Questnet Ltd v. Kurt Georg Rocco Rinck and Another
Read the full judgment text of HCA 1475/2006 on BabelCite. This High Court CFI judgment was delivered on 23 June 2008.
1. This is the plaintiff’s application to commit the 2 nd defendant for contempt of court on account of breaches of a Mareva Injunction Order. The application is contested primarily on the basis that the 2 nd defendant had not been personally served with the Order and did not have knowledge of it when he did the acts that were complained of.
Cites 1 case
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HCA 1475/2006 IN THE HIGH COURT OF THE HONG KONG ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1475 OF 2006 -------------------------------------
------------------------------------ Coram: Hon Chu J in Court Date of hearing: 23, 28 April & 13 June 2008 Date of Judgment: 23 June 2008 ---------------------- J U D G M E N T ---------------------- 1.This is the plaintiff’s application to commit the 2nd defendant for contempt of court on account of breaches of a Mareva Injunction Order. The application is contested primarily on the basis that the 2nd defendant had not been personally served with the Order and did not have knowledge of it when he did the acts that were complained of. The action 2.The plaintiff is a BVI company registered under Part XI of the Companies Ordinance, cap.32. The 1st defendant was one of its founders and, until early July 2006, a director and employee of the plaintiff. The 2nd defendant was between May 1999 and June 2005 the Chief Legal Officer of the plaintiff in charge of the Legal Affairs Department. 3.The plaintiff commenced this action against the 1st defendant on 12 July 2006. The dispute relates to certain funds of the plaintiff that were held by the 1st defendant on trust. The funds were held in six bank accounts maintained in the 1st defendant’s name with Citibank, Hong Kong and another bank account also maintained in the 1st defendant’s name with Dominick Co in Zurich, Switzerland (collectively referred to as “the Trust Accounts”). The 1st defendant had made two Declarations of Trust dated 18 November 2003 and 13 December 2005 in respect of the funds in the Citibank Bank account and the Swiss account respectively. 4.The plaintiff claims that the 1st defendant had, in breach of his duties as trustee, misappropriated and converted the trust funds to his own personal use. The acts complained of include, inter alia, the removal on 30 June 2006, of a sum of Euro 582,806.44 from one of the six Citibank accounts into his personal account maintained with Citibank. The sum was then transferred into one of the 1st defendant’s Swiss accounts with the Dominick Co. The plaintiff seeks an account of and the return by the 1st defendant of the trust funds that had been misappropriated and converted, in addition to damages and declaratory and injunctive relief. Summary judgment was entered against the 1st defendant on 30 November 2006. Mareva Injunction against the 1st defendant 5.Shortly after the plaintiff issued the Writ and on 21 July 2006, the plaintiff applied and obtained from Deputy High Court Judge Poon (as he then was) a Mareva Injunction to restrain the 1st defendant from disposing, transferring or dealing with the trust funds that were initially held by him in the Trust Accounts (“Poon J’s Order”). The Order further required the 1st defendant to make disclosure by affidavit of the balances in the Trust Accounts and his dealings with the funds in them since 1 March 2006, including details of every amount withdrawn or transferred and the identity of the recipient of each withdrawal or transfer. 6.Subsequently, the 1st defendant made four affirmations purporting to comply with the order for disclosure. On 16 August 2006, the 1st defendant made his fourth affirmation, which was filed with the court on 17 August 2006. In it, he disclosed, for the first time, that the sum of Euro 582,806.44, after being transferred into his Swiss bank account, was placed on trust with the 2nd defendant and the 2nd defendant had on his instruction paid debts owed to his creditors. The relevant part of the 1st defendant’s Fourth Affirmation reads:
7.The 1st defendant had since left the jurisdiction. On 17 November 2006, Saunders J found him guilty of contempt in that he had before 17 August 2006 failed to make full and proper disclosure as ordered by Poon J’s Order. Sentence has been adjourned pending the execution of a warrant for his arrest. Shortly before Saunders J’s Judgment, the 1st defendant had written to the Court on 14 November 2006, asserting that the funds he placed with the 2nd defendant had been returned to him. It is of interest to note from Saunders J’s Judgment that the 1st defendant had through his legal representatives given repeated assurances that he would pay the money into court, but nothing was ever paid in. The Mareva Injunction against the 2nd defendant 8.In light of the disclosure made by the 1st defendant in his fourth affirmation, the plaintiff’s solicitor moved for and obtained ex parte on 17 August 2006, a Mareva Injunction against the 2nd defendant restraining him from dealing with or disposing of his assets and any funds derived from the 1st defendant up to Euro 582,806.44. 9.Of particular relevance to this application is paragraph 1(3) of the Order, which provides:
10.Paragraph 2 of the order further required the 2nd defendant to make disclosure in relation to the whereabouts of and his dealings with the Euro 582,806.44. 11.A copy of the 1st Defendant’s Fourth Affirmation was attached to the ex parte Order. The Order as re-amended on 19 August 2006 was continued by the Order of 1 September 2006. 12.On the same day, a prohibition order was also issued against the 2nd defendant prohibiting him from leaving the jurisdiction. Since then, the 2nd defendant has been subject to successive sets of prohibition orders. His first application to discharge the prohibition order was dismissed in February 2008. On 10 June 2008, the 2nd defendant filed another summons to apply for the discharge of the prohibition order. The determination of the summons is pending. 13.With leave of the Court granted on 23 August 2006, the 2nd defendant was joined as a defendant to this action. 14.By the order of Master Ho of 23 August 2006, the Mareva Injunction and the prohibition order were permitted to be served on the 2nd defendant by substituted service. This was duly done. 15.On 25 April 2007, Messrs Au Yeung, Cheng Ho & Tin filed a notice to act for the 2nd defendant. The plaintiff’s solicitors immediately on 26 April 2007 served a copy of the Mareva Injunction on this firm together with the other court documents. The 1st contempt proceedings against the 2nd defendant 16.On 10 May 2007, the plaintiff commenced contempt proceedings against the 2nd defendant for failure to comply with the order to make disclosure under the Order dated 17 August 2006. 17.On 13 June 2007, the 2nd defendant filed an affidavit, in which he gave an account of his dealings with and the whereabouts of the money that the 1st defendant had transferred to him. I shall return to deal with the contents of this affidavit in greater details in the latter part of this Judgment. 18.The 2nd defendant did not, however, attend the hearing of the contempt proceedings. On 15 June 2007, I found him guilty of contempt and adjourned the sentence and further issued a warrant for his arrest. The warrant was subsequently discharged upon terms. Sentence is presently adjourned to after the determination of liability in the present contempt proceedings. The present contempt proceedings 19.On 27 June 2007, the plaintiff applied for leave to commence a second set of contempt proceedings against the 2nd defendant for breaches of the two Mareva Injunctions. Leave was granted on 30 June 2007. On 4 July 2007, the plaintiff filed the Notice of Motion. The Statement in support of the application and the Notice of Motion were subsequently amended with leave granted on 23 April 2008. 20.Although the application was initially to commit the 2nd defendant for contempt of both Poon J’s Order and the Mareva Injunction Order dated 17 August 2006 as re-amended on 19 August 2006 (“the 17-8-2006 Order”), the plaintiff indicated at the commencement of this hearing that it would only pursue the application for contempt of the 17-8-2006 Order. 21.With the leave of the court, both Mr Donegan of Messrs Barlow Lyde & Gilbert, the plaintiff’s solicitors, and the 2nd defendant had been cross-examined at the hearing of the application. The plaintiff’s case 22.The plaintiff’s case is that the 2nd defendant had disposed of, dealt with and diminished the value of funds that were placed with him by the 1st defendant, in breach of the terms of and, in particular, paragraph 1(3) of the 17-8-2006 Order. 23.Specifically, the plaintiff relies on the contents of the 2nd defendant’s First Affidavit that was filed on 13 June 2007. The relevant part of the affidavit states:
24.In essence, the acts complained of are that the 2nd defendant had on 11 July 2006 through Landbase Corporation, a BVI company controlled by him, received from the 1st defendant US$737,600.31, and that out of the money received, the 2nd defendant had on 27 July and 21 August 2006 paid two sums of US$105,000 and US$100,000 to Alpha Omega Group (AOG) of Austria and on about 28 August 2006, paid US$535,477.50, being the remainder of the funds with interest, to the 1st defendant’s wife. It is the plaintiff case that the 2nd defendant, in transferring these sums to Alpha Omega Group in Austria and the 1st defendant’s wife, acted in breach of the 17-8-2006 Order. It is also the plaintiff’s case that the only reasonable inference to be drawn on the totality of the evidence is that when the 2nd defendant dealt with the money on 21 and 28 August 2006, he was well aware of the existence of an order which prohibits him from so doing. Mr Duncan SC who appears for the plaintiff regards the last point as fundamental to the plaintiff’s application. 25.The plaintiff further says that the 2nd defendant has failed or refused to return or account to the plaintiff the funds that the 1st defendant had placed with him. In this regard, the plaintiff relies on a “without prejudice” meeting between the 2nd defendant and Mr Donegan on 27 November 2006. It was the 2nd defendant himself who first made reference to this meeting in his Third Affidavit filed in opposition to the present application. The 2nd defendant had gone into some details of what, according to him, was mentioned and discussed at the meeting, in an effort to dispute that he has been evading service. The 2nd defendant’s case 26.The 2nd defendant does not dispute the receipt of US$737,600.31 from the 1st defendant and the payment out of the funds as stated in his First Affidavit. There is therefore no dispute that he had done the acts complained of. 27.In his third affidavit, the 2nd defendant said that he was misled by the 1st defendant into believing that the funds placed on trust with him were the 1st defendant’s personal funds. His evidence in cross-examination is that the 1st defendant had confirmed to him that the money in the Swiss account was the 1st defendant’s own money and that he himself had further taken the caution of confirming with his bank in Bahrain that the funds that came to his account did come from Swiss account. According to the 2nd defendant, when he later found out that he had been misled, he was angry and had a heated discussion with the 1st defendant regarding getting the funds back into court. 28.The 2nd defendant also said in the Third Affidavit that he did not have notice or knowledge of the 17-8-2006 Order or any Mareva injunction order until 25 April 2007. He also complained that the plaintiff had failed to serve the 17-8-2006 Order on him. 29.In summary, the 2nd defendant contests the application on the basis that he did not know that the funds he received from the 1st defendant were trust funds belonging to the plaintiff and that when he paid them out on 21 and 28 August 2006, he did not know or have notice of the 17-8-2006 Order. Issues 30.The critical issue in this application is whether the 2nd defendant knew or had notice of the existence of the 17-8-2006 Order, which prohibits him from dealing with or disposing of any funds that came from the 1st defendant, when he paid out the sums to AOG of Austria and the 1st defendant’s wife. If he did, he would have breached the prohibition imposed by paragraph 1(3) of the 17-8-2006 Order. 31.Given that paragraph 1(3) relates to funds derived from or placed by the 1st defendant and is not confined to trust funds of the plaintiff, whether the 2nd defendant was at the material time aware that the funds that arrived from the 1st defendant’s Swiss bank account came from the trust funds in the Trust Accounts is not directly relevant to whether the 2nd defendant’s acts constitute breaches of the Order. Even if he did not know, he would still be in breach of paragraph 1(3) if he had notice of the prohibition. 32.The burden is on the plaintiff to prove beyond reasonable doubt that the 2nd defendant at the material time knew or have notice of the existence of the 17-8-2006 Order that prohibits him from dealing with or disposing of funds that came from the 1st defendant. Service of the 17-8-2006 Order 33.The starting point to consider the issue is the service of the Order in question. In this connection, Order 45 rules 5(1) and 7(2), (6) and (7) of Rules of the High Court provide:
34.Counsel are in agreement that generally speaking, an injunction should be personally served. It is however not an absolute requirement before it can be enforced by an order of committal. The order may be served by substituted service. Service may even be dispensed with where the court thinks it just to do so. More importantly, an injunction may be enforced by an order of committal if the court is satisfied that the person against whom enforcement is sought had been notified of the terms of the order whether by telephone, telegram or otherwise. 35.In the present case, the 2nd defendant had not been personally served with the 17-8-2006 Order. According to the plaintiff, it had since 18 August 2006 taken steps to locate the 2nd defendant, but had not been successful. There was only one occasion on 20 January 2007 that a business associate together with an employee of the plaintiff’s associated company saw the 2nd defendant and his wife and children in Wanchai. There was before that the without prejudice meeting on 27 November 2006 between the 2nd defendant and Mr Donegan, but the 2nd defendant had made it a pre-condition of the meeting that there would be no service of process. 36.With leave of the Court, substituted service of the Order was effected by: (i) leaving the Order on 23 August 2006 with Messrs Chan, Wong & Lam (“CWL”), who were until 31 August 2006 the 1st defendant’s solicitors; (ii) advertising a Notice of the Order in The Standard, being an English newspaper published and widely circulated in Hong Kong, on 24 August 2006; and (iii) providing a sealed copy of the Order to the clerk to Master B Kwan on 22 August 2006, whom the 2nd defendant had contacted on 18 and 22 August 2006. 37.Additionally, the plaintiff had taken the following steps to bring to the 2nd defendant’s notice of the 17-8-2006 Order and the related papers:
38.Mr Leung who appears for the 2nd defendant accepts that as a matter of law, the fact that the 17-8-2006 Order was not personally served on the 2nd defendant is not fatal. He however submits that the substituted service and the other steps taken by the plaintiff have not been effective in bringing notice to the 2nd defendant and that the 2nd defendant has not been evading service. Credibility of the 2nd defendant 39.Central to the determination of the issue is the credibility of the 2nd defendant. He has made a number of assertions that are in my view inherently improbable and hard to believe. 40.First, the 2nd defendant claims that when he dealt with the funds from the 1st defendant, he was not aware that the 1st defendant was subject to a Mareva Injunction. However, the private investigators engaged by the plaintiff had seen him accompanying the 1st defendant to CWL on a number of occasions between 10 and 16 August 2006. Although he did not accept this happened on a number of occasions, the 2nd defendant did not deny that he had gone to CWL with the 1st defendant on more than one occasion. During this period of time, the main matters in this litigation that required the 1st defendant’s attention were the Mareva Injunction, together with the disclosure order therein, and the plaintiff’s application for the funds to be paid into court. According to Mr Edward Chan of CWL, on the occasions that the 1st and 2nd defendants went to his firm, they had discussions and exchanged views to the extent that, although the firm did not represent the 2nd defendant, Mr Chan took the view that “he was also a client” and that “an element of joint enterprise existed”, so much so that when asked by the plaintiff’s solicitors in September 2007, he did not feel able to confirm, inter alia, whether the Mareva Injunction and prohibition order that were left with his firm had been forwarded to the 2nd defendant. It was after he was subpoenaed to testify in this application that Mr Chan informed the plaintiff’s solicitors that he did not forward the papers to the 2nd defendant or inform him of the same. In light of these matters, it is most unlikely that the existence of the Mareva Injunction against the 1st defendant would not be made known to the 2nd defendant, bearing also in mind their close association, a point that I shall elaborate in the latter part of this Judgment. Further, the 2nd defendant admitted in cross-examination that he was aware of the plaintiff’s claim against the 1st defendant and he also knew that the 1st defendant was required by a court order to make disclosure. He further said that the 1st defendant had asked him if he could say that he had put money into the 2nd defendant’s account. Considering that the disclosure order was part of the Mareva Injunction order, it is inherently improbable that the 2nd defendant did not know of the Mareva Injunction against the 1st defendant or would have no knowledge of the prohibition on the 1st defendant in relation to funds of the plaintiff held by the 1st defendant on trust. 41.Second, the 2nd defendant also claims that when he dealt with the funds on the 1st defendant’s instruction, he did not know that they were funds of the plaintiff. On the evidence, the 2nd defendant was at all material times closely associated with the 1st defendant. They have known each other for a number of years. The 1st defendant had described the 2nd defendant as a man he regarded to be his “lawyer” since 1991whereas the 2nd defendant stated in his affidavits that he was retained by the 1st defendant to be his business consultant shortly after the commencement of this action. 42.The two of them had also been in close contact in the period after the Mareva Injunction against the 1st defendant was issued. They were observed by the plaintiff’s private investigators to be in each other’s company for many hours. As noted above, they had visited CWL’s office together on a number of occasions. They had also been seen playing pool together. Around midnight on 15 August 2006, the 2nd defendant went with the 1st defendant to a storage facility in Kennedy Town and assisted him in removing boxes. The 2nd defendant also stayed at the 1st defendant’s residence at Hong Lok Yuen. The two of them were seen to leave the house in Hong Lok Yuen in the morning of 17 August 2006. They were last seen in the same afternoon leaving Printing House in Central and travelling in the 1st defendant’s car on which there was a quantity of language, including the 2nd defendant’s pool cue stick carry bag. 43.Subsequently in January 2007 when Mr Farbiarz, the business associate of the plaintiff’s holding company, came across him and his family in Wanchai, the 2nd defendant said that the 1st defendant had provided for him since the plaintiff had stopped paying his pension and had been taking good care of him financially. This is consistent with what the 2nd defendant said to Mr Donegan at the without prejudice meeting in November 2006. According to Mr Donegan, the 2nd defendant told him the 1st defendant had given an indemnity to him and that accordingly the 1st defendant was supporting him financially during his stay in Hong Kong. It is also Mr Donegan’s evidence that the 2nd defendant further said that if he were to disclose the written instructions given by the 1st defendant, that would really sink the 1st defendant. Mr Donegan had not been cross-examined on this aspect of his evidence. 44.Most importantly, the 2nd defendant was present when the 1st defendant went to CWL on 16 August 2006, when the 1st defendant made his fourth affirmation. According to the 2nd defendant’s evidence in cross-examination, during that visit to CWL, the 1st defendant had asked him if he could say he had transferred money from the Swiss account to the 2nd defendant, and he gave his agreement to the 1st defendant saying this in his affirmation. This is a revealing piece of admission because, as the 2nd defendant knew, the affirmation was in connection with the order of disclosure against the 1st defendant. Even accepting that prior to this visit, the 2nd defendant did not know that the funds from the 1st defendant’s Swiss account were funds of the plaintiff, the 2nd defendant would by then became alerted and put on enquiry that the funds from the 1st defendant’s Swiss account were funds of the plaintiff and/or subject matter of the plaintiff’s claim herein. 45.This is not to mention that it must strike a reasonable man that it is very odd that the 1st defendant have to channel funds through the 2nd defendant to his wife if indeed this were his personal funds. The 2nd defendant claims to have no knowledge that the 1st defendant was subject to a Mareva Injunction. If this were true, which I do not accept, then the request and arrangement to remit funds from a Swiss account to a Bahrain corporate bank account for onward transfer to the wife’s bank account in Indonesia would be even odder. Given the 2nd defendant’s legal background, his previous experience in law enforcement in New Zealand and as the plaintiff’s Chief Legal Adviser together with his knowledge that the 2nd defendant held funds on trust for the plaintiff and the plaintiff was claiming against the 1st defendant about the trust funds, he ought reasonably to find the request to place funds with him and the instructions to pay them out highly unusual and to have suspected that the 1st defendant had something to hide. Having regard to the circumstances analysed above, I find it inherently hard to believe the 2nd defendant’s assertion that he was misled by the 1st defendant and that he had no notice that the funds the 1st defendant passed to him were trust funds of the plaintiff. 46.At the same time, the 2nd defendant’s assertion that he had fallen out with the 1st defendant after he came to know the truth in about September 2006 also does not sit comfortably with several objective facts. One of which was that in October 2006, the 1st defendant had endeavoured to make the discharge of the 2nd defendant’s prohibition order a condition of his paying the Euro funds into court. Another was the fact that as late as November 2006, the 1st and 2nd defendants were using the same post box as their correspondence address with the court and the Immigration Department respectively. Thirdly, the 2nd defendant had told both Mr Donegan and Mr Farbiarz that the 2nd defendant had been taking care of him financially. Perhaps the most telling objective fact is the 1st defendant’s statement to Saunders J dated 13 November 2006 in which he said the 2nd defendant had returned the funds to him, fully accounted for. 47.Third, it is also the 2nd defendant’s assertion that he has not been evading service. This is however contradicted by his own conduct. In the first place, after he was stopped by the Immigration officer and told of the prohibition order against him on 18 August 2006, the 2nd defendant went to the Court to search the court file. He was unable to do as leave had not been granted to add him as a defendant and he was not yet a party. At his request, the Duty Practice Master, Master Kwan, heard him. During the hearing, Master Kwan pointed out that he was subject to a prohibition order and that a Mareva injunction, to say the least, might have been made against him. Master Kwan further asked her clerk to contact the plaintiff’s solicitors to arrange for copies of the documents to be brought to the court for him. When the 2nd defendant was informed that the documents would be delivered in half an hour, he stated that he was being held in the court like “a sitting duck to receive service”. He later left the court. Then on 22 August 2006, the 2nd defendant contacted Master Kwan’s clerk again seeking to obtain copies of documents in the court’s file, including the prohibition order and the Mareva Injunction. Although the plaintiff’s solicitors had on the same day provided copies of them to the Master’s clerk for collection by him, the 2nd defendant did not return to the court to collect them. 48.It is evident from these incidents that the 2nd defendant was looking for information about the proceedings and orders involving him, and he was aware that he had become embroiled in this litigation. In this connection, the 2nd defendant’s evidence that it did not go through his mind that the prohibition order was related to the litigation between the plaintiff and the 1st defendant is plainly incredible. At the very least, he would have seen that the action number was the same and learnt from the hearing before Master Kwan that the prohibition order was made in the action between the plaintiff and the 1st defendant. Despite his desire to find out the proceedings and orders against him, the 2nd defendant did not see fit to contact the plaintiff’s solicitors. It is not disputed that the 2nd defendant had met and known Mr Donegan before this action and had in May 2006 gone to the office of Messrs Barlow Lyde & Gilbert. And as highlighted by Mr Duncan SC, the reference to “sitting duck” was demonstrative of the 2nd defendant’s state of mind at the time. 49.Secondly, when setting up the without prejudice meeting with Mr Donegan, one of the conditions stipulated by the 2nd defendant was that there would be no service of process. This is again indicative of the 2nd defendant’s concern at the relevant time. 50.The third and the most striking of all is the fact that the 2nd defendant has all along insisted that the court papers and orders should be served on his address in New Zealand. He has even suggested that the plaintiff should have sought leave to effect service outside jurisdiction. This is despite the fact that he is throughout physically present in Hong Kong. He has also given no reason for insisting on being served at the New Zealand address. If the 2nd defendant was open and straight and had no intention to evade service of process, as he claims, he would not have requested for service to be effected in such a roundabout way. He could have simply collected the papers and orders from the plaintiff’s solicitors or contact the plaintiff’s solicitors to make arrangement for service in Hong Kong. 51.I pause here to deal with Mr Leung’s argument that the plaintiff could have served the 2nd defendant at the 1st defendant’s residence at Hong Lok Yuen. He had also cross-examined Mr Donegan as to why this was not done since the plaintiff’s investigator believed the 2nd defendant had lived there. In my view, this does not advance the 2nd defendant’s case. The evidence of the plaintiff’s private investigator is that the 1st and 2nd defendants left the Hong Lok Yuen address in the morning of 17 August 2006 and they were last seen that afternoon in a car loaded with luggage. In the circumstances, it is understandable that the plaintiff did not effect service at the Hong Lok Yuen address since it is apparently futile. More fundamentally, it is not the 2nd defendant’s evidence that he continued to reside at the 1st defendant’s residence after 17 August 2006 or that documents delivered at that address would be forwarded to him. It is not his case that the Hong Lok Yuen address is an effective address for service. It is therefore irrelevant that the plaintiff did not effect service at the Hong Lok Yuen address. 52.I turn now to the 2nd defendant’s denial of having knowledge or notice of the 17-8-2006 Order. In relation to the call and SMS text message Mr Donegan made to his New Zealand mobile phone number, the 2nd defendant’s testimony is that he had by then returned the New Zealand mobile phone to his home in New Zealand because roaming charges were too expensive. However, he only raised this for the first time in his cross-examination notwithstanding that these calls to his New Zealand mobile phone number had been mentioned in the 29th Affidavit of Li Adrienne May filed on 15 June 2007 in connection with the first set of contempt proceedings. When cross-examined as to whether his wife had related to him the telephone call of Mr Donegan and the SMS message received on his mobile phone, the 2nd defendant claimed that she did not. He explained that her first language was not English and that they had not been on very good terms, especially since he was detained in Hong Kong because of this litigation. These are hardly convincing reasons bearing in mind that Mr Donegan’s telephone call and SMS message were made in August 2006, just a few days after the first prohibition order. The fact that his wife was seen accompanying him in Wanchai, Hong Kong in January 2007 also does not support the claim that they have not been on good terms. It is also to be remembered that the 2nd defendant had, in connection with his first application to discharge the prohibition order, said that his wife had at least until February 2007 helped him to renew medical prescription for him. It is further irrelevant that English is not the wife’s first language. It would be a simple task to forward the SMS text message to the 2nd defendant’s mobile number in Hong Kong if indeed the message was received in New Zealand. 53.As to the email that Mr Donegan sent to the hotmail address on 21 August 2006 attaching the Mareva Injunction order, the 2nd defendant says he did not receive it. The 2nd defendant does not dispute that the hotmail address was at the time used by him. It is the email address given in his business card and his calendar. Mr Donegan also communicated with him at the hotmail address when setting up the without prejudice meeting in November 2006. The 2nd defendant also communicated with his former solicitors, Messrs Au Yeung Cheng Ho & Tin, on this email address. He had further indicated to the solicitors that he downloaded twice every day from this email address. Although the 2nd defendant suggested in his cross-examination that he had been using another email address, the undisputed fact is that he responded to Mr Donegan’s emails relating to the without prejudice meeting fairly promptly and within matters of hours. Given the above circumstances, it is too much of a coincidence that the critical email informing him of the Mareva Injunction and attaching the orders were never received by the 2nd defendant at all. 54.In short, I do not find the 2nd defendant a candid or credible witness. His evidence, especially with regard to the aspects outlined above, is unreliable and unconvincing. I do not accept his evidence that when he dealt with the funds transferred to him by the 1st defendant, he was not aware that the 1st defendant was subject to a Mareva Injunction. I also do not accept his evidence that he was misled by the 1st defendant to believe and that he did believe the funds were the personal funds of the 1st defendant. In addition, I reject his assertion that he has never evaded service of process. I further do not believe his evidence that he did not receive the email sent on 21 August 2006 informing him of the Mareva Injunction and prohibition order, with the orders attached, and/or that the telephone conversation Mr Donegan had with his wife as well as the SMS text message sent on the same day were not brought to his notice. The 2nd defendant’s knowledge of the Mareva Injunction 55.On all the evidence before the court, I am satisfied beyond reasonable doubt that the only and irresistible inference is that when the 2nd defendant paid out to AOG of Austria and the 1st defendant’s wife on 21 and 28 August 2006 respectively, he was aware and had notice of the existence of the 17-8-2006 Order that prohibits him from dealing with the funds placed with him by the 1st defendant. The basis for drawing the inference includes:
56.Further, having regard to his legal training and his experience in law enforcement and as legal adviser, I am satisfied beyond reasonable doubt that he was also aware of the penal consequences of the injunction order against him. Mr Duncan SC submits that if there was any doubt as to the 2nd defendant’s state of mind, that must be totally erased by the fact that the 2nd defendant is a sophisticated litigant. I agree. Conclusion 57.For the reasons set out above, I am satisfied beyond reasonable doubt that the 2nd defendant is guilty of contempt of court in that he had dealt with, disposed of and/or diminished the value of the funds that were placed with him by the 1st defendant, in breach of the terms of the Order dated 17 August 2006 as re-amended on 19 August 2006 and that he did so with knowledge of the restriction imposed by the said Order.
Mr Peter Duncan SC and Mr Jose-Antonio Maurellet instructed by Messrs Barlow Lyde & Gilbert for the plaintiff Mr Eric H K Leung instructed by Messrs Finley & Co for the 2nd defendant |
Cases cited in this judgment
Further hearings and rulings under HCA 1475/2006