Re Wing Fai Construction Co Ltd
Read the full judgment text of HCCW 735/2002 on BabelCite. This High Court CFI judgment was delivered on 23 July 2004.
1. There is before me a submission of no case in an application to commit the respondent, David John Kennedy, for criminal contempt. The respondent is a member of the Hong Kong Society of Accountants and a director of RSM Nelson Wheeler Corporate Advisory Services Limited ("RSM"). He was and is at all material times a joint and several liquidator appointed by the court in the liquidation of Wing Fai Construction Company Limited ("the Company"). The application to commit the respondent for contem
Cited by 6 cases · Cites 5 cases
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HCCW000735D/2002 HCCW 735/2002 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES (WINDING-UP) NO. 735 OF 2002 ____________
____________ Coram: Hon Kwan J in Court Dates of Hearing: 6, 7, 8 and 13 July 2004 Date of Judgment: 23 July 2004 ______________ J U D G M E N T ______________ A submission of no case 1.There is before me a submission of no case in an application to commit the respondent, David John Kennedy, for criminal contempt. The respondent is a member of the Hong Kong Society of Accountants and a director of RSM Nelson Wheeler Corporate Advisory Services Limited ("RSM"). He was and is at all material times a joint and several liquidator appointed by the court in the liquidation of Wing Fai Construction Company Limited ("the Company"). The application to commit the respondent for contempt was brought by two former directors of the Company, Kelly Cheng Kit Yin ("the 1st applicant") and Robert Yip Kwong ("the 2nd applicant"). 2.On 20 April 2004, I gave leave under Order 52 rule 2 of the Rules of the High Court on the ex parte application of the applicants to apply for an order of committal against the respondent on the grounds disclosed in the statement filed by the applicants on 2 April 2004. That statement was amended pursuant to leave given on 2 July 2004. 3.These proceedings are exceptional in that an officer of the court is accused of having committed a contempt of court. It is not because he had acted in breach of a court order or an undertaking given to the court. The applicants' complaint arises from various uses that the respondent had made of the transcripts of evidence given by them in private examinations conducted under section 221 of the Companies Ordinance, Cap. 32, without obtaining the leave of the court under rule 62(2) of the Companies (Winding-up) Rules ("the Winding-up Rules"). They also complain of the reports made by the respondent directly to the Commercial Crime Bureau of the police ("the CCB"), instead of proceeding under one of the avenues open to a liquidator in a compulsory winding up as provided in Cap. 32. 4.At the conclusion of the applicants' case, Mr Yu, SC, who appeared for the respondent, submitted that there is no case to answer in respect of all of the grounds in the Re-amended Notice of Motion for one or more of the following reasons:
5.Mr Yu's submission of no case is primarily based on the contention that as a matter of law, no case for contempt has been made out. Mr Whitehead, SC, who appeared for the applicants, accepted that as questions of law have been raised, they should be resolved at this stage of the proceedings. 6.Although the submission of no case was made by the respondent alone, I also have the benefit of submissions from the Official Receiver's counsel, Miss Linda Chan, on the law and practice in a number of areas. 7.I will first set out the relevant background matters. The background and related proceedings 8.Until 22 April 2002, the Company was a subsidiary within the China Rich Group, the holding company of which is China Rich Holdings Limited ("China Rich"). China Rich is incorporated in Bermuda and listed on the main board of the Hong Kong Stock Exchange. The subsidiaries of China Rich are held through Benefit Holdings International Limited ("Benefit Holdings"). The applicants were directors of the Company until 26 July 2001 and are directors of China Rich at all material times. 9.On 23 November 2001, the Company was given a letter by the directors of China Rich confirming that the latter would continue to provide financial support to the Company for the foreseeable future. On 22 April 2002, Benefit Holdings sold its entire shareholding in the Company to Sino Glister International Investments Limited ("Sino Glister"). 10.On 6 July 2002, Enfield Construction Company Limited, a former sub-contractor of the Company which was in liquidation, presented a winding-up petition against the Company in HCCW No. 735 of 2002. On the same date, the respondent and Cosimo Borrelli, also of RSM, were appointed the provisional liquidators of the Company. The Company was ordered to be wound up on 9 December 2002 and the provisional liquidators were appointed by the court as the liquidators on 28 February 2003. 11.A number of proceedings have been instituted by the liquidators on behalf of the Company and by various other parties, and are set out in a chronology annexed to the Amended Statement of the applicants. In most of these actions, an important issue in dispute relates to an alleged set-off agreement between China Rich and its various subsidiaries and the agreement between Benefit Holdings and Sino Glister for the sale of the shares of the Company. The proceedings relevant to the present application are described below. 12.On 12 July 2002, the respondent filed a winding-up petition on behalf of the Company in Bermuda against China Rich and obtained an order from the court in Bermuda appointing himself as the provisional liquidator of China Rich. On 13 July 2002, the Company obtained an interim injunction from the court in Hong Kong restraining the staff of China Rich from entering the office premises until 15 July 2002 when the Company's application for appointment of provisional liquidators of China Rich was to be heard in the Hong Kong court. Following a settlement reached by the Company with China Rich, the petition in Bermuda was withdrawn and the proceedings against China Rich in Hong Kong were discontinued. 13.On 2 August 2002, the respondent requested the applicants to attend a meeting with the liquidators of the Company for an interview regarding the affairs of the Company. After an exchange of correspondence between solicitors, the 1st applicant attended an interview with the liquidators accompanied by her then solicitors on 7 October 2002. As the respondent was not satisfied with the extent of the information provided by the 1st applicant at the interview, he sought and obtained an order on 25 March 2003 for the applicants and another former director, Kam Shing, to be examined under section 221. The applicants were summoned before the court to be examined on oath on 4 and 30 July 2003. The 2nd applicant was re-called for further examination on 16 and 17 February 2004. Transcripts of the applicants' depositions in the private examinations were made. 14.On 4 March 2003, the Company issued a writ in HCA No. 810 of 2003 against Benefit Holdings, the applicants and Kam Shing, for breach of the provision in section 47A of Cap. 32 against financial assistance by the Company for the purchase of its own shares by Sino Glister, and for breach of fiduciary duties at common law. A defence was filed and served on 17 April 2003. Lists of documents were exchanged in May 2003 and supplemental lists of documents were exchanged thereafter. 15.On 28 February 2003, a subsidiary within the China Rich Group, Wai Shun Construction Company Limited ("Wai Shun"), acting by its liquidators, being the respondent and Stephen Briscoe of RSM, presented a petition to wind up another subsidiary within the China Rich Group, Fitzroya Finance Company Limited ("Fitzroya"), in HCCW No. 253 of 2003. After an agreement was reached between Wai Shun and Fitzroya for an amount equivalent to the petitioning debt to be placed in an escrow account pending the determination of the dispute in separate proceedings, on 31 October 2003, Zhukuan Wing Fai Construction Company Limited ("Zhukuan Wing Fai", which was 51% owned by the Company), acting by its liquidators, Nicholas Hill and Stephen Briscoe of RSM, filed an application for Zhukuan Wing Fai to be substituted as the petitioner in the place of Wai Shun. The affidavit in support was made by the respondent. The liquidators of Zhukuan Wing Fai also sought the appointment of provisional liquidators for Fitzroya on 4 November 2003; that application was withdrawn on 7 November 2003. On 3 March 2004, an order was made dismissing the application of Zhukuan Wing Fai to be substituted as the petitioner and the petition was dismissed on 22 March 2004. 16.On 13 June 2003, the Company issued an application ("the unfair preference application") in HCCW No. 735 of 2002 against Benefit Holdings seeking a declaration under section 266 of Cap. 32 that payments of approximately HK$58 million made by the Company to Benefit Holdings be constituted unfair preferences. The respondent filed an affidavit in support of the application. Directions have been given in June 2003 for the filing of pleadings, evidence and discovery. 17.On 18 November 2003, the Company issued a writ against the 2nd applicant in HCA No. 4251 of 2003, claiming HK$1.6 million. An application was made for summary judgment in December 2003. 18.On 24 November 2003, the respondent sent a letter to the 1st respondent ("the 24 November 2003 letter") making various allegations against her including perjury in the private examination. The respondent further stated in that letter that he has "a duty under section 277 of the Companies Ordinance to report to the Court" if he suspected that a former director had committed a criminal offence and he "[is] now in the process of providing [his] evidence to the Court, with a view to obtaining instructions from the Court to refer the matter to the Department of Justice". The 1st applicant was requested by the respondent to respond to the allegations therein within 14 days. 19.On 5 December 2003, the 1st applicant issued the writ in HCA No. 4460 of 2003, being a defamation action against the respondent and RSM, claiming that the 24 November 2003 letter contained words defamatory of her and that it was published to others when it was faxed to her. 20.On 9 December 2003, the respondent wrote to the applicants' solicitors noting that no response was received from the 1st applicant to the 24 November 2003 letter and stating that he would make his report to the court regarding the matters set out therein based on the information then in his possession. The respondent did not proceed with his intended application to seek directions under section 277. On 20 January 2004, he made a report to the CCB of the allegations against the 1st applicant in the 24 November 2003 letter. The grounds for committal 21.Six grounds for committing the respondent for contempt were advanced in the Re-amended Notice of Motion. The main grounds are the first three. They give rise to the remaining grounds. Mr Whitehead has not pursued the fourth ground, which he accepted is subsumed by the first three grounds. 22.The first ground is that the respondent has filed and/or opened to inspection the depositions of the applicants in the private examination without leave of the court. Eight instances were particularised of such conduct and they are as follows:
23.The second ground is that the respondent has further compromised the privacy and confidentiality of the private examinations of the applicants by providing written reports to the CCB on 20 January 2004 and 31 March 2004 in which he alleged that the 1st applicant had knowingly perjured herself in sworn testimony with the intention of defeating the claims of the Company, Wai Shun or Zhukuan Wing Fai against herself, other directors of China Rich, and companies related to China Rich, and with the intent to defraud the creditors of Wing Fai, Wai Shun and Zhukuan Wing Fai. He also alleged that the 1st applicant had, in the various proceedings between the parties, provided untrue, conflicting and inconsistent sworn evidence, both oral and written, and had perjured herself with the intention of defeating the claims of the Company and defrauding creditors. In these reports, references were made to the transcripts of the examinations conducted in July 2003. In each of the reports, the respondent has annexed a copy of the 24 November 2003 letter. In the report made on 31 March 2004, the respondent has annexed copies of the complete transcript of evidence of the applicants' examinations on 4 and 30 July 2003. 24.The third ground is that the respondent has circumvented the procedures in sections 191, 222 and 277 of Cap. 32 by submitting his said reports and the transcripts of the private examination direct to the CCB, thereby depriving the court of its opportunity to consider matters of possible criminal conduct of former directors and give appropriate directions as to the reference of possible criminal conduct against directors to the Secretary for Justice and depriving the applicants of the opportunity to exculpate themselves of any charges in the event that the court should order a public examination under section 222. 25.The fifth ground is that in the defamation action, the respondent has sought to advantage himself in circumventing the procedures laid down in sections 191, 222 and 277 of Cap. 32. Had such procedures been followed, the court might have refused to order a public examination under section 222, or exculpate the 1st applicant after a public examination, or to dismiss an application under section 277 or the Department of Justice might have decided not to prosecute the 1st applicant. Any of these results would have been detrimental to the respondent's defence in the defamation action. 26.The last ground is that the respondent has obtained to himself the advantage of using the applicants' depositions in the manner set out under the first ground. In consequence, the court has been deprived of the opportunity to give directions which might have impacted on the way in which these related civil proceedings are to be conducted, and the applicants have been deprived of the opportunity to be heard on such matters. 27.In respect of each of the above grounds, it is alleged that in consequence thereof, the respondent has interfered with the administration of justice. The applicants' case 28.Before I consider the arguments advanced by Mr Yu on the submission of no case, to put his arguments in perspective, it is appropriate that I should set out the salient points made by Mr Whitehead in support of the applicants' case. 29.A private examination conducted under section 221 has long been recognised as an extraordinary process and the court "must be astute to prevent any oppressive, vexatious or unfair use" by the liquidator of this process (In re Rolls Razor Ltd (No. 2) [1970] 1 Ch. 576 at 592C, per Megarry J). Mr Whitehead submitted that the most significant aspect of such an examination is the abrogation of the privilege against self-incrimination. In England, the abrogation of the privilege by sections 235 and 236 of the Insolvency Act 1986 (equivalent to our section 221) was authoritatively established by the decision of the Court of Appeal in Bishopsgate Investment Management Ltd v. Maxwell [1993] Ch. 1. In Hong Kong, the first reported decision that the privilege has been impliedly abrogated by section 221 would appear to be my decision in Weihong Petroleum Co. Ltd [2002] 1 HKLRD 541. This has been followed in Re Asher & Co. (Hong Kong) Ltd., HCCW No. 150 of 1998, 30 June 2003, Deputy Judge To. 30.In In re Arrows Ltd (No. 4) [1995] 2 A.C. 75 at 93F and G, Lord Browne-Wilkinson, having mentioned that it was held in Bishopsgate that the privilege against self-incrimination was overridden by statute, went on to say as follows:
31.In C. A. Pacific Finance Ltd (in Liquidation), HCCW No. 36 of 1998, 21 November 2001, the court was concerned with the question whether a public examination under section 168IA(1) of Cap. 32 for the purpose of disqualification proceedings should be adjourned as the examinee had a pending criminal appeal. Yuen J took the view that the concerns of the examinee that the evidence he was to give in the examination might be used by the prosecution if a re-trial should be ordered in his criminal trial would be addressed if a private examination was to be conducted under section 221 instead of a public examination. In ordering a private examination to be held, Yuen J emphasised that such an examination would be conducted in private, as under rule 62(1) of the Winding-up Rules, only the Official Receiver or liquidator or their counsel or solicitors may attend the examination. The judge also stated that under rule 62(2), "the notes of the depositions of a person examined under Section 221 shall not be filed or be open to the inspection of any person except the Official Receiver or Liquidator unless and until the court shall so direct and the court may, from time to time, give such general or special directions as it shall think expedient as to the custody and inspection of such notes and the furnishing of copies of or extracts therefrom", and hence, "there would not be any fear that the prosecution would simply by attending the examination be able to obtain the answers of [the examinee] to any questions that may be put to him in a Section 221 examination" (paragraphs 15, 16 and 18 of the decision). 32.Similarly, in Weihong Petroleum, supra., in holding that the privilege against self-incrimination is not available in an examination under section 221, I had mentioned the provision in rule 62(2) of the Winding-up Rules as a safeguard to an examinee at 546F. 33.Mr Whitehead contended that the purport of rule 62(2) is clear. As an officer of the court, the liquidator is permitted to attend the private examination and given access to the depositions of evidence. He is entrusted with the privacy of the examination and the evidence given under compulsion. Although under rule 62(1), he "may take notes of the examination for his own use", the "notes of the depositions of a person examined under section 221" referred to in rule 62(2) are somewhat different. Mr Whitehead submitted that the notes of depositions in rule 62(2) are of a similar nature and status to the record of an examination conducted under section 236 of the Insolvency Act and that the provisions in rule 9.5 of the Insolvency Rules are similar to our rule 62. Rule 9.5(1) provides that the record of examination shall not be placed on the court file unless the court otherwise directs; rule 9.5(2) provides that the record is not open to inspection without an order of the court by anyone other than a person who made, or was entitled to make, an application for examination under section 236; and rule 9.5(4) provides that the court may give directions as to the custody and inspection of the record of examination, and as to the furnishing of copies of, or extracts from, the record. Mr Whitehead relied in particular on the following passages in the judgment of Lord Browne-Wilkinson in In re Arrows Ltd (No. 4), supra. at 104C to E and G to H:
34.Mr Whitehead submitted that the notes of depositions referred to in rule 62(2) are property of the court and are subject at all times to the control of the court. The deployment by the respondent of the notes of depositions of the applicants as particularised in each of the eight instances in the first ground in the Re-amended Notice of Motion would require the permission of the court under rule 62(2). 35.As for the reports made by the respondent to the CCB, the view that the respondent had formed of possible criminal acts on the part of the 1st applicant was based on the evidence she gave in the private examination. In such circumstances, the respondent is subject to the control of the court if he should wish to report possible criminal conduct to the appropriate authorities. Mr Whitehead submitted that clear guidance is given in various provisions in Cap. 32 as to what a liquidator should do in this situation. The respondent could have proceeded under section 191(2) and reported his opinion of fraud to the court; he could also have proceeded under section 277 for directions (which the respondent intended to do initially but abandoned after the 1st applicant has brought the defamation action). Section 191(3) provides that the court shall have the power to order a public examination under section 222 where a report of fraud is made. Section 277(1) provides that where a liquidator in a compulsory winding up has applied for directions and if it appears to the court that any past or present officer or member of the company has been guilty of a criminal offence, the court may refer the matter to the Secretary for Justice. Mr Whitehead contended that section 277(1) anticipates that the applicants would be entitled to be heard on the application before the court is to form a view whether to refer the matter to the Secretary for Justice and where a public examination is ordered under section 222(1), the applicants may apply to the court to be exculpated from any charges made or suggested against them under section 222(6). 36.Mr Whitehead relied on the following statement of Lord Browne-Wilkinson in In re Arrows Ltd (No. 4), supra. at 102H to 103A:
37.I should point out that section 218(1) of the Insolvency Act is the equivalent to our section 277(1). Section 218(3) has no equivalent in Cap. 32, it provides that in the case of a winding up by the court, if it appears to the liquidator, not being the official receiver, that any past or present officer of the company, or any member of it, has been guilty of a criminal offence in relation to the company, the liquidator shall report the matter to the official receiver, not to the court as paraphrased in the above extract. 38.Mr Whitehead emphasised that in a compulsory liquidation it should be the court's decision, not the liquidator's decision, whether possible criminal conduct would require investigation by the appropriate authorities. He cited Re Peregrine Fixed Income Ltd (in Liquidation) [1998] 4 HKC 151, in which the court considered an application to convert a compulsory winding up into a creditors' voluntary winding up under section 209A of Cap. 32 and Le Pichon J had this to say about compulsory liquidations at 159C to D:
39.As regards the respondent's deployment of the applicants' transcripts in various civil proceedings, Mr Whitehead submitted that the principles relevant to whether an order for private examination should be made where proceedings have been commenced against the person sought to be examined are just as relevant to this situation in that a private examination should not be used as a means of improving the liquidator's position in subsisting litigation over and above the ordinary advantages available to an ordinary litigant, citing In re Bletchley Boat Co. Ltd [1974] 1 WLR 630 at 637B to F; Re Spiraflite Ltd [1979] 1 WLR 1096 at 1098A and 1099H to 1100B; and In Re Castle New Homes Ltd [1979] 1 WLR 1075. So if the respondent had sought leave to deploy the transcripts in various civil proceedings under rule 62(2), the court would need to consider the above principles afresh in each instance (notwithstanding these principles might have been considered at the time when the court decided to make an order for examination) and provide the applicants an opportunity to be heard on each occasion. Rule 62(2) is not mere machinery and leave of the court is in no way automatic. A pertinent example of the impropriety of deploying the transcripts was the witness statement filed by the respondent in HCA No. 810 of 2003 in April 2004, when that action had reached an advanced stage and the applicants would have strong grounds in opposing leave on the basis that the respondent should not be given an unfair advantage beyond that available to ordinary litigants. 40.Mr Whitehead contended that section 5(1) of the Judicial Proceedings (Regulation of Reports) Ordinance, Cap. 287 would not have provided a defence to the respondent. This section provides that the publication of information relating to proceedings before any court sitting in private shall not "of itself" be contempt of court except in the instances set out in (a) to (e). The exception in (e) is "where the court, having power to do so, expressly prohibits the publication of all information relating to the proceedings or of information of the description which is published". Effect must be given to the words "of itself", the publication is not of itself a contempt of court but it may be if coupled with something else (In re F (orse. A) (A Minor) [1977] Fam. 58 at 88B). Further, the exception in (e) would apply. Here, the filing or inspection of the notes of depositions is expressly prohibited by rule 62(2) unless and until the court shall direct otherwise. The Winding-up Rules are made under section 296(1) of Cap. 32 and section 296(2) provides that "all rules and orders made under this section shall be judicially noticed, and shall have effect as if enacted by this Ordinance." As the express prohibition is already contained in rule 62(2), the court would not need to make an express prohibition. Furthermore, the publication to the CCB was contrary to the statutory regime in Cap. 32 which provides for the circumstances and methods by which the liquidator must seek directions or instructions from the court before making a report to the Department of Justice. 41.The respondent was aware of rule 62(2) at all relevant times. To establish contempt, it must be proved beyond reasonable doubt that he knew of the prohibition to publish without leave (assuming the applicants were right about the construction and effect of rule 62(2)) or that he must be taken to have known that what he published without leave was prohibited by law. Mr Whitehead has prayed in aid the following dicta:
42.He submitted that the respondent's conduct in dealing with the transcripts of evidence without the control of the court is "knowingly setting at nought one of the court's procedures devised to strike a balance between the various factors which pull in different directions in all court processes" (Dobson v. Hastings, supra. at 404B). The respondent has displaced a safeguard provided by law to an examinee in a private examination in which the privilege against self-incrimination has been abrogated. This would be severely prejudicial to the administration of justice and it is reasonably necessary to proscribe such conduct as a contempt of court (Dobson v. Hastings, supra. at 404C to F; Attorney-General v. Leveller Magazine Ltd [1979] 440 at 450C to D, per Lord Diplock). 43.It was contended that both the actus reus and mens rea for criminal contempt have been established, drawing on the wording and reasoning in the speeches in Attorney General v. Punch Ltd [2003] 1 AC 1046 at 1056B to 1059A, 1062D to 1064F, 1066C to D, 1071G to 1072C. The respondent had deployed the transcripts of evidence without leave of the court in breach of a statutory provision. The actus reus lies in thwarting the statutory provision by destroying the confidentiality of the material which it was the purpose of the statutory provision to preserve. The mens rea is established in that the respondent must have appreciated that by deploying the transcripts without leave, he was doing precisely what he was prohibited from doing by statute, and that is knowing interference with the administration of justice. The purpose of a private examination 44.It is obvious from Mr Whitehead's submissions that there is no reported case in respect of an application made by a liquidator (as opposed to an outsider) under rule 62(2) for leave to use the notes of the deposition of an examination conducted under section 221 by a court order for the purpose of discharging his own duties (as opposed to the purpose or benefit of an outsider), whether in Hong Kong or in England, where there were substantially similar provisions to our rule 62 before the enactment of the Insolvency Rules in 1986. That this may be a novel situation does not mean there cannot be contempt of court, if the statutory provision clearly contains the prohibition as contended by the applicants. Naturally, the court should exercise "great care" and "much caution" in this situation (Dobson v. Hastings, supra. at 404C). 45.Miss Chan referred me to one instance where the Official Receiver had applied for leave to use the transcript of a private examination for the discharge of his own duties. That was an application made in Re C. A. Pacific Finance Ltd (in Liquidation) on 2 September 2002 and the circumstances were special, as the Official Receiver as well as the liquidators had given an undertaking to the court, at the time the order for private examination was made, not to disclose the contents of the examination or any documents provided in the examination to any third party other than the officers of the Official Receiver and his legal and accountancy advisers "except with the prior written consent of [the examinee] or the leave of the court" (see paragraph 17 of the decision on 21 November 2001). She submitted that to require the liquidator to seek leave (whether ex parte or in an inter partes hearing as envisaged by Mr Whitehead) every time he wants to use the information obtained under section 221, when such use would involve the disclosure of information to a third party, would appear to defeat the purpose for which the order for examination was granted. 46.Before I go to the proper construction of rule 62, which is central to Mr Yu's submission of no case, it is pertinent to bear in mind the purpose of an examination conducted under section 221. It is also necessary to consider the genesis and reason for the enactment of rule 62. I do not agree with Mr Whitehead that it is not helpful to look at the purpose of section 221 and one would only need to focus on the "machinery" as provided in rule 62(2) to see whether there was interference with the machinery and thereby interference with the administration of justice. I do not think the passages cited by Mr Whitehead in Attorney-General v. Leveller Magazine Ltd at 473G and Attorney General v. Punch Ltd referred to earlier are entirely apposite to the present situation. The judges there were concerned with the situation where the alleged contemnor was accused of interfering with the administration of justice in acting in breach of a court order or ruling. One can see why it would not be necessary to ascertain the purpose of the judge in making the order in order to find whether an act is a frustration of the court order, as one would only need to look at the terms of the order to find out what is prohibited, "the purpose of the order and its terms are co-extensive" (Attorney General v. Punch Ltd., supra. at 1056E, 1062D to F, 1063H). 47.In our situation, there is no court order but a statutory provision. One cannot find a frustration of the purpose of the statutory provision without ascertaining what that purpose is. Before a view can be formed if the respondent has interfered with the administration of justice by destroying the confidentiality of the transcripts, it is necessary to ascertain if it is the purpose of the statutory provision to impose an obligation of confidentiality and, if so, the nature and scope of that obligation. Mr Whitehead has contended that the actus reus of the respondent's contempt lies in the destruction of the confidential material which is the purpose of rule 62(2) to preserve. Rule 62(2) cannot be construed in isolation without regard to related provisions such as section 221 and rule 62(1). As stated by Bokhary PJ in Medical Council of Hong Kong v. Chow Siu Shek (2000) 3 HKCFAR 144 at 154B to C:
48.With that, I turn to the purpose of an examination under section 221. Mr Yu has helpfully summarised the relevant propositions and they are not in dispute. The authorities show that:
(In re Rolls Razor Ltd [1968] 3 All E R 698 at 700A to B, per Buckley J; Re King's Dyeing & Weaving Factory Ltd [1987] HKLR 507 at 514A; British & Commonwealth Holdings plc v. Spicer & Oppenheim [1993] AC 426 at 439C and G, per Lord Slynn of Hadley; Re Weihong Petroleum Co. Ltd., supra. at 544C to H). 49.Mr Yu pointed out that in In re Pantmaenog Timber Co. Ltd [2004] 1 AC 158 at 163C, Lord Hope of Craighead took as a starting point the "self-evident" proposition that the powers conferred by section 236 of the Insolvency Act are "solely for the better discharge by the liquidator of his functions in the winding up". The question of principle raised in that case was whether the powers conferred by section 236 can lawfully be exercised "solely or principally to obtain evidence for use in disqualification proceedings; or whether their exercise is confined to cases where such use is at most incidental to the recovery and distribution of the company's assets among its creditors and contributories" (at 167G to H). The House of Lords held that the former is permissible under section 236. The reasoning may be gathered from these extracts:
50.Thus, the powers conferred by section 221 are for the better discharge of the liquidator's wider statutory functions in relation to the company being wound up. The same conclusion was reached by Yuen J, before the House of Lords decision came out, in a ruling in C. A. Pacific Finance Ltd (in Liquidation) on 6 November 2001. The information thus obtained in the examination may be used by the liquidator for a legitimate purpose in relation to the company in the wider public interest. The duty of the liquidator to investigate the affairs of the company has been described in some leading textbooks in these terms:
51.I was also referred by Mr Yu to these provisions in Cap. 32 relating to the liquidator's duty to report misconduct of directors to illustrate the general principle as regards the liquidator's duties:
52.In the above provisions, the law compels the liquidator to report forthwith. Neither section contemplates the liquidator applying to court for leave or directions before making his report to the Official Receiver or the Secretary for Justice. Mr Yu submitted that the fact that section 277(2) refers specifically to voluntary winding up does not mean that the liquidator in a compulsory winding up would not be entitled or authorised to make a report to the appropriate authority, applying similar reasoning to that of Dillon LJ in In re Arrows Ltd (No. 4) [1993] Ch. 452 at 469D to E, in the context of section 218 of the Insolvency Act. It would be absurd to suggest that whereas under section 277(2) there is a duty to report on the part of a liquidator in a voluntary winding up, a liquidator in a compulsory winding up could be cited for contempt if he should report without first seeking directions from the court under section 277(1). I will come back to this point when I consider the alleged contempt in circumventing the procedures in sections 191, 222 and 277(1) in the respondent making a report directly to the CCB. The proper construction of rule 62(1) and (2) 53.I turn to the construction of rule 62(1) and (2) of the Winding-up Rules. I set out the provisions for ease of reference:
54.To construe these provisions, it is necessary to have regard to their genesis. The provision was first introduced into the Companies (Winding-up) Rules in England in 1895. The enactment came about as a result of the decision in In re Standard Gold Mining Co. [1895] 2 Ch. 545. 55.Down to 1892, the practice in bankruptcy and winding up in England was the same in that the depositions in a private examination were considered private documents and it was not the practice to file them until it would no longer be injurious to expose them to disclosure, the reason being that the examination was held in order to obtain information for the trustee or liquidator so that he might decide whether he would commence proceedings and to allow inspection would often defeat the whole object of having a private examination (In re Merchants' Fire Office [1899] 1 Ch. 432 at 433 and 434; Learoyd v. Halifax Joint Stock Banking Co. [1893] 1 Ch. 686 at 693). Admitted creditors of a company had no general right to attend a private examination (In re Greys Brewery Co. (1883) 25 Ch. D. 400; Norwich Equitable Fire Insurance Co. (1884) 27 Ch. D. 515). There was a practice in bankruptcy and winding up that although the witness examined was allowed to have the professional assistance of counsel or solicitor, his solicitor was not allowed to take notes of the examination (Re Greys Brewery Co., supra. at 405; Re Merchants' Fire Office, supra. at 435). Depositions in a private examination were protected by privilege from disclosure by the trustee or liquidator in subsequent litigation (Learoyd v. Halifax Joint Stock Banking Co.; North Australian Territory Co. v. Goldsborough, Mort & Co. [1893] 2 Ch. 381 at 387). 56.Provisions were then introduced in rules 11 and 32 of the Companies (Winding-up) Rules 1892. They provided that all depositions and other proceedings in the High Court in a winding up matter were to be kept on the file of proceedings and every contributory creditor whose claim had been admitted was entitled to inspect the file of proceedings. In In re Standard Gold Mining Co., Vaughan Williams J held that he must give effect to these provisions, however inconvenient it might be and notwithstanding it would be inconsistent with the earlier practice. Thus, everything placed on the file of proceedings, including depositions in a private examination, was open to inspection as of right by a contributory or creditor. The judge expressed the view at 550 that it was "extremely inconvenient that the practice should be in this state" and that "the Court ought to have a discretion in the matter" whether inspection should be allowed. 57.To address the above concern, a new rule was made being the Companies (Winding-up) Rule, November 1895 (In re Merchants' Fire Office [1899] 1 Ch. 432 at 433; Buckley on the Companies Acts, 11th ed., page 844; Palmer's Company Precedents, 17th ed., page 474). Paragraph (1) of the rule provided that "notwithstanding anything contained in the Companies Winding-up Rules, 1890-1892, the notes of the depositions of a person examined under s. 115 of the Companies Act, 1862, or under any order of the Court, or before any officer of the Court, or person appointed to take such an examination (other than the notes of the depositions of a person examined at a public examination under s. 8 of the Companies (Winding-up) Act, 1890), shall not be placed on the file of proceedings, or be open to the inspection of any creditor, contributory, or other person, except the official receiver or liquidator, unless and until the Court shall so direct, and the Court may from time to time give such general or special directions as it shall think expedient as to the custody and inspection of such notes and the furnishing of copies of or extracts therefrom." The provision had appeared in subsequent enactments of the winding-up rules in England in substantially the same terms and the latest version was rule 74 of the Companies (Winding-up) Rules 1949 which provided as follows:
58.Rule 62 in our Winding-up Rules was based on rule 72 of the English Rules in 1929. Having regard to the historical background, the purpose of the statutory provision of not filing the notes of the depositions in a private examination becomes apparent. It was to protect the privacy of the information obtained by the liquidator in the discharge of his functions. I would agree with Mr Yu's observation that the provision was directed at third parties including the examinee, not the liquidator, and that the rule was for the protection of the liquidator, rather than the person to be examined. An illustration of this may be found in In re Merchants' Fire Office (decided after the rule in 1895 had come into force), in which an examinee was allowed to see his own deposition on showing good reason and upon an undertaking to use best endeavours to prevent the communication of his deposition to other defendants in the proceedings or their legal advisers. Thus, in Re King's Dyeing & Weaving Factory Ltd., supra. at 514H to I, Jones J stated that "an examinee must have good reasons why he or she should be entitled to have a copy of the transcript" as "the proceedings are confidential" and he declined to order that the examinees be supplied with copies of the transcript where no reasons had been put forward. Similarly, in In re London and Northern Bank Ltd [1902] 2 Ch. 73, a solicitor who attended a private examination to protect a witness was required to give an undertaking not to disclose to any one, without leave of the court, any information he might obtain in the examination. 59.When the provision in the English Rules was replaced by rules 9.4 and 9.5 of the Insolvency Rules 1986, the broad purpose for the enactment of the new procedural provisions would appear to remain the same as before, as could be seen from the following observations of Dillon LJ in In re Arrows Ltd (No. 4), supra. at 467D to F:
60.I was also referred by Mr Yu to three Australian decisions. The first two are of the Supreme Court of the New South Wales, Equity Division. The earlier decision is that of Needham J in Re Buchanan Enterprises Pty. Ltd & the Companies Act (1982) 6 ACLR 733 and the other decision is that of Young J in Plantara Pty. Ltd & the Companies Code, 31 October 1986, Lexis transcript. The relevant rule in the first decision was rule 126 of the Companies Rules 1968 (NSW) and this provided that "subject to the [Companies Act 1961 (NSW)] Act, and unless the judge or, where the master or other officer of the Court has jurisdiction, the Master or such officer shall otherwise direct: ... (b) after the original notes have been signed by he witness they shall be lodged forthwith in the Equity Office but shall not be filed or be open to the inspection of any creditor, contributory or other person except the liquidator his counsel or solicitor or, in a case where the Registrar or duly authorised officer of the Registrar is the applicant for the examination, the Registrar or duly authorised officer of the Registrar." The relevant rule in the second decision, being Part 80, rule 62(8) of the Supreme Court Rules, was of similar effect. 61.In Re Buchanan Enterprises, following the private examination of the examinees, the liquidator commenced proceedings against them for recovery of money and filed affidavit evidence setting out part of the examination of the examinees. Two of the examinees applied to the court for permission to inspect the depositions of their evidence and of their spouse's evidence in the examination. The approach in In re Merchants' Fire Office was followed. It was held that the usual practice is that the court would make an order permitting a witness to inspect a transcript of his evidence where in substance it is necessary in the interest of fairness that that be done. The applicants were allowed to inspect at that stage only those portions of the transcripts of their own evidence which had been quoted in the liquidator's affidavits. Whether they should be granted leave to inspect other parts of the transcripts not quoted by the liquidator was deferred until after they had filed evidence setting forth a defence to the liquidator's claim. 62.Similarly, in Plantara Pty. Ltd, there was an application by the examinees to inspect a transcript of their private examination where criminal proceedings were brought against them and the prosecution had intended to rely on the transcript. The applicants' solicitor needed to see the transcript before a deposition was to be taken from a witness in the criminal trial. Access to the transcript was given to the solicitor and the counsel to be instructed, upon their undertaking not to disclose the document to any other person. Young J referred to the principle adopted in In re Fire Merchants' Office and Re Buchanan Enterprises and said as follows:
63.The third Australian decision is that of the Supreme Court of South Australia in Re Southern Equities Corporation Ltd (in Liquidation) (1997) 24 ACSR 582 and (1997) 25 ACSR 394. There, the examinee was subject to a court order not to disclose the fact of the private examination. A question was raised whether the liquidator was in breach of the court order in including the information obtained in the examination in a statement of claim filed on behalf of the company and a subsidiary. Both Debelle J at first instance and the appellate court rejected the contention that the liquidator was under an implied obligation of confidentiality by virtue of the court order. Mr Yu submitted that this is analogous to the present situation and relied on the following passages in the judgments:
64.The above construction of the nature and purpose of the obligation of confidentiality in rule 62(2) of the Winding-up Rules is reinforced by the following considerations. 65.Firstly, consistently with the objective of a private examination, it must be lawful for a liquidator to use the notes of the depositions in a private examination to discharge his duties as liquidator. The authority to use such notes of depositions must be coupled with the authority of incidental disclosure for a legitimate purpose, such as the obtaining of legal advice or the recovery of assets or setting in motion appropriate steps to bring to book delinquent directors. In none of the authorities referred to above was there any suggestion to the effect that the relevant statutory provision would require the liquidator to obtain leave from the court before using or incidentally disclosing the notes of private examination in discharge of his duties in the liquidation. 66.Re Esal (Commodities) Ltd [1989] BCLC 59 is a useful case in point, decided at a time when rule 74 of the Companies (Winding-up) Rules 1949 was still in force. There, the question was whether it was proper for the liquidators of a parent company to disclose information obtained in a private examination to the directors or liquidators of its subsidiaries, the liquidators having made a compromise not to disclose such information except with the consent of the solicitors of the examinee or under a court order. Dillon LJ said at 64i that if the documents had been disclosed in the ordinary procedure of an examination under section 561 of the Companies Act 1985 or its predecessor being section 268 of the Companies Act 1948, he had "no doubt ... that [the liquidators] could use those documents without further order of the court". At 65b to c, he stated that "it would be fully open to the liquidators of the parent company to make documents obtained under s. 561 available to the directors or liquidators of the subsidiaries to assist them in getting in assets or defending assets for the ultimate benefit not merely of the subsidiary, but also of the parent company itself" and that is "common practice". 67.Secondly, the provisions in rule 62(1) and (2) should be read as a whole. Rule 62(1) (the equivalent in the 1949 Rules has not been retained in rule 9.5 of the Insolvency Rules 1986) expressly permits the liquidator to "take notes of the examination for his own use". It does not require the liquidator to seek leave of the court before using or incidentally disclosing the notes of the examination, such as in using the notes to cross-examine the examinee in subsequent proceedings, or in seeking legal advice. Mr Yu asked rhetorically what is the rhyme or reason for differentiating between the notes of examination under rule 62(1) (which could be used by the liquidator without reference to any one), and the "notes of the depositions" in rule 62(2) (which, as contended by the applicants, would be subject to stringent control and leave of the court is required on every occasion if the liquidator should wish to use or disclose them). Miss Chan supported the submission of Mr Yu that it would make no sense to differentiate between the notes in rule 62(1) and (2). 68.Mr Whitehead has sought to differentiate the provisions in rule 62(1) and (2) on these grounds:
69.I do not regard these as sufficiently cogent reasons for construing rule 62(2) in a manner that is inconsistent with rule 62(1), with the purpose of a private examination, and with the purpose behind the rule as to confidentiality. The rule of statutory interpretation referred to by Mr Whitehead is but a prima facie rule, the courts have also recognised the possibility that different words were used by the drafter of legislation without any intention to change the meaning, on account of "elegant variation" so as "to improve the graces of the style and to avoid using the same words over and over again" (Hadley v. Perks (1866) LR 1 QB 444 at 457; Bennion, op. cit. at page 995). I agree with Mr Yu that in construing a statutory provision, it is more important to look at the purpose and objective of the enactment. The practice nowadays is that the liquidator would either engage his shorthand writer or use the recording and transcription service of the court to prepare the depositions of a person examined. There is hardly any real distinction between the two to justify treating one as personal notes and the other as a court document. 70.As for the dicta of Lord Browne-Wilkinson in In re Arrows Ltd (No. 4) at 104C to E and G to H set out in the earlier part of this judgment and other dicta in the decision relied on by Mr Whitehead, such dicta should be read with regard to the following matters and what was actually decided:
71.In construing the purpose and effect of rule 62, I do not think the abrogation of the privilege against self-incrimination should be used as an interpretative factor. For one thing, the abrogation of the privilege was not the purpose for the enactment of the rule. Besides, in both public and private examinations, the privilege has been abrogated. This is not to say an examinee would have no protection on the use or disclosure of the transcripts of a private examination, as he may seek undertakings or ask the court to impose conditions on the liquidator before an order for examination is made or at the time of the examination if it is contended that the examination may be oppressive without appropriate undertakings or directions from the court. Examples are found in the cases mentioned earlier: In re Arrows Ltd (No. 4); C. A. Pacific Finance Ltd.; Re Esal (Commodities) Ltd. 72.I also do not think the principles relevant to whether an order for examination should be made where proceedings have been commenced (in In re Bletchley Boat Co. Ltd and other cases cited by Mr Whitehead as mentioned earlier) would provide support to the contention that a liquidator is required to seek leave under rule 62(2) before he is permitted to use the transcripts of examination in other proceedings. The court has drawn a clear distinction between the purpose or objective of seeking a private examination and the result of the order for examination, as can be seen from the following extracts in these authorities cited by Mr Yu:
73.As I have mentioned earlier, Miss Chan for the Official Receiver has also submitted that it is contrary to existing law and prevailing practice if a liquidator or the Official Receiver is required to apply for leave every time he wishes to use the information obtained in a private examination in the discharge of his duties where such use would involve the disclosure of information to a third party. The impracticality of such a requirement was expressed in the New Zealand decision of Re Baird (A Bankrupt) [1994] 2 NZLR 463 at 469 as follows:
74.If the applicants were to be provided with the opportunity to object on every occasion that the respondent should wish to use the transcript in the liquidation or in proceedings incidental to the liquidation, the respondent would be required to indicate in each instance which part of the transcript he wanted to use and for what purpose, and the court were to consider whether it would be oppressive to grant leave at every stage of the proceedings brought against the examinee, the effectiveness of a private examination would be seriously undermined. 75.For the above reasons, I find that on a proper construction of rule 62(2), no leave of the court is required in respect of the uses and disclosures of the transcripts of the examination by the respondent for the discharge of his duties in the liquidation. The specific instances of disclosure 76.I turn to the eight instances of disclosure alleged in the first ground of the Re-amended Notice of Motion. It would be convenient to group them into these four categories:
77.In respect of the first category, I find that the use of the transcripts in each instance came within the terms of rule 62 and no leave of the court was required on a proper construction of the provision. The contents of the transcripts were relevant to the issues in the proceedings concerned. The use of materials in the winding up of related companies which is in the interest of the creditors of the parent company was canvassed in Re Esal (Commodities) Ltd as mentioned earlier. 78.The 24 November 2003 letter was addressed to the 1st applicant. It was written for the purpose of giving the 1st applicant an opportunity to respond to the respondent's allegations arising out of the contents of her examination. This was a legitimate use of the transcripts by the respondent and leave of the court was not required. 79.As for the defence filed in the defamation action, Miss Chan submitted that this was use of the transcript in a personal action between the liquidator and the examinee and the use of the information was not for the purpose of the liquidation. Miss Chan also made the point that to the extent that the 1st applicant had, in the statement of claim in the defamation action, made reference to various parts of the 24 November 2003 letter which in turn referred to the contents of the examination, the confidentiality attached to that information had been destroyed. Mr Yu relied on the principle that the duty of confidence owed by one party to another would be treated as waived by the latter in bringing proceedings against the former so as to make a fair adjudication impossible without such waiver. He submitted that as the 1st applicant had opened up the issue in the defamation action whether she had perjured herself in the examination, she would have no right to complain if the respondent sought to defend the action by reference to the contents of the examination. I accept the submissions of Miss Chan and Mr Yu. The respondent's use of the information in justifiable defence of his reputation cannot be treated as a contempt of court (Scott v. Scott [1913] A.C. 417 at 444, 448 to 449, per Earl Loreburn). 80.For the reports to the CCB in which the respondent made references to the examination and provided copies of the transcripts, this was done in discharge of the respondent's duty at common law as confirmed by the House of Lords in In re Pantmaenog with a view to enabling the authorities to take appropriate action against a former officer who may be shown to have committed misconduct. The disclosure was for a legitimate purpose in relation to the liquidation of the Company. The alleged circumvention of statutory provisions 81.There is another complaint regarding the reports to the CCB, premised on the allegation that the respondent had circumvented the procedures laid down in sections 191(2), 222 and 277(1) in making a report directly to the CCB without first seeking directions from the court and thereby giving the applicants an opportunity to be heard. Mr Yu submitted that on a proper construction of these provisions, there is no prohibition of a liquidator in a compulsory winding up to report to the police possible criminal conduct of a former officer of the company without leave of the court. 82.I accept Mr Yu's submissions on this. The applicants' contention is simply not borne out by the provisions in Cap. 32. I have already set out the provisions in sections 168I(3) and 277(2), which require the liquidator to report forthwith to the appropriate authority in certain situations, without first seeking directions from the court. 83.Section 191(2) provides as follows:
84.The above is clearly not a mandatory provision requiring the liquidator to make a report of fraud to the court alone. It is not necessary for me to refer to section 222, which is triggered by section 191(3). 85.Section 277(1) is in these terms:
86.Again, it is quite impossible to spell out from the above provision an implied prohibition that the liquidator in a compulsory winding up is not allowed to report a possible criminal act to the police. I also agree with Mr Yu the reason for the different provisions in section 277(1) and 277(2) (which imposes on the liquidator in a voluntary winding up a mandatory obligation to report to the Secretary for Justice) is to ensure that in a voluntary winding up, where the liquidator would be acting under the control of the members or creditors, possible criminal conduct would be brought to the attention of the court or the relevant authority. 87.It is also pertinent to have regard to this dictum of Lord Browne-Wilkinson in In re Arrows Ltd (No. 4), supra. at 102G:
88.In the present case, the respondent was authorised under rule 62 to make disclosure of the transcripts to the CCB. He was not required to report to the police, but he was authorised in doing so. The principle against doubtful penalisation 89.If I were wrong about the proper construction of the relevant statutory provisions, there is real doubt whether these provisions should be construed in the manner as contended by the applicants. The nature and scope of the prohibition allegedly contained in the statutory provisions are obviously open to dispute. In the circumstances, I should apply the principle against doubtful penalisation and give the benefit of the doubt to the respondent. 90.The principle has been described as follows in Bennion, op. cit. at page 705:
See also R v. Bristol Magistrates' Court, ex parte E [1998] 3 All ER 798 at 804h; Halsbury's Laws of England, 4th ed. reissue, vol. 9(1), para. 472. 91.An example in which the principle was applied in a case of contempt is Grand Union Insurance Co. Ltd v. Clyde & Co. [1988] HKC 464. Mayo J dismissed the motion as the prohibition to publish matters which the court had decided should be kept confidential must be in clear terms and it was not enough to say an obvious inference should be drawn from the terms of the order. All that the judge had ordered in the previous case was that the file should be marked "confidential" in the registry, it was not expressly ordered that no one should publish information relating to the proceedings. 92.Dicta to the same effect are found in following cases:
The actus reus and mens rea of criminal contempt 93.With the last dicta of Lord Hope, I go to consider the actus reus and mens rea of a criminal contempt. It is Mr Yu's contention that the court cannot be satisfied beyond reasonable doubt both of the actus reus and mens rea of interference with the administration of justice, which is necessary to establish a criminal contempt. 94.It is not necessary to repeat the views I have reached on the proper construction of the various statutory provisions, save to say that on that basis, there is no question of establishing the actus reus or the mens rea in the present case. I turn to the additional points made by Mr Yu in this regard. 95.For the actus reus, I was referred to the following passage in Attorney-General v. Newspaper Publishing Plc. [1997] 1 WLR 926 at 936B to D:
96.In Pelling v. Hammond, 9 June 2000, Lexis transcript, the Queen's Bench Division dismissed an application for permission to bring proceedings for contempt. The above dicta of Lord Bingham were referred to. The alleged contempt was the disclosure of the transcripts relating to proceedings under the Children Act 1989, which was prohibited under section 12(1)(a) of the Administration of Justice Act 1960 (the equivalent provision in Hong Kong is section 5(1) of Cap. 287 mentioned earlier). In the case of some of the respondents, it was held that the disclosure was only an interference in the most technical sense and the actus reus was not established. Otton LJ noted that the recipients of the transcripts were confined to lawyers acting for the Circuit Judge whose decision was the subject of judicial review, the members of the Divisional Court in the judicial review proceedings, and the applicant himself who participated in the judicial review. At no point were the contents of the transcripts referred to in open court. 97.Mr Yu submitted that the court could not be satisfied that any of the disclosures made by the respondent would amount to a significant interference with the administration of justice, even if one were to assume against the respondent that the disclosures complained of were prohibited by statute. I am inclined to agree. The filing in court of affirmations, a defence, a list of documents, a witness statement did not involve publication of the transcripts to the public or a section of the public. The disclosure was to the other parties to the various civil proceedings, previously involved in some way with the affairs of the Company or the liquidation, being the related companies, the applicants themselves, another former director, RSM, and the lawyers acting for the respective parties in those proceedings. The 24 November 2003 letter, as already noted, was addressed to the 1st applicant alone. Only the disclosure to the CCB could be said to be publication to an outside party not previously concerned. 98.Further, it has not been made clear in what respects the respondent was alleged to have significantly interfered with the administration of justice in each of the five grounds set out in the Re-amended Notice of Motion, or in respect of each of the eight instances particularised under the first ground. It is not sufficient merely to assert, at the end of each paragraph, that in consequence of the act complained of, the respondent has interfered with the administration of justice. No evidence has been led by the applicants to demonstrate any significant and adverse impact on the administration of justice as a result of the acts complained of. It was not suggested by the applicants that the respondent did not necessarily believe he had grounds when he reported to the CCB. I fail to see how in that situation reporting to the CCB could be interference with the administration of justice. I am also unable to see how it is that the respondent has advantaged himself in allegedly circumventing statutory procedures by reporting directly to the CCB. One would expect the CCB not to act on the respondent's reports without proper investigation and prosecution would not be brought if there were insufficient evidence. 99.I also agree with the submission of Miss Chan that the publication is not caught by exception in (e) under section 5(1) of Cap. 287, contrary to the contention of the applicants. This exception applies "where the court, having power to do so, expressly prohibits" publication. In section 2 of Cap. 287, "court" is defined to mean "any court, tribunal or person having by law power to hear, receive and examine evidence on oath." Thus, the exception in section 5(1)(e) only applies to a situation where the court seized of the matter has expressly made an order to prohibit the publication of the information relating to the proceedings in private. It has no application where the prohibition to publish is contained in a statute. 100.Regarding the mens rea for a criminal contempt, Mr Yu submitted that nothing short of an intention to interfere with the administration of justice would suffice. He has referred to the following authorities in support:
101.In Dobson v. Hastings, supra. at 408D and 409A to B, even though the editor knew that the newspaper was in possession of information to which access was restricted by some form of prohibition, he had understood that the information was already widely available and as he did not believe there was a legal impediment to publication, there was no intention to interfere with the administration of justice and the mens rea for contempt was not established. 102.It is not sufficient to show that the respondent knew of the statutory provisions concerned. What has to be shown is that he knew of the prohibition. Where there is genuine doubt as to the ambit and nature of the prohibition, one harks back to the dicta of Lord Hope in Attorney General v. Punch Ltd cited earlier. Besides, there is no evidence of any intention of the respondent to circumvent any statutory procedure; the evidence led only showed that the respondent had changed his mind about proceeding under section 277(1). I am not satisfied that mens rea would have been established in this situation. Contempt as last resort 103.There is a further principle that contempt proceedings should only be brought as a last resort when no alternative powers of the court could be invoked (G v. S. (2001) 4 HKCFAR 419 at 427F, per Nazareth NPJ; In re an application by Liu Lee Yuk-ching [1982] HKLR 399 at 411F, per Hunter J; Dobson v. Hastings, supra. at 403G to H, per Sir Donald Nicholls V.-C). 104.Here, there are clearly steps that the applicants could have taken without resorting to an application to commit the respondent for contempt, even if their complaints were justified. As pointed out by Miss Chan and Mr Yu, there are provisions in Cap. 32 that the applicants could have prayed in aid: section 193(3) (where a liquidator is provisionally appointed by the court, the court may limit and restrict his powers by the order appointing him); section 196(1) (a liquidator appointed under section 194 may, on cause shown, be removed by the court); section 200(5) (if any person is aggrieved by any act or decision of the liquidator, that person may apply to the court, and the court may confirm, reverse, or modify the act or decision complained of, and make such order in the premises as it thinks just); and section 204(1) (the Official Receiver shall take cognizance of the control of liquidators of companies which are being wound up by the court and if a liquidator does not faithfully perform his duties and observe all the requirements imposed on him by statute, rules or otherwise with respect to the performance of his duties, or if any complaint is made to the Official Receiver by any creditor or contributory in regard thereto, the Official Receiver shall inquire into the matter and take such action as he may think expedient). As the liquidator of a company wound up by the court, the respondent is at all times subject to the control of the court. 105.Further, where documents have been improperly filed in civil proceedings, and where the aggrieved party is a party to the relevant proceedings, he may apply to expunge or remove the document from the court file. Here, one or both of the applicants were parties in HCA No. 4251 of 2003, HCA No. 810 of 2003, and the defamation action. Indeed, an application was taken out by the 1st applicant to strike out the defence filed in the defamation action on the ground that the inclusion of certain parts making reference to the transcripts without leave was in contravention of rule 62(2) and an abuse of the process of the court. 106.Thus, in this instance, the court would have at its disposal other sanctions for ensuring that justice is done between the applicants and the respondent and to regulate the conduct of the respondent as an officer of the court. There is simply no need to resort to contempt proceedings. Locus to bring proceedings for criminal contempt 107.Mr Yu further submitted it is doubtful if the applicants would have locus to bring proceedings for criminal contempt. 108.A similar argument was raised in Dobson v. Hastings, supra. at 411D to H that only the Attorney-General can initiate contempt proceedings where the contempt being alleged is not that of breaching or assisting in the breach of a court order or undertaking by a person involved in litigation (a civil contempt), but an act which significantly interferes with the administration of justice (a criminal contempt), as it is the exclusive right of the Attorney-General to represent the public interest. Sir Donald Nicholls V-C regarded this as a "far reaching argument" and was not persuaded that the matter was as "cut and dried" as presented by the respondents. He noted that in Pickering v. Liverpool Daily Post and Echo Newspapers Plc. [1991] 2 A.C. 370 at 425A to C, Lord Bridge of Harwich regarded this as a difficult point, on which the Attorney-General should be heard, and as this important point called for far more extensive treatment he did not decide the point as it was not necessary for the application before him. 109.Mr Whitehead did not argue the matter fully, save to draw my attention to the dicta of Lord Cross in Attorney-General v. Times Newspaper Ltd [1974] A.C. 273 at 326E to 327A. Having expressed the view that it is "most desirable" anyone who thinks that a criminal contempt has been or is about to be committed should, if possible, place the facts before the Attorney-General for him to consider if the matter should be brought to the attention of the court, Lord Cross went on to say as follows:
110.Other than Dobson v. Hastings and Pickering v. Liverpool Daily Post, the point was also left open in Chief Constable of Leicestershire v. Garavelli [1997] E.M.L.R. 543 at 556 to 557 and Pelling v. Hammond. So in England, there remains a degree of uncertainty as to the limits of the locus standi of individual litigants or other interested parties to initiate proceedings for criminal contempt (Arlidge, Eady & Smith, op. cit., para. 2-194 and 3rd cumulative supplement to the 2nd ed., para. 3-169). 111.I have not been referred to any local decision in which the question of locus to move for criminal contempt was raised. This is a difficult and important question and it is clearly desirable that the Secretary for Justice should be heard before the point is to be decided. 112.As I have come to the view that there are sufficient reasons to dismiss the application to commit the respondent for contempt, it is unnecessary to resolve the question of locus for present purpose. Conclusion 113.The respondent succeeds on the submission of no case to answer in respect of all the grounds alleged in the Re-amended Notice of Motion. I dismiss the application to commit him for contempt. I will hear counsel on costs and any consequential directions.
Representation: Mr Robert Whitehead, SC and Mr Eugene Yim, instructed by Barlow Lyde and Gilbert, for the Applicants Mr Benjamin Yu, SC, instructed by Clifford Chance, for the Respondent Miss Linda Chan, for the Official Receiver Appeal dismissed: see CACV244/2004 dated 18 August 2006 |
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