Kmh, Kmkt, and Kmcj, The Committee of the Estate of Kcc, A Mentally Incapacitated Person (Pursuant To the Order Made By Deputy High Court Judge H. Au-yeung on 19 June 2023 Under Part Ii of the Mental Health Ordinance, Cap 136) v. Lam Ho Chi

HCMP 1338/2023

[2023] HKCFI 2714

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLEANOUS PROCEEDINGS NO 1338 OF 2023

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J U D G M E N T

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A.  INTRODUCTION

1.The Plaintiff is the Committee of the estate of KCC. The Defendant (“Lam”) is the son of Madam Chan Ah Ping (“Madam Chan”) who used to take care of KCC.

2.In HCA 70/2023 (“the High Court Action”), Lam was sued as a 2^nd defendant together with Madam Chan as the 1^st defendant. KCC was then represented by an Interim Receiver. It was alleged that Lam and Madam Chan had misappropriated money belonging to KCC. Lam and Madam Chan are said to have held and holds those monies and their traceable proceeds on trust for KCC.

3.After hearing counsel on all sides, the court granted an interim injunction order prohibiting Lam and Madam Chan from disposal of KCC’s assets up to the value of HK$4.75 million and HK$24.69 million, respectively; and ordered Lam and Madam Chan to make disclosure of their dealings with the misappropriated sums (collectively, “the Order”).

4.The material parts of the Order are:

“10. Each of the 1^st and 2^nd Defendants [i.e. Lam] must inform the Plaintiff’s Solicitors in writing by fax number 2544-9318 and by email address [email protected]; [email protected]; [email protected]; and [email protected] followed by formal signed hard copies within 72 hours (including weekends and holidays) of being served with this Order of (i) his/her dealing with the sums received by him/her as set out in Annex 1 [of the Order], the current whereabouts of such sums and/or the location, nature and value of their traceable proceeds/substitutes, including all assets which represent in whole or in part or are derived from the said sums and any interest earned thereof; and (ii) all their respective assets of an individual value of HK$10,000 or more whether in or outside Hong Kong, whether in his/her own name or not and whether solely or jointly owned, giving the value, location and details of all such assets. The 1^st and 2^nd Defendants may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate them.

11. This information must be confirmed in an affidavit/affirmation which must be served on the Plaintiff’s Solicitors on or before 2 February 2023.”

§§10 and 11 of the Order shall be referred to as “the Disclosure Order” below.

5.Lam has indisputably failed to comply with the Disclosure Order even till today. This is the hearing of the plaintiff’s application by originating summons for an order to commit Lam for contempt of court.

B.  LEGAL PRINCIPLES ON COMMITTAL FOR CONTEMPT

6.To be able to commit for contempt, there must have been personal service of the relevant order on the alleged contemnor: Order 45, rules 5(1) and 7(2)(a). However, the Court has power to dispense with personal service and order substituted service pursuant to Order 45, rule 7.

7.Though this is a call-over, there is nothing to prevent the court from disposing of the originating summons summarily if there is no triable issue: Order 28, rule 4(1) of the Rules of the High Court and Hong Kong Civil Procedure 2023, Vol 1, §28/4/2. There is of course the prerequisite that the Court should be satisfied that the papers in connection with the contempt proceedings and notice of appointment to hear originating summons have been served on the alleged contemnor.

8.Once satisfied as to service or that service was dispensed with, the Court may proceed with the hearing in contempt proceedings in the absence of the defendant, as the court’s process should not be frustrated by the recalcitrance of the defendant: Hong Kong Civil Procedure 2023, Vol 1, §52/6/4.

9.The approach to committal for civil contempt has been set out by DHCJ H Au-Yeung in the case of Chan Ka Ho Abraham v Tung Yin Ling Cora [2023] HKCFI 1170, at §§32-33:

“(1) The approach to committal for civil contempt by reason of a breach of a court order is a three-stage process, namely:

(a) To construe the relevant court order to ascertain its meaning and operation;

(b) To determine whether the defendant has in fact complied with the orders as so construed;

(c) To consider whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt.

(2) The burden is on the plaintiff to prove a defendant’s contempt beyond reasonable doubt.

(3) An order should be construed strictly because the court is concerned with an order which has a potentially draconian effect on the commercial and economic freedom of an individual. What must be ascertained is the meaning which the document would convey to a reasonable person having all the background which would reasonably have been available at the time the order was made. This includes the purpose for which the order was made.

(4) Once a failure to comply with an order is found, there is prima facie contempt. It is for the defendant to show that it has always been impossible of carrying out the terms of the order. Even in those circumstances, the contemnor should have applied to the court for further time at the first practicable opportunity.

…

(6) In relation to the mental element, it is not necessary to prove that the defendant’s conduct was contumacious, i.e. he/she deliberately intended to disobey the order. It is sufficient to prove that he/she knew the facts which are said to make his act or omission a contempt and that such act or omission was not accidental.

…”

10.DHCJ H Au-Yeung also refers to the evidentiary principles applicable to contempt proceedings, following Jeanny Helena Franslay v Fung Ariel Mei Shan [2021] HKCFI 258, G Lam J (as he then was):

“(1) The burden lies on the plaintiff to prove the alleged contempt beyond reasonable doubt…

(2) Whilst the defendant may bear an evidential burden in relation to particular matters he has raised to exculpate himself, there is no legal burden on him to prove anything affirmatively.

…

(5) For an inference of fact properly to be made: (a) it must be grounded on clear findings of primary fact; (b) the inference must be a logical consequence of those facts; (c) beyond being logical, the inference must be “irresistible”, that is, it must be the only inference that can reasonably be drawn on the basis of those facts: ... The third requirement has also been expressed in other ways, such as that “the inference must be compelling — one (and the only one) that no reasonable man could fail to draw from the direct facts proved…, or that the facts must be such as to exclude reasonable hypotheses consistent with innocence...

(6) In other words, if the court concludes from the evidence that there is more than one reasonable inference to be drawn and at least one of them is inconsistent with a finding of contempt, the plaintiff fails…

(7) The standard of proof beyond reasonable doubt does not mean that every piece of evidence that does not by itself establish a fact beyond reasonable doubt should be disregarded. It is sufficient if the body of evidence relied on, viewed as a whole, satisfies the burden…

(8) In appropriate cases, proof of a fact by inference to the requisite standard may be achieved by taking various pieces of circumstantial evidence together, like cords comprised in a rope, or strands in a cable, or converging rays of light producing a body of illumination, such that “there may be a combination of circumstances, no one of which would raise a reasonable conviction, or more than a mere suspicion, but the whole, taken together, may create a strong conclusion of guilt, that is, with as much certainty as human affairs can require or admit of. ”

C.  SERVICE

C1.  Service of the Order

11.The Order was made at a hearing after the Court has heard representations from counsel for Lam and his mother. On the same day, after the Order was made, the solicitors then acting for Lam, Peter Cheung & Co, came off the record. A Notice to Act in Person was filed on behalf of Lam and his mother, stating their full address to be in Sham Shui Po (“Sham Shui Po Address”).

12.Two services of the sealed copy of the Order on Lam are relevant to the contempt proceedings:

(1)  Service by insertion into the letter box at the Sham Shui Po Address, at 6:21 pm on the day of the Order. The time for compliance with §10 of the Order expired on 23 January 2023 at 6:21 pm. The time for compliance with §11 of the Order was 2 February 2023.

(2)  Service on Or & Partners on 1 March 2023, the day after they came on record to act for Lam and his mother. The time for compliance with §10 of the Order expired on 4 March 2023. The time for compliance with §11 of the Order had expired.

13.Lam & Co has made efforts to fix an appointment with Lam and Or & Partners to effect personal service on Lam, but to no avail. Or & Partners even informed Lam & Co on 11 April 2023 that they had been unable to contact Lam and the retainer had terminated. However, it was on 7 June 2023, that Master Matthew Leung made an order for Or & Partners to cease to be solicitors for Lam in the High Court Action.

14.On 19 June 2023, DHCJ H Au-Yeung appointed the Committee for KCC in HCMH proceedings. By an order made by DHCJ MK Liu on 28 June 2023, the Committee substituted the Interim Receiver as plaintiff in the High Court Action.

15.In view of the evidence from Lam & Co that Lam had been evading service, this Court granted an order on 6 July 2023 to dispense with personal service of the Order on Lam. In the same order, this Court granted leave to the Committee to commence these contempt proceedings. The Committee was also granted leave to serve all relevant court documents of the Committal Proceedings (“Committal Documents”) by way of substituted service on Lam by ordinary post to his “Tsz Wan Shan Address” (with details as set out in the 6 July 2023 order) and Sham Shui Po Address.

C2.  Service of the Committal Documents

16.The originating summons for committal for contempt was filed, with leave out of time, on 18 August 2023.

17.The statement, the originating summons, supporting affirmations and the notice of appointment to hear originating summons (“Committal Documents”) have been served by way of substituted service by post on Lam on 22 August 2023 at the Sham Shui Po Address and Tsz Wan Shan Address. Lam has not filed any acknowledgement of service. The written submission, hearing bundles, costs statement and authorities have also been served on Lam at the Tsz Wan Shan and Sham Shui Po Addresses by post on 12 October 2023 but he has failed to attend today’s hearing.

18.Committal Documents served at the Sham Shui Po Address have not been returned.

19.Those posted to Lam at the Tsz Wan Shan Address were returned by Madam Chan. However such return would not assist Lam because service was complete once the document has been sent by post under Order 65, rule 5 of the RHC: Dao Heng Bank Ltd v Tam Siu Ping Christine, CACV 399/2001, 26 March 2002, at §9.

20.Further, Lam’s stated address for service in the High Court Action was the Tsz Wan Shan Address, as evidenced by his home-made defence dated 11 July 2023 and his own letter dated 23 June 2023 to DHCJ MK Liu regarding the application for default judgment brought against him in the High Court Action.

21.The irresistible inference is that the Tsz Wan Shan Address was and is still one of the last known addresses of Lam. I agree with Mr Jeff Yau, counsel for the Committee, that in view of the history of Lam’s evasion of service which led to the 6 July 2023 Order, the return of the Committal Documents by Chan (instead of the post office or Lam) was but a tactic on the part of Lam to avoid the consequences of breaching the Order. Further, the folder containing the Committal Documents had plainly been opened by or with the approval of Lam as 2 documents inside the folder had been taken out. In the premises, Lam must have been fully aware of the present proceedings but chose not to attend.

22.I am satisfied with service of the Order, the Committal Documents and relevant documents for this hearing and therefore proceed in the absence of Lam.

D.  BREACH OF THE ORDER

23.The terms of the Disclosure Order are simple and unambiguous. They require disclosure first in any form of writing and then by affirmation. Lam did not comply with either §10 or §11.

24.If the Committee can only rely on the second service of the Order on 1 March 2023, Lam has still failed to comply with §10. Though it was impossible for him to comply with §11 by 2 February 2023, it would not lessen or increase the culpability of his breach of §10.

25.Penal notice was given. Lam & Co had repeatedly warned Lam of the serious consequences of non-compliance with the Disclosure Order by English and Chinese letters to him dated 20 January, 30 January and 1 February, 2023; and to Or & Partners on 2 and 8 March 2023.

26.At a hearing on 28 February 2023, Or & Partners informed the Court that Lam’s “trading business had been affected by the Injunction Order”. It put beyond doubt that Lam had knowledge of the existence of the Order, the terms and consequences of the same.

27.Whilst Lam has chosen to file a defence and made representation to DHCJ MK Liu to resist an application for default judgment, Lam has chosen to ignore all letters and enquires from Lam & Co relating to the Disclosure Order.

28.This is a case where Lam has ignored the Disclosure Order wholesale even when he was represented by Or & Partners. There was no delay in the Committee applying for committal for contempt as the application for leave commenced on 26 April 2023 after Lam & Co has tried resolving the matter with Lam by correspondence.

29.I am satisfied beyond reasonable doubt that Lam has breached the Disclosure Order. It was deliberate and not accidental or unintentional. He is guilty of contempt of court.

E.  SENTENCE

30.The appropriate penalty would seem to be imprisonment for willful failure to observe a court order: Chan Ka Ho Abraham v Tung, §42.

31.Since Lam is absent at this hearing, a warrant of arrest shall be issued to have him arrested and brought before the Court as soon as possible for him to make submission as to sentence.

F.  COSTS

32.There is nothing to show that there should be a departure from the usual order for the contemnor to bear costs of the contempt proceedings (including the application for leave) on indemnity basis. I summarily assess costs and award the Committee costs in the sum of $475,600. I make an order nisi on costs accordingly.

33.I thank Mr Yau for his assistance.

Mr Jeff Yau, instructed by Lam & Co., for the Plaintiff

The Defendant was unrepresented and did not appear