Law Lai Lan v. Tamang Prem Chandr
Read the full judgment text of HCMP 2402/2017 on BabelCite. This High Court CFI judgment was delivered on 5 March 2018.
1. By an Originating Summons dated 27 October 2017, the applicant (the “Applicant”) sought an order for committal against the respondent (the “Respondent”). The Applicant is the plaintiff in High Court Action No 2310 of 2016 (“HCA 2310/2016”). The Respondent, a Nepalese, was at the material time the sole director and shareholder of the defendant Himali Engineering Construction Limited (“Himali”).
Cited by 13 cases · Cites 3 cases
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HCMP 2402/2017 [2018] HKCFI 536 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2402 OF 2017 ________________________
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__________________ J U D G M E N T __________________ INTRODUCTION Introduction 1.By an Originating Summons dated 27 October 2017, the applicant (the “Applicant”) sought an order for committal against the respondent (the “Respondent”). The Applicant is the plaintiff in High Court Action No 2310 of 2016 (“HCA 2310/2016”). The Respondent, a Nepalese, was at the material time the sole director and shareholder of the defendant Himali Engineering Construction Limited (“Himali”). 2.On 5 September 2017, upon the ex parte application of the Applicant, I granted an injunction order against Himali restraining dissipation of assets to the amount of $2 million (the “Order”). On 15 September 2017, the Order was continued with the amount of the injunction increased to $3.5 million. 3.The Order required Himali, inter alia, to disclose to the Applicant at once all its assets of an individual value of $10,000 or more in Hong Kong, whether in its own name or not and whether solely or jointly owned, stating the value, location and details of all such assets. The Order also required the information to be confirmed in an affidavit by its director which must be served on the Applicant’s solicitors by 4 pm on the fifth working day after it was served on Himali. The Order was served on Himali’s then solicitors on 6 September 2017 and the deadline for compliance expired on 13 September 2017. The Order was not complied with. 4.On 24 October 2017, I granted leave to the Applicant to commence committal proceedings against the Respondent. The application was set down for hearing on 23 November 2017. 5.At the hearing on 23 November 2017, the Respondent did not appear. Upon the Applicant’s proof of service and upon reading the affirmations filed by the Applicant, I was satisfied that the Respondent was guilty of contempt of court. I made an Order for Committal against him and issued a warrant for his arrest with bail fixed in the sum of $300,000. The hearing and order made on 30 November 2017 6.The Respondent was arrested and brought before me on 30 November 2017. He was explained the nature of these proceedings and the breaches of the Order alleged of him. He admitted he had not complied with the Order and accused the Applicant’s solicitors, Mr How, of harassing him. I gave him further time to give disclosure so as to purge the contempt. He said he could comply with the Order. Then I stood down the hearing for him to discuss with Mr How about the disclosure in greater details required of him. 7.During the discussion, the Respondent and Mr How reached agreement to make disclosure by filing an affirmation by 4 pm on 4 December 2017 and to pay the Applicant’s costs in the sum of $200,000 on 4 December 2017 and a further sum of $100,000 on the following day. 8.When the hearing resumed, Mr How reported the agreement. The Respondent confirmed that he understood what he had agreed and would be able to comply; but asked for more time to pay the second instalment of $100,000. At the court’s suggestion, the parties agreed to defer that payment to 7 December 2017. The Respondent undertook to perform the agreement. Hence, I adjourned the hearing to 8 December 2017 for sentence. The undertaking was made the terms of an order of this court. I committed the Respondent to prison but allowed him bail pending sentence in the sum of $20,000. On 4 December 2017, the Respondent applied by summons for leave to appeal that order (see paragraph 29). 9.The Respondent did not honour his obligation to give disclosure on 4 December 2017 or to pay the first instalment of costs. He applied for legal aid. On 5 December 2017, I gave a direction that notwithstanding his application for legal aid, the proceedings shall not be stayed. The hearing on 8 December 2017 10.At the hearing on 8 December 2017, the Respondent gave no disclosure but a letter relating to his legal aid application. He admitted that he had not complied with his undertaking. He put the blameon the court interpreter for not giving him a list of what he was required todisclose and taking that list away when she left. That “list” as I understand was the interpreter’s own notes to assist her when providing interpreting service. The Respondent said he had tried his best but he had no money. He then talked about irrelevant matters such as the problems with his employees and financial crisis. I then gave him a further chance to purge his contempt. I requested Mr How to explain to the Respondent after the court session with the assistance of the court interpreter what he had to disclosure and then to disclose whatever information he had and his reasons for his failure to disclose earlier. I remanded him in prison until he gives the disclosure. I advised him of his right to apply for legal aid and instructed the bailiff to provide him with such assistance as necessary. I also advised him of his right to appeal but reminded him that my order stands until set aside by the Court of Appeal. 11.In the meantime, there were some attempts by the Respondent’s secretary, Ms Lau, to give disclosure to Mr How. She produced her draft affirmation, copies of invoices, cheques from Himali’s main contractors and some bank statements. But none of the documents show the assets of Himali, either currently or as at 6 September 2017 when the Order was made. The documents suggested that there were payments and cheques made by Himali’s contractors, namely LGJV, Alstom and Intrafor, but such payments were not reflected in the bank statements produced. Obviously, disclosure was partial and incomplete. The hearing on 12 December 2017 12.The Respondent was brought up for hearing on 12 December 2017. He produced an affirmation. Still he did not disclose the invoices Himali issued to its contractors and other book debts which were assets of Himali and bank statements showing payments received. He only disclosed that he has a lot of expenses in the region of $180,000 per month. He stated, among other things, that Himali paid him and another director $50,000 and $30,000 respectively; and rent of $20,000 per month. The information is obviously incorrect as the Respondent is the sole director on record of Himali and Himali’s registered office is at the address of its secretarial service provider and Himali has vacated this office in early September 2017 without disclosing its current business address. He sought validation order in the sum of $100,000 for his household expenses and $500,000 for funding litigation. It is plain that he has assets but refused to disclose. If he does not have assets it would be pointless to ask for such validation order. It is worth noting that the Respondent has good working knowledge of company law. 13.It was obvious that disclosure was incomplete. In particular, the Respondent was trying to conceal what happened in relation to a cheque in the sum of $1,871,474.71 issued by LGJV to Himali which was not shown in any of the disclosed document. In answer to the court’s question, he admitted it had been deposited into the account of Nanyang Commercial Bank. He was asked to disclose the bank statements, specifically those of Nangyang Commercial Bank, and other supporting documents. 14.The Respondent said that he could not obtain the bank statements while in custody. Mr How agreed to assist him with the documentation so that he could authorise someone to approach the banks for the statements. I adjourned the hearing to 15 December 2017 to enablehim to obtain the statements. He was remanded in custody and reminded of his right to apply for legal aid and to appeal. Changes in Himali’s directors while the Respondent was in custody 15.In the meantime, the Applicant discovered the following changes in directorship of Himali:
The hearing on 15 December 2017 16.At the hearing on 15 December 2017, the Respondent’s secretary, Ms Lau, and his family member, including his nephew Mr Topraj Tamang also attended. Ms Lau and Mr Tamang made submissions. They explained the difficulties of the Respondent in providing disclosure while in custody and complained about the conduct of Mr How. Ms Lau said that the Respondent’s affairs were in a mess and it would be difficult for her to sort it out for him. 17.On the night before the hearing, Ms Lau disclosed some documents, including a summary of invoices to main contractors and settlement record (the “summary”); a bundle of invoices issued by Himali to LGJV, Alstom and Intrafor; bank statements issued by Standard Chartered Bank for the period between 3 January and 31 July 2017, whichfell outside the period required. The information in the summary does not match that obtained by the Applicant from LGJV. But, putting that aside, the disclosure was not complete. In particular, the bank statements from Nanyang Commercial Bank were not produced. In answer to the court’s question, the Respondent confirmed that Himali only had three bank accounts with Nangyang Commercial Bank, Standard Chartered Bank and Citibank. He was told to disclose the bank statements of these three banks as from August 2017. I granted him bail in the sum of $140,000 and other conditions after the Respondent and his family confirmed that it was affordable. I adjourned the hearing to 5 January 2018 for sentence. The hearing on 5 January 2018 18.At the hearing on 5 January 2018, the bank statements from the three banks were not disclosed and nothing material was disclosed. The Respondent explained he had ceased to be a director of Himali and the current director had disappeared. The Respondent is the sole shareholderof Himali. As outlined in paragraph 15 above, the changes in directorship were all orchestrated by him. He was advised to convene a general meeting by himself to appoint a new director to obtain the bank statements. I also requested Mr How to assist by preparing the documentation for that purpose for the Respondent. Mr How also prepared a draft affirmation for the Respondent to fill in the information to be disclosed. 19.I remanded the Respondent in custody with liberty to restore the hearing when he has obtained Himali’s bank statements with the three banks since 5 September 2017 and provided the information in the draft affirmation. I made clear indication to the Respondent that it was essential for him to disclose the above bank statements and if he would disclose them, I may consider it as substantial compliance of my disclosure order and sentence him to a term which would enable his immediate release. If these statements are disclosed, many of the blanks in the draft affirmation prepared by Mr How could be filled in. 20.The Respondent had applied for leave to appeal my order made on 30 November 2017. In the meantime, his wife wrote to my clerk informing me that the Respondent had complied with my order made on 5 January 2018. I therefore restored the hearing on 13 February 2018. I shall deal with the leave application and sentencing under a separate section and return to the procedural background hereunder. The hearing on 13 February 2018 21.Apart from the Respondent’s application for leave to appeal, the other focal point of the hearing on 13 February 2018 was whether the Respondent had disclosed the statements from the three banks. At the hearing, Mr How reported that the Respondent only made some selective disclosure, such as his cash balance in Nepal but had not disclosed the bank statements. He reported that as per my request he prepared the necessary resolution for the Respondent to sign appointing Limbu as director of Himali so that Limbu could apply to the banks for the bank statements. He took the draft resolution to Lai Chi Kok Reception Centre for the Respondent to sign. The Respondent signed the resolution and gave it to Mr How. As he was doing so, the Respondent told Mr How that he did all that to assist Mr How. Then, looking at Mr How in the eyes, he said he was going to divorce his wife and once he has done that he could do anything. Mr How felt being intimidated 22.The Respondent told Mr How to ask his nephew Tamang to accept appointment as director. But, when Mr How approached the nephew, the nephew refused. The Respondent then told Mr How to approach Limbu, an ex-director who was the person managing Himali previously. However, when Mr How later contacted Limbu, Limbu refused to be appointed because the Respondent had accused him of theft. 23.In the meantime, Mr How discovered from the document index search of the Companies Registry that between 13 September 2017 and 6 February 2018 there were five changes in Himali’s directors. In addition to the three changes mentioned in paragraph 15 above, he discovered on the very hearing that morning that Norbu who had been appointed as director on 15 January resigned on 6 February 2018. This indicated that while he was in custody, the Respondent was able to manipulate appointments and resignations of directors of Himali. His request for the court’s and Mr How’s assistance to appoint Limbu, an ex-director whom he accused of theft was just a show. 24.The Respondent explained that he could not obtain the statements through Limbu because Limbu had gone away and Citibank refused to provide the statements because of the injunction. Then Norbu was appointed as director and went to the bank to obtain the statements. Norbu was told that the bank would not provide the statements because of the injunction. The Respondent was asked to produce documentary evidence of the bank’s refusal to provide statements, but he could not. Of course, none of those assertions could be true because the injunction does not have the effect of restraining the banks from providing bank statements to its clients in the ordinary course of business. His inability to provide documentary proof of the bank’s refusal confirmed that his assertions were just convenient excuses. What the Respondent said simply confirmed that while he was causing Mr How to run to and from his office and Lai Chi Kok Reception Centre between 5 January and 6 February 2018 with his signed resolution, the Respondent was manipulating the resignation and appointment of Limbu and Norbu. 25.The Respondent then requested the court to discharge the injunction and to release him from custody so that he could approach the banks for the bank statements. He offered to produce his and his family members’ passports as security for his release on bail. Such request was full of ingenuity. While he was in custody, he had the means, proper means through Mr How or some other means unknown to this court, to appoint directors of Himali to obtain the bank statements. He did not cause the director to do so. The assertion that the banks would not provide the bank statements is just a convenient excuse which is incapable of belief. Besides, Himali must have been provided the statements as and when they were issued and had them in its possession. What is lacking is the Respondent’s will to disclose them. My surmise is that once the injunction is discharged, the Respondent and the funds in the bank accounts will be out of Hong Kong for good. 26.As for the Respondent’s wife’s assertion that the Respondent had made the discovery required, her grounds for that assertion as gleaned from her letter is that Deputy High Court Judge Douglas Lam SC had dismissed the Applicant’s appeal against the master’s order dismissing the Applicant’s application for summary judgment in another action, HCA 3194/2016. She considered that dismissal was premised on the fact that the disclosure of Himali’s assets by way of the Respondent’s affirmation in that action must have been considered by the court as adequate and this court should take a similar view in these proceedings. 27.In HCA 3194/2016, the Applicant obtained a default judgment against the Respondent. Then the Respondent took out a summons to set aside the default judgment. Upon the Respondent’s absence at the call-over hearing, the Applicant applied to have the Respondent’s summons dismissed. The master refused. Then the Applicant appealed before Deputy High Court Judge Douglas Lam SC. The appeal was launched on the ground that the Respondent was in contumelious breach of the disclosure order ancillary to the worldwide injunction order granted by Zervos J on 6 October 2017. At the hearing on 24 January 2018, the learned deputy judge afforded the Respondent another opportunity to make disclosure and adjourned the appeal to 31 January 2018. At the adjourned hearing, the Applicant was granted leave to withdraw the appeal and there was no direct evidence before the court showing that the Respondent had not made full disclosure of his worldwide assets. There was no evidence of what had been disclosed. It appears that the focal point of disclosure in that case was about worldwide assets, whereas the disclosure required in the present case is, among other things, bank statements of three bank accounts for specified period and there is no dispute that no disclosure has been made. Any reliance on the appeal in HCA 3194/2016 is misconceived. 28.Accordingly, I was satisfied that the Respondent had not given discovery and remand him to custody for sentence on 5 March 2018, with liberty for the Respondent to restore the hearing earlier upon his compliance with the disclosure order. He was reminded to cause a search of his home and office for the bank statements in addition to relying on applying to the banks for copies. LEAVE TO APPEAL 29.By his leave application, the Respondent sought to appeal my order made on 30 November 2017, committing the Respondent to prison for his contempt pending sentence on 8 December 2017. That order was made pursuant to undertakings given by the Respondent. The Respondent was committed for contempt by my order made on 23 November 2017 in his absence. He was arrested and brought before me on 30 November 2017 in which he admitted his failure to comply with my injunction order dated 5 September 2017 and undertook to comply. He did not seek to set aside the committal order and he never appealed against the committal order. He only asked for time to comply so as to purge the contempt. That was what was ordered by my order dated 30 November 2017 by remanding him in prison on bail terms which he could afford. He was in fact released on bail pending sentence to enable him to purge the contempt. Though my order for which leave to appeal is being sought was not a consent order, it was made entirely on his request and on the terms he offered which he confirmed were affordable to him. As the facts revealed, he took no steps to comply. All that he did was to apply for legal aid hoping that the proceedings would be stayed and he did so almost as soon as he was released. 30.In his application for leave, he stated the following:
31.His grounds for appeal as he stated in court are: (1) that he did not have enough time to enable him to comply with the order: (2) he had no lawyer to assist or represent him; (3) his friends could not help him; and (4) he had no idea about the whole matter. 32.The focal point of his application is against “cost order”. However, no costs order had been made at that hearing. Thus, the “cost order” the Respondent was seeking to appeal was the cost which he undertook to pay the Applicant in relation to the proceedings in HCA 2310/2016 up to that stage. The amount was reached by agreement between him and Mr How on behalf of the Applicant for which this court was in no way involved or had any input. What he is seeking to appeal is to appeal his own undertaking. There is no rule under Order 59 of the Rules of the High Court which provides that a litigant may appeal against his own undertaking. If he wishes to be relieved of his undertaking, the appropriate course for him to take is to apply to discharge his undertaking or to set it aside as if setting aside a contract. His own undertaking as such is not appealable. Besides, I have made no costs order against which he may appeal. 33.Furthermore, none of his grounds of appeal constitutes a good ground for appeal. The Respondent has failed to demonstrate how it could. These grounds are nevertheless dealt with below. 34.So far as his complaint for insufficient time to comply is concerned, the time was determined upon his agreement. Besides, what he was asked to disclose was seemingly not impossible to disclose within the time limit. He had offered no reasonable explanation why he could not produce the bank statements which must have been in Himali’s possession. Actually, he had been given sufficient time during the last three months to obtain copies from the banks, but he did not. What happened during the last three months demonstrated that he did not intend to produce them. 35.His complaint of lack of legal representation is not a valid ground. He had all the patience of the court to assist him on legal matters and procedure. He advanced no argument as to why lack of legal representation was a ground for appeal or caused him prejudice. 36.That his friends could not help him is obviously not a ground for appeal. 37.That he had no idea about the matter is obviously untrue. He was a company director conducting a substantial business of providing Nepalese labour in Hong Kong. He was able to communicate in English. As I have indicated, he has good working knowledge of company law and knew about applying for validation order. He had been duly explained by this court, with the assistance of Nepalese interpreter, about the proceedings about what was alleged against him and what he was required to do. I have requested the interpreter to assist him and to explain the documents to him after court adjourned. 38.As for his last head of appeal, it is not a cost order. I assume he meant the order for committal pending sentence on bail terms. He had offered no reasonable grounds for appeal. 39.Accordingly, this appeal is dismissed with costs to the Applicant, summarily assessed in the sum of $10,000. SENTENCE Principles on sentencing 40.The starting point for consideration of sentencing this type of offence is that the court’s orders are made to be obeyed. Civil contempt of court order is a serious matter. The principles applicable to sentencing this type of offences have been usefully summarized by Au-Yeung J in Bruno Arboit as Sole Liquidator of Highfit Development Company Limited and Koo Siu Ying and Another[1] as follows:
41.Of all the factors listed above, the two most important ones are whether the contemnor has purged the contempt and whether the plaintiff has suffered any prejudice which is irremediable. If the contempt has been purged, the coercive function of the sentence has been spent. What remains to be addressed is punishment for the disobedience. Purging the contempt may even affect the sentencing option. While each sentence depends on its facts and circumstances, references may still be drawn from sentences passed the court in similar cases. If the contempt has not been purged and was the result of wilful and contumelious conduct, the starting point is term of immediate imprisonment. The term depends on the prejudice suffered by the applicant as a direct result of the breach of the order and whether such prejudice is irremediable. In theory, the court has jurisdiction to impose an unspecified term of imprisonment until the contemnor purges the contempt. Such a sentence is a very draconian one and would only be imposed for the most recalcitrant contemnor and in the worst type of cases where unless the order is complied with the applicant would suffer or continue to suffer more irremediable and serious injury or damage. Background 42.The position remained the same as before. The statements of the three bank accounts were not disclosure. The Respondent repeated that the new director, Norbu could not obtain the statements because the banks refused to provide them due to the injunction. No documentary proof in support of that explanation was provided. He attempted to explain the appointment and resignation of Himali’s directors during January and February 2018 as steps which happened to have proceeded in parallel with Mr How’s effort to arrange for Limbu’s appointment. He repeated that the banks refused to provide the statements because of the injunction and repeated his request to have the injunction discharged and him released from custody so that he could go to the banks to obtain the statements. 43.The Respondent’s explanation about the appointment and resignation of directors during January and February 2018 is, at best, half-hearted. The fact remains that he had other means to bring about such appointments and resignations while in custody and his request for assistance from Mr How was just a show. 44.He also made a fresh allegation. He alleged that his wife had brought along the company chop to give to Mr How so that Mr How could affix it on a resolution to appoint himself as director to obtain the bank statements. Mr How’s response was that he was not aware of the fact that the Respondent’s wife had the chop with her in court. But in any event, in view of the fact that the Respondent had other means to cause appointments and resignations, he saw no need to assist and did not wish to involved in acts which might be mistakenly associated with such questionable conduct. Furthermore, he felt being intimidated by what the Respondent had told him in Lai Chi Kok Reception Centre. Sentence 45.I invited the Respondent to address me on mitigation. There is nothing remarkable about his personal circumstances which has mitigation value. He is a middle aged Nepalese, married with children. He used to operate a substantial business supplying Nepalese labour to Hong Kong building industry. The turnover of the company was in the tune of tens of millions of dollars. He said his wife is now seeking comprehensive social security assistance and he is now suffering from illnesses which need to be attended to. His family will be taken care of by the Social Welfare Department and his health by the Correctional Services Department. Besides, he has land and other resources in Nepal. 46.From the background set out above, this is an obvious case of willful and contumelious refusal to comply with a court order. He was given much time to comply. He was given assistance to comply. This court even went that far as to accept production of statements from three bank accounts as substantial compliance to merit an immediate release and to assist him in attempting to reach that goal. Accepting in good faith his difficulties as a foreigner who is not conversant in Chinese and English (his English is probably sufficient otherwise he could not have conducted such a substantial business in Hong Kong) and in custody, the court requested his opponent’s solicitor to render him assistance at no costs to his client and to the Respondent to arrange the necessary documentation to enable him to appoint director to obtain the bank statements. As the events turned out, he actually had means to make such appointments while in prison custody. He was shamelessly wasting the court’s and the opponent’s time and costs. He abused the court’s indulgence, the generosity of his opponent and the kindness of Mr How. Worst of all, all that he said about the difficulties in obtaining the statements were false pretends. The truth is he never intended to disclose and did not have the will to disclose. He was determined to spend his time in prison for as long as it takes to protect his secret by putting up false excuses. I consider all these are aggravating factors. 47.The only truly mitigating factor is his admission of non-compliance with the order at the hearing on 30 November 2017. Of course, the facts were such that he could not but to admit. 48.Mr How asks for an unspecified term of imprisonment. Recalcitrant as the Respondent is, this is not the worst type of case that calls for such a draconian measure. The applicant’s claim in the main action from which this contempt arose is about $3.5 million. It is not a proprietary claim and the applicant is not entitled to tracing. There is nothing to suggest that the applicant would suffer additional damage if the contempt is not purged. Some disclosure has, somehow, been made and bank accounts identified, from which some recourse could be made. A fixed term imprisonment with liberty to apply for a review upon the contemnor’s purging the contempt is appropriate. 49.The contempt, as I have found, was willful and contumelious. The Respondent’s conduct was recalcitrant. I consider a starting point of twelve months’ imprisonment appropriate. The Respondent’s admission deserves some mitigation, but that is more than wiped off by the aggravating factor I mentioned above. Accordingly, I pass a sentence of twelve months’ imprisonment which shall take into account the time he was remanded in custody pending sentence. This sentence is to be served consecutively to the sentence of 28 days’ imprisonment for common assault which he is currently serving. I also order costs against the Respondent on indemnity basis.
Mr C F How, of How & Co, for the Applicant The Respondent acted in person |
Cases cited in this judgment