JESSOP & BAIRD (HONG KONG) LTD v NEO HWEE KHIM AND OTHERS

HCMP 1152/2017

[2020] HKCFI 557

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1152 OF 2017

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BETWEEN

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Before:  Hon B Chu J in Court

Date of Hearing:  26 June 2019

Date of the 3^rd Defendant’s Written Submissions on Costs:  22 November 2019

Date of the 1^st and 2^nd Defendants’ Written Submissions on Costs:  25 November 2019

Date of the Plaintiff’s Written Submissions on Costs:  28 November 2019

Date of 1^st and 2^nd Defendants’ Reply Written Submissions on Costs:  12 December 2019

Date of the 3^rd Defendant’s Reply Written Submissions on Costs:  12 December 2019

Date of Decision:  2 April 2020

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D E C I S I O N

(On Costs)

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Introduction

1.  This Court handed down a judgment on 31 October 2019 in relation to the civil contempt proceedings issued by P against Ds, which were dismissed for reasons stated therein (“Judgment”) and costs were ordered to be dealt with on paper.  In this decision on costs, I will follow the abbreviations in the Judgment, unless otherwise indicated herein.

2.  P’s primary position is that P should be entitled to costs of these proceedings (with certificate for 3 counsel) and P’s fall back position is that no order as to costs should be made.

3.  The position of D1, D2, and also D3 essentially is the same, that there are no reasons to depart from the usual costs order, and as Ds are clear “winners”, P should pay Ds’ costs of these proceedings, including all reserved costs and the costs argument, to be taxed on the party and party basis, if not agreed.  D3 seeks certificate for two counsel.

P’s submissions

4.  It is submitted on behalf of P that P has successfully established the following matters beyond reasonable doubt:

(i)  That the Court did not find that the 12.09.16 Letter was a reasonable response and was issued with the intention to cause obstruction and delay, and that had there been requisite notice given, then the provision of only P’s audited financial statements from 2009 – 2014 for inspection on the 1^st visit would have been a breach of the Undertaking (para 73);

(ii)  That there was no reason why the Accounting Documents could not have been made available for inspection during the 1^st visit (para 71);

(iii)  The Undertaking was not subject to the availability or presence of Mike Chen or anyone else, nor was there any requirement to “narrow down” the scope of inspection for the 1^st visit (para 72);

(iv)  That P’s Accounting Documents had continued to be prepared after 1 July 2016 that they had been kept at the Zhongshan Factory even after P’s operations thereat ceased (para 109)

(v)  On the State of Mind Issue, P also established beyond reasonable doubt that, had there been non-compliance of the Undertaking, Ds’ non-compliance would have been accompanied by the requisite state of mind (para 157).

5.  It is further argued on behalf of P that P was unsuccessful only because of technical legal points, in that (1) the Court accepted Ds’ construction of the Undertaking that P’s notice was short of the requisite 48-hour notice requirement; (2) the alleged Withheld Documents in P’s solicitors’ letter and the Statement were not clear; (3) that committal is the last resort.

6.  P has also complained of Ds’ conduct in this litigation, namely that:

(i)  Ds had each argued at great lengths that they did not have control over PD Zhongshan, and could not have permitted the inspection of documents, and this was inconsistent with their own previous positions and contradicted by contemporaneous evidence, and to this end, Mr Lau has pointed out on behalf of P that that Ds’ arguments were met with this Court’s disapproval, criticising Ds’ conduct as a “game of finger pointing”, and the arguments as a “red-herring”^[1].

(ii)  Further, as this Court found, by voluntarily providing the Undertaking, Ds must have accepted that there were the Accounting Documents in their possession, custody, power or control at the Zhongshan Factory.

7.  It is further submitted by Mr Lau that the above arguments had resulted in considerable hearing time spent on resolving them, and it took up no less than 40 paragraphs in the Judgment[2].

Discussion

8.  I accept Mr Hui’s submissions that as these were contempt proceedings, the burden was on P to prove all elements of contempt beyond reasonable doubt, and that Ds did not have to prove anything. 

9.  Insofar as the 12.09.16 Letter was concerned, although the Undertaking specified giving not less than 48 hours’ advance notice, P’s own letter of 9 September 2016, giving notice, was only sent to Ds’ solicitors at 18:03 on a Friday, demanding to inspect the Accounting Documents on the following Tuesday, with an intervening weekend.  Although it was not required of them, without having received any response by Monday afternoon, one would have thought P’s solicitors could have telephoned or written again to Ds’ solicitors to confirm their attendance at the Zhongshan Factory on Tuesday morning, without deciding to simply turn up on Tuesday.  Even though the 12.09.16 Letter was found by this Court to be not a reasonable response and issued with intention to cause obstruction and delay, P’s attitude was also somewhat inflexible.  In any event, there was further notice given by P on 13 September 2016, but as there was an intervening public holiday, Ds’ response was found by this Court to be not unreasonable nor obstructive, nor with intent to cause delay.  Anyway, by the time of the hearing, it was some 2 years and 9 months down the road, and the issue of the adequacy of notice had long been overtaken by events.

10.  I have found that P did not manage to prove beyond reasonable doubt that Ds had caused obstruction and delay to P’s inspection on 19 September 2016 or thereafter.  I have also found that P had not identified in the Statement properly what Accounting Documents were said to be withheld.  Bearing in mind that contempt proceedings should be of last resort, in my view, P could have applied to the Court for further directions as to what documents should have been made available for P’s inspection.

11.  In the Judgment, this Court had set out its reasons for its findings as to why P had failed to discharge the burden to prove the actus reus, ie the actual non compliance with, or the breach of, the Undertaking.  In paragraph 113 of the Judgment, the Court indicated that it would nevertheless consider the State of Mind Issue, or mens rea, in the event if P were to succeed on proving the actus reus.

12.  Since P never managed to get past the 1^st limb, ie the actus reus, I accept the submissions made by on behalf of Ds that it is immaterial that P succeeded on the State of Mind Issue.

13.  Having considered all the submissions, and notwithstanding the Court’s findings Ds’ arguments over the control of PD Zhongshan, I have come to the view that there is no ground for the Court to depart from the usual costs order.

Order

14.  In the above circumstances, I order P to pay the Ds the costs of these proceedings, including the costs argument and any costs reserved, to be taxed if not agreed, on party and party basis, with certificate for one counsel for D1 and D2 and certificate for two counsel for D3.

Mr Martin Lau, instructed by Oldham Li & Nie, for the plaintiff

Mr Thomas Wong, instructed by Tanner De Witt, for the 1^st and 2^nd defendants

Mr John Hui, instructed by Cheung & Yip, for the 3^rd defendant