Hyundai Merchant Marine (Hong Kong) Ltd v. Ma Chun Kit

HCMP 1115/2017

[2018] HKCFI 328

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1115 OF 2017

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D E C I S I O N

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1.By a judgment dated 1 February 2018 (Judgment), Ma[1] is found to have breached the Restriction on Disposal of Assets imposed in a Mareva Injunction Order (Order) granted against him on 10 March 2016[2]. He is therefore in contempt of court.

2.The breaches of the Order concern 6 categories of payments made out of Ma’s bank accounts (May Accounts).  The money in the May Accounts came from 2 sources, namely, (a) a total sum of about HK$2.99 million which represented the liquidation of Insurance Policies and (b) the aggregate of 26 deposits in the sum of HK$916,950.

3.In respect of the HK$916,950, this court has found that it was part of Ma’s assets (see para 67 of the Judgment).  However, there is no clear evidence as to where the money came from.  It appears from the bank statements that many of the 26 deposits were made in cash, but there were also a number of telegraphic transfers in relatively large sums.  Ma has not been found to have breached his disclosure obligations under the Order.  Therefore, this aspect of the case is irrelevant for sentencing purpose. 

4.In respect of the breaches of the Order arising from exceeding the momentary allowance for legal expenses under the terms of Order, this court took the view that any mistake over the understanding of the Order was likely to have been made under legal advice, and that it might be unduly harsh to penalise Ma for such breaches (Judgment, paras 40 to 43).  This remains the view of the court, and there is no contrary suggestion by Hyundai Marine. In the premises, no penalty is imposed on Ma for having exceeded the allowance for legal expenses. 

5.The remaining breaches covered a period of no less than 4 months judging by the payment out from the May Accounts[3], and numerous acts of disposal of assets were involved.  The 5 categories of payments add up to just over HK$2.3 million. 

6.Apart from item 9 (see Annex I of the Judgment), the payments were used to maintain a lavish lifestyle enjoyed by Ma.  It must be said that making a purchase of HK$75,000 worth of Yen for his “close friends” for their visit to Japan was no less an act of extravagance. 

7.Ma was working for Hyundai Marine from 1992 to 2016.  At the time when his employment was terminated, he had a modest monthly salary.  There is no suggestion that he comes from a very rich family. To the contrary, the fact that he had a modest job for some 24 years suggests that he is not from such a family.  It is therefore very difficult to understand how Ma got accustomed to a high standard of living as he alleged.

8.The allegation in Ma 5^th that he was able to fund his high standard of living with his very successful gambling habit is unsupported by any independent evidence.  Evidence like his travel record to Macau and bank deposit slips for his winnings is not difficult to procure.  Further, Ma has not been able to purge his contempt by replacing the disposed assets.  Viewed in light also of the lack of credibility in Ma’s evidence on the Reimbursement Arrangement, the court is unable to accept this allegation. 

9.By reason of Hyundai Marine’s complaint made to his solicitors, Ma must have been specifically alerted to the need to disclose his insurance policies (see Judgement, para 19). 

10.In these circumstances, Hyundai Marine may justifiably think that these breaches of the Order are particularly egregious.

11.For the applicable legal principles, I bear in mind those set out in Secretary for Justice v Yuen Oi Yee Lisa, HCMP 2390/2008, 27 October 2010, §§9, 10 and 12. 

12.Mr Wong, appearing for Hyundai Marine with Ms Ng, has referred this court to the authority of AO Smith Holdings (Barbados) SRL v Zhang Dacheng, HCMP 1132/2011, 1 June 2012, §§58 to 62, where the court agreed with the English Court of Appeal that deliberate and substantial breach of a Mareva injunction should be met with an immediate custodial sentence measured in months, unless the contempt has been purged and the assets recovered.

13.This court has also been referred to a number of similar or comparable cases where immediate custodial sentences ranging from 3 to 6 months were imposed: Banca Popolare Di Vicenza Soc Coop v Alutech (Far East) Co Ltd, HCA 1973/2007, 11 September 2008, §§9-10 (6 months); A O Smith Holdings, §70 (3 months); GE Transportation (Shenyang) Co Ltd v Lu Jinxiang, HCMP 1792/2013, 22 January 2014, §§55-56 (3 months); Suzanne Ruth Henderson v Scott Henderson, HCMP 2016/2014, 14 April 2016, §23 (3 months). 

14.On the other hand, Mr Mughal, appearing for Ma with Ms Ma, has referred this court to the following authorities :

(1) In Birmingham City Council v Flatt [2008] HLR 5, p.55, Tuckey LJ held (p.59) that in contempt of court the court has an absolute discretion to suspend a committal order.  It was held In re G (A Child) [2003] 1 WLR 2051, CA, at 2058E, that a committal order, even suspended, is a last resort usually reserved for serious, intentional and repeated contempt;

(2) The case of Danchevsky v Danchevsky [1975] Fam 17, CA held (p.22A) that whenever there is a reasonable alternative available instead of committal to prison, that alternative should be taken;

(3) It was held in CMA CGM v Ng Chip Choi Maurice, HCMP 2988/2014, 12 March 2015, §24, that any custodial sentence imposed on a contemnor should be as short as possible in light of the circumstances of the case.  If a fine would be an appropriate punishment, it is wrong to impose a custodial sentence because the contemnor is unable to pay the fine.

15.There is little which can be said in mitigation for Ma.  The breaches of the Order cannot be regarded as anything but serious and deliberate infringements which took place over a long period of time. 

16.There is no good or acceptable explanation for the infringements.  Whilst Ma had made certain voluntary disclosure of his bank accounts and an insurance policy in his 5^th and 6^th affirmations, it is something which he should do in the face of the Order.

17.The only substantive matter in Ma’s favour is his apology.  On the other hand, it is of no comfort to Hyundai Marine and does not mitigate the effect of the breaches.

18.This court was informed that Ma is 44 years old.  He has a son aged 6 years and is of clear criminal record.  He now works in a logistics company on an ad hoc basis earning about HK$20,000 per month. 

19.Mr Mughal has urged upon this court to pass a suspended sentence on Ma.  In his skeleton submissions lodged with the court this afternoon, a number of fresh points have been made in favour of Ma.

20.Firstly, it is said that Ma’s landed properties and the associated car parking spaces have appreciated in value which well exceeded the HK$2.3 million.  I am unable to accept this as a mitigating factor as a matter of principle.  If this can be so accepted, it may follow that if the properties had depreciated in value it would become an aggravating factor.

21.Further, Hyundai Marine has a tracing claim against Ma for the money which he had taking from it.  If the properties were acquired with Hyundai Marine’s money, any appreciation must belong to it. Furthermore, as pointed out by Mr Wong, the assets disclosed by Ma are well short of the money allegedly taken from his ex-employer.  The appreciation is therefore of no real impact. 

22.Secondly, Mr Mughal submits that Ma has not been making full use of his living allowance under the Order since the 7 September 2016.  This court was informed that Ma has been living on his income of HK$20,000 per month.  I cannot accept this as a valid mitigating factor because Ma will have to satisfy the court that he has fully disclosed his assets before he can be permitted to draw on his disclosed assets (see Judgment, para 21).

23.In respect of the fact that the newly disclosed insurance policy (see Ma’s 6^th affirmation) will bring a further sum of HK$428,792.62 under the restraint of the Order, I cannot see this as a mitigation factor.  Mr Mughal accepts that this piece of asset is in any case covered by the Order. 

24.Finally, whilst the court should not for the present purpose penalise Ma for any breach of the Order save in respect of the 5 items, I am not prepared to accept the submission that Ma has otherwise duly complied with the terms and conditions of the Order.  As indication in the Judgment and above, there are real concerns shown in the evidence that Ma has salted away some of the money taken from Hyundai Marine.

25.I regret to say that there is little option open to the court.  Given the seriousness of the contempt and in light of the relevant authorities, it would not be appropriate to deal with Ma in the manner suggested by Mr Mughal. 

26.Taking the most lenient view for Ma’s benefit, I order that he be committed to prison for 4 months.  He must therefore surrender himself to the bailiffs who are in court as soon as this hearing is concluded.

27.There is no dispute that costs should follow the event and that such costs are normally awarded on indemnity basis.  I do not believe that the fact that Hyundai Marine did not pursue its case against Ma on failing to comply with the assets disclosure obligations under the Order constitutes sufficient reason to depart from such usual order. 

28.The costs of and occasioned by this application be paid by Ma and taxed on indemnity basis if not agreed. 

Mr Jonathan Wong and Ms Jacquelyn Ng, instructed by Reed Smith Richards Butler, for the Applicant

Mr Hanif Mohamed Mughal and Ms Van Ma, instructed by Terry Yeung & Lai, for the Respondent