Gande Price (Importers & Distributors) Ltd v. Cheung Tin Shun and Others

Case No.HCA 2750/1981[2002] 1 HKLRD 348

Court

High Court CFI

Date23 Aug 1982

Judge—

Case Document

100%Judiciary

HCA002750/1981

Application for discharge from prison under O.49B - discretion to discharge even if judgment creditor discharges onus under O.49B rule 6(3) - discretion should be exercised very sparingly and should take into account all the circumstances as they are known as at the date of the hearing of the application – principles on which discretion may be exercised.

IN THE HIGH COURT	1981, No. 2750
	(Civil)

BETWEEN:

	Ganda Price (Importers & Distributors) Limited	Plaintiffs
	AND
	CHEUNG Tin-shun	1st Defendant
	CHEUNG Shun-lin	2nd Defendant
	CHEUNG Shun-wah	3rd Defendant
	LEUNG Suet-lin	4th Defendant
	Well Soon Limited	5th Defendant
	The Winner Supermarket Limited	6th Defendant

____________________

Coram: Hooper, J., in Chambers

Date: 23 August 1982

_____________

JUDGMENT

__________

1. This is an application by a young married woman for discharge from prison under O.49B rule 6(1) of the Rules of the Supreme Court. She is the 2nd defendant and interim judgment was signed against her by the Registrar on the 13th of July 1981 for $1,703,921,80 plus interest and a final judgment was signed by the Registrar on the 22nd of July 1981 for an additional sum of $1,296,020.45 plus interest, thus making a total outstanding judgment debt in the order of $3,000,000,00 plus interest.

2. When this amount was not paid, the judgment creditors succeeded in having her committed to prison under O.49B(1). She launched her first application for discharge on the 11th of February this year and her application was heard by me on the 19th of February and the 20th of February. Although her affidavit in support of her application was sparse of information to say the least, she was subjected to very extensive cross-examination on behalf of the judgment creditors. As a result of this, it became clear to me that not only had she failed to disclose such shares that she had, but for the purpose of avoiding payment of the debts covered by the judgment she had been guilty of acts of bad faith. The debts were due as a result of provisions supplied by the plaintiffs to the super-markets owned by the applicant. As a result of the cross-examination, it became clear that she admitted that she was aware of her legal responsibility to settle these debts and that she had the legal ability to do so. However, I was satisfied that it had been established that she had ignored her responsibilities by turning a blind eye to the activities of her elder brother who was the leading light behind these businesses. I therefore dismiss the application.

3. The present application is the second application and was launched on the 14th of June. It first came before me on the 18th of June when the judgment creditors were represented by Mr. Ronny Wong and the applicant by Miss Maria Yuen. At this hearing Miss Maria Yuen applied for an adjournment, pending a transcript of the notes of the evidence of the earlier hearing. As it was contemplated at this time that this would take some time, the order was made that the matter should be adjourned to a date not before 14 days. Eventually because of the intercession of the law vacation, the matter was set down for hearing on the 20th of September. This resulted in an application for that date to be vacated and for a new date to be fixed during the vacation. As the application involves a matter of personal liberty, the application was granted but costs were reserved.

4. Mr. Bernacchi who appears for the applicant has asked me to exercise my discretion to release the applicant on the basis that she has been incarcerated for some 7½ months now and has therefore satisfied the punitive aspects of the provisions of these laws and that so far as the enforcement aspect is concerned, it is unlikely that the applicant can present any further information.

5. Mr. Wong for the judgment creditors opposes the application maintaining that the position has not changed since February and that since the applicant has not given any new information to the court, her application should be refused.

6. Both Mr. Bernacchi and Mr. Wong recognize that in the light of the decisions of the Full Court in GO Yet-wah and The China State Bank Limited⁽¹⁾ and the Court of Appeal in LAI Cheuk biu and Robertson Wilson Co. Ltd. ⁽²⁾, I have a discretion to order the applicant to be released despite the fact that the judgment creditors have proved one of the acts which O.49B rule 6(3) requires to be proved to enable the judgment creditor to succeed in opposing the application.

7. It is with regard to the principles upon which this discretion should be exercised that there is a divergence of opinion. I am indebted to counsel for expressing their respective positions simply and eloquently.

8. Mr. Bernacchi has dram the analogy of a committal for contempt of court for failing to obey an order of the court. In both situations, he argues, you have a judgment, and that judgment has not been obeyed. The primary purpose of the committal in both cases is to get the prisoner to obey the judgment and in this case to pay the sum of money which-she has been ordered to pay. However, he argues, there is a subsidiary purpose in both cases, namely, punishment for breach of the court order. Even when it is clear from all the circumstances (including the time that has elapsed), there is no real likelihood that the order will be complied with, the court can exercise its discretion to order her release.

9. In support of this contention, he relies on a passage in Halisbury 4th Edition, Vol. 9, pares. 120

"When committal is to enforce obedience to an order of the court, and it is clear that continued imprisonment will not cause the contemnor to comply with the order, the court may release him provided that he has been adequately punished for his disobedience."

10. The authority cited for this proposition is In re Barrell Enterprises Limited⁽³⁾. Mr. Bernacchi relies on this authority as indicating the modern thinking on the matter of civil contempt. Mr. Bernacchi stresses the fact that this young woman has not been prosecuted for any criminal offence, and that the penal aspects of these provisions are purely subsidiary to the main purpose which is to get her to provide information which will enable the judgment creditors to enforce the judgment. He further stresses that she has now been in custody for getting on for 8 months and that her fault was really a negative one of turning a blind eye to the actions of her elder brother, she being at that time a young unmarried woman who relied upon her elder brother for advice and who had clearly been taken advantage of by her elder brother.

11. Mr. Wong, whilst accepting that I have a discretion, says that it is a condition precedent to my exercising that discretion to order her release, that she should have given all the information in her power. He draws a distinction between the first ground which the judgment creditors must prove in order to succeed in opposing the application and the other grounds. The first ground, he argues, is an irreversible process, because the money will then have been frittered away by means of the unjustifiable extravagance. As far as the second set of grounds is concerned, he argues, the process is a reversible one. The object to the law is to nullify the fraudulent transfer etc. The court will inquire whether further information has been supplied so enabling the process to be reversed.

12. Against this background Mr. Won argues that GO Yet-wah's ⁽¹⁾ case shows that it is a condition precedent to satisfaction on the part of the court, that the judgment debtor has given all information in her power.

13. So far as LAI Cheuk-biu's⁽²⁾ case is concerned, he submits that the ratio decidendi is the proposition that if a judgment debtor fails to establish any of the grounds, the court has no discretion to refuse release. By way of obiter dicta it establishes, on the other hand, the further proposition that if one of the 4 grounds is established the court can still release as there is a discretion permitting the release.

14. This discretion is applicable both for the 1st application for release as well as the 2nd application and all subsequent applications for release. He argues that there is a sharp distinction between civil contempt and proceedings under O.49B. The distinction is that in order for the judgment debtor to be imprisoned, not only must there be a failure to comply with the order for payment of money, but the judgment creditor has to go further and establish one of the 4 grounds prescribed in the rules and, he argues, the standard of proof is a high one. Consequently once one of these grounds is established, the onus shifts on to the judgment debtor to establish that she has given all information in her power.

15. On the contrary, in the context of civil contempt the case of Ruby Moy and others and CHAN Luen-ying and another ⁽⁴⁾ illustrates the considerations which are relevant to deciding whether to grant the release or not.

16. In particular, he relies on the passage in the judgment of Blair-Kerr, J., where he quotes from the observations made by Lord Clyde in Johnson v. Grant and others⁽⁵⁾ on the meaning of the expression "contempt of court" in Scotland.

"The phrase 'contempt of Court' does not in the least describe the true nature of the class of offence with which we are here concerned,.......................... The offence consists in interfering with the administration of the law; in impeding and perverting the course of justice. ..................... where people take upon themselves to break the law and then to defy its administration - in short directly to impede and to pervert the course of justice. The currency of the phrase is particularly regrettable, inasmuch as it seems to have encouraged the idea that all that has to be done by a person who has, however deliberately, committed this class of offence, and then wishes to avoid the consequences of his conduct, is to present an apology, as for an offence against the dignity of the Court. It is not the dignity of the Court which is offended - a petty and misleading view of the issues involved - it is the fundamental supremacy of the law which is challenged."

17. Mr. Wong also relies upon another passage in the same judgment at page 591 in the following terms:

"Having got the money, the defendants have stubbornly served a considerable term of imprisonment; but they do not appear to intend to purge, or attempt to purge, their contempt. In effect they say to this court:-

'The money may have been gambled; but, even if it was not gambled, and even if it was used to purchase 15 Maple Street, we cannot order the second defendant's wife to sell this property. Never mind the orders of court; even if you assume we have misappropriated the money we have been in prison long enough; let us out.'

This is simply not good enough. The first defendant is an old woman. The sympathies of the court are all on her side. But the administration of justice demands more than sympathy. As Lord Clyde said in Johnson v. Grant:-

'It is easy to be lenient; while it is always difficult to be just.'

Indeed, it is very easy to be lenient. But the maintenance of the rule of law demands the implicit obedience to orders of court. If a person is unable to comply therewith, it is for him to satisfy the court that he has made a genuine effort to do so. If he fails, or is unable, to do so, it is his bounden duty to supply the court with full and truthful reasons for such failure or inability."

18. Mr. Wong argues that in February I exercised my discretion in the light of the materials then provided. The applicant is now making a fresh application. On this fresh application she must furnish additional material over and above the materials supplied on the last occasion. Mr. Wong argues that this she has not done and furthermore, he argues that she has made no attempt to trace the money which she has admitted had been in the hands of the supermarket. He argues that her affidavit fell short of giving all the information in her power and showing that she has made a genuine effort to do so. He asks that her application be refused.

19. Although it is useful to consider the authorities in the context of civil contempt, there is, in my view, a distinction between the two types of situation. The penal aspect in the law of contempt is no minor consideration. This was illustrated quite forcibly by the judgment of Blair-Kerr, J., in the case of Ruby Moy and others ⁽⁴⁾. However, it would appear from Barrell's⁽³⁾ case that once the prisoner has satisfied the penal considerations, then the court will consider whether there is any point in keeping him in custody any longer.

20. Non-payment of the judgment debt in the present case, however, does not amount to a contempt of court. The fundamental supremacy of the law is not challenged if the judgment debtor does not pay the judgment debt. Non-payment results in the accumulation of interest at the rate of 12½% from the date prescribed in the judgment. Nevertheless, as was stated by Gould, J, in GO Yetwah ⁽¹⁾ the forerunner to this rule contemplates that there is an element of penalty attached to some of the matters mentioned in the rule, The main purpose of the provisions of O.49B is to enforce payment of the judgment debt, and the penal aspects are comparatively minor.

21. Having considered this matter and the arguments advanced, I have come to the conclusion that I have a discretion to grant the release of the applicant (even though the judgment creditors have discharged the onus on them under O.49B rule 6(3)) but that it is a discretion which should be exercised very sparingly and should take into account all the circumstances as they are known as at the date of the hearing of the application. Without wishing to lay down any exhaustive set of principles, I am of the opinion that it may properly be exercised when the length of time the applicant has spent in prison is sufficient to satisfy the penal aspects of the provisions and secondly where a continuation of imprisonment is not likely to result in settlement of the judgment debt or any part of it and that it may also be exercised on compassionate grounds.

22. Bearing in mind, inter alia, that the fault of the applicant in this case was of a negative character in that whilst having the legal ability to discharge her debts, she did not do so but turned a blind eye to the activities of her elder brother, who was the leading light behind the businesses, taking into account her young age, the fact that she is a young woman, who appears to have been very much under the influence of her elder brother, I feel that 7½ months' imprisonment has more than sufficiently satisfied the penal aspect.

23. So far as the enforcement aspect (the primary aspect) is concerned, she is a young woman, whose early married life (she was married in June 1981) has been completely ruined by a long enforced absence from her young husband and whose first born child was born in custody. Taking all these matters into account it appears to me that this is adequate proof that she is not in a position to provide any further information, for otherwise, she would in all probability have done so by now.

24. I, therefore, in the exercise of my discretion, order that she be forthwith discharged from prison.