Leung Kwok Fu and Others v. Chen Kong Mian and Others

HCMP003779/1999

HCMP3779/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

IN THE MATTER BETWEEN

Coram: The Hon Mr Justice Findlay in Chambers

Date of hearing : 8 November 1999

Date of handing down of judgment : 10 November 1999

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JUDGMENT

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1. On 21 August 1998, I handed down a written judgment in respect of proceedings brought by the applicants against the fourth respondent (the company). I ordered the company, amongst other things, to prepare proper accounts for its management of a residential block under a deed of covenant and the Building Management Ordinance (Cap. 344). This order was simple and easy to understand.

2. The first and second respondents are the only directors of the company. The third respondent is the son of the directors, and manager of the company. As manager, the third respondent is an officer of the company.

3. On 28 June, 1999, the applicants applied for leave to seek an order of committal against the first, second and third respondents. The applicants also applied for leave to dispense with personal service of the order on these respondents.

4. The statement filed by the applicants in support of this application revealed that a copy of my judgment had been handed to the solicitors for the company, and that there had been communications between the respective solicitors regarding compliance with my order; indeed, there had been some attempts by the company to comply with the order. These facts are not in dispute.

5. It seemed to me that, prima facie, there had been a failure to comply with my order, and I gave leave for the applicants to apply for committal of the first, second and third respondents, as the responsible officers of the company. It also seemed to me that any responsible solicitor would have explained my judgment, the effect of my order, and the consequences of not complying with it to the company, through its responsible officers. As I have said, it appeared that the company was aware of my judgment, and was making some attempt to comply with it. On the basis that it seemed that the company and its officers were already aware of the terms of my order contained in my judgment, I granted the application to dispense with service.

6. On 15 July 1999, the applicants issued a notice of motion seeking an order that the first to third respondents be committed for contempt. The only relief sought against the company was an order for costs.

7. On 13 August 1999, the respondents issued a summons seeking an order that my order dispensing with service be set aside, and that, consequently, the notice of motion be struck out.

8. In his affirmations in support of this summons, the third respondent says that he is the manager of the company. He says that the first and second respondents are the only two directors of the company, but, because of their age and infirmities, they were not involved in the affairs of the company. He says "I understandably did not bother them with" this case. He confirms, as I anticipated, that the company's solicitors "promptly reported to me the making of the order and provided a copy of the judgment". He told the first respondent, and probably the second respondent, that the company had lost the action, but he did not tell them what the company was required to do. He says that he appreciates the company's obligations under the order.

9. Miss Wong accepts that the applicants were not guilty of any non-disclosure of any material fact when they applied for and obtained the dispensation. She complains only that the applicants did not draw my attention to the relevant authorities that, she submits, say I should not have granted the dispensation. I do not accept that. No authority that has been drawn to my attention says that I should not have granted the dispensation. Certainly, there is no authority that says, as Miss Wong contends, that dispensation should only be granted where the respondent is evading service. If that were what was intended by the rule, I would have expected it to say so. Rule 7 is framed in terms typical of rules that allow a wide discretion; "if it thinks just to do so.". The discretion to dispense with personal service is a broad one, extending to granting this retrospectively, and it seems to me that the obvious situation in which it is "just" to grant the order is where it seems clear that the respondent already knows about the order, and the consequences of not obeying it. After all, the whole purpose of service is to draw the terms of the order to the attention of the person affected. Where that person already possesses that information, and is, in fact, making attempts to comply with the order, it would seem to be an exercise in futility to tell him what he already knows. That would serve only to increase costs.

10. It is the respondents' case that the first and second respondents are not in a fit state to deal with the affairs of the company. If that is the case, they should not be directors of the company, because, I am told, they are not able to carry out the obligations of that office. If this is indeed the condition of the first and second respondents, personal service of the documents on them would have served no purpose whatsoever. On the evidence of the third respondent, the probability is that these papers, like all the other papers concerning the company, would have been handed to the third respondent to handle. Miss Wong says that, by failing to serve the first and second respondents personally, they were deprived of their right to see that the order was complied with. That is unrealistic on the evidence. If the first and second respondents were able to see that the company complied, it is the third respondent who deprived them of their right to secure compliance by failing to tell them what was required of the company. He did not tell them because, as I understand his evidence, they were not fit to attend to the matter. Now, that may or not be so; that, and other matters, are for investigation at the hearing for committal, but there is absolutely no reason for setting aside an apparently validly made order dispensing with personal service because it appears, after the event, that the directors of the company, who should be responsible for implementing the order, are suffering from such disabilities that makes it not possible for them to undertake that responsibility, or because one officer of the company, who knew what the company was required to do under my judgment, thought fit not to tell this to other officers of the company. There can be no doubt whatsoever that the company, through its officer, the third defendant, knew about the terms of my order, its obligation to comply and the consequences of a failure in that obligation. The first to third respondents of the company are responsible for implementing my order, and may cited for contempt for failing in that responsibility. Whether or not, in the circumstances of the case, any one of them should be punished, and, if so, to what extent, is a matter to be decided in the committal proceedings. The inability of the first and second respondents to ensure that the company complied is a matter for consideration in those proceedings, not now.

11. In the result, the summons is dismissed.

12. There seems no obvious reason why costs should not follow the event. I make an order nisi that the respondents pay the applicants' costs.

Representation:

Mr Chan Chun Yee, Thomas, instructed by Messrs Peter WK Lo & Co, for the applicants.

Miss Lisa KY Wong, instructed by Messrs Baker & McKenzie, for the respondents.