Civil Action2004

ROGER PAUL GERMAIN YVES FROMENTIN v. KIM\'S YACHT CO LTD AND ANOTHER

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56515-EN-2007-03-22

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HCA 1226/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1226 OF 2004

______________________

BETWEEN

	ROGER PAUL GERMAIN YVES FROMENTIN	Plaintiff
	and
	KIM’S YACHT COMPANY LIMITED	1^st Defendant
	JOHN ALAN BRODIE	2^nd Defendant

______________________

Before : Hon Sakhrani J in Chambers

Date of Hearing : 22 March 2007

Date of Judgment : 22 March 2007

______________________

JUDGMENT

______________________

1. This is the adjourned hearing of the plaintiff’s application by summons dated 5 January 2007 for an order that the plaintiff’s payment into Court of US$100,000 pursuant to the order of Yam J made on 23 November 2004 be withdrawn and paid out with accrued interest to the plaintiff.

2. The matter first came before me on 24 January 2007. At that time I was also dealing with the plaintiff’s appeal from Master de Souza’s order of 5 December 2006 whereby he ordered that the plaintiff provide security for the defendants’ costs of the action in the sum of HK$450,000 by payment into Court or by way of a bank guarantee. He also ordered that in the interim all further proceedings be stayed.

3. On 24 January 2007 after hearing arguments, I dismissed the appeal from Master de Souza’s order but varied his order to the extent that the plaintiff be permitted to make the application for the payment out of the sum of US$100,000 which had been paid into court. I also gave directions for the filing of evidence by the defendants as they indicated that they were opposing the plaintiff’s application for payment out.

4. The plaintiff’s claim in the action is for breach of contract in respect of an agreement dated 22 December 2000 as amended in February 2003 for the building of a yacht. The plaintiff’s case is that the 1^st defendant was in breach of the agreement. There is also a claim for damages for deceit. The plaintiff’s claim for damages is to the extent of about US$847,000.

5. The defendants deny that they are liable to plaintiff. They plead a discharge of the agreement and the entering into of a new agreement. There is also a counterclaim by 1^st defendant to the extent of US$580,000.

6. The order of Yam J dated 23 November 2004 provided, inter alia,as follows :

“The Yacht named “Sea Cellar” currently moored at the Gold Coast Marina, Tuen Mun, New Territories, Hong Kong and under the custody of the chief Bailiff of the High Court, be released to the Plaintiff and be allowed to leave Hong Kong upon the Plaintiff either paying into Court the sum of U$100,000, or by way of a bank guarantee for the same amount to the satisfaction of the Master of the High Court.”

7. Mr. Sheppard, for the defendants, submitted that the order for security in the sum of US$100,000 to be provided by the plaintiff was in respect of a lien on the yacht by a company in the Mainland, Kim’s Yacht Company Xinhui Limited (“Xinhui”), the boatyard. He submitted that the subject of the lien of Xinhui was in the documents before the court when it made the order and that the security ordered was in respect of Xinhui’s lien to the extent of US$100,000. He also relied on the evidence filed after the last hearing and submitted that that is how his clients understood the position in respect of the security ordered and paid in. He submitted that the Court should not grant the plaintiff’s application.

8. Mr. Sheppard does not act for Xinhui in the application before me and I observe that Xinhui has not sought to be joined as a party in these proceedings or in this application.

9. In my view, it is quite clear from the perusal of the transcript of the proceedings before Yam J on 23 November 2004 why he ordered the plaintiff to provide security. The plaintiff was seeking the release of the yacht unconditionally. The 1^st defendant had a defence and a counterclaim.

10. After hearing arguments, Yam J gave his ruling. This is at page 74 of Bundle B2 of the documents before me and he said :

“COURT: Yes. In the hearing today, I am asked by the plaintiff to release the yacht to him and I have taken the course of calculating of how much would be the figure in order to secure the defendant’s position should the defendant succeed in the defence and the counterclaim. The plaintiff offered US$50,000; the defendant suggested US$230,000...”

And then Mr. Brodie interrupts him by saying that the figure should be $250,000, actually, and the Court continued with its ruling :

“COURT: Two hundred and fifty, yes. A substantial sum of that $250,000 concerned with future costs of defending the action and proceeding with the counterclaim in terms of HK$1 million. I am afraid that has to be a separate proceedings in terms of an application for security for costs.
That left me with US$100,000. I consider US$100,000 is a fair assessment of the amount the plaintiff should pay into the court for the purpose of having the yacht released. I therefore make an order that the plaintiff either pay into court the sum of US$100,000, or by way of a bank guarantee to the satisfaction of a Master of the High Court.”

11. The ruling he gave, as well as earlier passages in the transcript that Mr. Maurellet has referred me to, makes it quite clear in my view that Yam J ordered the provision of the security to secure the 1^st defendant’s position should it succeed in its counterclaim.

12. I would also mention that in the 7^th affidavit of the 2^nd defendant which was before Yam J at the time at paragraph 10 he said this :

“The yacht provides security to the 1^st defendant for the value of its counterclaim against the plaintiff and for costs. The counterclaim is for an amount of US$580,000.”

13. And at paragraph 11, in response to the plaintiff’s solicitor’s affirmation at paragraph 8, the 2^nd defendant said this :

“The defendant’s claim against the Plaintiff if the Court rules that the “New Agreement is valid is RMB 779,569.45 which has to be paid to Kim’s Yacht (Xinhui) Company and the execution of the release agreement.”

There the 2^nd defendant was speaking about the 1^st defendant’s counterclaim against the plaintiff.

14. I do not think that it can reasonably be said that the security ordered by Yam J was not to provide security for the 1^st defendant’s counterclaim but was to secure Xinhui’s lien. At that time the 1^st defendant maintained its counterclaim against the plaintiff.

15. It was only subsequently that the 1^st defendant indicated that it wanted to discontinue the counterclaim. At the Check List hearing before Master Lung on 4 October 2005 the Master was informed by the 2^nd defendant speaking on behalf of the 1^st defendant that he intended to discontinue the counterclaim. This can only be a reference to the 1^st defendant’s counterclaim.

16. Furthermore, at the hearing before Master de Souza on 5 December 2006, solicitors for the 1^st defendant made it plain that there was no separate counterclaim but only a set-off. This made it plain that the counterclaim was by way of set-off only. This was on the basis that if it is found at trial that the 1^st defendant is liable to the plaintiff then the 1^st defendant counterclaims by way of set-off the sum of US$580,000. If the defendant is not found to be liable then there is no counterclaim. It is beyond argument it operates by way of set-off only and not as a separate counterclaim.

17. In my judgment as the counterclaim is no longer put forward as a separate counterclaim it seems to me that the purpose of the payment into Court ordered by Yam J is no longer there. In the exercise of my discretion I grant the plaintiff’s application.

(Arjan H. Sakhrani)
Judge of the Court of First Instance,
High Court

Mr José-Antonio Maurellet, instructed by Messrs Robertsons, for the Plaintiff

Mr Andrew Sheppard, instructed by Messrs Minter Ellison, for the 1^st and 2^nd Defendants

55881-EN-2007-01-24

ROGER PAUL GERMAIN YVES FROMENTIN v. KIM\'S YACHT CO LTD AND ANOTHER

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HCA 1226/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1226 OF 2004

BETWEEN

	ROGER PAUL GERMAIN YVES FROMENTIN	Plaintiff
	and
	KIM’S YACHT COMPANY LIMITED	1^st Defendant
	JOHN ALAN BRODIE	2^nd Defendant

Before : Hon Sakhrani J in Chambers

Date of Hearing : 24 January 2007

Date of Judgment : 24 January 2007

_________________

JUDGMENT

_________________

1. This is an appeal against the order of Master de Souza on the 1^st and 2^nd defendants’ application that the plaintiff do provide security for the defendants’ costs up to the action being set down for trial. Master de Souza ordered that the plaintiff do provide security in the sum of HK$450,000 by payment into Court or by way of a bank guarantee by a bank in Hong Kong. He also ordered that all further proceedings be stayed in the interim.

2. As a matter of discretion, it is the usual ordinary or general rule of practice to require a foreign plaintiff to give security for costs because it is ordinarily just to do so. However, it is not an inflexible or a rigid rule that a plaintiff resident abroad should provide security for costs. The Court in its discretion may order security for costs if having regard to all the circumstances of the case the Court thinks it just to do so (O. 23, r. 1(1) RHC).

3. The plaintiff’s claim is for breach of contract in respect of an agreement dated 22 December 2000 as amended in February 2003 for the construction of a yacht. The plaintiff’s case is that the 1^st defendant breached the agreement and in addition there is a claim for deceit. The plaintiff’s claim for damages is to the extent of about US$847,000.

4. There is a counterclaim by the 1^st defendant. However, it has been made plain that the counterclaim is by way of set-off only. This is on the basis that if it is found at trial that the 1^st defendant is liable to the plaintiff, then the 1^st defendant counterclaims by way of set-off the sum of US$580,000. If the defendant is not found to be liable at trial then there is no counterclaim. And it has been made plain to me that the counterclaim operates by way of set-off only and not as a separate claim.

5. Here the plaintiff is undoubtedly a foreigner resident abroad.

6. Pursuant to an order made by Yam J the plaintiff on 3 December 2004 paid into court the sum of US$100,000 in order to obtain release of the yacht. Mr Maurellet submits that the sum of US$100,000 paid in was intended as security for the 1^st defendant’s counterclaim. However, Mr Sheppard disputes that the money was paid in as security for the counterclaim.

7. Mr Maurellet made the further point that the US$100,000 represents assets of the plaintiff and as the plaintiff has assets in Hong Kong there should be no order for security for costs. However, on the material before me I am not satisfied that the US$100,000 is freely available to the plaintiff as it is money paid into court pursuant to an order. That being so, I am not satisfied that the plaintiff has any assets freely available in Hong Kong.

8. It seems to me that if, as Mr Maurellet submits, the 1^st defendant does not have a separate counterclaim there is no reason for the money to remain in court. If that is right then Mr Maurellet’s client should make an application for the release of the sum of US$100,000. However, it is plain that the sum US$100,000 is not meant to be security for costs.

9. Mr Maurellet made the point that there was delay in applying for security. However, the action is nowhere near ready for trial and from what I have been told discovery has been completed.

10. The master was satisfied that the sum of US$450,000 represented sufficient security up to the action being set down for trial. I agree with the master that it is a reasonable sum.

11. The authority of Innovare Displays plc v. Corporate Broking Services Ltd [1991] BCC 174 where a modest sum for security was ordered and relied on by Mr Maurellet is not applicable here. In that case the application was made very close to trial dates and there was also evidence that if a substantial sum were ordered for security that might well stifle the plaintiff’s claim. These considerations do not apply here.

12. It seems to me that the master was right to order security for costs in the amount as he did.

13. The only other matter that I think I ought to deal with is the order whereby he made an order that all further proceedings be stayed pending the payment of the security for costs. I am prepared to vary that part of the order to permit the plaintiff to make an application to seek release of the US$100,000. It seems to me that if the plaintiff is right then there is no reason why the US$100,000 should not be paid out to the plaintiff. However, before that can be determined the defendants must be given an opportunity to deal with the matter properly with affidavit evidence in opposition if they wish as I have been informed by Mr Sheppard that they wish to file affidavit evidence in opposition.

14. I will dismiss the appeal but vary the order to the extent that the plaintiff be permitted to make an application for the release of the US$100,000 in court.

(Arjan H. Sakhrani)
Judge of the Court of First Instance,
High Court

Mr José-Antonio Maurellet, instructed by Messrs Robertsons, for the Plaintiff

Mr Andrew Sheppard, instructed by Messrs Minter Ellison, for the 1^st and 2^nd Defendants

52175-EN-2006-04-11

ROGER PAUL GERMAIN YVES PRMENTIN v. KIM\'S YACHT CO LTD AND ANOTHER

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HCA1226/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1226 OF 2004

---------------------

BETWEEN

	ROGER PAUL GERMAIN YVES PRMENTIN	Plaintiff
	and
	KIM'S YACHT COMPANY LIMITED	1^st Defendant
	JOHN ALAN BRODIE	2^nd Defendant

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Before : Hon Yam J in Chambers

Date of Decision : 11 April 2006

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DECISION ON COSTS

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1. The plaintiff applied to commit the 2^nd defendant for contempt of court on the ground that he was in breach of an order of this court. That application was dismissed but the court made an order nisi that there should be no order as to costs. In other words, the 2^nd defendant was deprived of his costs even though he was successful in resisting the contempt application of the plaintiff.

2. The plaintiff now applied for a variation of the said order to the effect that the costs of the contempt proceedings should be borne by the 2^nd defendant. In this application, the plaintiff relied on the following matters and submitted that the court should take them into account in exercising his discretion for the order of costs, namely :

“(a) from the completion of the Plaintiff's Yacht in April 2004, the Plaintiff requested that a valid shipbuilder's certificate be issued in his name and that the Yacht be delivered to him in Hong Kong, in accordance with the terms of the Agreement between the parties (letters to the Defendants of 9^th and 26^th April and 11^th June 2004)

(b) the Defendants refused to take any action to comply with the Plaintiff's requests or rather made such compliance conditional upon the Plaintiff signing a “release agreement” exonerating the Defendants of any liability.

(c) A Writ of Summons was issued on 20^th May 2004. Yet, the Plaintiff made a last attempt at resolving the dispute between the parties and wrote to the Defendants on 11^th June 2004 (see exhibit “DW — 1”). In reply, the 1^st Defendant claimed that the Yacht was ‘held by China Customs Department control' and that until the yacht was removed from the 1^st Defendant's shipyard, the Plaintiff would be charged RMB150,000 per month (see exhibit “DW — 1”).

(d) Upon the Plaintiff's application on 29^th June 2004, this Court ordered that within 14 days a shipbuilder's certificate be issued and the yacht be delivered to the Plaintiff in Hong Kong. The Defendants did not apply to the Court for a variation of the Order. The Defendants also failed to comply with the Order within time.

(e) They issued a document purported to amount to a shipbuilder's certificate but which was of no value to enable the Plaintiff to arrange for the export and delivery of the Yacht in Hong Kong. This was done deliberately by the 2^nd Defendant in full knowledge that such document was not what was in the contemplation of the Plaintiff. Further, no evidence was produced by the Defendants to show that they had taken any steps whatsoever to procure the delivery of the Yacht to Hong Kong.

(f) The Plaintiff was left with no other alternative but to go back before the Court in order to seek further directions. However, as the Defendants had not asked for any extension of time in order to comply with the terms of the 29^th June 2004 Order, there would be no added guarantee that the Defendants would comply with any further Order or direction from the Court unless failure to comply with such further Order or direction resulted in a sanction. The only course of action available to the Plaintiff was therefore to force the 2^nd Defendant, through legal means, to abide by the Rule of Law and take all necessary steps to procure the 1^st Defendant to comply.

(g) Leave was granted by the Court to the Plaintiff on 28^th July 2004 for him to issue committal proceedings against the 2^nd Defendant. The proceedings took place on 22^nd to 24^th August, 21^st, 22^nd, 27^th and 30^th September 2004. On 24^th August 2004, the 2^nd Defendant submitted in Court that he could not and would not issue a certificate that conferred ownership in the Plaintiff.

(h) In order to have the Yacht brought to Hong Kong as a priority, Mr. Justice Yam made a further Order against the 2^nd Defendant on 24^thAugust 2004 requiring him to issue a shipbuilder's certificate by 3^rd September 2004 and deliver the yacht by 21^st September 2004. The terms of the Order of 24th August 2004 differed from the 29^th June Court Order in that it brought both the Yacht and the Shipbuilder's Certificate into the custody of the Chief Bailiff of the High Court. The 2^nd Defendant did not apply for a variation of this Order and again deliberately failed to comply with its terms.

(i) On 21^st September 2004, the shipbuilder's certificate that had been issued on 3^rd September 2004 was not valid because it did not bear the chop of the 1^st Defendant. The Yacht was still in China and no practical steps had been taken to arrange for its export. Rather, the 2^nd Defendant argued that the resolution of one alleged problem preventing the export revealed the existence of yet another ‘problem' allegedly preventing delivery of the Yacht. In the course of the hearing, the 2^nd Defendant affixed the 1^st Defendant's chop on the shipbuilder's certificate.

(j) On 22^nd September 2004, another Order was made by Mr. Justice Yam, requiring that the 2^nd Defendant arrange for the Yacht to be brought to Hong Kong before 27^th September 2004. Mr. Justice Yam made it clear that if the Order was not complied with, the 2^nd Defendant would have to ‘face the consequences' and would probably be committed to custody for his continued failure. Again the 2^nd Defendant did not apply for a variation of the Order. Nor did he comply with its terms.

(k) At the hearing of 27^th September 2004, the Yacht was still in China. It was only through the actions of the Plaintiff and at his costs that the Yacht was eventually brought to Hong Kong on 29^th September 2004. It took the 2^nd Defendant no less than 3 Court Orders dated 29^th June, 24^th August and 22^nd September 2004, three months and Mr. Justice Yam's clear indication on 22^nd September 2004 that the 2^nd Defendant would have to bear the consequences if the Yacht was not brought to Hong Kong by 27^th September 2004 for the 2^nd Defendant to eventually comply with the Plaintiff's requests embodied in the 29^th June 2004 Court Order.

(l) At no time did the 2^nd Defendant seek directions that the Orders were ambiguous or that he needed more time to comply with their terms.

(m) the 2^nd Defendant's excuses for failing to have the 1^st Defendant issue the Certificate by reason of the ownership issue suddenly disappeared. The Certificate was provided on 23^rd November 2004.

(n) As a direct consequence of the Defendants' refusal to satisfy the Plaintiff's demands, the Plaintiff also had to go to Court again to seek possession of his Yacht which, after further delays and at substantial costs to the Plaintiff, was granted by Mr. Justice Yam on 23^rd November 2004.”

3. However, this court has already taken the aforesaid matters into account and came to a conclusion that the 2^nd defendant should be deprived of his costs in spite of the fact that he was successful in resisting the application for contempt application of the plaintiff. This is already a departure from a general rule that costs should follow the event.

4. Further, I accept the submissions of Ms Catrina Lam, Counsel for the 2^nd defendant, that it is well established that order for costs against a successful party in contempt proceedings will only be made in very exceptional circumstances. In Knight v. Clifton [1971] Ch 700 (CA) Russell LJ said at p.714 :

“Motions to commit a man should not be launched except on solid grounds, and it would, I think, be unfortunate if plaintiffs were encouraged to think that where a defendant has acted rashly and foolishly, their threat to his liberty may, with luck, be made at his expense when they fail to establish a case of contempt.”

5. Further, it has been said in Blackstone's Civil Practice (2000) at p.670 :

“… where the party who invokes the court's jurisdiction whollyfails to establish one or more of the ingredients necessary toentitle him to the relief claimed, whether discretionary or not, it is difficult to envisage a ground on which the opposing party could properly be ordered to pay his costs. Indeed in Ottway v.Jones, Parker LJ said, at p 715, that such an order would be judicially impossible, and Sir Raymond Evershed MR said, at p 708, that such an order would not be a proper judicial exercise ofthe discretion …” [emphasis added]

6. It is also inappropriate to award indemnity costs without any express finding of contempt, even if the application is properly made and the applicant should be paid the costs : see Hong Kong Civil Procedure (2004) at para.52/1/11; AG v. South China Morning Post Publishers Ltd [1991] 2 HKC 603 per Mayo J (as he then was) at 603G & 606C-D.

7. In the end I cannot find any ground for ordering the 2^nd defendant to pay the costs of the plaintiff's application. Accordingly, the plaintiff's application to vary the order nisi on costs is dismissed and the costs order is now made absolute. The costs of the plaintiff's application herein shall be to the 2^nd defendant in any event.

( D. Yam )
Judge of the Court of First Instance,
High Court

Mr Michael Lintern-Smith of Messrs Robertsons, for the Plaintiff

Ms Catrina Lam, instructed by Messrs Paul W. Tse for the 2^nd Defendant

45368-EN-2005-02-26

ROGER PAUL GERMAIN YVES FROMENTIN v. KIM’S YACHT CO LTD AND ANOTHER

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HCA1226/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1226 OF 2004

---------------------

BETWEEN

	ROGER PAUL GERMAIN YVES FROMENTIN	Plaintiff
	and
	KIM’S YACHT COMPANY LIMITED	1^st Defendant
	JOHN ALAN BRODIE	2^nd Defendant

---------------------

Before : Hon Yam J in Court

Date of Hearing : 26 February 2005

Date of Judgment : 26 February 2005

Date of Written Judgement : 7 June 2005

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J U D G M E N T

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1. This contempt proceedings were brought by the plaintiff against the 2^nd defendant in respect of my order made on 29 June 2004. The terms of the order reads as follow :

“The 1^stand 2^nd Defendants within 14 days hereof do, and further or in the alternative, that the 2^nd Defendant within 14 days hereof do, procure the 1^st Defendant to:

(a) within 14 days hereof provide to the Plaintiff a shipbuilder’s certificate attesting to the building of the Yacht K112 at the 1^stdefendant’s shipyard in Xinhui in the Mainland China; and

(b) within 7 days after the said Yacht can set sail to Hong Kong lawfully from the said 1^st Defendant’s shipyard in Xinhui in the Mainland China deliver or cause to be delivered the said Yacht to the Gold Coast Marina, Tuen Mun, New Territories in Hong Kong into the joint custody of the parties hereto, and in the case of dispute and/or discord between the parties, into the custody of the bailiff of the Court.”

2. I accept that in contempt proceedings in considering whether Mr Brodie, the 2^nd defendant, was in contempt of court by not obeying the order, it must be an objective test. However, in an objective test concerning the construction of the order, the order should not be construed in vacuum. It should be construed in the circumstances of the case with the full knowledge and experience of Mr Brodie as at the material time of the order and the 14 days thereafter in which the 2^nd defendant should comply with the same. In other words, it should be construed in the context and also as I have said what Mr Brodie would understand that to mean. In my judgment, the 2^nd defendant actually knew, with his vast knowledge and experience, what a shipbuilder’s certificate means and in particular, it would confer title onto the owner.

3. After hearing the evidence of Mr Brodie in-chief, after cross-examination and his own re-examination, I actually believe that he knew at least :

(1) the shipbuilder’s certificate he has given on the last day as prescribed by the order that is 13 July 2004 as contained at page 18 of bundle 2A would not be enough to enable the plaintiff to take the yacht out of the PRC to the HKSAR to the plaintiff;

(2) there would be other problems flowing from such a so-called shipbuilder’s certificate, say custom clearance when the plaintiff was named as the owner of the yacht.

4. This is just an example of the number of hurdles, the plaintiff would have to face with such a document. That, in my view, fell short of the spirit of the order. Therefore this is distinguishable from the case of Federal Bank of Middle East Ltd v. Hadkinson (CA) [2000] 1 WLR 1695 whereby Mr Hadkinson’s understanding of what his assets would mean. As an entrepreneur, Mr Hadkinson obviously knew that his assets should mean assets beneficially owned by him and therefore it would not cover assets he held on trust for the benefit of other members of his family. It is also different from the undertaking given by the company, by the name of Redwing Forest Products Limited in that case whereby there were two possible constructions of an undertaking and one of them would not cover or include kitchen furniture although it is so named in the order which the defendant company did not in fact carry on business in those products.

5. This is an indication of a purposive approach in the construction of the term of an order or an undertaking given by the defendants. In respect of strict construction of an order in contempt proceedings, Mr Daniel Fung SC, counsel for the 2^nddefendant, in his forceful submission with flattery submitted that those were the words I have chosen to use in my order. In the first place, this is an order sought from me. Secondly, being the person of humble means, I actually know very little about pleasure boats not to mention about a shipbuilder’s certificate thereof and I must confess my ignorance in Admiralty law and procedure.

6. However, Mr Brodie is different. I am satisfied that he probably knew that the plaintiff could not succeed in getting this yacht to be delivered to Hong Kong in the joint custody of the plaintiff and the defendants or to the Chief Bailiff of our court. The whole operation in that stage would not affect Mr Brodie’s lien on the yacht. The question, however, before the court today is whether Mr Brodie is in contempt of court when he gave the defendant this document, the so-called generically shipbuilder’s certificate. I do not consider the second part of the order has any bearing today because the order said Mr Brodie would have an obligation to deliver the yacht only after it could set sail to Hong Kong lawfully from Xinhui in the mainland.

7. To my mind, it is the opposite of notion that Roses by another name would smell as sweet. The question before the court is whether these are roses at all, or a proper shipbuilder’s certificate acceptable to all person in the trade as such. This is a question of mixed question of fact and law. In other words, it would not be enough if this is not a shipbuilder’s certificate acceptable to all person in the trade.

8. The question is : was he in contempt of such an order? To put it in another way, did he deliberately flout the strict wordings of the order. I accept Mr Fung’s submission that breach of an order is not equivalent to contempt of court. In order to find contempt of court, I must find that Mr Brodie contuminously, knowing what the order means, disobeyed such an order. I am afraid I cannot say here that it is a case proved beyond reasonable doubt that Mr Brodie as a shipbuilder himself had deliberately disobeyed an order even when I find that he probably was in breach of the order requiring him to give a shipbuilder’s certificate which he understood what it means and/or properly so-called and accepted by people in its trade.

9. This fine distinction is important as explained by Mummery LJ in the case of Federal Bank cited above. It has been said that (at p.1705)

“… in the civil law of contempt is that, although there is an obligation to comply strictly with the terms of an order, the court will only punish a person for contempt of court upon adequate proof that the terms of the order are clear and unambiguous and that he has broken those terms …”

10. It is not beyond reasonable doubt by following the strict wordings of the order as he was flouting the order and the requirement of the order and he was contemptuous about it. Whilst the order itself is not ambiguous, the ambiguity lied in what is a compliance and what is not a compliance. Here, I must say this is by no means any criticism of the plaintiff’s team of lawyers or the plaintiff himself. They or even their client probably would not know the document at page 18 would not enable them to bring the yacht to Hong Kong territorial waters. They could only deal with the unanticipated hurdles until they encountered them.

11. However, on the other hand, I cannot say the 2^nd defendant knew with mens rea that by following the strict letters of the order, he would be in contempt of court. To my mind, that is just the contrary situation of an order enabling a creditor to get one pound of fresh from his debtor without allowing him to shed blood and so if blood is shed that would not be covered by the order and therefore consequently it would be an act of disobedience of the order simpliciter.

12. I now come back to the law cited before me and that is in the Hong Kong Civil Procedure 2004 (Vol.1) cited by Mr Fung at paragraph 52/1/16 “any ambiguity in the order or undertaking will be resolved in favour of the alleged contempt law. Thus, where the order is silent on its geographical scope, it will be construed as limited to Hong Kong only”. This is only an example in that case.

13. Accordingly, with some reluctance, I have to dismiss the plaintiff’s application to commit the 2^nd defendant for contempt of court on the basis of disobedience of my order dated 29 June 2004.

14. I have reserved the question of costs until this written judgement. I consider that the 2^nddefendant has just fall short of committing contempt beyond reasonable doubt. He followed the strict letters of the order but he knew, in my judgement, the document would not be enough to enable the plaintiff to have the yacht delivered to Hong Kong. I do not consider that he should have the costs of the contempt proceedings. Accordingly, I make an order nisi that each party should bear his own costs.

(D. Yam)
Judge of the Court of First Instance,
High Court

Mr Michael Blanchflower, SC, instructed by Messrs Robertsons, for the Plaintiff

The 1^st Defendant, in person

Mr Daniel R. Fung, SC, leading Ms Catrina Lam, instructed by Messrs Paul W. Tse, for the 2^nd Defendant

“COURT:	Two hundred and fifty, yes. A substantial sum of that $250,000 concerned with future costs of defending the action and proceeding with the counterclaim in terms of HK$1 million. I am afraid that has to be a separate proceedings in terms of an application for security for costs.
	That left me with US$100,000. I consider US$100,000 is a fair assessment of the amount the plaintiff should pay into the court for the purpose of having the yacht released. I therefore make an order that the plaintiff either pay into court the sum of US$100,000, or by way of a bank guarantee to the satisfaction of a Master of the High Court.”

“The 1^stand 2^nd Defendants within 14 days hereof do, and further or in the alternative, that the 2^nd Defendant within 14 days hereof do, procure the 1^st Defendant to:

(a)	within 14 days hereof provide to the Plaintiff a shipbuilder’s certificate attesting to the building of the Yacht K112 at the 1^stdefendant’s shipyard in Xinhui in the Mainland China; and

(b)	within 7 days after the said Yacht can set sail to Hong Kong lawfully from the said 1^st Defendant’s shipyard in Xinhui in the Mainland China deliver or cause to be delivered the said Yacht to the Gold Coast Marina, Tuen Mun, New Territories in Hong Kong into the joint custody of the parties hereto, and in the case of dispute and/or discord between the parties, into the custody of the bailiff of the Court.”

(1)	the shipbuilder’s certificate he has given on the last day as prescribed by the order that is 13 July 2004 as contained at page 18 of bundle 2A would not be enough to enable the plaintiff to take the yacht out of the PRC to the HKSAR to the plaintiff;

(2)	there would be other problems flowing from such a so-called shipbuilder’s certificate, say custom clearance when the plaintiff was named as the owner of the yacht.