COURT: I have found the defendant guilty of contempt of court. The basis of that finding has been set out in my Judgment handed down on 18 March 2019. In paragraph 2 of the said Judgment, I have set out the plaintiff’s case which I reproduce as follows:
“(1) On 8 May 2015, the plaintiff commenced HCA 1012/2015 (the “Action”) against Mathnasium Hong Kong Limited (“Mathnasium HK”). The claim related to a Regional Franchise Agreement dated 20 November 2009 (“RFA”). Under the RFA and the plaintiff’s claim in the action, the scope or performance of some of Mathnasium HK’s obligations depended on the number of centres it operated.
(2) In its Defence and Amended Defence, Mathnasium HK admitted that it opened and operated 12 learning centres (“HK Centres”). The admission was verified by two statements of truth made by the defendant, the sole shareholder and then director of Mathnasium HK.
(3) The plaintiff then sought summary judgment on 27 May 2016, and Mathnasium HK practically consented to the plaintiff’s application when the application was heard on 20 June 2016. Eventually, the plaintiff, relying on the admission, entered into a Tomlin Order (the “Tomlin Order”) with Mathnasium HK on 22 June 2016.
(4) The plaintiff then sought to enforce the schedule to the Tomlin Order (the “Tomlin Schedule”), which refers to inter alia ‘all the learning centres operated by Mathnasium HK in Hong Kong from May 2012 to-date’, but was unsuccessful. The plaintiff therefore took out a summons to enforce the Tomlin Schedule (the “Enforcement Summons”) on 15 July 2016.
(5) The application was initially granted by Master K Lo on 18 July 2016, but her decision was by consent overturned on appeal by this court on 10 November 2016. Importantly, it transpired from Mathnasium HK’s opposition to the Enforcement Summons that the admission was false, and the plaintiff has been gravely prejudice as the Tomlin Schedule cannot be satisfactorily enforced. The administration of justice has been materially interfered with.
(6) The plaintiff’s case is that the defendant had no honest belief in the admission or his statement of truth, and knew of the likelihood of them interfering with the administration of justice.”
As correctly reminded by the plaintiff, in the said Judgment, this court has made the following salient findings of fact:
(1) On the issue of falsity, there can be no doubt that the subject admission was false. The falsity was confirmed by the defendant’s own evidence herein and in the action (at paragraph 21).
(2) Further, the defendant correctly understood paragraph 5 of the Statement of Claim, the unqualified admission in the Defence and the falsity of the admission (at paragraph 22).
(3) On the issue of interference, the false admission was inherently likely to interfere with the administration of justice and the plaintiff has actually and reasonably relied on the false admission and proceeded on the basis that Mathnasium HK owned and operated the HK centres (at paragraphs 39 to 42).
(4) On the issue of the defendant’s state of mind and his representation to his lawyer, there has been a sea change in the defendant’s evidence given on this matter, and his oral evidence given at trial is plainly unbelievable (at paragraph 56).
(5) The defendant did not have an honest belief in the truth of the subject admission pleaded in the Defence and the Amended Defence and knew of the likelihood that the subject admission, if false, would interfere with the administration of justice (at paragraphs 62 and 63).
(6) Finally, it was in fact in the defendant’s interest to make the false admission. By making such false admission, the defendant could prevent, discourage or at least delay the plaintiff from taking actions against the revenue-generating operators, 11 of which were controlled and partially owned by the defendant himself (at paragraphs 63 to 65).
In England, it has been stated that a claimant who made “false claims if caught should expect to go to prison”, South Wales Fire and Rescue Service v Smith [2011] EWHC 1749 (Admin) at paragraph 5.
Arlidge, Eady & Smith on Contempt (5th ed), citing the above case, suggested that:
“Anyone committing this form of contempt can ordinarily expect to receive an immediate custodial penalty, by way of marking the gravity of such misconduct and also for the purpose of deterring others.”
at paragraphs 11-61. I note the need for general deterrence stated in that passage.
Indeed, in a very recent English Court of Appeal decision decided in March 2019, namely Liverpool Victoria Insurance Company Limited v Dr Asef Zafar [2019] EWCA Civ 392, the English Court of Appeal stated as follows, at paragraph 58:
“...It is therefore appropriate for a court dealing with this form of contempt of court to consider (as a criminal court would do) the culpability of the contemnor and the harm caused, intended or likely to be caused by the contempt of court. Having in that way determined the seriousness of the case, the court must consider whether a fine would be a sufficient penalty. If it would, committal to prison cannot be justified, even if the contemnor’s means are so limited that the amount of fine must be modest.”
Paragraph 59:
“We say at once, however, that the deliberate or reckless making of a false statement in a document verified by a statement of truth will usually be so inherently serious that nothing other than an order for committal to prison will be sufficient...”
In terms of local jurisdiction in Hong Kong, in the District Court decision of Kinform Limited v Tsui Loi (No 2) [2011] 5 HKLRD 80, the 1st and 3rd defendants (the 3rd defendant being an ex-employee of the plaintiff) gave false statements in pleadings and witness statements verified by statements of truth regarding a letter of complaint allegedly sent to the plaintiff, which could not have then existed.
Deputy Judge Herbert Au-Yeung (as he then was) found them guilty of contempt of court. When it came to sentencing, His Honour held, inter alia, that:
(1) This was undoubtedly a very serious matter. The giving of a false statement verified by a statement of truth undermined the whole process of the system of justice and would not be tolerated;
(2) Save in exceptional circumstances, an immediate custodial sentence should be imposed; and
(3) When sentencing contemnors who had put forward false statements verified by statements of truth, account should be taken of any indemnity costs order which might be made against them.
Turning to the background of the defendant, what follows is extracted from his second affirmation.
The defendant is 48 years of age. He is married with one son, now 8 years old. The defendant started to work after completion of his secondary education. In September 1990, the defendant opened his first learning centre for providing courses and tuition to primary and secondary students. To date, he has been in the business of managing and operating learning centres for providing courses and tuitions to students for around 30 years.
Since 2007, he has focused on providing tuition on mathematics only and claims to have become an acknowledged expert and pioneer in designing and providing such courses for primary and secondary students principally in Hong Kong but also other countries.
After the termination of the relationship with the plaintiff, the learning centres have started to use the brand name of MathConcept and MathConcept Education in providing courses and tuitions and have won quite a number of awards.
The defendant has also organized a mathematics competition, namely MathConceptition for primary and secondary students since 2016. The defendant has a very good relationship with his colleagues and has earned their respect. After learning that the defendant was found guilty of contempt of court, a number of his colleagues have volunteered to write reference letters to the court, expressing their opinions about his character and achievements. Those letters have been read in court and have been duly noted.
Prior to July 2010, the defendant’s wife was a secondary school teacher. She has since become a housewife after the birth of the defendant’s son in order to take care of the family. The defendant is therefore the sole breadwinner.
The defendant has a clear criminal record. He has been unable to sleep well since he was found guilty of contempt in March of this year. The defendant has been suffering from mental distress since the commencement of these proceedings. The defendant’s mother died in February 2018 which caused considerable distress and sadness to the defendant during the period running up to the hearing.
The defendant made the point that if he was sentenced to gaol, not only would he suffer loss of personal liberty but his wife and his son would be heartbroken and the family life would be shattered.
The defendant also made the point that he has spent over $2 million in legal fees in opposing the plaintiff’s application in these proceedings. He is also required to pay the plaintiff’s costs of these proceedings on an indemnity basis which would be substantial, and the defendant pointed out that as a professional in the education sector, integrity is one of the major assets. No doubt the mere finding of guilty of contempt of court will undermine his reputation which he has established for many years throughout his career and he has learnt a very good lesson from these proceedings.
Having considered all the relevant circumstances (including the fact that the defendant is liable to pay indemnity costs to the plaintiff in the present proceedings), I would adopt a starting point of 4 months’ imprisonment. I do not consider a fine to be a sufficient penalty, either in marking the gravity of the defendant’s conduct or for the purpose of general deterrence.
In adopting a starting point of 4 months’ imprisonment, I have taken into account in the defendant’s favour that this is not a case of a claimant making false claim in his pleadings. Nevertheless, it is part of my finding in the Judgment that it was in the defendant’s interest to make the false admission in question. By making such false admission, the defendant could prevent, discourage or at least delay the plaintiff from taking actions against the revenue-generating operators, 11 of which were controlled and partially owned by him.
In the light of his personal circumstances and good character, I will give a small discount of 1 month. I will therefore sentence him to 3 months’ imprisonment in respect of his contempt.
I give little weight to the apology offered to this court in his second affirmation. I feel that I should not give weight to an apology which was only offered after a finding of guilt has been pronounced.
Also, I give little weight to the “delay” point. In this regard, I refer to the Liverpool Victoria Insurance Company Limited case (supra) at paragraph 67:
“67. As to delay, we think it important to distinguish unreasonable delay, not attributable to any fault on the part of the contemnor, from the passage of time which is a necessary consequence of the proper litigation of allegations of contempt of court. Where a contemnor has made an early admission of wrongdoing, but for reasons beyond his or her control a long period of time then passes before a court imposes a sanction for the wrongdoing, the passage of time, attended as it inevitably would be by great anxiety, may be an important point in mitigation. The position is, however, different when all wrongdoing is denied. An alleged contemnor is, of course, entitled to contest the allegation, and the fact that he or she does so cannot make the contempt more serious; but the contemnor cannot then expect much weight to be given in his or her favour to the fact that the necessary court proceedings result in the passage of a substantial period of time... Although it is unfortunate that the contempt proceedings took as long as they did, it was always open to the respondent to try to shorten them by admitting his wrongdoing. He did not do so. We reject the submission on his behalf that he could not do so because he had to contest those allegations in respect of which he was successful: he could have made admissions regardless of whether the appellant would regard them as sufficient, and, if he had done so, he would have had much stronger mitigation based on delay.”
In the present case of course, there has been no admission of any wrongdoing by the defendant.
Finally, in my view, there is nothing in the defendant’s case which renders it suitable for me to suspend the sentence. Therefore the defendant will have to serve the 3‑month term of imprisonment immediately.