Case Document

100%Judiciary

HCA009218B/1999

HCA 9218/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9218 OF 1999

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BETWEEN
	DARYL MARK O'SHAUGHNESSY	Plaintiff

	AND

	DAVID WILLIAM GUNSON	1st Defendant
	PACIFIC SUPERANNUATION FUND LIMITED	2nd Defendant

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Coram: Hon Chung J in Court

Date of Hearing: 12 April 2000

Date of Decision: 12 April 2000

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D E C I S I O N

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1. This is the decision on the Plaintiff's Notice of Motion to commit the 1st Defendant for Contempt of Court. Leave to do so was given to the Plaintiff on 1 March 2000.

2. The history of the proceedings can be briefly stated as follows. The Plaintiff commenced this action against the 2 Defendants on 4 June 1999 claiming that his money which has been placed with the 2nd Defendant on trust for the Plaintiff in November 1997 was wrongfully converted by the 2 Defendants. This claim was denied by the 1st Defendant in his defence filed on 23 September 1999. A number of interlocutory applications were taken out by the parties, including the Plaintiff's application for summary judgment taken out pursuant to R.H.C. Order 14. That application came to be heard by Cheung J on 7 January 2000 and resulted in a consent order being made. The consent order contains an undertaking given by the 1st Defendant in the following terms.

"Upon the 1st Defendant's undertaking that he will within 14 days pay or cause to be paid unconditionally (save for the usual indemnity given between trustees) the sum of A$246,090.94 which stands to the credit of the Plaintiff's account with the 2nd Defendant to Byrne Corporate Services Ltd as agent for the Plaintiff's new pension fund trustees Byrne Trust (NZ) Ltd and/or Byrne Trust Co. Ltd" ("D1's undertaking")

3. It is in relation to an alleged breach of D1's undertaking (which is denied by the 1st Defendant) that the Plaintiff commenced this application for contempt.

4. It is trite law that an undertaking given to court has the same force as an order made by the court: see for example Borrie & Lowe: The Law of Contempt (1996) 3rd ed., pp 578 to 582.

5. Further, D1's undertaking was that "he will within 14 days pay or cause to be paid unconditionally ... A$246,090.94." This may be regarded as the 1st Defendant's personal undertaking to pay that amount. I understand from Mr Pirie, however, that the 1st Defendant gave this undertaking not in his personal capacity but in his capacity as a trustee and director of the 2nd Defendant. This point has not been disputed by the 1st Defendant at the hearing before me.

6. It is also trite law that in contempt proceedings, the applicant (the Plaintiff in this action) has the burden of proving that the respondent (the 1st Defendant in this action) is in contempt. The standard of proof is a criminal one, that is, the applicant must prove the respondent's contempt beyond all reasonable doubts.

7. The following matters are undisputed:-

(a) D1's undertaking was given to court on 7 January 2000;

(b) he was present when D1's undertaking was given and he understood its nature and effect;

(c) no payment or transfer of money has been made in accordance with D1's undertaking.

8. The evidence filed by the 1st Defendant (and the arguments advanced by him at the hearing) was to the effect that:-

(1) at the time when he gave D1's undertaking, the 1st Defendant has reasonable grounds to believe that he would be able to comply with it. Further, he honestly believed that it could be complied with timeously;

(2) matters which caused the non-compliance of D1's undertaking were matters beyond his control and included:-

(a) delay caused by clearance problems in Australia;

(b) delay caused by the internal procedure of the banks concerned;

(c) delay caused by the 1st Defendant's colleague in Australia who was in charge of the funds in question.

9. On 30 March 2000, directions were given for the hearing of the contempt proceedings. One of the directions was:-

"Subject to notice of cross-examination being given to the other party on or before Friday 7 April 2000, the parties be at liberty to cross-examine the deponent of affidavits intended to be used or relied upon at the hearing on 11 April 2000 and for that purpose unless the deponent of the said affidavits attend court to be cross-examined, their affidavits cannot be used or relied upon at the said hearing."

10. No notice to cross-examine was given by the 1st Defendant on the deponents of the affidavits filed by the Plaintiff. On the other hand, the Plaintiff has given a notice to cross-examine the 1st Defendant. At the hearing, Mr Pirie for the Plaintiff indicated that he wished to cross-examine the 1st Defendant and the 1st Defendant elected to offer himself for cross-examination.

11. Two main areas of criticism were launched by Mr Pirie in his cross-examination of the 1st Defendant:-

(a) previous representations made by the 1st Defendant dating as far back as 1998 to the effect that the Plaintiff's funds were available (or available shortly) but none of which materialised;

(b) the lack of any documentary verification of the whereabouts of the Plaintiff's funds.

In the course of doing so, Mr Pirie has referred the 1st Defendant to quite a number of documents which I do not propose to set out herein.

12. Having heard the testimony, the parties' submissions and considered the materials before me, I find the 1st Defendant's testimony to be unbelievable. No satisfactory explanation has been given by him as to why he made the previous representations and why they did not materialise. Similarly, no satisfactory explanation has been given by him as to the lack of documentary proof of the whereabouts of the Plaintiff's funds. For these reasons, I find the 1st Defendant's testimony as well as his affidavits to be untruthful evidence and therefore reject them.

13. In these circumstances, I also find that the Plaintiff has established that there was no reasonable excuse for not complying with D1's undertaking. Mr Pirie has invited me to infer that there was certain motive for the 1st Defendant to have given D1's undertaking. With respect to Mr Pirie, I do not find it necessary to make a positive finding as to the 1st Defendant's motive in relation to these matters at least insofar as this decision is concerned. What is relevant is that I consider I am entitled to (and should) infer from the admissible evidence before me that the 1st Defendant was wilfully in breach of D1's undertaking by not complying with it, that is, to pay or cause to be paid within 14 days from 7 January 2000 the sum of A$246,090.94 which stands to the credit of the Plaintiff's account with the 2nd Defendant to Byrne Corporate Services Ltd as agent for the Plaintiff's new pension fund trustees Byrne Trust (NZ) Ltd and/or Byrne Trust Co. Ltd.

14. For the above reasons, I find that the Plaintiff has established that the 1st Defendant has been in contempt.