Essilor Manufacturing (Thailand) Co., Ltd v. Wong Kam Wai (Trading As Sun Wai Lok HK International Company) and Others

CACV 71/2020

[2020] HKCA 351

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 71 OF 2020

(ON APPEAL FROM HCA 159/2020)

________________________

BETWEEN

________________________

________________________

REASONS FOR JUDGMENT
AND DECISION ON COSTS

________________________

Hon Poon CJHC (giving the Reasons for Judgment and Decision on Costs of the Court):

1.On 17 April 2020, after hearing counsel, we allowed the plaintiff’s appeal against the decision of Deputy High Court Judge M K Liu of 20 March 2020 refusing to continue the ex parte injunctions (“Injunction Orders”) granted by Mrs Justice Campbell-Moffat on 24 January 2020. We held that while the Judge was correct in ruling that the Injunction Orders had lapsed on 7 February 2020, the return date as stated in the Injunction Orders, he erred in refusing to consider the plaintiff’s application to re-grant the Injunction Orders. Below are the reasons for our judgment.

Injunction Orders

2.A private company based in Thailand, the plaintiff is a manufacturer of spectacle lenses.  It fell victim to a fraudulent scheme perpetrated by one of its employees when between September 2019 and December 2019, a total sum of approximately US$39.3 million was transferred from the its bank account without its authorization to the 1^st to 18^th defendants.  Subsequently, some of the stolen monies were further transferred to the 19^th to 43^rd defendants and, in turn, to the 44^th and 45^th defendants.

3.Upon discovery of the fraudulent scheme on about 12 December 2019, the plaintiff reported the matter to the Hong Kong police on 16 December 2019.  On 27 December 2019, the plaintiff obtained a disclosure order against 7 banks with whom the accounts of the 1^st to 18^th defendants were held.

4.On 24 January 2020, the plaintiff obtained from Mrs Justice Campbell-Moffat the Injunction Orders:

(a)  a proprietary and domestic Mareva injunction against the 1^st to 37^th and 43^rd to 45^th defendants;

(b)  a proprietary and worldwide Mareva injunction against the 38^th to 42^nd defendants.

5.Each of the Injunction Orders contained the provision regarding its duration taken from the standard form in Practice Direction 11.2:

“This Order will remain in force up to and including 7 February 2020 (“the return date”), unless before then it is varied or discharged by a further order of the court.  The application in which this Order is made shall come back to the court for further hearing on the return date unless the Defendant pays the Injuncted Amount into court or makes provision for security in that sum by some other method as provided for hereinabove and serves notice that they do not require the application to come back to court.”

6.Each of the Injunction Orders also contained a number of usual undertakings given by the plaintiff, including the one that it would as soon as practicable serve on each defendant a summons to be heard on the return date.

GAP

7.On 28 January 2020, the Judiciary announced that due to public health consideration (i) all hearings of the courts/tribunals originally scheduled from January 29 to February 2 would be adjourned (“General Adjourned Period” or “GAP”); (ii) court registries would also be closed during this period; and (iii) urgent hearings will be dealt with in accordance with established mechanism.[1]

8.On 1 February 2020, the Judiciary issued another announcement extending GAP to 9 February 2020, thus adjourning all hearings of the courts/tribunals originally scheduled from 3 to 9 February 2020 to a date to be fixed.  It further stated that:[2]

“Despite the general adjournment, the courts will handle urgent and essential hearings/matters during this period. These include fresh remand cases, urgent and essential bail-related reviews and other urgent applications to the courts. They will be handled in accordance with the established mechanisms, including the Duty Judge system.”

GAP was subsequently extended several times during which the above statement continued to apply.

Events leading to the hearing on 20 March 2020

9.Despite the undertaking mentioned at [6] above, the plaintiff did not take out an inter partes summons to be heard on 7 February 2020, the return date as stated in the Injunction Orders.  The reasons appeared in the letter dated 26 February 2020 by the plaintiff’s solicitors, refuting the assertion of the former solicitors for the 6^th defendant in their letter of the previous date that the Injunction Order against it has already lapsed on 7 February 2020.  There, the plaintiff’s solicitors stated:

“Your assertion that the Injunction Order (the ‘Order’) expired on 7 February 2020 is misconceived. It is standard procedure with respect to court orders secured on an ex parte basis that they run to the return date for that application or to the date of the discharge of the order by action of the parties, we draw your attention to 29/1/63 of the White Book in this respect. Whereas the Order made by the Honourable [Mrs] Justice Campbell-Moffat defined the return date as 7 February 2020, that direction was made on the basis that the on-going and unprecedented court closure would not take place. The Order is plainly intended by the Court to endure until the actual return date hearing, which will be determined in due course on the issuing of an inter partes summons by our client on the reopening of the Court Registry.”

10.On 6 March 2020, the Judiciary announced that (i) plans were being made for orderly resumption of court proceedings upon the cessation of GAP on 22 March 2020 and (ii) the High Court Registry would be re-opened on 9 March 2020.[3]  The plaintiff’s solicitors made enquiries with the clerk to Ng J, the Summons Judge designated for 7 February 2020, between 6 and 11 March 2020.  By a letter of 13 March 2020, Ng J pointed out that if the plaintiff wished to continue the Injunction Orders, it was their duty to honour the undertakings, including the issue of a summons in the usual way and re-fix the hearing date of the summons.

11.Acting on the Ng J’s indication, the plaintiff’s solicitors on 13 March 2020 issued a summons (“Summons”) seeking for among others, an order that the Injunction Orders, subject to certain minor amendments, be continued until trial or further order.

The Judge’s decision

12.The Summons came before the Judge on 20 March 2020.  At the hearing, none of the defendants opposed the Summons except the 10^th defendant. At the end of the hearing, the Judge refused to continue the Injunction Orders because they had “expired immediately after 7 February 2020” and therefore “there is nothing which can be continued now” (Decision at [4] to [7]). He also refused to grant any new injunctions in the same terms as the Injunction Orders because (i) the plaintiff did not apply for any new injunction in the Summons but only sought to continue the Injunction Orders and (ii) there was neither urgency (since the Injunction Orders had already lapsed for 1.5 months) nor secrecy (since all the defendants had already been notified of the action) to justify granting any new injunction on an ex parte basis (Decision at [8]).  Finally, he made no order in respect of the applications in the Summons since there was no injunction in place and therefore no urgency in those applications (Decision at [9]).

13.The plaintiff subsequently obtained an interim interim injunction in the same terms as the Injunction Orders from Lam VP until the hearing of the plaintiff’s application for the leave to appeal on 23 March 2020.  On 23 March 2020, the hearing was vacated due to GAP, Lam VP directed that the interim interim injunction granted on 20 March 2020 shall continue until the determination of the application for leave to appeal on the papers.  On 2 April 2020, Lam VP further granted the plaintiff leave to appeal on paper and ordered the interim interim injunction be continued until the determination of the appeal.

The plaintiff’s arguments

14.Before us, Mr Bernard Man SC[4] for the plaintiff advanced two main points on the duration of the Injunction Orders, which mirrored those taken by the plaintiff’s solicitors in their letter of 26 February 2020.

15.Mr Man first submitted that the Injunction Orders did not expire on 7 February 2020 but continued until 20 March 2020.  He reasoned that when construing a court order, the starting point must be context and purpose, rather than the natural and ordinary meaning of the words.  One cannot simply read the words “remain in force up to and including 7 February 2020” in the duration provision of the Injunction Orders in isolation.  Reading the passage as a whole, it is clear that in granting the Injunction Orders, the ex parte judge presumed and intended that the matter would come back for a return date and the injunctions should continue in the meantime.  The judge could not possibly have meant that the Injunction Orders should only continue until 7 February 2020 regardless of whether any return date took place.  Mr Man submitted that a Mareva injunction is granted ex parte in situations of urgency and/or secrecy, where there is a real risk of dissipation of the defendant’s assets and therefore an immediate need to preserve them in order not to render the plaintiff’s claim futile.  Thus the purpose of the Injunction Orders would be wholly defeated if they were to expire before the return date. 

16.Next, citing Hughes v Griffiths (1862) 13 CBNS 324 and Pritam Kaur v S Russell & Sons Ltd [1973] 1 QB 336, Mr Man submitted that under common law, where a date or time period is prescribed by law for the doing of an act (whether contained in a statute, judgment or order of the court) and that act can only be done by the court, then if the court is not open on the said date or on the last day of the said time period, the provision of law should be construed as extending time until the next day on which the court is open and will act.  Here, the return date hearing of the Injunction Orders is an act to be done by the court (i.e. to hear both parties) and GAP prevented that from taking place until 20 March 2020.

17.As a fallback, Mr Man argued that even if the Injunction Orders had expired on 7 February, the Judge erred in principle in refusing to grant new injunctions in the same terms as the Injunction Orders.  It is so because firstly, no prejudice would be suffered by any of the defendants if the injunctions were to be re-granted.  There is no suggestion that any of the defendants relied on an understanding that the Injunction Orders had expired and had, say, dissipated their assets in the meantime.  None of the defendants (except the 10^th defendant) opposed the continuation of the Injunction Orders at the hearing of 20 March 2020, and even the 10^th defendant only raised its technical objection on 19 March 2020.  Secondly, although the Summons was phrased in terms of “continuation” of the Injunction Orders, there could not be the slightest doubt about what the plaintiff was seeking, i.e. injunctions on the same terms as the Injunction Orders from 20 March 2020 until trial or further order.  In any event, as a matter of language, one could “continue” something which had “lapsed” for a short period.  And thirdly, the issue of whether the Injunction Orders were technically in place between 7 February 2020 and 20 March 2020 should not have been a relevant consideration.  The question should simply be whether, as of 20 March 2020, the plaintiff should be entitled to injunctions in the same terms.  Given the uncontested existence of a good arguable case and ample evidence showing a real risk of dissipation on the part of the 10^th defendant, there is no reason in principle why the plaintiff should not be entitled to the Mareva injunctions[5] it seeks as from 20 March 2020.

18.Finally, Mr Man submitted that the rules of civil procedure are not a game or a trap for the unwary.  One of the underlying objectives is “to ensure fairness between the parties”.  He pointed out that GAP is wholly unprecedented and exceptional, and beyond the control of any of the parties. There must be a strong policy against parties using GAP to create arid technicalities, particularly in Mareva proceedings.

The 10^th defendant’s arguments

19.Mr Alan Kwong[6] for the 10^th defendant submitted that the Injunction Orders had lapsed immediately after 7 February 2020.  He took a number of points.

20.First, he argued that injunctions should be strictly construed.  The Injunction Orders defined their durations extremely clearly, that is, they would “remain in force up to and including 7 February 2020”.  There is no room to read in anything else.  Mr Kwong submitted that it would be wrong to construe the Injunction Orders as lasting until an actual return date hearing.  The duration of the Injunction Orders is one thing, and the duty of the plaintiff to seek a return date hearing is another.  It is difficult to understand why the duration of the Injunction Orders would be extended automatically because the plaintiff failed in its duty to obtain a return date.  If the plaintiff’s argument were correct, it would result in the absurd consequence that a plaintiff could unilaterally extend the duration of an injunction order by not seeking a return date hearing.

21.Second, Mr Kwong argued that it is irrelevant whether any of the defendants thought that the Injunction Orders had lapsed.  The duration of the Injunction Orders is a matter of interpretation and its terms does not depend on the subjective views of the defendants or indeed anyone else.  In any event, as evidenced by the letter sent by the former 6^th defendant’s solicitors of 25 February 2020, it is untrue that all the defendants proceeded on the basis that the Injunction Orders had remained in place after 7 February 2020.

22.Third, Mr Kwong submitted that none of the authorities cited by Mr Man is of assistance.  They are distinguishable as they are either concerned with computation of time when a particular period is specified for something to be done, or statutory interpretation, which is not the case here.  Also, unlike in those cases where it was impossible for the party to do the act in question, here the plaintiff could have taken out an application to continue the Injunction Orders during GAP.  In any event, the High Court Registry re-opened on 9 March 2020 and yet it took the plaintiff until 13 March 2020 to issue the Summons.

23.Mr Kwong supported the Judge’s refusal to grant new injunctions. He submitted that the lack of urgency and secrecy means that a sudden ad hoc ex parte application was unwarranted and inappropriate in the circumstances.  More fundamentally, the Injunction Orders should not have been granted in the first place.  Insofar as the Mareva injunction is concerned, the plaintiff failed to demonstrate a real risk of dissipation against the 10^th defendant.  Insofar as the proprietary injunction is concerned, it was groundless since after the US$1.2 million was made on 18 September 2019, almost all such monies had been paid out of the 10^th defendant’s account by 23 September 2019[7].  Further, Mr Kwong complained that the plaintiff was guilty of multiple material non-disclosures.

When did the Injunction Orders lapse?

24.We first deal with the question as to when the Injunction Orders had lapsed.  There are two main issues:

(1)  Whether on a proper construction, the Injunction Orders would lapse on the date as specified, that is, 7 February 2020, or the actual return date.

(2)  If the former, whether the Injunction Orders had effectively been extended until 20 March 2020 because of the special circumstances in this case brought about by GAP.

25.It is well settled that generally speaking, in interpretating a court order, the starting point is the natural and ordinary meaning of the words used in light of the syntax, context and background in which those words were used.  See Secretary of State for Business, Innovation and Skills v Feld [2014] 1 WLR 3396, at [28].  Further, because of the penal consequences of breaching a freezing order and the need of the defendant to know where he, she or it stands, such orders should be clear and unequivocal, and should be strictly construed: JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754, per Lord Clarke JSC at [19].

26.These principles apply to the construction of an ex parte injunction couched in the terms as contained in the standard form in Practice Direction 11.2.  And having regard to those principles, we are of the view that the ex parte injunction remains valid until the date as specified in the order.

27.The wording used puts the matter beyond doubt.  It is stated that the injunction order will remain in force up to and including the date as specified, which is then defined as “the return date”, unless before then it is discharged or varied by a further court order.  Properly understood, the return date must mean the specified date and not any date on which the inter parte summons which the plaintiff undertakes to take out is actually heard by the court.

28.There is a strong legal policy for such construction.  An ex parte injunction carries with it serious penal consequences.  The defendant is entitled to know when exactly it remains in force.  Its duration must be expressly and clearly specified in the order.  It cannot be left open for an unspecified period, the duration of which is unknown at the time of the order, until the actual date when the inter partes summons is heard by the court.

29.Further, under Mr Man’s construction, the ex parte injunction would remain in force until the actual date when the court holds the inter partes hearing, which in turn depends on when the plaintiff takes out the inter partes summons.  It means that the plaintiff, if he so chooses, can simply sit on the injunction and allows it to run unilaterally until the time he takes out the inter partes summons.  The court could not have left the duration of the ex parte injunction to be determined by the plaintiff’s litigation conduct.

30.We also reject Mr Man’s argument that if an ex parte injunction is to only last until the specified date its purpose would be defeated, referring presumably to the benefits it enures to the plaintiff.  However, in the context of defining its duration, one cannot take such a blinkered approach.  One must also firmly bear in mind two material aspects about the nature of an ex parte injunction.  First, it is only an urgent interim measure.  This is why the court must expressly provide for the period of its duration until the specified date.  Second, it is a draconian measure as the court has not heard the defendant when granting it.  To mitigate its draconian effect and to ensure that the defendant can be heard as soon as practicable, the court requires the plaintiff to undertake to serve the inter partes summons on the defendant to be heard on the return date, which as we have demonstrated, is none other than the specified date.  If the plaintiff did not do so, the injunction would automatically lapse.  Not only does this mandate the plaintiff to prosecute the matter dutifully in accordance with the timeframe set by the court, more importantly it ensures fairness to the defendant by bringing the matter to be heard by the court inter partes on the specified date.

31.It must be stressed that the plaintiff has a duty to take out a summons for the continuation of the ex parte injunction which is returnable on the specified date.  If (for whatever reason and through no fault of the plaintiff) the inter partes hearing could only take place after the specified date, the plaintiff should seek directions from the court, including a continuation of the ex parte injunction pending the inter partes hearing.  Indeed, even in this case, it was possible for the plaintiff to seek a continuation of the Injunction Orders before 7 February 2020 by applying to the Duty Judge.

32.To complete the discussion on the first issue, we will shortly dispose of Mr Man’s reliance on Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749.  Mr Man cited Mannai for the proposition that the court can construe a date in a legal document to mean a different date from that expressly written, if, having regard to the context and purpose, it is clear that the reasonable recipient would have understood the document as referring to the different date.  However, Mannai involved the construction of a termination notice served by a tenant which contained an obvious error.  The legal proposition derived from it does not avail the plaintiff because an informed recipient would understand that the ex parte injunction, on a proper construction, would only last until the specified date.

33.We now turn to the second issue.  For the purpose of resolving it, we have invited the parties to consider the possible impact of section 71(1A) of the Interpretation and General Clauses Ordinance (Cap 1) (“IGCO”) and Kaur.  The issue in that case was whether the writ was issued in time where (i) the cause of action accrued on 5 September 1967; (ii) the limitation period was 3 years; (iii) 5 and 6 September 1970 were Saturday and Sunday on which the court office was closed; and (iv) the writ was issued on 7 September 1970.  The Court of Appeal unanimously answered in the affirmative.  Lord Denning MR said at 349D-E:

“The important thing is to lay down a rule for the future so that people can know how they stand. In laying down a rule, we can look to parallel fields of law to see the rule there. The nearest parallel is the case where a time is prescribed by the Rules of Court for doing any act. The rule prescribed in both the county court and the High Court is this: If the time expires on a Sunday or any other day on which the court office is closed, the act is done in time if it is done on the next day on which the court office is open. I think we should apply a similar rule when the time is prescribed by statute. By so doing, we make the law consistent in itself: and we avoid confusion to practitioners. So I am prepared to hold that when a time is prescribed by statute for doing any act, and that act can only be done if the court office is open on the day when the time expires, then, if it turns out in any particular case that the day is a Sunday or other dies non, the time is extended until the next day on which the court office is open.” (emphasis added)

Megarry J put it this way at 356E-F:

“If the act to be done by the person concerned is one for which some action by the court is requisite, such as issuing a writ, and it is impossible to do that act on the last day of the period because the offices of the court are closed for the whole of that day, the period will prima facie be construed as ending not on that day but at the expiration of the next day upon which the offices of the court are open and it becomes possible to do the act.” (emphasis added)

34.Mr Man also referred us to the case of Hughes v Griffiths (1862) 13 CBNS 324, which was cited in Kaur.  In Hughes, the issue was whether a writ of capias (which authorised the continued arrest of a debtor already in custody) was issued in time where (i) the statute required a writ of capias to be issued within 7 days of the date of the arrest warrant; (ii) the arrest warrant was issued on 12 April 1862; (iii) 19 April 1862 was Good Friday and the court office was closed from that day until 22 April 1862; and (iv) the writ of capias was issued on 23 April 1862.  The Court again answered in the affirmative.  The leading judgment was given by Erle CJ who said at 133:

“Now, the capias cannot be issued unless the court is in a position to act. I am of opinion that, when the last of the seven days happens to fall on a day which is declared to be a holiday, and on which the court cannot act, the party has until the next following day on which the court can act to issue his writ. It seems to me that the distinction between a thing which is to be done by the court and a mere act of the party, is maintainable. Where the act is to be done by the court, and the court refuses to act on that day, the intendment of the law is that the party shall have until the earliest day on which the court will act.” (emphasis added)

35.We agree with Mr Man that the principle formulated by Erle CJ and Megarry J (which applies to any acts done by the court) appears to be wider than the one formulated by Lord Denning MR (which applies to acts done at the court office), and that it is the narrower formulation that has been codified in section 71(1A) of the IGCO and Order 3 rule 4 of the Rules of the High Court, Cap 4A (“RHC”).  We also agree with Mr Man that the broader formulation remains a common law principle which is applicable not only in the context of statutory time limits but also time limits set by court orders.  We see no reason why this common law rule of reckoning of time limits should only apply to legislation but not court orders.  On the contrary, as Lord Denning MR observed in Kaur, it is important to maintain consistencies across different parallel fields of law so as to avoid confusion to practitioners.  The fact that Order 3 rule 4 makes no distinction between court orders and the RHC also supports our view.

36.However, we do not think this common law principle can assist the plaintiff.

37.Central to the common law rule is the notion of “impossibility”.  It is clear that the reasons the court decided to effectively “extend” the statutory periods in Kaur and Hughes were that (i) it was impossible for the parties to carry out the required act on the deadline day and (ii) the parties carried out the required act on the next available day.  Here, it was not impossible for the plaintiff to take out the inter partes summons returnable on 7 February 2020.  For the plaintiff could have applied to the Duty Judge to do so as the matter clearly fell within the scope of urgent business which could be conducted during GAP.  This was exactly what the plaintiff’s solicitors belatedly did on 13 March 2020: see [11] above.  It was also possible for the plaintiff to seek a continuation of the Injunction Orders before 7 February 2020 through the Duty Judge system.  In short, the plaintiff had the means to prevent the Injunction Orders from lapsing but chose to do nothing.  The honest yet mistaken belief that the Injunction Orders had not lapsed is not a justification for its inaction.

38.Mr Man cited Arnold v Britton [2015] AC 1619 at [22] in support of the proposition that where an event subsequently occurs which was plainly not intended or contemplated by the parties, if it is clear what the parties would have intended, the court would give effect to that intention.  Mr Man submitted that neither the plaintiff nor the ex parte judge contemplated GAP and that, if they had, they would plainly have intended the Injunction Orders to continue until the actual return date on 20 March 2020.  With respect, we disagree.

39.Arnold v Britton concerned the interpretation of a provision in a lease regarding service charges.  Even if the proposition advanced by Mr Man is applicable in the context of interpreting a court order, given that it was possible for plaintiff to apply to take out the inter partes summons returnable on 7 February 2020, as to continue the Injunction Orders pending the inter partes hearing, we see no basis for concluding that the ex parte judge would have agreed, let alone “plainly” agreed, to allow the Injunction Orders to run all the way until 20 March 2020.

40.For the above reasons, we conclude that the Injunction Orders had lapsed immediately after 7 February 2020.  The Judge was correct in so ruling.

Was the Judge wrong to refuse to continue the Injunction Orders?

41.The next question is whether the Judge was correct in refusing the plaintiff’s application to continue the Injunction Orders simply on the basis that they had lapsed without considering the merits of the application.

42.As mentioned, the Judge reasoned that, according to the Summons, the plaintiff was only seeking to “continue” the Injunction Orders rather than the grant of a new injunction.  Since the Injunction Orders had lapsed, there was “nothing which can be continued”.  With respect, the Judge erred.  The Summons must be approached by looking at its substance and not form.  And as a matter of substance, it was plain that the plaintiff was seeking injunctions in the same terms as the Injunction Orders from 20 March 2020 until trial or further order after the Judge told that they had lapsed on 7 February 2020.  By adopting an unduly restrictive approach to the plaintiff’s application, the Judge had failed to properly apply his mind to consider it on its merits.

Disposition

43.In consequence, we allowed the appeal, set aside the orders made by the Judge and, as agreed by the parties, remitted the Summons to the Court of First Instance for disposal.

44.In terms of costs, although we have allowed the appeal and set aside the Judge’s orders, we have ruled against the plaintiff on the duration of Injunction Orders and have remitted the question as to whether it is entitled to the fresh injunctions to the Court of First Instance for disposal.  In the circumstances, we think the costs of the appeal and before the Judge below should be in the cause of the Summons.  And we so order.

Mr Bernard Man SC leading Mr Sebastian Hughes, instructed by Herbert Smith Freehills, for the Plaintiff

Mr Alan Kwong, Mr Alexander Tang and Mr Howard Wong, instructed by Franki Ho & Associates, for the 10^th Defendant

Jimmie K S Wong & Partners, for the 6^th Defendant, absent

Gallant, for the 18^th Defendant, attendance was excused

Lu & Partners LPP, for the 23^rd and 24^th Defendants, attendance was excused

KCL & Partners, for the 26^th and 27^th Defendants, attendance was excused

Chris H M Yuen & Co., for the 34^th Defendant, attendance was excused

Chong & Partners LLP, for the 37^th Defendant, absent

Wat & Co., for the 40^th Defendant, attendance was excused

Lo, Wong & Tsui, for the 45^th Defendant, attendance was excused

The 1^st to 5^th, 7^th to 9^th, 11^th to 17^th, 19^th to 22^nd, 25^th, 28^th to 33^rd, 35^th, 36^th, 38^th, 39^th, 41^st to 44^th Defendants, in person, absent