Bt v. Yhk

CACV 439/2019

[2020] HKCA 426

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 439 OF 2019

(ON APPEAL FROM FCMC NO. 943 OF 2011)

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J U D G M E N T

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Hon Kwan VP :

1.I agree with the judgment of Cheung JA.

Hon Cheung JA :

I.     Background

2.1.The parties are former husband and wife. The wife (Respondent/Judgment Creditor) applied before H H Judge Melloy for an order of committal against the husband (Petitioner/Judgment Debtor) for contempt of court on the ground that the husband was in breach of two court orders.  The Judge refused to commit the husband.  Pursuant to leave granted by the Judge, the wife now appeals.

2.2.The committal proceedings were instituted by the wife pursuant to Rule 90 of the Matrimonial Causes Rules, Cap 179A (‘MCR’) and Order 52 of the Rules of the High Court, Cap. 4A (‘RHC’). 

2.3.As appeared from the Statement lodged in support of the wife’s application for committal (‘the Statement’), the two orders were first, an order by consent dated 9 August 2011 (‘the 2011 Order’) and second, paragraph 1 of the order made by the Judge on 29 May 2015 (‘the 2015 Order’).

2.4.The 2011 Order was made pursuant to an agreement between the parties on the division of their matrimonial assets. Both parties were then legally represented.  The husband agreed to pay the wife HK$26 million by way of seven installments beginning from 1 September 2011.  The seven installments were either in the sum of HK$3.8  or HK$3.7 million each.  All payments were to be effected within 36 months i.e. on or before 1 September 2014.  The parties agreed that upon compliance by the husband of the terms of the 2011 Order, a clean break was to come into effect between the parties. 

2.5.The husband did not pay the agreed sum despite his undertaking to do so and the clean break did not come into effect.  The wife then applied by way of three judgment summonses for, among other things, an order to commit the husband for contempt of court. 

2.6.The husband made partial payment on 1 March 2013 following the issuing of the first judgment summons and pending the determination of the judgment summons he was ordered to make interim payments of HK$300,000 per month, payment to commence on 1 March 2014. 

2.7.As of 5 May 2015 the interim payment had been used to offset against the accrued interest of the outstanding sum due from the husband. 

2.8.As of 5 May 2015 the sum outstanding to be paid by the husband was HK$24,170,410.67. 

2.9.By the 2015 Order the Judge found that the husband was in contempt of court for his breach of the 2011 Order. The Judge made the following orders against him :

‘ 1) The [husband] be committed to prison for the period of three months, suspended, provided that the [husband] pays the [wife] the judgment debt in the said sum of HK$24,170,410.67 as at 5 May 2015 plus interest thereafter at a daily rate of HK$5,297.62 and surcharge in the sum of HK$1,208,520 on or before 1 June 2016;

2)     Pending payment of the judgment debt, interest and surcharge under paragraph 1 above, the [husband] shall continue to pay the [wife] the sum of HK$300,000 per month;

3)     The costs of these enforcement proceedings be to the [wife], to be taxed if not agreed on an indemnity basis;

4)     A warrant of arrest shall be issued upon the solicitors for the [wife] filing an affidavit of non‑compliance with the terms of suspension; and

5)     Liberty to apply.’

2.10.The application for committal by way of judgment summons was the recognised procedure adopted by the Courts at that time. 

2.11.On 30 December 2016 this Court in YBL v. LWC [2017] 1 HKLRD 823 held that the judgment summons procedure was not compatible with the fundamental right of a judgment debtor under Articles 10 (right to fair trial) and 11 (rights of persons charged with or convicted of criminal offence) of the Hong Kong Bill of Rights Ordinance (‘BOR’). In order to render the judgment summons procedure compatible with the BOR, it has to be segregated into two distinct procedures: first, an examination summons and second, a committal summons which, subject to specific provisions to the contrary in Rules 87 and 88, the procedure in Order 52 of the RHC are to be applied.  The implementation of YBL is now contained in Practice Direction – SL 10.2 Guidance Notes on Judgment Summons Procedure.

2.12.The husband, however, again failed to pay according to the terms of the 2015 Order.  The wife applied to activate the suspended committal order.  The Judge in her ruling of 29 September 2017 (‘the 2017 Order’) refused to activate the suspended order in the light of YBL.  She held that it is for the wife to decide whether or not to issue a judgment summons which will be in substance an examination summons under the new procedure or to proceed directly to commit the husband for contempt of court.

2.13.On 5 December 2017 the wife issued a summons pursuant to Rule 90 MCR and Order 52 RHC to commit the husband for contempt in respect of his failure :

‘ 1) to pay the [wife] the judgment debt in the sum of HK$24,170,410.67 plus interest thereafter at a daily rate of HK$5,297.62 and surcharge in the sum of HK$1,208,520 and

2)     to pay the [wife] the sum of HK$300,000 per month pending payment of the judgment debt, interest and surcharge, in breach of the order made by H H Judge Melloy on 29 May 2015.’

2.14.On 27 April 2018 the wife issued the present summons, seeking leave to withdraw the summons of 5 December 2017 and asking for an order for committal against the husband for his

‘1) breach of his undertaking to the Court and to the [wife] to pay the [wife] seven lump sums in a total sum of HK$26,000,000 under the order made by H H Judge Melloy dated 9 August 2011;

2)     failure to pay the [wife] the judgment debt in the sum of HK$24,170,410.67 plus interest thereafter at a daily rate of HK$5,297.62 and surcharge in the sum of HK$1,208,520; and

3)     [failure] to pay the [wife] the sum of HK$300,000 per month pending payment of the judgment debt, interest and surcharge, in breach of the order made by H H Judge Melloy on 29 May 2015 upon the grounds and particulars set forth in the copy Statement filed on 23 April 2018 served herewith used on the application for leave to issue this summons.’

2.15.The Judge gave her judgment on 28 June 2019 (‘the 2019 Order’) dismissing the wife’s application. 

II.     Principle on Contempt

3.It is common ground that in order to establish a contempt of court, it is sufficient to prove that the defendant’s conduct was intentional and that he knew of all the facts which made it a breach of the order.  It is only necessary to prove that he appreciated that he did breach the order.  It is not necessary to show that the defendant intended to disobey the order i.e. his conduct was contumacious : Kao, Lee & Yip v. Koo Hoi Yan (2009) 12 HKCFAR 830. 

III.     The Judge’s decision

4.1.The Judge held that the husband had breached the 2015 Order in that the outstanding sum of HK$24,170,410.67 plus interest and surcharge has not been paid.  This, prima facie, activated the suspended committal order.  Further he has not continued to pay the sum of HK$300,000 per month as agreed.

4.2.The Judge further held that the husband had the requisite state of mind necessary to prove civil contempt.  She held that :

‘ 44. .....The husband certainly knew of the order and he knew that if he chose not to pay the wife and on his case, if he chose to put other financial commitments before his obligations under that order, then prima facie he would be in contempt. It is clear that this was not an accidental breach, although it seems to be the husband’s case that he had no alternative but to take the action that he did.’

4.3.The Judge, however, refused to commit the husband because she held that the wife had not been able to show beyond reasonable doubt that the husband was in contempt.  The Judge held :

‘ 46. The difficulty is that without the wife going through the examination summons process now prescribed, it is difficult for her to successfully challenge the husband’s current position, which is that although he sold the two Midlevel’s properties he was not able to realize any significant sums from them and certainly he has not been able to use the net proceeds of sale to pay off what he owes. Further it is his case that there is very little chance of him recovering the RMB20 million from the so called China Fund. In addition, he says that he now has no regular income and is focusing instead on different individual projects.’

4.4.The Judge also referred to the husband’s fourth affirmation filed in these proceedings in which he said that if he were to be sent to prison he would not be able to continue with his projects which essentially were his assets and his only chances left in life.

IV.     Basis to commit

5.1.Before I deal with the grounds of appeal of the wife, it is necessary to address a preliminary point of whether the wife had, in fact, any basis in law to commit the husband having regard to the terms of the 2011 Order and the 2015 Order.   The principle is summarised by Neill LJ of the English Court of Appeal in Kumari v. Jalal [1997] 1 WLR 97 at page 101 as follows :

‘ .... However, both as a matter of principle and on authority, if there is a breach of an order to do a certain act by a certain date, such as the delivery of goods, and that non-compliance is visited with a penalty, the breach cannot be the subject matter of a further committal order. If the failure by the alleged contemnor has continued, then it is necessary to go back to the court and obtain a further order.’

5.2.This approach is recently followed in the Matter of an application by Her Majesty’s Solicitor General for the committal to prison of Jennifer Marie Jones for alleged contempt of court (‘Jones’) [2013] EWHC 2579 (Fam) where Sir James Munby, President of the Family Division, held that :

‘ 23 I do not want to be misunderstood. If someone has been found to be in breach of a mandatory order by failing to do the prescribed act by the specified time, then it is perfectly appropriate to talk of the contemnor as remaining in breach thereafter until such time as the breach has been remedied. But that pre-supposes that there has in fact been a breach and is relevant only to the question of whether, while he remains in breach, the contemnor should be allowed to purge his contempt. It does not justify the making of a (further) committal order on the basis of a further breach, because there has in such a case been no further breach. When a mandatory order is not complied with there is but a single breach: Kumari v Jalal [1997] 1 WLR 97. If in such circumstances it is desired to make a further committal order - for example if the sentence for the original breach has expired without compliance on the part of the contemnor - then it is necessary first to make another order specifying another date for compliance, followed, in the event of non-compliance, by an application for committal for breach not of the original but of the further order: see Re W (Abduction: Committal) [2011] EWCA Civ 1196, [2012] 2 FLR 133.’

5.3.Kumari is based on the earlier decision of Danchevsky v Danchevsky (No. 2) (1977) 121 S.J. 796.  The principle as restated in Kumari and Jones is based on either one of the following two grounds.  First, it is based on a construction of the terms of the order itself.  This can be seen from the judgment of Goff  LJ in Danchevsky which is reproduced in Kumari :

‘ [the] order for breach of which Mr. Danchevsky was committed was an order to deliver up possession on a fixed date and was broken once and for all when he failed to deliver up possession on that date. It was not an order requiring a continuance of acts or a continuance of forbearances, so that his returning to possession and remaining in possession was not a new breach or a new offence.’

5.4.This principle is also an illustration of the principle against double jeopardy by reason of autrefois convict.  Lord Denning observed in Danchevsky :

‘ “We had quite a considerable discussion about orders for possession. An order for possession can be made in the first instance without giving a time: but, if it is proposed to commit a man for disobedience of it, you have to have an order specifying the time within which the possession has to be given.”―He referred to Ord. 42, r. 2(2) and Ord. 45, r. 6(2) and continued―“In the present case the order of 15 May 1974 did specify the time, namely, possession by 12 June 1974. That was a simple order and non compliance with it was a single offence, and he cannot be punished twice for it. That is sufficient to decide this case.” ’

5.5.Lawton L.J. in Danchevsky drew attention to the fact that contempt of court was a common law misdemeanour. He said :

‘ If a man is being dealt with for a common law misdemeanour, it is always relevant to see whether time is a necessary averment in the charge. The inquiry which we have had in this court has established that, if there is going to be an order for committal for breach of an order of the court, that order must have had a time specified in it. There was a time in the relevant order in this case. It follows that the reference to the 12 June was a relevant averment. It also follows that, had there been a prosecution for a common law misdemeanour of contempt of court, on all subsequent occasions Mr. Danchevsky would have been entitled to plead autrefois convict. It follows therefore that there is no power in the county court to do that which a criminal court could not have done.’

5.6.The rule against double jeopardy is expressly enshrined in Article 11 of the Hong Kong Bill of Rights Ordinance which this Court in YBL has relied upon. 

5.7.This Court in Ubamaka v Secretary for Security [2011] 1 HKLRD 359 held that there are two aspects of the rule against double jeopardy.  First, there is the common law autrefois convict (or autrefois acquit) plea in bar which is a defence against a subsequent prosecution and which only arises in the narrowly defined situation where the elements of the second offence are the same as or included in the original offence.  Secondly, there is the wider common law rule against double jeopardy whereby the Court has power to stay proceedings as an abuse of process if the subsequent charge involves an attempt to re‑prosecute a person previously convicted or acquitted on the same or substantially the same facts.

5.8.This distinction has been accepted by the Court of Final Appeal in Yeung Chun Pong v Secretary for Justice (2009) 12 HKCFAR 867, [10]‑[12], [21]‑[25] and in Ubamaka v. Secretary for Security [2012] 15 HKCFAR 743 at [25].

5.9.This principle was expressly relied upon by Mr Lam for the husband in the court below and repeated in this Court.  Although the husband has not filed any respondent’s notice prior to the hearing of the appeal seeking to affirm the Judge’s decision on this ground, as this point was squarely raised by the husband both in the court below and before us, we granted leave to the husband to file a respondent’s notice which Mr Lam did in the course of the hearing. 

5.10.In the present case the Judge did not address the point raised in Kumari and Jones apart from saying that she disagreed with Mr Lam’s submission on double jeopardy.  

5.11.The principle from the Kumari line of cases is well‑established and I would follow it.  However does it apply to the facts of this case?  It is helpful to refer to the facts of these cases to see how it was applied.

5.12.In Kumari the wife made an application for ancillary relief, including a request for the delivery to her of items of personal property.  The district judge ordered the husband to return specified items to the wife within seven days.  The husband failed to return all the items, and on the wife’s application he was found guilty of contempt of court and committed to prison for three months.  On his release he took no action to return the specified items and the wife applied a second time to have him committed for contempt by reason of his continuing failure to comply with the order.  The district judge committed the husband to a further six months in prison.  The Court of Appeal allowed the appeal. 

5.13.Kumari deals with a situation where the husband had been convicted of contempt and had served his sentence.  The judgment of Neill LJ addressed the argument that the husband remained in continuous breach of the same order of which he was already found to be in contempt.  This argument was rejected.

5.14.In Jones, the mother was ordered to surrender the children to the father no later than a specific hour at a specified railway station on a specified date.  She did not do so but was found to have good grounds in not complying with the order.  The continuous breach argument was again raised and was rejected.

5.15.In Danchevsky, the husband was ordered to give up possession of a matrimonial home by a specified time in June 1974.  He failed to do that and he was committed for contempt of court.  He went to prison and, when he came out of prison, he went back to the same property.  He did that not once but twice, and on each of the subsequent occasions his behaviour was punished by a sentence of imprisonment. On the third occasion on which he was sent to prison he applied to be released on the ground that he had already been punished.

5.16.In the present case the Judge by the 2015 Order committed the husband for breach of the 2011 Order.  In the current application, although both the 2011 Order and the 2015 Order were relied upon, it is clear that the husband could not be convicted based on the 2011 Order because it would be contrary to the double jeopardy rule.  Ms Yip SC (together with Mr Leung for the wife) in her reply to the respondent’s notice accepted that the wife would not rely on the 2011 Order and the committal is based solely on the 2015 Order.  Once the 2011 Order is excluded, none of the situation in Kumari, Jones and Danchevsky is present in this case. The husband is not being committed based on an order (i.e. the 2011 Order) which he had breached and for which he had been committed.  There is no question of double jeopardy being engaged because there is none.  The 2015 Order is clear enough.  It imposed a new timeframe, namely 1 June 2016 for the husband to pay the outstanding sum.  The husband is in breach of this order by failing to pay this sum as the Judge had found.  The wife is entitled to rely solely on this further breach to ground the current committal application. Unlike the situations in the Kumari line of cases, she does not need to resort to an alternative argument that the husband remains in continuous breach of the 2011 Order. 

5.17.Mr Lam submitted that the 2015 Order ordered the husband to pay the outstanding sum by 1 June 2016, failing which there is a prescribed consequence with the order, namely he be committed to prison for three months.  He then referred to Kumari at [101] which stated, among other things, that if an alternative way of complying with the order is given to the person against whom the order is made, then it is not an order which can be enforced by committal.

5.18.I disagree.  The prescribed consequence of the 2015 Order was in relation to the breach of the 2011 Order for which the husband was committed and his committal was suspended.  At the same time the 2015 Order has a clear and express provision that the husband has to pay the outstanding sum on or before 1 June 2016, the breach of which could properly constitute a ground for committal.  The consequential provision for non‑compliance of the 2015 Order does not detract from this clear requirement.

5.19.Neill LJ at Kumari [101] was discussing the rules dealing with the delivery up of property.  He addressed Order 45, rule 5(3) of the Rules of Supreme Court when he made the statement about alternative way of complying with an order.  Order 45, rule 5(3) as reproduced in the Supreme Court Practice 1999 which was the last issue before the United Kingdom changed to the new rules is as follows :

‘ (3) Where under any judgment or order requiring the delivery of any goods the person liable to execution has the alternative of paying the assessed value of the goods, the judgment or order shall not be enforceable by order of committal under paragraph (1), but the Court may, on the application of the person entitled to enforce the judgment or order, make an order requiring the first mentioned person to deliver the goods to the applicant within a time specified in the order, and that order may be so enforced.’

5.20.Plainly Neill LJ’s statement on the restriction on committal if there is a provision for alternative way of compliance is in the context of Order 45, rule 5(3).  It has no general application to a situation like the present case.

5.21.In my view the wife has a proper basis to apply for committal against the husband.

5.22.Before I leave this issue, I will briefly deal with paragraph 2 of the 2015 Order which also includes an order requiring the husband to pay the sum of HK$300,000 per month.  But this order was, in fact, not relied upon by the wife in the Statement in which the wife expressly relied only on paragraph 1 of the 2015 Order.  The present summons filed by the wife in support of her application for committal referred to paragraph 2 of the 2015 Order.  But in the light of what was identified in the Statement, she was not allowed to expand upon the scope of the breach of the husband.  After all the Statement forms the basis upon which the application for committal was made.  It was verified by the wife’s fourth affirmation dated 23 November 2017 in which she made no reference to paragraph 2 of the 2015 Order.  

V.     Grounds of appeal

6.1.I will now address the grounds of appeal of the wife.  In so doing one must bear in mind that the Judge had found the husband to be in breach of the 2015 Order.  The discussion now is whether the Judge was correct to say that the wife is unable to prove beyond reasonable doubt that the husband was in contempt in respect of the ‘current position of the husband’ and other related issues. 

1)     Current situation

6.2.Ms Yip argued that the Judge was wrong to consider the current financial position of the husband at the time of the hearing before her in April 2019.  She argued that on the facts relevant to the husband’s state of mind he has and has had since the 2015 Order the means to pay but has refused and refuses to pay. 

6.3.Ms Yip refers us to YBL which states that :

‘ 112. The following shall be read into r.87, namely:

In determining a Committal Summons, where the court is satisfied that the judgment debtor ―

(a)     has or has had since the date of the order the means to pay the sum in respect of which he has made default; and

(b)     has refused or neglected, or refuses or neglects, to pay the sum,

it may, in its discretion, make an order of commitment against the judgment debtor.’

6.4.This follows the approach of paragraph 33.14 of the UK Family Procedure Rules 2010 which deals with committal by way of judgment summons :

‘ Committal on application for judgment summons

33.14.―(1) No person may be committed on an application for a judgment summons unless―

(a)  where the proceedings are in the High Court, the debtor has failed to attend both the hearing that the debtor was summonsed to attend the adjourned hearing;

(b) where the proceedings are in a county court, an order is made under section 110(2) of the County Courts Act 1984(1); or

(c)  the judgment creditor proves that the debtor―

(i)    has, or has had, since the date of the order the means to pay the sum in respect of which the debtor has made default; and

(ii)   has refused or neglected, or refuses or neglects, to pay that sum.

(2)     The debtor may not be compelled to give evidence.’  (emphasis added)

6.5.There is no dispute that the test is whether the respondent to the committal application ‘has, or has had’ the means to pay.  The issue here is what the relevant period of time for this test to be considered.

6.6.Mr Lam attempted to overcome this point by saying that the use by the Judge of the word ‘current’ is not as the wife suggested a reference to the time of the hearing in April 2019.  He submitted that this was specifically defined in the critical part of the judgment at paragraph 46 :

‘ … current position, which is that although he sold the two Midlevel’s properties he was not able to realize any significant sums from them and certainly he has not been able to use the net proceeds of sale to pay off what he owes …’

6.7.Mr Lam submitted that the husband’s evidence is that he had no means to repay the amount ordered under the 2015 Order by 1 June 2016 or thereafter.  He summarised the husband’s evidence as contained in his fourth affirmation, a topic which I will address later on.

6.8.I disagree with Mr Lam.  Ms Yip had clearly demonstrated by reference to the whole of the judgment, that the Judge was not focusing on 1 June 2016 and shortly thereafter but rather only at the time of the hearing :

(1)     [15]: ‘... given that there may have been a significant lapse of time and his financial circumstances may have changed, he should also be given an opportunity to explain his current circumstances.’

(2)     [27]: ‘the issue ultimately therefore should be whether or not he currently has the means to pay’;

(3)     [37]: ‘she has no idea about the husband’s current financial position... it is for the wife to show beyond reasonable doubt that the husband now has the ability...’;

(4)     [46]: ‘it is [husband’s] case that there is very little chance of him recovering the RMB20 million ... he says he now has no regular income ...’; and

(5)     [47]: ‘it seems to me that as things stand the wife has not been able to show beyond reasonable doubt that the husband has the current ability to pay her what he owes’.

6.9.In my view the relevant time for the purpose of considering whether the husband was in contempt of the 2015 Order is the period from the making of the order in May 2015, continued to 1 June 2016 which is the extended time for the compliance of the 2015 Order and a reasonable short period thereafter which may be needed for the preparation of the committal application.

6.10.It would be incorrect to fix the relevant time at the time of the hearing because the hearing of the trial may be delayed for various reasons as shown in this case.  But even assuming Mr Lam was correct to say that the Judge had only addressed the position in June 2016, as will appear in the latter part of my judgment, I am of the view that the Judge is still wrong to hold that the husband was not in contempt.  

2)     Insufficient evidence

6.11.The wife complained that the Judge was plainly wrong in finding that that there was ‘insufficient evidence to prove beyond a reasonable doubt that the husband has the current ability to pay her what he owed’.

6.12.The grounds relied upon by the wife in support of her committal application are set out in paragraph 2(a) to (l) of the Statement.

6.13.There were submissions before us about paragraphs 39 and 34 of the judgment below. It was submitted that by these paragraphs the Judge had wrongly relied on double jeopardy and excluded from her consideration paragraph 2(a) to (g) of the Statement.  Reference was made to the case of R v Z [2000] 2 AC 483 which addressed the relationship between double jeopardy and the admission of similar facts evidence in a subsequent trial. 

6.14.It is, however, not necessary to address these matters because Ms Yip has cut through the undergrowth and focused on the events identified in ground 2(h) to (l) of the Statement which the Judge had relied upon but considered insufficient to commit the husband.  These events are :

(1)     On 13 March 2015, the husband borrowed a loan of HK$48,320,000 from a company called HY Credit Co. Limited which was secured by two properties in Robinson Road (namely, the 43B Property and 43C Property) and three other properties (‘the HY Loan’);

(2)     According to the Loan Agreement, the purpose of the loan was for (1) discharging the existing second charges registered against four of the five properties; and (2) for making available funding for an intended acquisition of shares in Upbest Macau Land Company through Advance Jade Investments Limited in which the husband is a shareholder;

(3)     The husband gave a personal guarantee for the full amount of HK$48,320,000;

(4)     Amongst the total loan proceeds of HK$48,320,000 available, HK$29,500,000 was stake held by either solicitors for HY Credit or the borrowers’ solicitors for the purpose of making good redemption payment for all existing second charges registered against the four properties, and HK$350,000 was for legal costs.  The remaining HK$18,470,000 was not used to comply with the 2015 Order and the whereabouts of this approximate HK$18.5 million were never disclosed;

(5)     The HY Loan was shortly replaced by a new loan from Good Success Limited in the amount of HK$52 million i.e. an additional HK$4,000,000 was obtained (‘the Good Success Loan’) in July 2015.  The additional HK$4 million was not used for the partial payment of the judgment debt;

(6)     If the husband can raise funds of more than HK$22.5 million (i.e. HK$18.5 million plus HK$4 million) by signing and charging properties (which seemingly do not even belong to him) and provide personal guarantees of HK$48,320,000, then he can clearly have afforded to repay the judgment debt and comply with the May 2015 Order.  The fact that he used the loans purely for his own benefit is evidence of his deliberate intention not to pay.  This was clearly not by accident.

6.15.I agree with Ms Yip that there is sufficient material to find the husband to be guilty of contempt.  The husband has had the means to pay the wife but has refused to do so because he chose not to use the available funds to satisfy the debt he owes to her. 

VI.     Husband’s affirmation evidence

7.1.The clear principle regarding the use of a respondent’s affidavit in committal proceedings is that the applicant cannot make use of the respondent’s affidavit until the respondent has deployed it by reading or relying upon it.  This is stated by Wall J in In re B. (Contempt of Court : Affidavit Evidence) [1996] 1 WLR 627 at [629].  For ease of reading I have separated the four paragraphs of the judgment.

‘ (1) the court is entitled to require respondents to motions to commit to swear affidavits or produce statements of witnesses of fact on which they may wish to rely and to file and serve the same in convenient time before the hearing to permit proper preparation of evidence in reply; however

(2)     the applicant must prove his case on the evidence filed in support of the application (supplemented by any admissions made by the alleged contemnor upon which the applicant is entitled to rely); thus the applicant can make no use of the respondent’s evidence until the same is deployed by the respondent (by reading or relying upon the same);

(3)     a submission of no case to answer should be and is available to a respondent to an application to commit without the respondent at the same time being put to an election as to whether he would call evidence; and

(4)     a respondent who complies with a direction as envisaged under (1) above is not in peril of cross‑examination until such time as he deploys the evidence in his own case.’  (emphasis added)

7.2.Wall J at [638] further stated :

‘The applicant can make no use of the respondent’s evidence until it is deployed by the respondent, either by reading it or relying upon it. It equally follows that a respondent who obeys a direction to swear, file and serve affidavit evidence prior to the hearing does not by so doing put himself in peril of cross‑examination, until such time as he deploys the evidence in support of his own case.’

7.3.In Comet Products UK Ltd v Hawkex Plastics Ltd, Megaw LJ at [76-77] seemed to suggest that there is no general rule that a deponent of affidavit in contempt proceedings cannot be subject to cross‑examination.  This view may not be compatible with the advent of the human rights legislations which prevent the respondent to a committal proceeding to be a compellable witness.

7.4.In this case the husband had filed his fourth affirmation in which he claimed that he was unable to pay the wife.  He dealt with the loan he obtained in December 2010 of RMB 20 million to deal with a China project.  He referred to the HY Loan and Success Credit Loan.  He dealt with the sale of the Robinson Road properties and the negligible proceeds of sale after the release of mortgages and legal charges.  He claimed that this proved he did not ‘pocket’ the proceeds.  But he had also stated expressly that he would not be subject to cross‑examination.  By so doing this could only be construed as meaning the husband did not wish to deploy his affirmation because the husband could not have his cake and eat it as well.  One would have thought that would be the end of the matter and his affirmation should not be considered by the Court.  However, the Judge did consider his evidence on his financial position and his inability to pay.  The Judge’s approach which I consider to be in error may have been due to the stand taken by the wife’s counsel (not Ms Yip who only appeared on appeal) who said in his written closing submission that :

‘ Here, the JD’s affirmations have been filed and by such conduct he has chosen to open it up to the judge. It must be kept in mind that these Affirmations were filed voluntarily ― as opposed to being forced or coerced into filing the Affirmations. Similar to a confession statement that is admissible if obtained fairly in the criminal context, the JD’s affirmations in these proceedings are equally admissible. He has not at any point in time pre-trial made clear that despite affirmations he has filed, he did not wish to put it in before the closure of the JC’s case. The Affirmations can therefore be referred to by the JC. What cannot be done is for the JD to be cross‑examined on his affirmations as he has not deployed them for the purposes of this trial.’ (emphasis added)

7.5.Based on this submission, counsel for the husband jumped on the bandwagon and also referred to the husband’s affirmation notwithstanding his clear stand that the husband would not subject himself to cross‑examination.

7.6.The approach below is wrong.  The starting point is that the respondent to a contempt proceedings is not compellable to give evidence.  However, it does not mean that the Court cannot give directions for him to file evidence as he retains the right to elect whether to use it or not.  The preparation of evidence in advance is to prevent the applicant being taken by surprise by the evidence which may cause the hearing to be adjourned in order for her to file rebuttal evidence.  What is not permissible is for the applicant to say (like what happened below) that since the evidence has already been filed she can refer to it.  This is because the right to elect to use it or not is only given to the respondent.  The wife’s counsel misunderstood the law.  The Judge should make it clear that the husband’s right to use the evidence is subject to him being cross‑examined. 

7.7.But assuming for the purpose of argument that the husband’s fourth affirmation is treated as having been deployed, what he said in that affirmation would still not assist him.  The Judge in accepting what the husband said had overlooked the fact that what he alleged was not tested in cross‑examination.  More particularly the 2015 Order was granted on the husband’s undertaking (and which has never been withdrawn) as recorded in the judgment of 29 May 2015 :

‘ 20. The husband for his part asks for a continuation of the status quo. His counsel argues – and again I am referring to the submissions, paragraph 39 and 40-

“As the petitioner can only offer what he has some realistic prospect to pay, he repeats his offer to pay monthly instalments of $300,000. He would continue to abide by his undertaking to place Flat 43B and Flat 43C on the market for sale and to pay the net proceeds into court, alternatively, directly to the petitioner. He offers to pay the China funds when received. On this basis, he is capable of making and, if it became an order of the court, performing the following offer: to pay consecutive monthly instalments of $300,000; to pay the net proceeds of sale of Flat 43B and Flat 43C; to pay the China funds upon receipt in repayment of the then remaining debt.” ’

7.8.The husband’s credibility must be tested in the light of these undertakings.  Ms Yip has highlighted the problems of the husband’s financial arrangements which I have already referred to earlier and which I consider to be highly relevant in assessing the husband’s claim of inability to pay.  If the husband already had all the financial commitments which might swallow up the proceeds of sale of the Robinson Road properties, why would he still give the undertakings that the two properties would be put up for sale to satisfy the wife’s claim? 

7.9.In the husband’s fourth affirmation, he first referred to his third affirmation filed in respond to the earlier application by the wife to activate the suspended committal order.  He claimed in his third affirmation that he had ‘grossly overestimated my earning capacity and I have not been able to live up to my promise’.  He asked the Court not to activate the suspended committal order.  He asked ‘for indulgence of the Court so not to put me in jail, in order that I may have a final chance to meet the sum due’.  He promised to pay the wife HK$2 million of HK$1 million each by 31 August 2017 and 31 September 2017 respectively.  This was said in July 2017 in the now aborted proceeding.  Up to the hearing in April 2019, the husband still had not paid the outstanding sum apart from HK$500,000.  What the husband said then must be viewed with scepticism.  He was well aware, as disclosed in the third affirmation, that at the time of the 2015 Order, the Robinson Road properties were subject to another mortgage.  On that basis how could he realistically expect to pay the wife by the sale of these properties?  Further he chose to repay his sister HK$13.12 million when there was already the existence of the 2011 Order which he had entered into by consent.

7.10.His inability to repay the wife was self-generated because he put his priority in repaying his family member and his creditors ahead of his wife.  The husband’s fourth affirmation is an almost word by word repetition of his third affirmation apart from some brief additional statement that his family was also in financial difficulties and his inability to proceed with his projects if he were sent to jail.  The husband has not disclosed what he lives on since ceasing to earn the HK$950,000 a month salary as the Chief Executive Officer of Lightscape Technologies Management Ltd.  He said the ‘financial deals’ he is working on are ‘his assets’ without disclosing the size of these assets and whether he put money in these deals and the sources of the money.  None of what the husband said in his third or fourth affirmation could be properly tested in view of his stand that he would not be cross‑examined.  He was trying to get the best of both worlds.  In the circumstances the Judge was plainly wrong to accept what the husband said in his fourth affirmation regarding his inability to repay and hold on that basis the wife could not prove her case beyond reasonable doubt.  In my view it is not necessary nor desirable to remit the matter to the Judge because there is sufficient evidence adduced by the wife for this Court to come to the view that the husband is guilty of contempt by his breach of the 2015 Order.  There are already substantial delays in this case.

VII.  Activation of a suspended committal order

8.1.At the hearing a point was raised as to the proper procedure for the activation of a suspended Committal Order.  The Judge in her 2019 Order held that she might have been wrong with her 2017 Order when she agreed then with counsel for the husband that it was inappropriate to activate the suspension without hearing the matter afresh.  She said now the correct course at that stage was to hear the husband on the basis of the old law and for him to explain why the committal order should not be activated.

8.2.In my view the Judge’s doubt was misplaced.  By the time of the 2017 Order, this Court had already delivered the judgment of YBL.  The procedure previously adopted by the Judge in arriving at the 2015 Order was clearly not sustainable.  In the light of YBL it would be wrong to activate a committal order which was arrived at by a wrong procedure. 

8.3.As to the proper procedure to activate a properly obtained suspended committal order, the point has not been fully argued before us.  What is clear is that it is not permissible to rely only on a solicitor’s affidavit stating that the condition suspending the committal had been breached and obtain a warrant of committal on that basis : G v G [2001] 1 HKLRD 580 [CA] and on appeal to Court of Final Appeal, G v S (2001) 4 HKCFAR 419.  A full discussion on this topic can only be canvassed in an appropriate case when this issue arises. The present case is a fresh application for committal and not an activation of a suspended committal order.

VIII.  Conclusion

9.For my part I would allow the appeal and proceed to hear the husband’s mitigation before sentence.

IX.     Costs

10.I would make an order nisi that the wife is to have the costs of the appeal and below on an indemnity basis.  The Court will grant certificate for two counsel.

Hon Yuen JA :

11.I agree with the judgment and proposed order of Cheung JA.

[Mitigation heard]

The Court :

12.The parties accepted that the principles for sentencing in contempt of court are recently summarised by Au Yeung J in Arboit v. Koo Siu Ying (No 2) [2016] 3 HKLRD 154. 

13.We are of the view that this is an appropriate case for the husband to be committed to prison for a term of three months for his failure to comply with the order to pay the judgment sum on 1 June 2016.  The history of the case reveals a clear pattern by the husband to flaunt Court orders for payment made either with his consent or upon his undertaking to comply with an earlier order.  He had been found in contempt once and was given a chance to purge his contempt when the Judge suspended the operation of committal order by giving him further time to pay the wife.  To date he still has not complied with the order for payment. Accordingly we will now commit the husband to prison for a term of three months.  Mr Lam informed us that that the husband has to take care of two daughters aged nine and seven (the two daughters were born outside marriage) and an elderly mother.  This is a case where the Social Welfare Department may choose to step in in the event that the husband is imprisoned.  However, this is not a factor that will cause us to take a different decision.

Ms Anita Yip SC and Mr Eric Leung, instructed by Wan and Leung, for the respondent (judgment creditor)

Mr Benjamin Lam, instructed by S. Y. Wong & Co., for the petitioner (judgment debtor)