Eugene Mah Yau Chim v. C. King Lee and Others
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CACV000016/1969 IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 16 OF 1969 -----------------
----------------- Coram: Hogan, C.J. and McMullin, J. Date of Judgment: 8 August 1969 ----------------- JUDGMENT ----------------- 1. We have before us two appeals, one filed by the first defendant, and the other by the first and third defendants, in which we are asked to set aside an order of committal for 4 weeks, made on the 28th May, 1969 against the first defendant, for his contempt in disobeying an order made by Briggs, J. on the 21st December, 1968, and a further order of committal, also made on the 28th May, 1969, against the first and third defendants for a period of 4 weeks for their contempt in disobeying another order made by Briggs, J. in chambers on the 26th April, 1969. Facts 2. So far as material to these proceedings, the facts may be stated as follows: The first and the second defendants in the action are founder members of the fourth defendant company. The third defendant is the son of the first defendant and the plaintiff is the son of Mr. Ma To Sang, a third founder member of the company. Differences of opinion had arisen within the company and on the 2nd December, 1968 the plaintiff issued a writ, claiming, inter alia, declarations as to his position in the company and as to the validity of resolutions alleged to have been passed by the directors, injunctions against the second and third defendants and accounts. He also asked in paragraph (viii) for:
An appearance to this writ was entered by each of the defendants on the following day. It is alleged by the plaintiff that at the relevant time the effective control of the company was in the hands of the defendants. This is contested by the defendants before us, who point to the position of the plaintiff as a director and of his father as chairman of the directors and to the information about the activities of the company which was being passed to the plaintiff by one or more of the company's employees, including the storekeeper who had the keys to the store in which were held some, if not all, of the more valuable assets of the company: its stock-in-trade. Over this he had some control, at least until the locks were broken, apparently on the orders of the first defendant, shortly before the 21st December, following which the plaintiff, as a result of information reaching him about the removal of wigs and wiglets from the store, obtained from Briggs, J. an injunction. The oral order was made at about 9.20 a.m., but the formal order was not drawn up and filed until noon and is in the following terms:-
3. Meantime, at about 9.30 a.m., the plaintiff's solicitor had telephoned the defendants' solicitor informing him of the order. At about 9.45 a.m., this information was, in turn, telephoned by the latter to the first defendant at the company's factory. According to an affidavit of the defendant's solicitor, his message was that: "all the defendants in this action have been restrained from removing any of the goods stored at the factory of the company"; the first defendant asked him for the exact terms of the injunction, to which he replied that, not having been served with a copy of the order, he could not then give full particulars but would do so as soon as he received the order; he read out the exact terms to the third defendant at 12.30 p.m.. The first defendant, in an affidavit, said that at about 9.50 a.m. he received a message from his solicitor saying that an injunction had been issued restraining the defendants from "removing the goods of the company stored at the factory premises of the company" and that he then asked for particulars which his solicitor could not give him. He also said that, at about 10.30 on the same morning, the factory manager telephoned to say that a telephone message had come through from somebody purporting to be the plaintiff that an injunction had been obtained prohibiting the removal of the goods of the company stored at the factory. 4. According to the defendants; shortly before these incidents, the first defendant, acting on behalf of the fourth, had sold to Messrs. Van Shung Chong Hong wigs, which were subject to the debenture to the Bank of America, at a price of $165,000, to be applied in discharge of the debenture; the Bank was paid and discharged the debenture on the 20th December, having received an additional sum of $2,336.94 from Van Shung Chong Hong. It appears that, following this, on the morning of the 20th the first defendant instructed the factory manager to deliver the wigs to the warehouse of the Hong Kong & Kowloon Wharf & Godown Co. Ltd. as soon as they were packed. The wigs were in the process of being packed and removed pursuant to these instructions when the first defendant received the telephone calls already mentioned. He took no steps to arrest action at the factory and by noon on the 21st December all the wigs had been removed from the factory. He left the factory at about 11 a.m., returned to his house in Stanley and thereafter proceeded to Kai Tak Aerodrome, whence he departed at 2 p.m. for the U.S.A. in pursuance, he claimed, of arrangements made some time before. Apparently he did not return to Hong Kong until early in March 1969. It is alleged by the plaintiff, but denied by the defendants, that the sale to Van Shung Chong Hong is not genuine and was made at a gross undervalue. The defendants say that although the price obtained was less than might have been got from an unforced sale on the ordinary market, it was better than would have been obtained by a forced sale as a result of action then being threatened by the debenture holder. 5. An application to commit all the first three defendants for a breach of the injunction was filed on the 27th December. The committal order on the 29th May was made against the first defendant only. The delay in bringing it to a hearing has not been fully explained although the first defendant's absence from the Colony no doubt accounted for a major part of it. 6. Turning to the second committal order, it appears that, early in January 1969, the defendants, sought suspension or relaxation of the injunction, which was continued and extended by subsequent orders. It was said to be causing difficulties in that salaries of the staff of the company for the latter half of December had not been paid and further salaries for the first half of January were about to become due, whilst the company had an order from Dynasty Imports of New York for finished hair products which it wished to complete. This application was contested by the plaintiff and on the 28th January Briggs, J. made an order extending the injunction but sanctioning the sale to Dynasty Imports of wiglets for US$40,260: "to be used so far as necessary to satisfy the outstanding salaries and wages of the employees of the 4th defendant". The judge directed that the balance (if any) was to be paid to the solicitors for the plaintiff as stakeholder, and that an account thereof should be furnished to the court and to the said solicitors. 7. It has been suggested before us that this order was secured to some extent by misrepresentation as, by the 28th of January, the greater part of the wages and salaries due up to the middle of January had been discharged, leaving unsettled only claims by the 1st and 2nd defendants, and a small amount of US$1,505.90 due to other employees. Liberty was given to apply but on the 24th of April the defendants took out a summons seeking ratification of the sale at a lower price, which had already been accepted. From the affidavits in support it appears that the purchasers had claimed a reduction because of delay in delivery and expenses involved in repacking. On the 26th of April, Briggs, J., on this application, ratified the sale at the lower price and ordered that the proceeds be used in payment of the outstanding salaries and wages of the employees of the 4th defendant on or before 5 p.m. on the 2nd of May. He ordered that the balance should be paid to the plaintiff's solicitors and accounts furnished, as before. 8. The defendants, by an affidavit of the third defendant sworn on 26th April, sought to explain the departure from the original order of the 28th January and the delay in carrying out its terms by showing why a lower price had been accepted. They went on to say that when the Bill of Exchange delivered by the buyers on receipt of the documents of title to the goods - which was not payable until 90 days thereafter, i.e. on the 10th of June 1969 - had been discounted by the company's bankers, the latter had refused further credit on the company's account, which was overdrawn, and therefore the company was unable to apply the proceeds in the manner directed. Mr. Litton has, however, made much of the fact that when, on the 19th of April, the defendants' solicitors had written to the plaintiff's solicitors giving details of the transaction they had enclosed a letter of the 8th April from the 3rd defendant, stating that the payment for the sale would not be received until June 10th, and that the discounting of the Bill of Exchange was disclosed only as a result of information which had come to the plaintiff, partly in his capacity as a director and partly from a letter written to him by employees of the company, who alleged that notwithstanding the order of the 28th and the subsequent sale and payment, their wages had not been paid. Mr. Litton has also laid much stress on the fact that the defendants, whilst putting forward the excuse about the Bank's refusal of further facilities, made no attempt to secure a variation of the order of the 28th January but apparently accepted its full implications. It seems they were advised by their then lawyers that it was necessary for them to make the payments set out in that order and that they raised money for this purpose. 9. At 3.45 p.m. on the 2nd of May the 3rd defendant filed an affidavit to which were attached letters and accounts, purporting to show the disposal of the net proceeds of the sale to Dynasty. These indicated that a payment was made to the 1st and 2nd defendants of $5,500 in respect of salary for December and January; that a sum of $1,505.90 which the defendants had been unable to pay to certain workmen was sent to the plaintiff's solicitor in cash; and that a cheque for $27,890.86 had also been sent to these solicitors to cover the balance. 10. In an affidavit subsequently filed on the 14th May the 3rd defendant gave, as the reason for not paying the workmen, the excuse that the factory had closed and it was difficult to contact them; that they had not called at the office until after the accounts had been made up at 4.05 p.m. on Friday, 2nd of May; and that the accounts and the necessary money had already been submitted to the solicitors for the plaintiff. 11. At 3.40 p.m. on the 13th of May the defendants took out a summons, returnable on the 17th May, seeking directions in respect of matters arising out of the order of the 26th of April and at 4 p.m. on the same day the plaintiff issued a notice of motion seeking the committal of the 1st and 3rd defendants on four grounds: first that the order of the 28th of January had been secured by fraudulent misrepresentation on the part of the 3rd defendant; secondly, that the 1st and 3rd defendants had fraudulently paid the sum of $5,500 to themselves; thirdly, that the 1st and 3rd defendants had failed to pay the sum of $1,505.90 to the employees of the 4th defendant, and fourthly, that they had failed to render an account. In his decision, which has been entitled a judgment, delivered on the 28th of May, the judge said that it was unnecessary for him to deal with the first and second grounds, adding that he would rather not decide them on the affidavit evidence before him. He confined his order apparently to the 3rd and 4th grounds put forward and held that, presumably in relation to these alone, there was "abundant evidence of non-compliance with the order of the court. Indeed there is abundant evidence that the defendants did not intend to abide by the court's order". He then made the second order of committal. 12. Apparently no order was made on the application for directions filed on the 13th. The "judgment" merely says that it was "abortive". Mr. Litton has told us that it failed because it was not the task of the court to give the defendants directions as to how to run the company. Grounds of Appeal on first committal 13. Returning to the first order of committal as against the 1st defendant, the first of the three grounds of appeal filed on the 30th May reads as follows:
The second and third grounds related to punishment only. 14. There has been argument before us as to what was contemplated by this first ground in that it appears to assume that the goods in question had been sold: an issue which the trial judge expressly refrained from deciding because he thought it unnecessary to do so. Eventually counsel for both sides agreed that this ground should be treated as if amended so as to request a finding that there had been such a sale, in return for an agreement by counsel for the defendants that the plaintiff in his turn would not be prevented, through failure to file a cross-appeal or notice under O.59 r.6, from requesting a finding that there had been no such sale. 15. Subsequently, in the course of argument, we indicated we were not proposing on this appeal to decide this issue of sale or of no sale, which did not appear to have been fully ventilated in the court below, but that if we found a determination of this issue to be necessary, we would return it for decision in the lower court. 16. At the outset of the hearing before us, Mr. Ching for the defendants sought liberty to add three further grounds of appeal; of these one was abandoned during the course of subsequent argument but the other two read as follows:
17. After hearing counsel on both sides we came to the conclusion that we could not properly decide whether these additional grounds should be admitted until we had been made fully aware of the questions arising on the appeal as originally filed and of the implications surrounding the admission of these new grounds. Consequently we deferred our decision until we were more fully informed. A separate ruling to that effect has been delivered. Argument 18. Consequently Mr. D'Almada for the defendant, subject to our subsequent ruling on admissibility, included these further grounds in his argument, and taking the grounds in their logical rather than their chronological sequence, they can be summarised as follows:
19. It will be convenient to take (a) and (b) of these grounds together. In support of them, Mr. D'Almada drew attention to the distinction which at one time prevailed between mandatory orders and prohibitory orders, referring to the notes to the 1964 Annual Practice p.1004 and the cases there mentioned, which show that if committal was sought for breach of a mandatory order it was essential to prove that the order had been served personally on the person to whom it was directed but that, where the order was prohibitory only, personal service was not necessary if it could be shown that the individual in question had notice, either through presence in court or otherwise, of the terms of the order. 20. Mr. D'Almada contends that this distinction was annulled in England in 1967, with the introduction of the new rule O.45 r.7, which specifically required that service of orders, whether mandatory or prohibitory should, in all cases, be personal; without such service and the endorsement on the order of the penal provision referred to in sub-rule (4), there could be no committal. This position, he said, lasted for only a brief period in England. In July 1967, O.45 r.7 was again amended for the express purpose of enabling the courts, if the specified conditions were satisfied, to commit for breaches of prohibitory orders, even when these had not been personally served. This further amendment has not, however, been made in Hong Kong so that we are in the position which in England prevailed for a brief period in 1967. 21. The requirement of service is, however, subject to para.(6) of O.45 r.7 as enacted in England at the beginning of 1967, which is the form still in force in Hong Kong today. Paragraph (6) reads as follows:
22. This provision, according to the notes in the Annual Practice for 1967, kept in force the previous practice of the courts whereby prohibitory orders could be enforced by committal even if not personally served, provided notice of the order had been given to the person concerned. Mr. D'Almada contends that these notes are mistaken as the paragraph, in his submission, did nothing of the kind. The power of dispensation is, he says, only a power to dispense in advance, if so requested, with the obligation to make personal service; then there can, under the provisions of this paragraph, be no question of an ex post facto dispensation. This construction is, he claims, confirmed by the amendment of July 1967, which would not have been necessary if the old powers had remained intact. Moreover, paragraph (6) has in England been preserved in the new form of O.45 r.7 where it has become para.(7). To preserve both these provisions side by side, would, Mr. D'Almada says, have been quite unnecessary if they cover the same ground. 23. Mr. Litton, on the other hand, contends that a power to dispense with the requirements of the law means precisely what it says and this power can, in the absence of any express limitation, be exercised either before or after the alleged breach, if the court is satisfied that, in the circumstances, it is proper to visit the delinquent with a penalty. In the past it had been deemed proper to do so where, with knowledge of a prohibitory order, the subject of that order had chosen to defy it: it would, he said, be no less proper now to dispense with service in such circumstances. 24. Before dealing with these arguments, it is necessary to decide whether the grounds of appeal which raise these questions can be admitted. 25. In seeking their admission Mr. D'Almada referred us to the well-known cases of The "Tasmania"(1) and the Connecticut Fire Insurance Co. v. Kavanagh(2). Relying on these cases, and on a subsequent case to which I will refer in a moment, he contends that the conditions required for admission, i.e. that the appellate court has before it all the material which could have been available in the court below if the matter had been raised there, are fully satisfied, and that where the liberty of the subject is involved there should be no question of excluding argument as to whether the law has been correctly applied. 26. Mr. Litton, on the other hand, whilst admitting that, had the point been raised in the court below, no additional evidence relating to it could have been introduced, nevertheless contends that the defendants should not be allowed to introduce it on this appeal. He says that had it been raised earlier he could have got a dispensation from the judge below. But we can, of course, take that step here if we think it justified. However, he also relied on the contention that the point having been mentioned below was abandoned by the defendants' then counsel, Mr. Gittins. 27. As the judge refused a request by the defendants to make available, for the purpose of this appeal, his notes of what occurred, there has been some difficulty in determining what exactly happened in the court below over this issue but Mr. D'Almada and Mr. Litton have furnished us with an agreed statement from which it appears that Mr. Gittins submitted to Briggs, J. at the hearing on the 2nd of May 1969 that, at the material time, the first defendant was in doubt as to whether an injunction had any legal effect before service and that this was a reasonable doubt because Mr. Gittins had himself to look up the law before he was satisfied that his client had been in breach. He went on to refer to the 1967 Annual Practice, p.610, and to the 5th Supplement, claiming these showed the 1st defendant's doubt to be reasonable, as the doubts of practitioners in England on the same point had to be removed by the inclusion of a new rule. Mr. Gittins advanced this as a mitigating factor but the matter was carried no further. 28. From this it would appear that, whilst Mr. Gittins' client claimed that the injunction did not take effect until served or at least was in doubt on that point, Mr. Gittins thought that his client was wrong and his client's contention was therefore not further pursued, but Mr. D'Almada now tells us that it was not the client but Mr. Gittins who fell into error. 29. Mr. Litton argues that the course taken by Mr. Gittins amounts to an abandonment of the point and consequently is governed by the observation of Bankes, L.J. in the case of Hickman v. The Kent or Romney Marsh Sheep Breeders Association(3), where he said:
30. In answer to that contention, Mr. Ching for the plaintiff, argued that the decision of Bankes, L.J. thus sparsely expressed was a slender ground on which to deprive a man of his liberty although in the case of Thomas v. Marconi's Wireless Telegraph Co. Ltd.(4), where the respondent sought to introduce an additional ground that it was the appellant's breach of the Factories Act 1961 that had caused the accident which injured the respondent, Winn, L.J. said:+
31. At this point Mr. Ching took up a suggestion from the bench that there might be some relevance in the observation of Lord Normand in South of Scotland Electricity Board v. British Oxygen Co. Ltd.(5), where he said that in Stonehaven Magistrates v. Kincardine County Council(6) the House of Lords entertained a point which had been expressly abandoned below. Mr. Ching added however that the report of the latter case did not seem to bear out Lord Normand's observation but it might be that there was material available to the Law Lords which did not appear in the report. 32. Mr. Ching, saying that where the liberty of the subject was concerned there could be no waiving or condoning of irregularity, drew attention to the statement of Scrutton, L.J. in the case of Re Weatherley(7):
33. Mr. Ching also drew attention to the burden of proof resting on the plaintiff and the observations of Denning, L.J., as he then was, in Huyton-With-Roby Urban District Council v. Hunter(11), where he distinguished the legal burden imposed by law from the provisional or evidential burden which arose from time to time during the course of a case as the evidence shifted the burden on a particular issue from side to side. The over-all burden, Mr. Ching emphasised, rested with the plaintiff and was not discharged in the court below. He supported this argument by a reference to the Canadian case of J.B. Snowball Co. Ltd. v. Sullinvan(12) where Barker, C.J. said:
34. At a late stage in the argument, the report in the London "Times" on July 21st of the case, In Re Bramblevale Ltd., became available, where the Master of the Rolls indicated that the standard of proof required in committal for contempt was proof beyond reasonable doubt and referred to it as "a quasi-criminal matter". 35. Up to that point, counsel on both sides had been disposed to take the view that the introduction of the additional grounds of appeal should be dealt with as if it were merely an ordinary issue in a civil case but the appearance of this dictum, describing committal for failure to produce certain books of account as a quasi-criminal matter, appeared to throw some doubt on the allocation by the authors of the Annual Practice of this type of contempt into the category of civil as distinct from criminal contempts. (See notes to O.52 r.1 1967 Annual Practice 679 et seq.) 36. The distinction between civil and criminal contempts is not an easy one. The principle behind the decided cases is not always clear but would seem to have received its most penetrating and constructive analysis in the judgment of Palles, C.B. in the Irish case of Attorney General v. Kissane(13) where he showed that, in their origins, attachments for contempt had been basically criminal but that the extension of the use of this power by the courts of chancery, first for the control of the proceedings of common law courts and then for the benefit of a party in a suit, had subsequently made it impossible to affirm that every proceeding for an attachment is in its nature criminal. He went on:
He clearly and rightly put into the latter category interference with, or failure, when required, to come to the assistance of, an officer carrying out the process of the court but his line of distinction would, I think, put the breach of the order in the present case in a civil category. Nevertheless when seeking to punish that breach, it would seem appropriate to adopt not only the criterion that the breach must be proved beyond reasonable doubt, by analogy with criminal cases, but also to be no less ready to consider a new point than an appellate court would be when dealing with a criminal conviction. But even if the matter were to be determined by the principle ordinarily applicable to the introduction of a new point on a civil appeal, the defendants would appear to have a strong case. 37. We would refer to the Hong Kong decisions, Attorney General v. Lam Ying Ching & Others(14) and Ho Kwok Chu & Others v. The Chung Ying Boarding House & Others(15), and to the judgment of Willmer, L.J. in Donaghey v. P. O'Brien & Co. & Others(16) where he refers to the adoption by the Privy Council in Warehousing & Forwarding Company of East Africa v. Jafferali & Sons(17) of Lord Watson's statement in Connecticut Fire Insurance Co. v. Kavanagh(2) that:
On the other side mention was made of the judgment of Greer, L.J. in Smith v. Cammell, Laird & Co.(18) where he quoted Lord Herschell's statement in The "Tasmania"(1) that:
The case before Willmer, L.J. was a claim for damages by a workman and proceeded on the basis that a certain Building Regulation applied. The new point advanced on the appeal was that it did not. Willmer, L.J. said:
But the pith of Mr. Litton's argument is, of course, that we are dealing not merely with a question of introducing a new point but of re-introducing a point already abandoned and Davies, L.J. touched on this aspect when he said(16):
It will be noted that Davies, L.J. then appears to have drawn a distinction between an "express abandonment" and an intimation that a point is not being pursued. 38. On a criminal appeal the court may allow even an express abandonment to be withdrawn if given on bad advice. See Reg. v. Sutton(19). Ruling on Admission of New Grounds of Appeal 39. Whether what occurred in the court below could properly be described as an abandonment of this point is at least doubtful. It seems to come closer to what occurred in Donaghey v. P. O'Brien & Co. & Others(16). 40. If an individual, who is threatened with committal to prison says "I thought I was justified in doing what I did, as I was not bound by an order of this kind unless and until I had been served with it" and if his counsel in the lower court, taking the view that his client was mistaken, did not seek to argue the point as a ground for freeing his client from liability being content to advance it only as an element in mitigation, but another counsel thinks this view mistaken and seeks to satisfy an appellate court that the client was justified in his belief, should he be precluded from doing so? If the ordinary citizen is presumed to know the law and has based his action on his own correct interpretation of it, can he be deprived of the benefits of this correct interpretation because his counsel and the judge in the lower court have followed a mistaken interpretation? To punish him for their mistake would seem quite indefensible. Such a situation, regrettable though it might be, could conceivably arise if there was no court of appeal or other instrument available to set the matter right but it would seem impossible to justify the refusal of a court of appeal to take the necessary steps when the matter was still before it. 41. Whether, if what occurred below could properly be termed an "abandonment", this step should be treated as an exception to the general rule or merely as an exercise of that discretion in dealing with abandoned points which, from Lord Normand's speech in South of Scotland Electricity Board v. British Oxygen Co. Ltd.(5) would still appear to remain with the higher court, is I think immaterial. When dealing with the liberty of the subject we think it is our duty, when the matter is brought to our attention, on hearing an appeal, to correct, if correction is necessary, an erroneous view as to the application of the law which may have been formed by the counsel and the judge in the court below. We think it is all the more appropriate that we should discharge that duty if, as is suggested here, the error was partly due to an incorrect note in the Annual Practice, which may have misled both counsel and judge, and the error occurred, moreover, on the hearing of an application which, as indicated in the case of Attorney General v. Lam Ying Ching & Others(14) may, on occasions, merit treatment more indulgent than would be accorded when issues are subject to formal pleading. Consequently, we have decided that these two additional grounds of appeal may be argued though we would propose to make that concession on terms as to costs with which we will deal later. Dispensing with Personal Service 42. We turn then to Mr. Litton's argument that, assuming these points are raised and we are satisfied that under O.45 r.7 personal service of a prohibitory order, appropriately endorsed with the penal provision, is normally necessary, a view which he did not seek to contest, these requirements can be dispensed with by order of the court. He claims that there is nothing in the terms of the rules to suggest that this dispensation cannot be given subsequently. In fact, he goes so far as to argue that it would not have been appropriate to have sought this dispensation at the time when the injunction was obtained because, at that time, his client did not have available the information which can now be put before the court or could have been put before Briggs, J. in the court below, to indicate that dispensation would be justified. He says that it is the telephone message to the first defendant of what was being sought and what had been obtained and the haste and bad faith with which the first defendant sought to move the property away from the factory so as to escape the consequences of any such order that justifies the request for dispensation. In effect he says that if, under the old procedure, the courts thought notice should be sufficient without service there is no reason why the courts should not use the powers conferred upon them by paragraph (6) to give effect to the same view. He submits that this is the intention and effect of paragraph (6) and that, to this extent, the notes to the Annual Practice are correct and that it would be in accordance with the merits of the case and the established practice of the courts over many years to interpret and apply the newly created power in this way. This is a cogent argument and if the English Rules which came into force in January 1967 had, like the Hong Kong Rule, remained unaltered, there would appear to have been much reason for supporting it. It conflicts, however, with the action taken by the Rules Committee in England in July 1967. If everything necessary and appropriate could have been done under paragraph (6) as it stood from January to July 1967 there would appear to have been no need to introduce the new paragraph or to leave paragraphs (6) and (7) standing side by side in the order as it operates today. This enactment of July 1967 indicates that the Rules Committee in England thought their paragraph (6), as originally enacted, did not confer power to dispense ex post facto. 43. Counsel for the plaintiff also produced a strong argument that if personal service is required by the rules as they stand and can only be dispensed with by order of the court then any individual who, prior to service or dispensation, took action that was innocent at the time should not see his innocent act transformed into a guilty one by a subsequent order of dispensation. This would, he said, be highly objectional in principle and contrary to normal practice; the matter was quite different when there was no rule requiring personal service and when notice was in itself capable - and known to be capable - of imparting a guilty quality to the act. 44. It can, however, be argued that the English enactment in July 1967 was merely a legislative interpretation of the meaning of the order as it had stood prior to that date and that it does not have the authority or weight of a judicial interpretation. Moreover, the Hong Kong rules were made on the 29th May, 1967 although they did not come into operation until the 1st September, 1967; so there has been adequate time to make such an amendment, and as the Hong Kong Rules Committee adhered so closely to the English pattern in their comprehensive revision in 1967, the absence of an amendment here may indicate that the Hong Kong Rules Committee does not share the opinion of the English Rules Committee as to the effect of the order in its unamended form. On the other hand, the Committee may be awaiting a suitable opportunity to combine this with other amendments. 45. Certainly the Hong Kong courts are, at this juncture, less constrained than their English counterparts from taking a decision which would endorse the note in the 1967 Annual Practice as correct and from using paragraph (6) of O.45 r.7 for the purpose of granting dispensation ex post facto in circumstances where notice would, prior to the introduction of these rules, have been regarded as sufficient. But such an interpretation, running contrary to the view so clearly implied by the English Rules Committee, whose work the Hong Kong Rules Committee have sought to follow so that the English decisions will be readily available for the use and guidance of practitioners and others, could lead to difficulties. In the circumstances, it would seem undesirable now to express a conclusion on this point, unless it is necessary to do so for the determination of this case, which may be capable of decision on a narrower ground. 46. The 5th ground of appeal which claims that the failure to endorse the injunction in the manner prescribed by O.45 r.7(4) of the Rules of the Supreme Court, 1967, stands really on the same footing as the argument about the necessity for service. If service can be dispensed with then the necessity for the penal endorsement would presumably go with it. 47. Turning then to the other arguments which have been advanced and assuming, without deciding, that Mr. Litton is right in his submission that a dispensation could be given ex post facto, it is necessary to examine Mr. D'Almada's argument on the first ground of appeal that the order made by the judge on the 21st December could not apply to property which was no longer in the ownership of the fourth defendant or at least was so uncertain in this respect, that no matter what notice the first defendant might have had of it, he could not be said to have transgressed the order if due regard was to be paid to the levels of certainty, properly applicable to a quasi-criminal proceeding of this kind. 48. In rejecting the contention that the order applied only to those goods which remained in the ownership of the 4th defendant on the 21st December the judge said:
49. It is not clear from these paragraphs whether the judge thought that his order of the 21st covered the goods removed because it applied to all goods which belonged to the company on the 2nd December, when the writ was filed, or because it pointed at specific articles and described them in a manner which made ownership irrelevant. Before us, Mr. Litton has endeavoured to support the former construction only. The order described the goods by reference and counsel for the plaintiff has submitted that substituting for this reference the actual words of the paragraph in the writ to which it refers, the order should read:
50. If the order, as Mr. Litton was disposed to concede, refers only to goods belonging to the company, it is apparent that such a description used on the 21st of December may have an effect very different, as regards the property it embraces, from the effect of the same words used on the 2nd of December. The only justification for suggesting that when, on the 21st December, the judge by his order spoke of goods belonging to the 4th defendant this should be read as goods belonging to that company on the 2nd December is that the judge made use of a description which had appeared in a document dated the 2nd December. That would seem a tenuous ground for suggesting that the order of the 21st was contemplating not ownership on that date but at an earlier date. The justification becomes still more tenuous when one looks at the purpose which this description was intended to serve in the writ. It was not amongst the averments of fact on which the plaintiff relied but in the statement of the relief for which he prayed. In effect it was telling the court of the order which the plaintiff hoped in due course to obtain. In the normal way, that order would be the appointment of a receiver not over the property of the company as it stood at the filing of the writ but over the property at the time when the order was made. Any other construction would mean that the court was being asked to appoint a receiver over property which could have passed out of the ownership of the company prior to the order for receivership whilst omitting property which was in the ownership of the company at the time of the receivership. We doubt if any court would make such an order. 51. If the order granting the relief prayed for in paragraph (viii) of the writ would not apply to property which had passed from the ownership of the company prior to the making of the order, we cannot see how the reference to this particular paragraph of the writ could justify giving any more retrospective construction to the order of the 21st December. 52. If, on the other hand, the judge thought that his order was effective to control goods which had passed out of the ownership of the company between the 2nd and the 21st December because these goods were sufficiently and clearly specified in his order so as to identify them, irrespective of who might be the owner, we think he was mistaken. Ownership by the company is predicated of all the goods and although some of them have been particularized by referring to their appearance in the debenture that did not, we think, in this context, extend the operation of the order. Ownership was still the basic qualification. The position might have been very differnt if the words "in particular" had been omitted. 53. It seems therefore that the order did not have the effect which the judge ascribed to it, or, at the very least, that it was so ambiguous and uncertain that it would not be proper to commit a man to gaol for interpreting it in the manner more favourable to himself. Within the last few days the court of appeal in England (In re Moore(20)) said a person should not be made bankrupt on an "ambiguity". It would seem still more inappropriate to send him to gaol on an ambiguity. 54. We think Mr. D'Almada is correct in his contention that if the order did not, by its terms, cover the goods removed then it was immaterial what notice of that order the defendant did nor did not have. The judge does not appear to have adverted to the discrepancy between the account of the telephone conversation given by the defendant and that of his solicitor although the decision to commit seems to have been based primarily on the belief that notice had been conveyed to the first defendant. Before committing him it seems to us that, in the absence of a decision as to ownership of the goods, the judge would have needed to resolve this divergence over the telephone message, a task which might have been difficult on the basis of the affidavits alone but which was not undertaken, possibly because of the judge's belief that there was "no reason why he (the first defendant) should not have waited if only for a couple of hours until the injunction's specific terms were handed to Mr. Kao at the factory". We do not think the first defendant was bound to do so. A wiser and more cautious man and a party acting in better faith might have done so and might have arrested the departure of the goods on the morning of the 21st when he learned of the efforts to obtain an injunction and their successful outcome. The first defendant may be fortunate. He took a risk but if the order failed, as we think it failed, to cover goods no longer the property of the fourth defendant, he should not, whilst the ownership of the removed goods remained undetermined, have been committed to gaol for his participation in the events of the morning of the 21st December. But we cannot base our decision on that conclusion. The defendants were not content to rest their appeal on the contention that the trial judge had failed to make a finding as to the ownership of the goods. In argument, at least, they sought a further declaration that the ownership of the goods in question no longer remained with the company, the fourth defendant, on the 21st December last. This opened the door to a contention by the plaintiff that there should have been a finding the other way and to the mutual agreement that both sides would waive any necessity, in this connection, for amendment or service of a notice under O.59 r.6. As already indicated we subsequently told the parties that we did not think we were the proper forum to make this decision, and that should such a decision be required we would send the case back for that purpose. Clearly, if the goods continued to be the property of the company on the 21st December, the argument about ambiguity or whether ownership on the 2nd or 21st December was contemplated by the terms of the order, become irrelevant. But irrespective of a decision on that point, there is a further factor, arising out of the facts in this case which has, we think, a decisive bearing on whether, if we had power to dispense with service at this stage, we should now do so. There is no conflict about the first defendant's averment that he asked for the terms of the order and was told that he could not have them as yet. The solicitor's affidavit confirms this query and reply. When a party to a proceeding is told on the telephone that a judge has issued an injunction addressed to him and, after receiving a description of it which does not satisfy him, he asks for the terms of the order and is told that he cannot have them until later, we do not think that even if there is power to dispense with service retrospectively, any such order should be made so as to admit the injunction to operate against the defendant at any time prior to the moment at which he received reasonably precise notification of its exact terms. 55. Consequently, in this case, if dispensation ex post facto was possible, a point on which we make no finding, we think it should not be granted so as to make the first defendant liable for committal for breach of the first injunction. Grounds of Appeal on Second Committal 56. Turning to the appeal on the second injunction, it is necessary, at this stage, to mention only grounds (1) and (3) of the original grounds. They are:
Other grounds included an appeal against the punishment. 57. We are, however, again met with an application to add an additional ground, which reads as follows:
58. It is unnecessary to go again through the reasons outlined in dealing with the admission of new grounds on the first appeal. Sufficient of them are applicable to the second appeal to justify permission being granted to introduce this ground also, subject to terms. 59. Mr. D'Almada argued that the order of the 26th April, 1969, contemplated four things: (1) a reduction in price, which was ratified; (2) the application of the purchase money to paying wages; (3) the payment of the balance to T.S. Tong and Company and (4) the lodging of accounts. 60. There was, he argues, no question of defying the order as to price; in so far as wages were concerned, the failure, he says, to indicate clearly what wages were involved and in respect of what period made the order too uncortain but, quite apart from that, whilst there may have been dilatoriness, there was no defiance and even dilatoriness could only be established if the defendant's explanation that the money was never received, owing to the action of the bank, is overruled; as for payment to Messrs. Tong, that was accomplished by raising other money, which was devoted, in part, to paying salaries; and accounts were certainly rendered. Far from the parties wishing to defy the order, they took counsel's advice and, finding some difficulty in relating the terms of the order to the facts of the situation, they probably went beyond what was required of them in raising money separately and, having failed to find a suitable home for the sum of $1,505.90, sought the directions of the court which were refused to them, without justification, on the 17th May. 61. Mr. Litton sought to meet these contentions by saying, first, that if the defendants had any difficulty in contacting the workmen, during the period between the 26th April and the 2nd May, that was entirely their own fault as they had plenty of opportunity of paying these workmen earlier and should have done so. Secondly, he stigmatized as a lie the information given to his clients in the letter of the 8th April sent by the defendants to their solicitors which said that, although the wigs had been sold, payment for them would not be received until 10th June: a lie, he said, which clearly demonstrated the bad faith of the defendants. He contended that these two indications of the defendants' attitude turned what might have been otherwise described as a technical breach of the order of the 26th April into a more serious defiance of the court. 62. The judge did not quite put it this way, he said that the defendants simply refused to comply with his order of the 26th April in that they had not paid the workmen and they had not rendered accounts. Mr. Litton did not seek to support the second statement. As for the first, it is undoubtedly true that the defendants did not pay the workmen by the 2nd of May; on the other hand, they did raise the money required for this purpose and, not having settled accounts with the workmen, whom they say were difficult to contact, they handed or sought to hand the appropriate amount to the solicitors for the plaintiff, thereby depriving themselves of any benefit from it. 63. Mr. Litton, however, argued that the payment which they had made to themselves was evidence of their bad faith but, as Mr. Ching quickly pointed out, the judge had declined to rule on whether this was or was not a proper payment and no notice had been given of a desire to raise this issue on the appeal. Mr. Litton did not pursue it. 64. We express no views as to the manner in which the first defendant and his colleagues ran the company. It may be that they were not doing so in the interests of all the shareholders. The conduct of the first defendant on the morning of the 21st December does not seem to bear all the marks of good faith. The apparent haste with which goods, that might well be the subject of argument, were removed from the factory and the subsequent swift departure for the United States might well give rise to suspicion but these are matters and issues different and distinct from those arising on the appeals before us. Whilst we can understand Mr. Litton's desire to introduce them, undetermined and, to a great extent, unexplored though they were in the court below, these efforts have tended to befog the real issues. It is not for us to decide whether there was full disclosure when obtaining the order of the 28th January or whether, before the 26th April, all that should have been done to carry it out had been done. The questions for us are whether the order of the 26th April was sufficiently clear and whether there has been a breach of it. 65. As to the first question, having regard to the grounds on which the order of the 28th January was sought, we think the defendants could have had no doubt that a payment of wages in respect of the latter part of December and the first half of January was contemplated by the order. 66. Turning to the second question, the defendants certainly seem to have treated somewhat cavalierly their obligation to pay the workmen for this period. Their efforts to make contact with these workmen in good time appear, on the face of the affidavits, to have been casual and inadequate. It may be the defendants had difficulty in raising the necessary money in good time but, if that was the reason for their failure, they did not put it forward. They were not entitled to throw on to the shoulders of the plaintiff's solicitor the chore of seeking out the workmen and paying them; that was an obligation of their own under the terms of the judge's order. On the other hand, it could, in the circumstances, hardly be treated as a very serious breach. Moreover, when they found difficulty in paying the workmen, they took out a summons for directions. We find it difficult to understand why no order was made on that summons. Mr. Litton's explanation seems unsatisfactory in view of the intrusion into the business of the company implied by the earlier orders. The orders made in December were likely to cause problems: to leave a trading company in operation whilst freezing its stock in trade by an injunction was almost bound to lead to trouble. A company which cannot move its stock in trade without making a series of ad hoc applications to the court could hardly avoid getting into difficulties. Be that as it may, it would seem that the aim and object, at any rate of the plaintiff, by the 17th May was not so much to get the workmen paid as to get the defendants into gaol. There may well be occasions when a party, who shows himself able and willing to comply with a mandatory injunction, should nevertheless be punished for not doing so timeously, but one would have expected the breach to be more serious and damaging than in this case. The usual aim of a court is to ensure that its orders are carried out and when a party comes before a court expressing a desire to carry out the court's order, it seems strange that advantage should not have been taken of that attitude and that the defendants should not have received any necessary directions to ensure discharge of the obligations to the workmen. See The Laws of England, 3rd Edition, Vol.21, p.436, para.924, where it is said: "The Court takesa lenient view in favour of the liberty of the subject,.... and where the defendant has endeavoured to set himself right in respect of the original charge against him the Court will hesitate to commit." The judge was, no doubt, influenced by what he, even if erroneously, thought was a deliberate defiance of his earlier order and both from his action and his written decision it would seem that this may have coloured his assessment of the steps taken to comply with the second injunction. 67. The first and third defendants were in prison for six days following their committal before boing released on bail. We think this is sufficient punishment. Representation: The judgment of the Full Court was pronounced by the Chief Justice Leo D'Almada, Q.C. & Charles Ching (Philip Remedios & Co.) for the 1st and the 3rd Defendants (the appellants) Henry Litton & Robert Wei (T. S. Tong & Co.) for the Plaintiff (Respondent) (1) (1890) 15 A.C. 223. (2) (1892) A.C. 473. (3) (1920) 37 T.L.R. 163. (4) (1965) 1 W.L.R. 850. (5) (1956) 1 W.L.R. 1069. (6) (1940) S.C. (H.L.) 56. (7) (1919) 120 L.T.R. 432. (8) 55 L.T. Rep. 745; 34 Ch. Div. 172. (9) 9 Times L. Rep. 108. (10) (1910) W.N. 128. (11) (1955) 2 A.E.R. 398 at 400. (12) 14 D.L.R. 528, 530. (13) (1893) L.R.I. 220, 274. (14) (1964) H.K.L.R. 655. (15) (1965) H.K.L.R. 894, 900. (16) (1966) 1 W.L.R. 1170, 1179, 1180 and 1183. (17) (1963) 3 All E.R. 571. (18) (1938) 3 All E.R. p.52 at 55 (16) (1966) 1 W.L.R. 1183 (19) (1969) 1 W.L.R. 375. (16) (1966) 1 W.L.R. 1170, 1179 and 1180. (20) The Times, 24.7.69. |
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