K. Yu Sein Trading Co Ltd and Another v. Suratwala Rubin Talakchand

CACV000146/1981

Contempt proceedings. Whether a Court has power to order a person not a party to the proceedings to deliver up to the Bailiff goods in his possession belonging to the Defendant. Whether an order to deliver up such goods is a nullity or an irregularity. Whether such an order made ex parte is a nullity. Whether in contempt proceedings the rules of evidence applicable to the criminal law apply. In what circumstances is a person an accomplice in contempt proceedings Burden of proof in contempt proceedings.

BETWEEN

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Coram: Sir Alan Huggins, V.-P. Yang and Barker, JJ.A.

Dates of hearings 15, l6, 17, 18 and 19 February 1982 and 12 March 1982

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JUDGMENT

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Barker, J. A.

1. This is an appeal from an order of Jackson-Lipkin J. whereby he ordered that the Respondent to this appeal be at liberty to issue a Writ of Sequestration against the Appellants thereto.

2. The Respondent, Suratwala Rubin Talakchand alias Rubin Talakchand (to whom I shall refer hereinafter as the Plaintiff) brought an action against Hameed Moona Assan Abdul Cader, trading as Durai Enterprise (to whom I shall refer hereinafter as the Defendant) in which he claimed the sum of HK$1,591,879.05 together with interest on seven dishonoured cheques.

3. On the 29th April 1981 the Plaintiff took out a summons for the interim attachment of property of the Defendant under Order 44A rule 7 of the Rules of the Supreme Court, which order was granted on the same day.

4. On the 30th April 1981 the Plaintiff took out an ex parte summons under Order 44A rule 10 for an order that the Appellants should not give the Defendant's property consisting of diamonds and precious stones listed in a schedule appended to the summons and alleged to be in the possession of the Appellants to the Defendant or to any other person or in any way whatsoever dispose of charge or deal with such property or part with possession thereof until further order of the Court, and an order in terms of the Summons was made on the same day.

5. It is convenient at this stage to set out the relevant rules of Order 44A, which provide as follow :-

'7(1) If in any action the Defendant, with intent to obstruct or delay the execution of any judgment that may be given against him in the action, is about to dispose of his property or any part thereof or to remove any such property from the jurisdiction of the Court, the Plaintiff may, either at institution of the action or at any time thereafter until final judgment, apply to the Court to call upon the Defendant to furnish sufficient security to produce and place at the disposal of the Court, when required, his property, or the value of the same, or such portion thereof as may be sufficient to answer any judgment that may be given against him in the action, and, in the event of his failing to furnish such security, to direct that any property, movable or immovable, belonging to the Defendant shall be attached until the further Order of the Court.

10(1) The attachment shall not affect the rights of any persons not being parties to the action, and in the event of any claim being preferred to the property attached before judgment, such claim shall be investigated in the manner prescribed for the investigation of claims to property attached in execution of a judgment.

(2) Where the property consists of movable property to which the judgment debtor is entitled subject to a lien or right of some other person to the immediate possession thereof, the attachment shall be made by a written order prohibiting the person in possession from giving over the property to the judgment debtor or to any other person.'

6. No application was made by the Appellants to have this order against them set aside and it is conceded that it was validly made, even though ex parte, the significance of which will appear later.

7. On the 28th May 1981 the Plaintiff obtained Judgment against the Defendant under Order 14 of the Rules of the Supreme Court in the sum claimed.

8. On the 20th June 1981. the Plaintiff took out a summons, inter partes as between him and the Defendant but ex parte the Appellants for an order that the First Appellants do forthwith deliver up to the bailiff all or so much of the Defendant's property attached by the Attachment Order of the 20th April 1981 as was sufficient to cover the judgment debt with interest and costs and on the 25th June 1981 Penlington, J. made an order in terms of the summons, which order was served on the Appellants. No such property having been delivered by the Appellants to the bailiff, the Plaintiffs on the 2nd September 1981 gave notice to the Appellants of their intention to apply for leave to issue a Writ of Sequestration and the hearing took place in November 1981 and lasted five days.

9. Both the Plaintiff and the Defendant were at all material times dealers in precious stones and it appeared from the evidence that at some time early in 1981 the Defendant had deposited with the Appellants precious stones to the value of some $9 million and it was in respect of these stones the Attachment Order of the 30th April 1981 and the Order of the 25th June 1981 were made.

10. At the hearing before Jackson-Lipkin J. it was the case for the Appellants that the stones in question had been returned by them to the Defendant before the 30th April 1981 and that therefore they could not be in breach of either Order. There was produced in evidence a number of receipts, partly typed and partly bearing the handwriting of the Defendant purporting to show the dates of the return of the stones, in each case before the 30th April 1981. The Defendant gave evidence, during the course of which he said that the writing was put on the receipts by him some time in early May 1981, with the object of defeating the Attachment Order, and at the behest of the second Appellant and certain other gem dealers. The Appellants neither gale nor called evidence and withdrew from the Judge's consideration an affidavit made by the second Appellant. The Judge, n a careful judgment, accepted the evidence of the Defendant, found that the Appellants were in possession of the stones on the 30th April 1981 and on the 25th June 1981 and made the order prayed.

11. At the hearing before us, application eras made to amend the original notice of appeal to argue grounds of appeal which were never argued before the Judge. Since these are quasi-criminal proceedings (see In re. Bramblevale Ltd. ⁽¹⁾ and Eugene Mau Yau-Chim v. C. King Lee⁽²⁾), we allowed the application in part. In our discretion we refused leave to argue ground 10(b) of the proposed amended grounds of appeal since it might well have been that, had the Plaintiff been apprised of this argument at the hearing, he would have presented his case differently or called further evidence.

12. The first point taken before us, though not before the Judge, was that the Order of the 25th June 1981 was a nullity, and that the Appellants could not be in contempt of something which had no effect whatsoever. It was argued that there is no jurisdiction in the Court to order a person not a party to the proceedings (and the Appellants were not parties to the proceedings) peremptorily to deliver up goods in his possession which belong to another. In Brydges v. Brgdges & Wood ⁽³⁾ Farwell L. J. said (at p. 191):-

"The Court has no jurisdiction, inherent or otherwise, over any person other than those properly brought before it as parties or as persons treated as if they were parties under statutory jurisdiction."

13. It was further argued that the form of order is not provided for in the rules, and that whereas Order 44A contains rule 10, above referred to, directing persons not parties to the proceedings not to part with a Defendant's property, Orders 45 and 46 and 47 relating to judgments and execution have no such provisions. Therefore, it was contended, the order of the 25th June 1981 was not a mere irregularity, but was a nullity, of no effect whatsoever, and that there was in consequence nothing which the Appellants had to seek to set aside or to obey.

14. I disagree. It is clear that an attachment order under Order 44A, though made before judgment, continues after judgment (See Che San and Company v. Wa Shing Printers⁽⁴⁾). It was clear moreover that what the Plaintiff was seeking to do was to levy execution upon the Defendant's property in the possession of the Appellants which the Attachment Order had made available for execution. This he could have done in accordance with the Rules of the Supreme Court.

15. Order 47 Rule 7(1) provides, so far as is relevant, "The following property is liable to attachment and sale in exection of a judgment namely .... goods .... and all other property whatsoever, whether movable or immovable, belonging to the judgment debtor, and whether the same is held in his own name or by another person in trust for him or on his behalf."

16. Rule 7(10)(a) provides: "where the property sold consists of movable property in the possession of the judgment debtor or to the immediate possession of which the judgment debtor is entitled, and of which actual seizure has been made the property shall be delivered to the purchaser."

(I observe in parenthesis that the general heading to Order 47 is 'Writ of Fieri Facias' whereas in fact Order 47 rule 7 deals with orders for sale).

17. What the Plaintiff should have was, the goods already being attached, to apply for an order for sale, and, so that this order might be effective, to apply for an order that the bailiff be permitted to enter the Appellants' premises and seize the requisite quantity of stones. He could not have sold what he did not have in his possession.  It was argued that there is a fundamental distinction between permitting a person to enter one's premises to seize goods belonging to another and actually handing over such goods to the bailiff. I disagree.

18. Does the Plaintiff's mistake in procedure render the order of the 25th June 1981 a nullity? In my judgment it does not. Order 2 Rule 1(1) of the Rules of the Supreme Court provides: "Where in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any documents, judgment or order therein."

19. Rule 1(2) provides, so far as relevant:-

"The Court may on the ground that there has been such failure as is mentioned in paragraph (1) ...... set aside either wholly or in part the proceedings in which the failure occurred."

20. In Harkness v. Bell's Asbestos end Engineering Ltd. ⁽⁵⁾ Lord Denning M. R. said at page 735:-

''This rule (i. e. Order 2 Rule 1) should be construed widely and generously to give effect to its manifest intentions. I think that any application to the court, however, informal, is a 'proceeding'."

And later on the same page:-

"This new rule does away with the old distinction between nullities and irregularities. Every omission or mistake in practice or procedure is henceforward to be regarded as an irregularity which the court can and should rectify so long as it can do so without injustice."

21. I respectfully agree with and adopt those words. What happened here was an irregularity. What the Appeallant could and should have done was to apply to have the Order of the 25th June 1981 set aside, and had they done so, the Judge would almost certainly have made an order for sale under Order 47(7). But until they applied to have the Order set aside, it had to be obeyed, and failure to do so amounted to contempt.

22. It was further argued that Penlington J. had no jurisdiction to make the order because the application by which the Order was sought was not served upon the Appellants, who were not parties to the action and that this was contrary to natural justice. But applications for orders in respect of execution are normally made ex parte, it being left to the person against whom execution has been ordered to apply to the Court to have it set aside (see Order 32 rule 1 and 6 and note 32/1-6/4 in the Annual Practice 1982). In my judgment the Plaintiff acted correctly in making the application ex parte. Even if I be wrong, his failure to serve the Appellants with the application was an irregularity only. The position would have been different had the order not been served on the Appellants, but as it. was, they could have applied to have it set aside.

23. I turn then to consider the Attachment Order made on the 30th April 1981. It was argued that, since the Judge found that the Appellants were in possession of the stones on that date, they could not be in breach of this Order as they had not given them to the Defendant or to anyone else, nor had they parted with possession of them. This would be correct if the effect of the order of the 25th June 1981 was to bring the Attachment Order entirely to an end. But it could be argued that as the Appellants were ordered, in effect, to keep possession of the property 'until further order of this Honourable Court' the order of the 25th June 1981 was 'the further order', i. e. it was merely a working out of the Attachment Order. In the light of the view I have formed as to the order of the 25th June 1981 it is unnecessary for me to express any opinion on this point, and I do not do so.

24. The next argument concerned the nature of contempt proceedings. These, it was said, and not disputed, were in the nature of criminal proceedings, and therefore all the rules of evidence relating to criminal cases applied to contempt proceedings. In particular, it was argued that, as the Defendant was a party to forgery and to a conspiracy to defraud, he was an accomplice to the offence of conspiracy to defeat the course of justice and the Judge ought therefore to have directed himself as to the danger of acting upon his evidence if it were uncorroborated. These arguments may or may not be correct. On the view I have formed it is not necessary to express any opinion on them.

25. The rule as to the desirability of corroboration of the evidence of an accomplice and the necessity of a warning against acting upon his uncorroborated evidence only arises in respect of the particular crime with which a person is charged and to which the accomplice is alleged to have been a party. It may be that the Defendant was an accomplice to a conspiracy to defeat the Attachment Order, but he was not an accomplice in relation to the Appellant's non-compliance with the order of the 25th June 1981. Moreover, I cannot see how the Defendant could be an accomplice to the Appellant's failure to do something, namely to deliver up something to the bailiff, unless there was evidence that he aided and abetted such failure, which there was not. In my judgment, for all relevant purposes the Defendant was not an accomplice, and therefore there was no need for corroboration, nor for a warning against the danger of accepting his uncorroborated evidence.

26. Finally, it was submitted that in any event the Judge should not have accepted the evidence of the Defendant. The burden of proof in contempt proceedings is high. In In re. Bramblevale Ltd. ⁽¹⁾ (op cit) Lord Denning M. R. at p.137 said:-

"A contempt of court is an offence of a criminal character. A man may be sent to prison for it. It must be satisfactorily proved. To use the time honoured phrase, it must be proved beyond reasonable doubt."

On the same page, Winn L. J. said:-

"Unless the guilt of the appellant was proved with such strictness of proof as is consistent with the test "beyond reasonable doubt" or as my Lord has more than once put it, consistent with such standard as the court, with its responsibility, regards as consistent with the gravity of the charge - a test which I personally prefer - the decision that he should be imprisoned for contempt of court cannot be sustained."

I share Winn L. J. 's preference. But the Judge had well in mind, and on several occasions made express reference to, the correct standard of proof.

27. It was said that the Judge placed undue and misplaced reliance on the fact that the Defendant did not realise that the proceedings were not against him, when in fact the Defendant was himself summoned to be cross-examined as to his means. I think there is no substance in this argument. Virtually the whole of the cross-examination of the Defendant was in regard to the contempt proceedings, and he being unrepresented, may well have thought until a late stage that he was involved in such proceedings, especially as he had been subpoenaed to give evidence in them, and the title in these proceedings contained his name and not that of the Appellants.

28. Then it is said that the Judge did not pay sufficient attention to the apparent conflict between the Defendant's evidence and the affidavit of Mr. Peter Hon, a Solicitor of the Supreme Court. This conflict was expressly dealt with by the Judge, and I see no reason to differ from his view.

29. Finally it was said that the Judge paid too much. attention to what counsel for the Appellants called the "theatrics" of the Defendant whilst giving evidence, to which the Judge referred on page 16 of his judgment - such things as raising his right forefinger to Heaven and invoking the name of Allah in support of his evidence. But it is quite clear from the statement at the beginning of page 15 of his judgment which reads 'I think that is sufficient to indicate some of my reasons, the major ones of my reasons, for accepting his evidence, without qualification' that the so called "theatrics" formed only a minor part of his believing the Defendant's testimony.

30. The Judge was fully aware of the necessity of scrutinising the Defendant's evidence with great care, and in my judgment he did so. Having found the Defendant's evidence worthy of belief, he was then and only then entitled to fortify his opinion by the fact that the Appellants had failed to give or call any evidence and had expressly withdrawn the second Appellant's own affidavit in the proceedings.

31. In my judgment the Judge came to the correct result and I would dismiss the appeal.

Yang, J. A.:

32. I agree.

Sir Alan Huggins, V.-P.:

33. I agree that the appeal should be dismissed for the reasons which Barker, J. A. has given. For my part I think there may be a fundamental distinction between an order to deliver up and an order to allow someone to enter and seize possession, but, if there is, it is a distinction which does not assist the Appellants. The case in the court below was that they could not deliver the stones because they did not have them: it was never argued that even if they had them they could not be ordered to deliver them up, nor even that the stones were not liable to seizure by reason of the existence of a lien. It was only upon the appeal - and then by last minute amendment - that it was sought to raise these contentions. The Appellants have never suggested that it was the form of the Order of 25th June 1981 which led to their disobedience of it: clearly their stand would have been the same had the Order been in a form which required them to allow the bailiff to enter and seize the stones. Had they applied at once to set aside the Order on the ground that they should not be required to submit to an order in that form, they might have succeeded and the Plaintiff would then, no doubt, have asked for an Order in the passive form. Instead, the Appellants did nothing. The Order was irregular and should not have been made, but I agree that it was not a nullity.

(1) 1970 1 Ch. 128

(2) 1969 H. K. L. R. 411

(3) 1909 P 187 C.A.

(4) 1927 H. K. L. R. 120

(5) 1967 1 Q. B. 729

12th March 1982.

Representation:

Swaine, Q. C. & N. Pirie (Johnson, Stokes & Master for Appellants.

Mills-Owens, Q. C. & J. Bleach (Deacons) for Respondent.