chun also made an affirmation dated 25 July 2016 about 2 weeks before the trial. 69.Judy and Mr Fung both attended trial for cross examination. Although leave was granted for the late filing of Mrs Chun’s affirmation, in the end she elected not to attend trial to be cross examined. Pursuant to paragraph 3 of the order made by this court on 26 July 2016, Mrs Chun’s affirmation of 25 July 2016 was not admitted as evidence. 70.Other affidavit/affirmations filed in the Main Action relevant to the issues in these proceedings were also placed before this court and included in the agreed trial bundles. The Undertaking 71.The Undertaking was as follows[39]:
72.Mr Mok argued that the Undertaking was a negative undertaking, and that for there to be a dealing with the asset by the Daughters, there must be some positive act by them[40]. 73.Ms Sit did not dispute that the Undertaking was a negative undertaking. She however relied on the passage quoted by Brennan NPJ in paragraph 23 of the Kao Lee & Yip case[41] from Wilcox J in Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees’ Union of Australia (1987) 72 ALR 415 in which it was said that provided that the order specified with certainty the result to be achieved it was not normally for the applicant to suggest or for the court to prescribe, a particular method of complying with the order and that it was the duty of the defendants to find out the proper means of obeying the order. Whether there was a breach of the Undertaking on the part of the Daughters and if so, whether there was the requisite mens rea on the part of the Daughters 74.Ms Sit submitted that the “specified result” of Ds’ Undertaking was not to dispose/deal with/diminish the value of their shareholdings in Chung Shing Belize or the assets of the 8 Companies. 75.In the Amended Statement[42], Ds were alleged to be in breach of the Undertaking in that each of them had:
76.The above italicized words did not appear in the Undertaking. Mr Mok submitted that there was no room to imply terms that were not originally there in the Undertaking. I do not think Ps were adding or implying terms to the Undertaking and they were only giving the particulars of how Ds were alleged to be in breach of the Undertaking. 77.The chronology of relevant events leading to the de-registration of the Jiangsu Company was as follows[43]:
78.It would appear that notwithstanding what was stated in the Liquidation Report that all residual properties distributed to the sole shareholder Chung Shing HK, that as at 31 December 2015 there were still bank balances of RMB364,225 in the bank accounts of the Jiangsu Company[57]. Anyway, there was no evidence as to what had happened to the distributed assets of the Jiangsu Company, and whether Chung Shing HK had indeed received the distributions of cash, claimable assets of some RMB216m and electronic equipment as set out in the Liquidation Report. Of the claimable assets of some RMB216m, about RMB139m was due from Wellrun. There was no evidence that such the amount had been received by Chung Shing HK from Wellrun. 79.From the above events, the bulk of the assets of the Jiangsu Company had clearly been disposed of and/or dealt with upon its liquidation. With Jiangsu Company liquidated, deregistered and the bulk of its total assets of over RMB216m disposed of and/or dealt with and whereabouts unknown, the value of Ds’ shareholdings in Chung Shing Belize and the value of the assets of the Chung Shing Singapore and/or Chung Shing HK had been diminished. 80.The “specified result” of the Undertaking was not to dispose/deal with/diminish the value of the Daughters’ shareholdings in Chung Shing Belize and/or the assets of the 8 Companies, and the specified result of the Undertaking had not been achieved. Ms Sit submitted that it was the Daughters’ duty to take proper steps or to find out the proper means to achieve the “specified result” and that they had failed to do so and were in breach of the Undertaking. 81.Mr Mok submitted that there was no evidence that those who liquidated the Jiangsu Company were acting on behalf of the Daughters and further there was no evidence that the Daughters were even aware of the liquidation. 82.Judy and Kristy were respectively about 19 and 18 years of age at the time when the Undertaking was offered by them. Judy, who is now 20, told the court that she started studying in England since she was 12 years old, some 8 years ago and is now in her 3rd year at a well known university in London, reading economics. She had been an intern during the summer vacations, including working at a bank and for a property equity fund company for which she received no remuneration. As for Kristy, she is now 19 years of age and is in her 2nd year at the same university as Judy. 83.Judy elected to give her evidence in English. In fact her English is of almost native fluency, and she is clearly intelligent and well-educated. 84.Judy had said in her 1st Affirmation that Ds had no knowledge of their ownership of the shares in Chung Shing Belize and were never told of this until about June 2015. Judy further said during the trial that she first became aware of the Gift in June 2015 when her mother notified her of the court proceedings, and when she asked her father about this matter, he told her that it was a gift and that they did not need to worry about it, and that she trusted him, and they had also been told by their father that the business of Chung Shing Belize and its subsidiaries in the Mainland were managed by Mr Li who was the sole director of Chung Shing Belize. 85.From Judy’s 1st affirmation filed on 31 July 2015, the Daughters were clearly aware of the Undertaking. In fact, Judy had specifically referred to it and had said that Ds would continue to uphold the Undertaking they made through counsel at the hearing on 12 June 2015[58]. 86.In her 1st Affirmation, Judy had said that as Ds could not possibly deal with the proceedings against them, and that it would therefore be unfair to impose on them personally the onerous burden of compliance, and worse, the threat of consequence of non-compliance[59]. 87.Notwithstanding what she said above in her 1st Affirmation, it was Judy’s evidence during the trial that she was not aware of the consequence of imprisonment which she only found out a month before the trial. Although Judy admitted that someone would have told her at the time that there were some consequences, she claimed she could not remember whether the seriousness of the consequences was mentioned. She further said that in summer 2015 she was very confused and that when people explained to her, she did not really understand what was happening, and that she had to go back to university and her mother had told her not to worry about it and to concentrate on her studies. 88.Judy said she is closest to her mother out of the 3 sisters. She said she would talk to her mother a lot on the telephone, more than once a week during term time. She said she had trusted her mother when her mother told her not to worry about it. 89.Although there was no evidence that the Ng Order containing the Undertaking was endorsed with a penal notice or was personally served on the Daughters, as I have mentioned earlier, the Daughters did not take any issue with service. In any event, the 17.08.15 Order was endorsed with a penal notice and there was no dispute that it was personally served on the Daughters, who had also personally signed an acknowledgment of personal service on 27 August 2015 in the presence of their solicitor[60]. The penal notice states that the Daughters may be held to be in contempt of court and liable to process of execution to compel their obedience if they neglect to obey the order. 90.Ms Sit had referred Judy to her acknowledgment of personal service and had put to Judy that her solicitor must have explained to her the consequences of non-compliance at the time. Judy admitted that she had asked her solicitor every time she signed a document and that her solicitor would go through the document with her and had explained to her, but she claimed she could not recall what the solicitor’s explanation was. However, Judy admitted that she had been explained the penal notice at the time when she was personally served. 91.Anyway, on Judy’s evidence, the Daughters should be aware of the “threat of consequence of non-compliance” latest by end of July 2015, and that they were again explained the penal notice on 27 August 2015 at the time when personal service was effected, even if the consequence of imprisonment was not specifically spelt out in the penal notice. 92.Judy admitted she had read the 17.08.15 Order at the time of service but said that was all she could remember and everything else was told to her by her mother. She was asked whether she had read any court documents when she made her 3rd Affirmation in London in July 2016, she answered not that she could remember, and that her evidence was that she only read the court papers for the first time 2 days prior to the trial. She claimed that she did not really understand what was happening in these proceedings until recently. 93.However, Judy had said she was told of the serious consequence of imprisonment by one of her sisters in June 2016. She said she was working in London at the time and that both her sisters were in Hong Kong, but she could not recall which sister had told her. She further said she did not know that she had to attend the trial until about a week ago. 94.What Judy said was rather odd. The trial dates were fixed as early as February 2016. This court directed on 26 July 2016 that unless Ds attended trial to be cross examined, their affirmations would not be admitted. As the Daughters have been legally represented throughout, there was no reason as to why they would not have been informed of the trial dates as soon as they were fixed. Of course, Judy could elect not to give any evidence or attend trial for cross examination, but she chose to seek leave to file her 3rd affirmation, and there was no reason as to why she would not have been informed of this court’s direction on 26 July 2016 which was given at the same time when granting her leave to file her 3rd affirmation. 95.Judy admitted that she was aware that as Ds’ Summons was dismissed, she remained liable to comply with the Undertaking. 96.Judy had said her mother does not understand English, and yet she did not ask for the court papers to read or make inquiries from their lawyers or others, as to the nature of the claims against her and her sisters. 97.It was clear that the Daughters did not personally make any enquiries or took any steps to ascertain what the assets of any of the 8 Companies were or the value or whereabouts of such assets whether at the time they provided the Undertaking or after they had provided the Undertaking. 98.Ms Sit submitted that the Daughters could have asked their father or Mr Li, or their relatives who was in control of the 8 Companies directly, but the Daughters never bothered to find out. Ms Sit had further submitted that without finding out the assets of the 8 Companies, it must have been obvious that the Daughters could not even begin to know whether the Undertaking would be complied with. 99.On her own evidence, Judy had clearly asked her father about the Gift in about June 2015 and that according to her, it was her father who told her to go to Mr Li for advice, and that Mr Li was the manager and director of “the company” Ds own shares in, and that her father told her there was nothing he could do. She said she did not know which company, nor did she ask her father to take her to see Mr Li, nor did she know how to find Mr Li. She said she went to her mother for advice and it was her mother who found lawyers for her. Judy had also said in her 3rd Affirmation Ds had agreed that their solicitors could contact their mother directly for all relevant matters[61]. 100.Judy’s evidence that she did not know Mr Li’s address had to be seen in light of the fact that she had in fact signed the 21.07.15 Letter to Mr Li, which was drafted by the Daughters’ solicitors and which was then sent to Mr Li by the Daughters’ solicitors. In Mr Li’s 24.07.15 Letter, he had provided the Daughters with his mobile telephone number. Judy had said she did not know who provided the address of Mr Li, but even so, as her solicitors had both the address and the contact telephone of Mr Li, I find she did have the means of contacting Mr Li direct had she wanted to. 101.Judy had denied that it was her father who advised her to issue Ds’ Summons. She had said that she went with her mother and Carmen to see a lawyer at the time and it was the lawyer who gave them the advice for the proposed transfer of the legal title of their shares in Chung Shing Belize to Mr Fung as trustee. Her evidence had to be seen in light of the letter sent by Mr Chun’s own solicitors to Ps’ solicitors on 4 June 2015 suggesting that an independent trustee be appointed on behalf of Ds in respect of their shareholding in Chung Shing Belize (“04.06.15 Letter”)[62]. The proposal clearly came from Mr Chun. Having said this, when Judy was asked the 04.06.15 Letter, she maintained that she did not know about it and that it was Ds’ lawyers who suggested the proposal to them. There was no sufficient evidence to contradict what Judy had said, that she did not know about the 04.06.15 Letter. 102.Judy had referred to her father a silly and a jolly person and said she and her father did not talk about serious matters. She admitted that she had read on the internet about her father being in trouble. 103.Even if Judy was/is closer to her mother than her father, and that she said her father had done things to her mother which she did not agree to, it was not Judy’s evidence that she had no communications with her father at all, or that she had a bad relationship with her father. 104.I accept that the Daughters could have sought advice or information from their father after they learnt of the Gift and about the court proceedings against them. I further accept that the Daughters could have asked their father about the assets of the 8 Companies at the time of providing the Undertaking or thereafter. Having said this, however, it was Judy’s evidence that their father had told them there was nothing he could do and redirected them to Mr Li, and there was no sufficient evidence that even had the Daughters tried to seek advice or more information from their father or Mr Li, they would have obtained more information than Mr Fung whom they instructed later. 105.Although the Daughters had clearly been explained the penal notice by about 27 August 2015, Judy’s evidence was that she was confused and did not really understand what was going on, and she had to go back to university. Judy’s evidence showed that the Daughters did nothing apart from simply entrusting all matters to their mother. However, the Daughters were very young at that time, and I find Judy’s evidence that the Daughters not doing anything but trusting their mother to take care of all matters cannot be said to be unreasonable or unbelievable or inherently improbable. Judy’s evidence showed that the Daughters had led a very protected life and her evidence that she did not understand what was in the Fung Report was not unbelievable. In any event, there was no sufficient evidence to show that the Daughters were in a position to take matters into their own hands and to bypass their father and their mother and to make independent decisions of their own. 106.Ms Sit had relied on Hone v Page [1980] FSR 500 and submitted that in the present case that :
107.The Undertaking was drafted in wide terms, namely that Ds “shall not in any way ...”, following the wording of the terms of paragraph 1 of the standard form for Mareva injunctions. Ms Sit had submitted that in paragraph 1 of Ps’ Summons, they were in fact seeking an order in similar wording as paragraph 1 of the standard form and that Ds had offered the Undertaking instead of having an order made against them. Thus, Mr Sit relied on the part under “Effect of This Order” of the standard form which states that:
108.The Undertaking was provided personally by each of the Daughter. As mentioned earlier, the “specified result” of the Undertaking was not to dispose/deal with/diminish the value of their shareholdings in Chung Shing Belize or the assets of the 8 Companies, and I accept that, in achieving that, the Daughters must not do it themselves or through others acting on their behalf or on their instructions or with their encouragement. 109.In Hone v Page , it was held, among other things, that[64] :
110.Mr Li signed the 1st Shareholder Resolution to liquidate the Jiangsu Company in March 2015, prior to the Daughters learning about the Gift and prior to the Undertaking being provided. There was no evidence that Mr Li was authorized by the Daughters to sign the 1st Shareholder Resolution in March 2015 or that the Daughters had any knowledge of Mr Li’s act at the time of their giving the Undertaking to Ng J. 111.Mr Li had in the 24.07.15 Letter indicated that he would assist the Daughters and co-operate with their trustee Mr Fung, if appointed, in relation to the enquiries from the Liquidators. Such enquiries, as seen in the 21.07.15 Letter, were however only in relation to (i) the source, (ii) the use and (iii) the present whereabouts of the registered capital of the Jiangsu Company and the Tianjin Company (“Requested Information”)[65]. 112.The Requested Information was only part of what was sought in paragraph 2.1 of Ps’ Summons. There was no mention of the Undertaking in the Daughter’s 21.07.15 Letter, nor did the Daughters send a copy of Ps’ Summons or its Chinese translation to Mr Li, and nor did they instruct Mr Li not to dissipate/deal with or diminish the assets of the 8 Companies. There was no evidence the Daughters had informed Mr Li of the Undertaking prior to the 17.08.15 Order. Having said this, however, there was no evidence that their failure to do so was because when they signed or sent the 21.07.15 Letter, they had knowledge of the liquidation of the Jiangsu Company. 113.The Jiangsu Company’s attorney Mr Chen Xingchen filed for commencement of the liquidation case on 28 July 2015 and the Liquidation Committee proceeded to prepare the Liquidation Report. This was prior to the 17.08.15 Order and the appointment of Mr Fung. Again there was no sufficient evidence that such filing or any step taken by the Jiangsu Company in relation to its liquidation and deregistration was authorized by the Daughters or that the Daughters had knowledge of the acts of Mr Chen Xingchen or the Liquidation Committee at the time. 114.Mrs Chun instructed, purportedly on behalf of the Daughters, Mr Fung to assist the Daughters to comply with the 17.08.15 Order immediately afterwards even though they were only personally served with the order on 27 August 2015. Mr Fung then sent the 18.08.15 Letter to Mr Li to ask for documents and information[66]. It was quite clear that items 1 to 4 of the 18.08.15 Letter were almost identical to items 2 to 5 of the 21.07.15 Letter. Mr Fung only repeated his request for the same Requested Information in the 21.07.15 Letter. There was no mention of the Undertaking by Mr Fung. There was also no evidence that a copy of the 17.08.15 Order or its Chinese translation was sent to Mr Li on 18 August 2015. 115.Ms Sit had criticized Mr Fung’s competence when Ps made the 1st Receivership Application, and DHCJ Keith had accepted that there was a good deal of force in such criticism[67]. It was clear from Mr Fung’s evidence that he was engaged by Mrs Chun and acting on Mrs Chun’s instructions. Prior to the Fung Report, even on Mr Fung’s own evidence, he had not conducted any independent company searches. In fact, any purported analysis in the Fung Report was information self evident in the documents attached. 116.In any event, it appears from the Liquidation Report that the assets of Jiangsu Company were distributed by end of August 2015 shortly after the 17.08.15 Order was personally served on the Daughters and before the Fung Report was submitted. 117.Mr Li was a director of Chung Shing Belize, Chung Shing Singapore and Chung Shing HK, but he was not employed directly by the Daughters and not their “servant”. There was no sufficient evidence that he was an “agent” of the Daughters. Even if he were regarded to be an agent of the Daughters by being a director or his agreeing to assist the Daughters and to co-operate in providing the Requested Information, there was no sufficient evidence that the Daughters knew of the liquidation and the deregistration of the Jiangsu Company or could it be said that they had authorized the acts of Mr Li, Mr Chen Xingchen, or the Liquidation Committee or others involved in the liquidation or deregistration. 118.There was simply no sufficient evidence that the Daughters could reasonably have foreseen the possibility of the acts of Mr Li and the others and/or the liquidation of the Jiangsu Company and failed to take reasonable steps to prevent them. There was also no sufficient evidence that Mr Li in signing the 1st and the 2nd Shareholders’ Resolution, the Liquidation Committee and Jiangsu Company’s attorney Mr Chen Xingchen and others carrying out the various acts in filing for liquidation and deregistration of Jiangsu Company were acting on the Daughters’ behalf or on their instructions or with their encouragement. 119.The burden is on Ps to prove beyond reasonable doubt that the Daughters had failed to comply with the Undertaking intentionally or that they had the requisite mens rea in failing to comply with the Undertaking. Having considered all the circumstances of this case, I find that Ps have not discharged their burden.
120.Ds were ordered under paragraph 1 of the 17.08.15 Order (“Paragraph 1”), among other things, to inform Ps by the deadline imposed :
121.In short, under Paragraph 1, Ds were ordered to provide all the above information on the amounts injected respectively into the Tianjin Company and the Jiangsu Company, and the details of the assets of each of the 8 Companies (“Required Information”). 122.Under paragraph 2 of the 17.08.15 Order (“Paragraph 2”), Ds were then ordered to confirm the Required Information in an affidavit exhibiting all documents evidencing the matters set out in Paragraph 1 (“Evidencing Documents”). Judy’s Evidence 123.As mentioned earlier, upon the Daughters being informed of the 17.08.15 Order being made, their mother instructed Mr Fung to assist them to comply with the order. In Judy’s 2nd affirmation, she had said that Mr Fung was instructed to liaise with Mr Li to locate the financial information and materials as required and that Mr Fung had on 10 September 2015 issued the Fung Report which Judy then produced in her 2nd affirmation[68]. 124.Judy further said during the trial that in and around September 2015 the Daughters were advised by their mother that Mr Fung had collated the necessary information required under Paragraph 1 and that she was told that their solicitors requested her attendance at their office so that they could explain the matter to her personally and so that she could sign some documents to submit to the court to comply with the 17.08.15 Order. She duly attended the office of her solicitors on 16 September 2015 and was advised by her solicitors that Mr Fung had collated the necessary information required under the 17.08.15 Order, and it was under such circumstances, she made her 2nd Affirmation to comply with Paragraph 2. 125.Judy had said in her 3rd Affirmation that her mother told her in about October 2015 that Ps had made complaints that the documents and information provided were inadequate. However, during the trial she said she could not remember and she was not sure whether she was told in October 2015 or in December 2015 round Christmas. Anyway, she had said in her 3rd Affirmation that her mother told her that Mr Fung and her solicitors would follow up the matter and that the Daughters should focus on their studies. Judy said she trusted her mother and put the whole matter into her mother’s “good hands”[69]. 126.Judy said she was then told by her mother in about Christmas 2015 that Ps had instituted the contempt proceedings against the Daughters but she said her mother did not elaborate on the nature of the proceedings and again the Daughters were told to focus on their studies and that her mother would instruct Mr Fung and the legal team to take care of the matter. 127.Then in around January 2016, Judy said her mother told her that despite Mr Fung’s numerous attempts, Mr Li had been uncooperative and that the Daughters should remove him as director and appoint Mr Fung as the new director of Chung Shing Belize. Judy said she trusted her mother’s judgment and the Daughters then signed a resolution for such purpose. 128.Thereafter in around February 2016, Judy said her mother told her about the Receivership Order and that the Receivers had the right to control the subsidiaries of Chung Shing Belize, and that they would be the persons who would be able to locate the Required Information. 129.Judy had said in her 3rd affirmation that the Daughters would be willing to appoint some other independent accountant of Ps’ choosing to replace Mr Fung, insofar as the complaint was of Mr Fung’s competence, and that further as indicated by this court, that it was open for the Daughters to renounce the Gift from their father, and in this regard they would be willing to give up their shares in Chung Shing Belize. 130.I have said earlier in this judgment that Judy had admitted that she had read the 17.08.15 Order at the time when the Order was personally served on her. The Daughters were ordered to confirm the Required Information under Paragraph 2. Judy had herself said that her solicitor had explained the matter to her personally. Yet, all Judy did in her 2nd Affirmation was to produce a copy of the Fung Report and there was no confirmation by her of any kind nor did she exhibit any Evidencing Documents. 131.When Judy was cross examined on this, she agreed that there was no confirmation by her and said at the time she really thought that she had confirmed and she also said she had looked through the Fung Report but did not read it fully. She said that she did not understand the information in the Fung Report and also she did not ask her solicitors to explain to her. She said the information was very complicated and even if her solicitors had explained to her, she would not have understood. Judy however accepted during cross examination that her 2nd Affirmation was not in compliance with Paragraph 2. 132.During cross examination, very often, Judy’s answers to questions would be she could not recall. By way of examples, she said she did ask her mother what Ps’ complaints were about the Fung Report but she could not recall when she asked her mother; she could not recall whether it was in October or December 2015 when she was told that the Fung Report did not comply with the 17.08.15 Order; she could not recall when she found out that Mr Li was not being co-operative; she could not recall which of her two sisters informed her a month before the trial of the serious consequence of imprisonment which caused her to be extremely shocked and concerned. 133.When it was put to Judy that even though Mr Li was not answering Mr Fung’s calls, there was no reason why Mr Li would not answer her calls if she were to call Mr Li, Judy had said she did not know Mr Li was not answering Mr Fung’s calls. Further, when it was put to Judy that had she asked questions, she could have found out how she could have helped, her answer was she had asked her mother but her mother told her not to worry, and she trusted her mother. 134.Judy repeatedly said she trusted her mother who asked her not to worry and to focus on her studies. 135.I accept many of Judy’s answers were vague and confusing. She became emotional and broke down in tears on two to three occasions during cross examination. She was clearly under immense pressure. I accept that she probably had to focus on her studies when term started in September/October 2015 as she was told by her mother. Notwithstanding some of her answers being unsatisfactory, there was no sufficient evidence that Judy would know what documents would be necessary before she could provide the Required Information under Paragraph 1 or that she could understand or analyse the documents even if she were given the same. There was no sufficient evidence that Judy knew of the nature of the business of each of the 8 Companies or the relationship among the 8 Companies or the relationship of the 8 Companies with her father. 136.As I have said earlier, there was no sufficient evidence to show that the Daughters were in a position to bypass their mother and their father or to make any decisions independent of their parents. Mr Fung’s evidence 137.As mentioned earlier, after being instructed by Mrs Chun purportedly on behalf of the Daughters, Mr Fung sent the 18.08.15 Letter to Mr Li. Notwithstanding the 18.08.15 Letter was on Mr Fung’s firm’s letterhead. As I have said earlier, in this letter, he was only repeating the Requested Information set out in the Daughters’ 17.07.15 Letter. Instead of informing Mr Li the full contents of the 17.08.15 Order or to send Mr Li a Chinese translation of the entire order, he chose to summarise part of the 17.08.15 Order and sought only the Requested Information. 138.Mr Fung had confirmed that he could read English, and that he had read the 17.08.15 Order at the time and fully understood the contents and seriousness of the order. There was no reason why he should not immediately bring to Mr Li’s attention the full contents of the 17.08.15 Order unless those were his instructions. 139.It was Mr Fung’s evidence that a meeting was then arranged in Guangzhou on 25 August 2015, which was attended by him, Mr Li, a Ms Chen Juan (“Ms Chen”) who was said to be the accountant of “the Company in PRC”, and a Mr Ray Chong from Ds’ solicitors firm. Mr Fung said he had asked Mr Li at the meeting for the registration information of the Jiangsu Company and the Tianjin Company, the 2 Singapore companies and Chung Shing Belize, namely all 7 of the 8 Companies of which Mr Li was a director. Mr Chun was the sole director of Chung Shing Finance. There was no evidence that Mr Fung had ever approached Mr Chun after the 17.08.15 Order to seek information. Ms Sit had submitted that this made no sense as Mr Chun was the original owner and founder and the person who appointed all the officers and with whom these officers were all connected. 140.Mr Fung had also admitted that he himself did not carry out any independent company searches nor did he go to the Jiangsu AIC to investigate at that time and his reason was because he did not suspect nor was he told that Jiangsu Company was being liquidated and deregistered. 141.The Fung Report consisted of a letter dated 10 September 2015 addressed to Ds with 3 attachments[70]:
142.On 14 October 2015, Ps’ solicitors sent a 7 page letter to Ds’ solicitors setting out all the deficiencies of the Fung Report and the breaches of the 17.08.15 Order and Ps’ solicitors threatened to issue committal proceedings against the Ds[71] (“14.10.15 Letter”). 143.Ds’ solicitors replied on 22 October 2015 to say they had instructions to accept service on behalf of Ds. Then on 26 October 2015, they wrote another letter while denying Ps allegations, they said that Ds would instruct Mr Fung to contact Mr Li again to request for additional documents[72]. 144.At the trial, Mr Fung had maintained that the Fung Report was in compliance of Paragraph 1. I agree with Ps that the Fung Report was clearly deficient. Without going into all the deficiencies complained by Ps in the 14.10.15 Letter, just to name a few, the so called “management accounts” of each of the 8 Companies consisted of only one sheet of paper titled “balance sheet”. They were clearly neither full “management accounts” nor “balance sheets” and they were obviously created to be exhibited in the Fung Report. There was no explanation as to where the information thereon was extracted from nor was there any Evidencing Documents produced. In so far as the Jiangsu Company and the Tianjin Company were concerned, the one sheet “balance sheet” of each of these companies was in English, which was odd in light that the two companies were PRC companies and Mr Li could not read English. The capital injection reports only showed the dates and bank accounts into which the various capital amounts were paid in 2011 and 2012 for the Jiangsu Company and Tianjin Company. There was no full particulars or full explanation as to what had become of the monies, nor was there any information as to their current whereabouts. 145.In any event, the one sheet “balance sheets” purported to show the information of the 8 Companies as at 31 December 2014 or 31 July 2015, and not the current value and assets or the location of the assets of the 8 Companies as at the date of the 17.08.15 Order. 146.In light of Mr Fung’s professional qualifications and experience, I find it surprising that he would not accept even at the trial that the Fung Report was deficient, and the fact that Mr Fung had maintained at the trial that it was compliant with Paragraph 1 would further confirm that Ps indeed had good reasons to complain about his competence. 147.Anyway, Mr Fung admitted that Ds’ solicitors had contacted him and sent him a copy of Ps’ 14.10.15 Letter the next day and asked him to seek further information and documents from Mr Li. 148.According to Mr Fung’s 1st affirmation, he said he contacted Mr Li through telephone on 19 October 2015 and asked for a meeting, and Mr Li had agreed to meet him in Guangzhou on 23 October 2015. However, the meeting was cancelled by Mr Li. Mr Fung then sent a letter to Mr Li enclosing a copy of Ps’ 14.10.15 Letter. 149.On 30 October 2015, according to Mr Fung, Mr Li telephoned him to say he was not able to do anything because he did not understand the 14.10.15 Letter which was in English. Mr Fung then said he sent an email to Mr Li on 9 November 2015 enclosing a Chinese letter containing a list of the required documents. Mr Li replied by email on 10 November 2015 that he would collate the documents. 150.Pausing here for a moment, I find it odd that this time Mr Fung would choose to send a covering letter to Mr Li in Chinese and attached a copy of Ps’ 14.10.15 Letter in English, as Mr Fung had admitted that he always communicated with Mr Li in Chinese. Further, previously, he had chosen to summarise the contents of the 17.08.15 Order when sending the 18.08.15 Letter, and yet this time he chose not to list out or summarise the contents of the 14.10.15 Letter in Chinese. In any event, all this resulted in further delay. 151.According to Mr Fung, after 10 November 2015, he had called Mr Li on numerous occasions from end of November 2015 to early December 2015 but no one answered. 152.He said on 12 December 2015, he managed to locate Mr Li at his residential address in Guangzhou but Mr Li said he needed more time to prepare and promised to deliver the documents by end of December 2015. Thereafter, there were further attempts to contact Mr Li and one more visit to Mr Li’s address in Guangzhou on 29 December 2015 but Mr Fung claimed all these attempts were unsuccessful. 153.There was no record produced by Mr Fung of any attempted telephone calls to Mr Li, nor did he produce any attendance notes/records of any telephone conversations and/or meetings he had with Mr Li. 154.Mr Fung said he had also contacted Ms Chen over the telephone on 30 December 2015, but she told him to go through Mr Li. 155.Mr Fung said after the above attempts, he then advised Ds to remove Mr Li as the director of Chung Shing Belize and appoint himself instead. Ds signed the requisite shareholders’ resolution on about 4 January 2016. Mr Fung said he contacted Ms Chen on 19 January 2016 informing her of his appointment and arranged a meeting with her on 25 January 2016 and he had asked Ms Chen for all the latest financial statements of the 8 Companies together with all documents in support. On 27 January 2016, Mr Fung said he called Ms Chen again and then met her on 28 January 2016 in Shenzhen and on this occasion, he was given a further bundle of documents in relation to the Tianjin Company and the Jiangsu Company by Ms Chen[73]. This time, the documents said to be provided by Ms Chen to Mr Fung consisted of audited financial statements of the two PRC companies in Chinese. Mr Fung said he had told Ms Chen to continue to look for financial and supporting documents. 156.On 1 February 2016, Mr Li was replaced by Mr Fung as director of Chung Shing Singapore and Chung Shing HK. Mr Fung said he contacted Ms Chen again on 18 February 2016 to request for additional financial documents/information and that after the Keith Order, Mr Li had issued a further letter to Ms Chen on 27 February 2016 to chase her and eventually on 29 February 2016 Mr Fung said he received a further bundle of information/documents which he produced in his 1st progress report dated 1 March 2016 filed pursuant to his undertaking in the Keith Order[74]. On 2 March 2016, pursuant to the request of the Receivers, Mr Fung further added the Receivers as directors of Chung Shing HK. 157.Finally on 3 March 2016 Mr Fung attended the office of Ms Chen in Guangzhou with the Receivers’ representative to attempt to locate additional financial documents/information, but were told she was not in the office, and several made staff came out and violently pushed him away, injuring his hand. 158.So far, the Required Information and Evidencing Documents provided in 3 batches were still not complete. It was put to Mr Fung that his instructions were either to delay or not to co-operate (拖慢 or 無須配合). Mr Fung denied that he was following orders from the person who was instructing him. Notwithstanding his denial, I must say the impression he gave the court was that certainly up to the Keith Order, he was not dealing with the Disclosure Obligations expeditiously, whether on instructions or not. Whether Paragraph 1 was ambiguous 159.It was Mr Mok’s submission that Paragraph 1 was susceptible to at least two interpretations:-
160.Mr Mok further submitted that Paragraph 1, properly construed, was not an absolute order which could only be complied with by achieving the result stipulated therein. Instead, what it required was for the Daughters to do was “what they could and set out the best particulars” by the deadline. 161.Mr Mok referred this court to Kenneth Togher v Commissioners of Customs and Excise [2001] EWCA Civ 474. In that case, the order required Mr Togher “to swear and serve within 14 days of the date of service of the order ... an affidavit giving full particulars of all his assets inside and outside the jurisdiction” [77], where the following was said by Lightman J:-
162.However, Lightman J had gone on to say that Mr Togher interpreted the order in one way and that thereafter both the Commissioners and the court appeared to have proceeded on this basis and Mr Togher requested time to access to further information to enable him to comply and both the Commissioners and the Court allowed these to him, and as a result the 14 day time limit became a matter of no consequence for all concerned. Lightman J said that where the parties had proceeded in this way, it was not open to the Commissioners in effect retrospectively to invoke the long expired 14 day time limit for swearing the affidavit and treat the order as contumaciously breached by a failure to swear an affidavit within that time period[78]. 163.In Togher, the disclosure order was part of a restraint and disclosure order made under the Drug Trafficking Offence Act 1986[79] and Mr Togher had raised the subject of his lack of documents to comply with the order, as the documents were seized from him by Customs and Excise. What was said by Lightman J was in the context of that case. Further, as submitted by Ms Sit, what was said by Lightman J in Togher was obiter. 164.As pointed out by Mr Sit, the 17.08.15 Order was in similar terms as the Mareva Orders and the ancillary order for disclosure in the Chan Order. Subsequently, Chow J had granted an unless order against Mr Chun and Wellrun in respect of their non-compliance with the Chan Order. Mr Chun and Wellrun had sought leave to appeal from the Court of Appeal on 2 broad grounds, one of which was that the Chan Order was unclear and that even if there had been non-compliance by the defendants, they should not be faced with the sanction of an unless order. Lam VP had said that the Chan Order was clear and the defendants had plainly failed to comply with the requirement to give “full explanation” and “full particulars of the circumstances” and to exhibit “all documents which evidence the matters”[80]. 165.If all was required was that the Daughters “do what they could and set out the best particulars known to them ...”, the 17.08.15 Order would have so provided[81]. In fact, as indicated by this court in the Reasons, there was no real opposition to the terms of the orders sought in Ps’ Summons and it was under such circumstances Paragraph 1 and Paragraph 2 were made[82]. 166.In my view, here was no ambiguity in Paragraph 1 of the 17.08.15 Order. Whether Paragraph 2 was ambiguous 167.Mr Mok also complained that Paragraph 2 was ambiguous. The Daughters were ordered under Paragraph 2 to confirm the Required Information, but Mr Mok argued that Paragraph 2 did not state that they had to confirm to the truth and accuracy of the Required Information, and therefore it was ambiguous as to what they had to confirm to. 168.Under Paragraph 2, the Daughters had to confirm the Requested Information by exhibiting the Evidencing Documents. Judy had accepted that there was no confirmation in her 2nd affirmation and that her 2nd affirmation was not in compliance with Paragraph 2. I do not find ambiguity in Paragraph 2. Judy had also said she would not in any way be able to confirm whether anything in the Fung Report was correct or not, but this is a matter which goes to her impossibility defence. Whether it was impossible for the Daughters to comply with the Disclosure Obligations 169.Mr Mok argued that an issue unique to the facts of this case was the issue of instructing a professional accountant out of necessity, and that such need stemmed from the Daughters’ lack of ability to (1) comprehend what Paragraph 1 required in terms of documents; (2) understand the documents; and (3) extract from the documents the disclosure sought, and that delegation was appropriate, and that it was envisioned by this court from the outset. 170.Mr Mok relied what this court had said in the Reasons, as follows[83]:
171.To clarify, what this court said above was in response to Ds’ Summons in applying to transfer their legal title in the shares to Mr Fung, which this court found unnecessary. As this court had said, this would be the same as instructing a firm of solicitors to deal with legal matters. This court did not express any view as to whether it was necessary for Ds to instruct an accountant or not. 172.Ms Sit referred this court to Dadourian Group International Inc v Simms [2007] EWHC 2634(Ch), where it was said if one were later to discover that he/she could not do what was ordered by the court, this would not mean that the order was not to be complied with; rather, one should apply to the court to vary it on the basis that he/she was unable, for good reasons, to comply with it[84]. 173.Mr Mok however referred to what was said Lord Justice Munby, as he then was, in Re L-W (Enforcement and Committal: Contact) [2010] EWCA Civ 1253:-
174.Mr Mok further submitted that what was said in Dadourian was only in light of the facts of that case and also in that case, the order was made by consent. He referred to what was said by Sir James Munby in Re Jones [2013] EWHC 2730, and submitted that the normal approach of the court when asked to grant an injunction was not to bandy words with the respondent if the respondent say it could not be performed or would not be performed, and that the normal response of the court would be to say: “The order which should be made will be made, and we will test on some future occasion, if the order which has been made is not complied with, whether it really is the case that it was impossible for the respondent to comply with it”[86]. 175.Judy’s evidence in her 1st Affirmation at the time of the hearing of 17 August 2015 was that the Daughters were not capable to deal with the disclosure orders sought in Ps Summons and the potential follow ups because being students, they had no commercial or financial know-how or experience, and they therefore issued Ds’ Summons to transfer their legal title in the shares to Mr Fung. It was submitted by their then Counsel that it would be utterly unrealistic for the Daughters to come to grasp the finances of all those companies and to respond meaningfully and astutely to the disclosure orders if made[87]. However, it was not really argued that it was impossible for the Daughters or it was not within the Daughters’ power to comply with the disclosure orders if made. As I have said earlier, there was no real opposition to those disclosure orders sought by Ps. 176.In any event, what Sir James Munby said in Re Jones was the normal approach at the time of the making of the order whereas in Dadourian, what Mr Justice Warren said appeared to this court was when one were later to discover that he/she could not comply with an order to which one had consented to. I do not see there was any real inconsistency. I also do not see that what was said in Dadourian was inconsistent with what was subsequently said by Sir James Munby in L v W. 177.In the present case, in my view, if the Daughters were to discover after the order that they were not able to comply with the terms thereof, I see no reason why they could not try to apply to vary the order and/or to seek further directions in complying with it. 178.However, I accept the fact that the 17.08.15 Order was made in the first place would not preclude the Daughters raising impossibility as a defence in these contempt proceedings as seen in Re Jones. I further accept that in these proceedings, the burden was on Ps to prove that (a) the Daughters had not done what they were required to do and (b) that it was within the power or within the ability of the Daughters to do what they were required to do. The Daughters’ case 179.It was Mr Mok’s submissions that it was impossible nor was it within the power for the Daughters to personally investigate the affairs of the various companies, collect the underlying documents themselves, conduct a professional analysis of the documents and information so obtained and present a professional report to the Court to satisfy all the particulars under Paragraph 1. 180.Mr Mok argued that what was within the power of the Daughters to do what the order required them to do was (a) to instruct a professional accountant, such as Mr Fung, to deal with it and (b) to provide full cooperation to the professional accountant insofar as it was within the Daughter’s power to do so. 181.Mr Mok had referred to Re Bramblevale Ltd [1970] Ch 128 in which it was held that where it was alleged was that the contemnor had failed to produce documents, it would be crucial to determine that he did have the document in his possession, custody or power at the time when the order was made against him. 182.In Arboit v Koo HCMP 2749/2012, 8 March 2016, Au Yeung J had summarized the meaning of “possession, custody or power” as follows[88]:
183.Mr Mok had submitted that in the present case, there was no evidence that the Daughters had the Required Information and Evidencing Documents in their actual physical possession at the time when the 17.08.15 Order was made, and further that the people who had possession of the required information and documents were not servants or agents of the Daughters. Having submitted this, however, the main thrust of Mr Mok’s argument was not really on “possession” or “custody” but that the required information and documents were not within the Daughters’ “power” to obtain. 184.In B v B[1978] Fam 181, the board of an “operating company” consisted of the husband, who was chairman and managing director, and six directors. A holding company owned 75% of the “operating company” and the husband held 51% of “holding company”. On application for discovery by the wife, the husband was ordered to produce, among other things, all books of accounts etc relating to the “operating company”. The Court of Appeal, allowing the husband’s appeal in relation to production of documents of the “operating company”, held, among other things, that:-
185.In Re Tecnion Investments Ltd [1985] BCLC 434, discovery of documents in the possession of five companies was ordered against the two respondents whose appeal was limited to the orders relation to two of the companies, (i) company E which was alleged that the two respondents indirectly controlled through their nephew, the controlling shareholder and a director of the company and whom it was alleged acted as their nominee; and (ii) company T, a company in which the two respondents were directors and held 95% of the shares, the remaining 5% being held by the only other director. 186.In so far as company E was concerned, neither of the two respondents was a director or a shareholder. The sole director and, it would seem, the controlling shareholder was their nephew, a student by occupation who was in his early twenties. The basis of the claim that the documents of the company were in the power of the respondents was a submission that the nephew was merely a nominee for the respondents or one of them. 187.Dillon LJ was of the view that on the facts of that case, there was no sufficient evidence to warrant the conclusion that the nephew held his shares in company E as the nominee for the respondents or either of them, and it was not right to regard company E as the alter ego of the respondents or either of them. It was thus not possible to conclude that the documents of company E were in the power of the respondents or either of them[90]. 188.As for company T, this was incorporated under Austrian law and the evidence of an Austrian lawyer was that each of the 3 directors had under the articles of association of the company power to represent the company singly and that the 5% shareholder was admitted by the other shareholders to the position of a shareholder and director because of a particular purpose. The 5% shareholder and director had objected to the disclosure of the company documents. Dillon LJ had said that the question was whether the court was satisfied that, on, in particular, the evidence of the Austrian lawyer, whether the 5% shareholder was indeed a mere nominee and that it was appropriate to regard company T was the alter ego of the respondents[91]. On the evidence, Dillon LJ did not think that the petitioner had made out his case. 189.In Innovisions Ltd v Chan Sing-chuk [1992] 2 HKLR 306, discovery of documents was sought of a company “Continental” of which the defendant Mr Chan was a substantial shareholder and Mr Chan denied having control of the company or of being its alter ego. It was held, among other things, that, following Tecnion, dominance in the running of a company’s business did not provide the requisite degree of control and that it had to be shown that the company was under the unfettered control of the shareholder and that as it was impossible to say that the company was under the unfettered control of Mr Chan, it followed that the documents sought were not within his power to produce. 190.Ms Sit sought to distinguish the above cases and submitted that they did not assist the Daughters, namely in Innovisions, Continent was a listed company and that Mr Chan clearly had no unfettered control; in Tecnion, the respondents were not sole shareholders or in control; and in B v B, again the operating company was held by another listed company and no board control. Ms Sit pointed out in the present case Ds are the sole shareholders. 191.In my view, when considering whether a company is under the “unfettered control” of a shareholder, one does not simply look at the registered shareholding in that one is entitled to look behind the registered shareholding to see whether the company is in fact the alter ego of the shareholder, as was agreed in Tecnion. The question in the present case is whether it can be said that the 8 Companies were/are under the unfettered control of the Daughters so that the 8 Companies can be said to be their alter egos. 192.Ms Sit pointed out that the Daughters/Mr Fung did manage to obtain information and documents from Mr Li and they were able to remove Mr Li as director of Chung Shing Belize and to appoint Mr Fung in his place. Thus, the Daughters controlled the 8 Companies which were/are their alter egos, and that the Required Information and Evidencing Documents of the 8 Companies were within their power to obtain. 193.At the time of the making of the 17.08.15 Order, this court had stated in the Reasons that there was no evidence that Mr Li would not be willing to work with the Daughters and that if Mr Li were to refuse to obey the direction given to him by the Daughters, the Daughters would have the power to remove Mr Li as director and to appoint new ones who would comply with their direction[92]. 194.As it turned out, notwithstanding the 24.07.15 Letter sent by Mr Li, Mr Fung’s evidence indicated that Mr Li became un-cooperative when Mr Fung sought further information as set out in Ps’ 14.10.15 Letter. Although the Daughters signed resolutions to remove Mr Li in 12 January 2016 and Mr Fung obtained some further documents from Ms Chen, but after 1 March 2016, he had not been successful in obtaining any further additional information and documents. 195.It was not clear whether the change of directors or management in relation to the PRC companies had in fact been effectively carried out by Mr Fung, since the subsequent evidence was that after the appointment of the Receivers as directors of Chung Shing HK, without the business licences and company chops of the PRC companies, any changes regarding the directors and/or management of the PRC companies could not be effected at the Tianjin AIC or equivalent authority. 196.There was no sufficient evidence that the business licences and the company chops of the PRC companies were in the possession of the Daughters and/or within the Daughters’ power to obtain. There was also no sufficient evidence that they were in the possession of Mr Fung. 197.In any event, notwithstanding that in the 04.06.15 Letter, Mr Chun had said that the Daughters were aware of the Gift, I find that there was no evidence to contradict Judy’s evidence that they only found out about the Gift in June 2015 after the court proceedings against them or after Ps’ Summons, and that they were told by their father that the business of Chung Shing Belize and its subsidiaries in the Mainland were managed by Mr Li. 198.Mr Li was the person who executed the Deed of Gift on behalf of the donee, namely Chung Shing Singapore. The Deed of Gift made it clear that Chung Shing Singapore was to manage Chung Shing HK for and on behalf of Ds and that its board of directors should only surrender its own management and control of Chung Shing Singapore together with its management and control of Chung Shing HK to nominee director/s appointed by Ds when they reach 25 years of age on average and in the meantime, Chung Shing Singapore should exercise its best endeavour to maintain and manage its affairs including maintaining the corporate structure described in the recitals and managing Chung Shing HK’s assets and business[93]. 199.Chung Shing Singapore further undertook to keep the terms of the Deed of Gift confidential until Ds reach the said age[94]. This accords with Judy’s evidence that the Daughters did not know anything about the Gift until Ps’ Summons. 200.Mr Chun in his 14th affirmation filed in the Main Action had denied that he or Wellrun had any direct or indirect legal or beneficial interest in 8 Companies. According to Mr Chun, the companies were controlled and managed by their own management team for the benefit of Ds[95]. He further claimed that before the listing of China Metal in 2009, it had all along been his intention to set up a trust for the benefit of his family and in particular Ds and he had contemplated injecting some of his shares in China Metal into a trust structure for the benefit of Ds[96]. This was later abandoned. He said he set up the Tianjin Company and the Jiangsu Company in 2011 and that he said his intention that these companies and their assets would form part of the trust for the benefit of Ds. Thereafter, he incorporated Chung Shing Belize and Chung Shing Singapore in August 2012 and he then executed the Deed of Gift[97]. 201.Prior to the execution of the Deed of Gift, Mr Chun admitted that he had exercised management and control over the Tianjin Company and the Jiangsu Company the only two of the 8 Companies with operating businesses. In fact, notwithstanding the Gift, Mr Chun had remained the Chairman, legal representative and director of the Tianjin Company and the Jiangsu Company on record until around July 2013. Mr Chun further admitted that after the Gift, he had been “consulted” by the new management teams given his familiarity with the businesses of the Tianjin Company and the Jiangsu Company and he further admitted that he continued to be the account operator of a futures account held under the name of “Zhongjin Goldman” in February 2013[98]. 202.Mr Chun had said that his involvement in the affairs of the companies after the Gift was only for the purpose of ensuring a smooth transition to enable the new management to take over control and to avoid unnecessary disruption to the companies’ businesses and operations. Mr Chun admitted that the persons occupying management positions after July 2013 were his friends/relatives, but he had denied that they acted at any time as his nominees[99]. 203.Mr Borrelli had stated in his 14th affidavit filed in the Main Action that the information provided by Mr Chun in his various affirmations strongly indicated that the Gift was a sham designed by Mr Chun to seek to conceal his assets by causing such assets to be legally held by Ds whilst continuing to be ultimately beneficially owned by him[100]. 204.Mr Borrelli further said in his 20th affidavit in the Main Action filed in support of Ps’ 1st Receivership Application that it was inconceivable that Mr Chun would not have known about, and that Mr Chun had consented to the liquidation of the Jiangsu Company, and that it was plain that any instruction to Mr Li could only have come from Mr Chun, and that according to the Daughters Mr Li would not listen to them[101]. Mr Borrelli had also said that on any view of the matter, the liquidation of the Jiangsu Company was a conscious decision, and must have been made at the direction or with the consent of Mr Chun[102]. 205.Ps’ 1st Receivership Application was heard by DHCJ Keith, who in his decision had expressed his opinion that Ps had reasonable grounds for believing that it was Mr Chun who had instigated the liquidation[103]. 206.Notwithstanding Ps’ case that Mr Chun had remained the ultimate beneficial owner of Chung Shing HK and its subsidiaries, and that the Gift was a sham, Mr Borelli had nevertheless said in circumstances where Mr Chun had put Ds in place as the shareholders of Chung Shing Belize, Ds would be able, in their capacity as shareholders of Chung Shing Belize to provide asset disclosure in respect of Chung Shing Belize and its subsidiaries[104]. 207.However, it would appear to this court that all the evidence pointed towards supporting Ps’ case that Mr Chun remained the ultimate beneficial owner of Chung Shing HK and its subsidiaries. 208.In any event, in my view, without the cooperation of those in control of the Tianjin Company and the Jiangsu Company, the Daughters or Mr Fung would not be able to obtain any of the Required Information or Evidencing Documents, or the business licences or company chops of the PRC companies. Without the business licences or company chops, it would take time to change the legal representative. I note from the companies chart submitted by Ms Sit that Mr Li was appointed as sole director of the Tianjin Company on 23 December 2015 in place of the previous 3 directors but this was registered with AIC only on 8 March 2016. This would seem to indicate that Mr Li would have the business licences and company chops to effect the change. However, so far, these had not been produced and the Receivers’ attempt to change the management of PRC companies had not been successful. 209.Although the Ds are the sole registered shareholders, I am not satisfied that the Daughters were/are in unfettered control of the 8 Companies or that these companies can be said to be their alter ego. 210.In the above circumstances, Ps had not been able to establish beyond reasonable doubt that it was within the Daughters’ “power” to comply with the Disclosure Obligations. Mens Rea 211.It was also Mr Mok’s submission that on the facts of this case, the Daughters suffered from a mistake of law when their solicitors Messrs. Chong & Partners advised them that the Fung Report was in compliance with Paragraph 1. 212.However, Mr Mok accepted that a mistake of law, or a mistake about the legitimacy of action to comply with a court order would not be an excuse for non-compliance, as seen in Kao, Lee & Yip[105]. 213.Mr Mok, however, submitted that the Daughters were also operating under a mistake of fact and circumstances by entrusting the work to a person whom they had reasonably believed was competent and could be trusted to do the work necessary for the compliance with the 17.08.15 Order. Kao, Lee & Yip, Brennan NPJ had said that “... mens rea is negatived if an act or omission is involuntary, or if there is a mistake about the circumstances which make the act or omission a crime or if an element of the crime is a result of the act or omission and the result is accidental”[106]. 215.Further, Brennan NPJ had referred to Adam Phones Ltd v Goldschmidt [1999] 4 All ER 486[107], where a defendant who was required to hand over a source program of computer software and to delete any copies thereof, handed over what he thought was the program required but which was slightly different and placed his copy of the program in the recycle bin but did not overwrite (and thereby delete) it. When proceedings for civil contempt were brought, Jacob J had observed
216.Brennan NPJ had gone on to comment that it may be that the breach in Adam Phones fell within the “unintentional” exemption in the Stancomb principle[108]. 217.Mr Mok submitted that in doing so, Brennan NPJ was clearly applying the defence of mistake of fact to negative mens rea, which is well established in criminal law, and that this was clear from his citation of DPP v Morgan [1976] AC 182[109] and Sweet v Parsley [1970] AC 132[110], both leading criminal cases in this area. He summed up the defence of mistake, and how it would defeat the existence of mens rea as follows:-
218.Ms Sit on the other hand submitted that it was an intentional act on the part of the Daughters to allow Mr Li to remain and that Mr Li had deliberately put Jiangsu Company into liquidation, and she again relied on Hone and Page referred to earlier in this judgment. To add, in that case Slade J concluded that the defendant could reasonably have foreseen the possibility of the breach, namely distribution of yellow cards by his agents or servants, which did in fact take place, and that he had failed to take reasonable steps to prevent it. Thus, Slade J was of the view that he could not claim that his disobedience had been casual, accidental or unintentional and must be deemed to have intended what he could have reasonably foreseen and taken further steps to prevent[113]. 219.In the present case, there was no sufficient evidence that the Daughters had authorised or could reasonably have foreseen the possibility of the Fung Report being non compliant with the 17.08.15 Order. Nor was there sufficient evidence that they could have taken reasonable steps to prevent such non compliance. In fact on the contrary, the evidence showed that Mr Li had agreed to co-operate with Mr Fung. There was no sufficient evidence to contradict what Judy said, that it was only in December 2015 that she realized that Mr Li was not co-operative, and that the Daughters then signed shareholders’ resolutions to remove Mr Li as director. In fact, even after Mr Li was replaced by Mr Fung, Mr Fung had not been able to obtain all the remaining or outstanding Required Information or the Evidencing Documents. There was no sufficient evidence that the Daughters could have foreseen such circumstances. 220.Having considered the above, I am not satisfied that the Daughters’ non compliance with Paragraph 1 and Paragraph 2 of the 17.08.15 Order was anything other than unintentional, or that they had the requisite mens rea, in that the Daughters believed that Mr Fung was to be trusted to deal with the Disclosure Obligations in the 17.08.15 Order properly and competently and they were mistaken. Availability of an alternative 221.It was Mr Mok’s submission that in the present case as there is now the Receivership Order, under which the Receivers could, as an alternative to the Daughters, proceed to obtain any outstanding of the Required Information and Evidencing Documents under the 17.08.15 Order, an order of committal should not be made against the Daughters. 222.This appears to be an issue which should be addressed only when the Daughters are found guilty of contempt and when the court is to consider whether imprisonment should be the appropriate punishment. Nevertheless, I will consider what was submitted by Mr Mok. 223.In Danchevsky v Danchevsky [1975] Fam 17, the Court ordered a house to be sold but the husband would not vacate the house. An order of committal was granted by the family judge. On appeal, Lord Denning held that since the sale could be facilitated by a writ of possession, there was no need for committal. His Lordship held that, among other things, the object was to see that the order of the court was obeyed and that the house was sold for the benefit of both parties, and to achieve this, it was not necessary to send the man to prison. Lord Denning went on to say whenever there was a reasonable alternative available instead of committal to prison, that alternative must be taken, and that in that case there was a reasonable alternative available, which was to enforce the order for possession by a warrant for possession[114]. 224.In G v S (2001) 4 HKCFAR 419, the husband failed to comply with the order to pay the wife monthly payments, and the wife issues a judgment summons for enforcement. The judge held that the husband was in contempt and ordered that he be committed to prison for 6 months suspended on condition he would pay arrears at a fixed monthly sum together with the current monthly payments. His appeal to the Court of Appeal was dismissed and a further attachment of earnings order was imposed. On appeal to the Court of Final Appeal, CFA held, among other things, that committal orders were remedies of the last resort and that the parts of the order dealing with the husband’s committal and suspension of the sentence were unnecessary due to the attachment of income order[115]. 225.Mr Mok had also referred the court to Excel Nobel Development Ltd v Wah Nam Group Ltd [2001] 4 HKC 148 where there was a disclosure order in aid of Mareva was granted to obtain information of a company, and was breached. The 2nd defendant, a director of the company was found guilty of contempt in breaching the disclosure order and was sentenced to 21 days’ imprisonment. The company then underwent liquidation whereby liquidators would be able to obtain the information. It was held by the Court of Appeal that there was a change in circumstances which made it unnecessary for the director to serve a sentence of imprisonment. 226.However, in the above case, it appears the Court of Appeal only set aside the sentence of imprisonment and did not disturb the order holding that the director was liable for the breach of the order by the company[116]. 227.Ms Sit submitted that there was no viable alternative to achieve what was required under the 17.08.15 Order, which remained un-complied with at the trial, notwithstanding the disclosure of 3 lots of documents, in September 2015, January and March 2016. 228.The Receivership Order was over the entire assets and undertakings of Mr Chun and Wellrun, which assets comprised, among other things, Mr Chun’s and Wellrun’s interests in the Schedule 2 Companies. The Schedule 2 Companies now include all 8 Companies. 229.Judy’s evidence was that the Daughters were willing to renounce the Gift. In fact, this was raised by this court in the Reasons, and yet by the time of the trial, nothing had been done about it. No doubt, if the Daughters succeed in renouncing the Gift then the one share in Chung Shing HK held by Wellrun prior to the Gift would revert to Wellrun. 230.Anyway, with or without any renunciation, all Wellrun’s assets and undertakings are also subject to the Receivership Order. After the Receivership Order, Mr Fung had also appointed the Receivers as directors of Chung Shing HK together with himself. 231.The Receivers are independent professionals appointed by the court, unlike Mr Fung who was appointed and engaged by Mrs Chun purportedly for the Daughters. Mrs Chun is in fact one of the defendants in the Main Action and appears to have previously also been under the investigation of SFC[117] and against whom the police has laid a charge of conspiracy to defraud on 8 March 2016[118]. 232.As mentioned earlier, Ms Sit had complained of Mr Fung’s competence and lack of action at the time of the 1st Receivership Application and at that time Ms Sit had in fact argued that Mr Fung was no substitute for independent receivers. 233.In Ms Chi’s 6th affirmation filed in support of Ps’ 2nd Receivership Application, Ms Chi had set out Ps’ reasons for not being able to take comfort in Mr Fung’s supposed seizing of control of then 3 of the Schedule 2 Companies and had set out what the Receivers, if appointed, could do[119]. Ultimately, DHCJ Yee made the Receivership Order, and further refused to grant a stay of the same on subsequent application by Mr Chun and Wellrun, and the Receivership Order was continued until the determination of the discharge and continuation applications or further order of the court. 234.Anyway, as said earlier, the latest position appears that the Tianjin AIC or relevant authority has refused to accept the notices of change of directors, legal representatives and other officers of the Tianjin Company and Tianjin Equity due to the unavailability of the relevant business licences and company chops which should be with Mr Li and/or Ms Chen. Ms Chi pointed out that notwithstanding that Mr Fung’s agreement to assist in the change, he had not done anything to date to retrieve or facilitate the retrieval of the business licences and company chops, and that the Receivers are driven to pursue legal proceedings in the PRC against the two Tianjin companies. 235.The Receivers could proceed to pursue legal proceedings in PRC as they seemed to have already done or at least contemplated in doing so. In my view, they being independently appointed by the court should be in a better position to find out any outstanding Required Information and Evidencing Documents than the Daughter and/or Mr Fung whether by issuing legal proceedings in PRC or otherwise. The Receivership Order is in my view a viable alternative, and in fact an alternative which had been proposed by Ps themselves in June 2015, as seen below. 236.As mentioned earlier, after Ps Summons was issued and prior to Ds’ Summons being taken out, Mr Chun’s own solicitors had sent the 04.06.15 Letter to Ps’ solicitors suggesting that an independent trustee be appointed on behalf of the Daughters. Ps had in fact replied on 10 June 2015 indicating they were prepared to consider agreeing to the appointment of a court-appointed receiver and manager as an independent officer of the court, to hold and exercise all of the rights of the Daughters’ shares in Chung Shing Belize together with power to manage each of Chung Shing Belize and its direct and indirect subsidiaries, subject to certain conditions set out therein[120]. There was no agreement by Mr Chun to Ps’ proposal, and later Chong & Partners came onto the scene acting for the Daughters. Particular Items of Complaint 237.Mr Mok had also criticized the Amended Statement containing roving complaints with some being facts which had nothing to do with the alleged breaches of the 17.08.15 Order. He referred to Chiltern DC v Keane [1985] 1 WLR 619 where it was held that “the person alleged to be in contempt shall know, with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes a contempt of court”[121]. 238.I have earlier found that there was no ambiguity in the 17.08.15 Order. There was no evidence that the Daughters did not know what exactly they were said to have done or omitted to do under the Disclosure Obligations of the 17.08.15 Order. Their case was only that they thought Mr Fung had complied with the 17.08.15 Order. Conclusion 239.It was Ms Sit’s submission that the Daughters’ lack of action indicated that they did not truly intend to comply with the Undertaking and the 17.08.15 Order and that they were playing a “cat and mouse game”. I accept that a “cat and mouse game” was/is being played but I am not satisfied beyond reasonable doubt that the Daughters were/are the active or real players. 240.To conclude, I have found earlier that Ps had not satisfied this court beyond reasonable doubt that the Daughters had failed to comply with the Undertaking intentionally or they had the requisite mens rea in failing to comply with the Undertaking. I have also found that Ps had not satisfied this court beyond reasonable doubt that it was within the Daughters’ power to obtain the Required Information and Evidencing Documents or that the Daughters had the requisite mens rea in failing to comply with the Disclosure Obligations in the 17.08.15 Order. In any event, I have also found that there is a viable alternative. 241.In the circumstances, I find the Daughters not guilty of contempt of the Undertaking or the Disclosure Obligations in the 17.08.15 Order and I dismiss Ps’ application. 242.I will reserve the question of costs, and direct that the parties to fix a one day hearing in consultation with Counsel’s diaries for argument on costs.
Ms Eva Sit and Mr Martin Ho, instructed by Hogan Lovells, for the 1st and 2nd plaintiffs Mr Johnny Mok SC and Mr Alexander Tang, instructed by Chong & Partners LLP, for the 1st and 2nd defendants [1] See para 2, B:6; Cosmo Borelli and Chi Lai Man Jocelyn were appointed as provisional liquidators of China Metal on 26 July 2013 and provisional liquidators of Central Steel on 8 August 2013. They were later appointed as joint and several liquidators of China Metal on 14 May 2015 and of China Steel on 10 July 2015. Both companies are now in compulsory liquidation. [2] See para 11, B:65 [3] See para 12, B:65 [4] C2:99-101 [5] Para 114, B:89-90 [6] See para 91, B:83 [7] See para 97, B:84 [8] A:34.1-34.38 [9] A:42-50 [10] C2:116-119 [11] A:62-75 [12] C2:121-139 [13] C2:129-131 [14] Para 5, B:49.28 [15] At para 6, pg 840-841 [16] See Kao, Lee & Yip v Koo Hoi Yan (2009) 12 HKCFAR 830, §42 [17] See Kao, Lee & Yip§§6 & 30 [18] See Concorde Construction Co Ltd v Colgan Co Ltd (No 2) [1984] HKC 253 [19] See Kao, Lee & Yip§21 [20] See: Arlidge, Eady & Smith on Contempt (4th edn), §§12-186-12-188 [21] See Kao, Lee & Yip §§23 & 26 [22] See eg Arlidge, Eady & Smith §12-83 [23] At paras 46 & 53 [24] see Kao, Lee & Yip §26 [25] see Arlidge, Eady & Smith §12-102, Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456, 481D-E (per Lord Nolan) [26] see Hone v Page [1980] FSR 500, 507 (per Slade J) [27] see Hone v Page 509 [28]see Kao, Lee & Yip §§26, 46, 53, 63 [29] Chiltern DC v Keane[1985] 1 WLR 619 at 622B; [30] see Kao, Lee & Yipat §21. [31] Sino Wood Investment Ltd v Wong Kam Yin(2005) 8 HKCFAR 715 at §20-23. [32] Kao, Lee & Yipat §53. [33] ibid §§45-46 [34] Concorde Construction Co Ltd v Colgan Co Ltd[1984] HKC 253; Kao, Lee & Yip at §48. [35] CYM v YML[2013] 1 HKLRD 701 (CA). [36] Re Bramblevale Ltd[1970] Ch 128. [37] Danchevsky v Danchevsky[1975] Fam 17; G v S (2001) 4 HKCFAR 419 at 427F-G. [38] Bruno Arboit v Koo Siu Ying,HCMP 2749/2012 (8.3.16) at §323. [39] A:34.40 [40] See para 4-005, pg 128, Gee on Commercial Injunctions, 6th Ed [41] At para 23, pg 847 [42] Para 40, at A:30 [43] See para 13, B:31; para 14, B:31-32; also C2:32-70 [44] C2:181-187 [45] C2:35, C2:47 [46] C2:32 [47] C2:40, C2:53 [48] See para 6, B:22 [49] C1:134-136 [50] C2:39, C2:51 [51] C2:57-70 [52] Para 6 sub-para 2, C2:64 [53] C2:65 [54] C2:43, C2:56 [55] C2:37, C2:49 [56] C2:37,C2:49 [57] See para 18(c), B:161 [58] See para 15, B:206 [59] At para 9, B: 205 [60] C1:41, C1:47 [61] At para 7c, B:49.13 [62] D:109.3-109.4 [63] At pg 1766, Hong Kong Civil Procedure, 2016 ; The Hong Kong White Book, Service 1 [64] See Headnote, at pg 501 [65] Item 5, C2:182 [66] C1:134-136 [67] See para 21, A:74 [68] B:2, para 4 [69] Para 12, B:49.15 [70] C1:2-32 [71] C1:98-104 [72] C1:117 [73] C1:179-262 [74] C3:61 [75] [A/4/36] [76] [A/6/52] [77] At para 53 [78] At paras 54, 55 [79] See para 3 [80] At para 5, pg 3, HCMP 459/2015, unrep, 21.04.15 [81] See D-E, at pg 848, Kao Lee & Yip [82] See para 4, A:43 [83] See para 26, A:48 [84] At para 14, [85] At para 34 [86] See para 15 [87] See para 25, A:48 [88] At pgs 31 – 32, paras 138-143 [89] See holding (1), Headnote at pg 182 [90] At g-h, at pg 440 [91] At d-e, at pg 443 [92] At para 28, A:49 [93] Clause 4 of the Deed of Gift, C2:100 [94] Clause 5, C2:100 [95] See para 10(1), B:180 [96] At para 14, B:181 [97] At para 17, B:182 [98] At para 34, B:187 [99] At para 22, B:184 [100] At para 18, B:66 [101]para 21, at (d), B:108 [102]At para 30, B:111 [103] At para 8 Keith Judgment, A:67 [104] At para 122, B:92 [105] At para 63 [106] At para 41, pg 854 [107] At para 48, pg 857 [108] At para 48, pg 857 [109] at para 41, at pg 854 [110] at para 40, at pg 853 [111] At 16-9 [112] At 389-390 [113] At pg 509 [114] At H, pg 21, A-B, pg 22 [115] See Holding (2), pg 420 [116] See F-G, pg 161; D-E, pg 162 [117] At para 7, A:79 [118] Para 41, B:174 [119] See para 45, B:137 [120] See D: 109.7-109.8 [121] At B, pg 622 | ||||||||||||||||||||||||||||
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