Jrb v. Klww
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CACV 28/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 28 OF 2011 (ON APPEAL FROM HCMC 8 OF 2010) ________________________ BETWEEN
Before : Hon Cheung JA and Suffiad J in Court Date of Hearing : 17 June 2011 Date of Judgment : 27 June 2011 ________________________
________________________ Hon Cheung JA : 1.This is an appeal by the 1st respondent against the refusal by Deputy Judge Carlson to grant her leave to issue contempt proceedings against the petitioner. For the purpose of this judgment, I would refer the 1st respondent as the wife and the petitioner as the husband. Background 2.The parties were married in 1989 and divorced on 30 April 2010. The wife is a successful financial advisor and has by her efforts accumulated huge wealth. The husband is a barrister. His former occupation was a chartered secretary but changed to the present profession in 2002. They have two children, a son aged 21, living in Toronto and a daughter aged 18, studying in England. Application for injunction 3.The husband applied for ancillary relief for himself and the children. Based on the documents disclosed by the wife, the husband discovered that the wife had transferred large sums of money to her mother (the 2nd respondent) in Vancouver, Canada. 4.The husband by an ‘Ex-parte Summons on Notice’ dated 29 July 2010 applied for an injunction to restrain the wife from dealing with assets identified in thirteen named bank accounts. He was represented by counsel and solicitor. The husband in his 4th Affidavit filed in support of the application stated that,
5.The application was heard by Saw J on 30 July 2010. The Judge adjourned the application to the return date of the inter partes summons which was to be issued by the husband upon the wife’s undertaking not to transfer funds in excess of HK$400,000 per month from ten named accounts without providing notice to the husband of her request to do so and the purpose of such transfer. The wife was represented by her current solicitors at the hearing. 6.The order of Saw J recited the following undertaking by the husband,
7.The husband by a summons dated 9 August 2010 applied to set aside the disposition made by the wife in favour of her mother. 8.The husband also issued the inter partes summons for injunction returnable on 13 August 2010. Before the hearing of the summons, the parties filed a consent summons dated 12 August 2010 to vacate the hearing date and adjourn the husband’s application to a new date. The wife continued to give her undertaking as stated earlier. Yam J made an order in terms of the consent summons on 12 August 2010. 9.The application for injunction came before Judge Carlson on 11 November 2010. The husband also applied to join the wife’s mother as a party in his application to set aside the disposition. This application was also heard on 11 November 2010. Judge Carlson joined the mother as a party and granted an injunction in the following terms :
10.The injunction was a mareva injunction. One glaring omission of the injunction order is that there was no undertaking as to damages by the husband to the wife and third parties who may be affected by the granting of the injunction. Service on banks 11.On 31 December 2010 the husband’s solicitors, Ip & Heathfield, served the injunction on the banks named in the order which proceeded to freeze the accounts of the wife. Amongst the banks were the Hang Seng Bank and HSBC. Both the Hang Seng Bank and HSBC did not give effect to the exceptions provided for in the order which allowed the wife to withdraw $165,000 per month from the Hang Seng Bank account and $40,000 per month from the HSBC account. 12.The wife’s accounts in Hong Kong were for her personal and business use and the account in the Vancouver branch of HSBC funded the son’s maintenance in Canada. 13.In the letter dated 31 December 2010 from Ip & Heathfield which accompanied the service of the injunction, the exceptions referred to in the order were expressly stated. Hang Seng Bank
HSBC
The correspondence 14.The freeze by these two banks of the wife’s accounts which included the use of her credit cards naturally caused huge problems for the wife. By a letter dated 6 January 2011, the wife’s solicitors Peter K S Chan & Co (‘Chan & Co’) wrote to Ip & Heathfield stating that the action by the husband damaged the wife’s personal and commercial reputation and requested the husband, among other things, to take steps to eradicate the effects of the conduct complained of. 15.By a letter dated 7 January 2011, the Ip & Heathfield replied that,
16.The husband by an email dated 10 January 2011 wrote to the wife stating that,
17.Chan & Co. wrote again to Ip & Heathfield on 14 January 2011 stating that,
18.Ip & Heathfield replied on 17 January 2011, stating that,
19.Ip & Heathfield further explained in a letter dated 19 January 2011 the reason for the delay in the service of the order :
Present proceedings 20.On 28 January 2011 the wife issued the proceedings for contempt against the husband. The statement in support of the application stated, among other things, that
21.On 14 February 2011 Judge Carlson refused to grant leave to the wife to commence contempt proceedings against the husband. Variation of the injunction 22.On 19 April 2011 Judge Carlson, pursuant to a summons issued by the husband, varied the order of 11 November 2010 to allow the wife to open a new bank account to be funded with money from the Hang Seng Bank account in the sum of $175,000 per month starting from 2 May 2011 and from one of the HSBC accounts in the sum of $30,000 per month. The new account was also allowed to be funded with a ‘one-off lump sum’ of $550,000 from the Hang Seng Bank account. The wife was further allowed to withdraw reasonable sums for payment of legal fees and tax. The following terms and undertakings which were the standard terms and undertaking in a mareva injunction were also for the first time incorporated into the order.
Mareva injunction 23.Mareva injunction has been introduced into our civil jurisdiction regime since the 1970’s. It is an extremely drastic remedy and has been described as an atomic bomb in view of the serious effect on a party whose assets are restrained by the order. It is precisely because of the dire consequence on a receiving party that the Court demands the strictest compliance from lawyers of established principles in applying for this remedy. Full and frank disclosure and adherence to the specified form of the order are required. Practice Direction 11.2 expressly stated that the standard form of order for mareva injunction should be followed in the absence of good reason to the contrary. Further, where the order sought deviates in a material respect from the standard form, this should be drawn to the attention of the judge hearing the application. Practitioners are advised that they should familiarise themselves with this Practice Direction which was first issued in as early as 1998 and draw it to the attention of the judge before whom they are appearing. 24.The order of 11 November 2010 contained glaring and serious omissions. Despite the husband’s statement in his affidavit that he would provide undertakings as to timely service on banks and undertakings as to damage, none was provided for in that order until the variation on 19 April 2011. This is regrettable. While the wife’s lawyers (not Mr. Ronny Wong SC who only appeared in this appeal nor Ms Po Wing Kay and Ms Doris Li who only appeared in the contempt application) were equally at fault in not noticing the omission, the starting point must be that it was the duty of the husband who is a practising barrister and his legal advisers to include the undertakings in the draft order. They should further take the initiative of correcting the omission, particularly in a matter as important as the undertaking as soon as they realised it. 25.Further the intended service on the banks should be expressly stated both in the supporting affidavit and in the order which was not done in the present case. As Kerr LJ observed in Z Limited v. A-Z and AA-LL [1982] 1 QB 558 at 588 that,
26.As Hunter J observed in In re application by Liu Lee Yuk Ching [1982] HKLR 399 at 410, the breadth of intended service should be known to and controlled by the court by the undertakings in its order. 27.Further as the present order is a worldwide injunction which covered worldwide assets, the prescribed form in the Practice Direction requires this important provision to be included :
28.This provision was omitted in the order and the order was served on a bank outside Hong Kong without there being any evidence that compliance with the requirement had been met. 29.We are of course not sitting in an appellate capacity on an appeal from the granting of the injunction. However, I consider strict compliance to the established principles and requirements to be of such a fundamental importance to the injunction regime that I need to restate them clearly to ensure that they will be properly observed in the future. Contempt of Court 30.However, the core issue to be resolved in this appeal is whether the omission of the husband in the injunction application and his subsequent conduct after the wife notified him of the freezing of her bank accounts constituted prima facie evidence of contempt for which this Court should now allow the wife to commence contempt proceedings in order to have the issue fully explored. 31.It is worth repeating the principles regarding the contempt jurisdiction stated by Hunter J in In re application by Liu Lee Yuk-ching at 408-409 :
32.The leave requirement is to filter out obviously unfounded or oppressive applications for committal (Fabrique Ebel SA v MBO Far East [1985] 1 HKC 166 and Anthony Eric Ryan Hotung v Ho Yuen Ki, unreported, CACV 178/2006, 25 September 2009). Deliberate obstruction or interference with course of justice? 33.While there were serious omissions, I do not regard the obtaining of the injunction and the service thereof by the husband were done purposely to obstruct or interfere with the cause of justice. In the first place there appeared to be a legitimate basis to apply for the injunction in the light of the evidence of disposal of assets by the wife which may affect the ancillary relief sought by the husband. Since the mareva injunction was for the purpose of safeguarding the assets, it would have to be served on the banks. As the husband had already stated in his affidavit that he would give the necessary undertaking on service on the banks, I just cannot discern any possible advantage to be gained by him if he deliberately chose to withhold giving such undertaking as to compensate the banks in the order itself. The omission must in all likely events be a careless omission rather than a deliberate or reckless decision. As to the failure to specify the undertaking as to loss and damages to the wife in the order, this again must likely to be another careless omission rather than a deliberate or reckless decision to withhold giving the undertaking. Any attempt to do so runs the real risk of having the injunction being discharged, apart from the risk of being committed for contempt. 34.Further the husband could not possibly have intended to freeze all the wife’s accounts without recognising the need for her to have money to pay for her living or legal expenses. As pointed out earlier, when the banks were served, Ip & Heathfield had actually drawn their attention to the exemption provided for in the order. It was unfortunate that the two banks had not paid attention to the terms of the order. To argue that the banks took this step because of the absence of provision in the order of the right of set off by the banks or of an undertaking by the husband to be responsible for their loss is stretching the argument too far. Certainly the banks had not indicated that that were the reasons for their decision. Subsequent conduct 35.Mr. Ronny Wong SC, who advanced the wife’s application most persuasively, argued that when the wife issued the contempt application, she did not do so in order to seek revenge on the husband who obviously had caused her great distress and inconvenience when she was unable to operate the accounts, but only to ensure that the husband would take steps to eradicate the consequence of her assets being frozen completely. Last resort 36.I have to disagree with this approach. As repeatedly said by the Courts, committal for contempt is the last resort. This procedure takes time to be activated. It first requires the Court to consider an application to grant leave to institute the proceedings. If the wife wished to eradicate the consequence immediately when her accounts were frozen, the proper step to be taken was to make an urgent appointment with Judge Carlson (or a Duty Judge if he was not available) and seek further directions on the terms of the order. However, I do wish to say that, in the light of the glaring omissions in the present case, the husband and his lawyers should take a proactive approach in addressing the problem rather than simply saying to the wife that they would render the assistance when the banks approached them. Nonetheless I do not find that the husband had purposely obstructed or interfered with the cause of justice which requires this Court to allow the wife to invoke the contempt jurisdiction. 37.In any event, although this is not a factor I would rely upon in my decision, the wife had, since April 2011, been able to operate a new account with funds of a specified limit coming from the two Hong Kong bank accounts. 38.Any damages sustained by the wife’s would have to be pursued by way of the husband’s undertaking as to damages. Two other matters 39.There remain two other matters that I should briefly address. 40.First, Ip & Heathfield stated in correspondence that the wife was in contempt in not complying with the order in terms of the spending limit and requested the wife to disclose this matter to the Court. Mr. Ronny Wong SC has properly referred us to the letter. The so-called overspending occurred when the daughter was stranded at the London airport because of the snow storm in December 2010 and the wife had to purchase new air ticket for her to return to Hong Kong. I do not see the relevance of this matter in the present appeal. 41.Second, counsel for the husband wrote to Mr. Ronny Wong SC setting out his comments on matters raised in the wife’s appeal documents which Chan & Co. had served on Ip & Heathfield. Counsel stated he made the comments without instruction from the husband but ‘out of concern’. He wished Mr. Wong to put all relevant matters fairly before the Court. Mr. Wong again properly drew our attention to this letter. We declined to consider the letter as it was written by counsel who was not appearing before us and who said that the letter was written without instruction from his client. This being an ex parte appeal, if the husband or his lawyers wish the Court to be aware of matters relevant to the appeal, the proper approach is for Ip & Heathfield who is the solicitor on record to ask Chan & Co to draw these matters to the attention of the Court as it had done in the earlier letter. Conclusion 42.Accordingly the appeal is dismissed with no order as to costs. Hon Suffiad J : 43.I agree with the judgment given by Cheung JA and have nothing to add.
Mr. Ronny Wong SC, Ms Po Wing Kay and Ms Doris Li, instructed by Messrs Peter K. S. Chan & Co., for the 1st Respondent |
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