HIGH FASHION NEW MEDIA CORPORATION LTD v. LEONG MA LI

HCMP 932/2020

[2025] HKCFI 3992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 932 OF 2020

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BETWEEN

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DECISION

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A. INTRODUCTION

1.  By a Judgment handed down on 26 July 2022 (“the Liability Judgment”), the defendant was found guilty of having committed contempt of court in failing to comply with an order in HCA 1953/2014 of Chow J (as he then was) (“the Injunction Order”).

2.  By a Decision (“the Sentencing Decision”) made at the end of the hearing held on 30 May 2024, the defendant was committed to prison for a period of 4 weeks (“the Committal Order”). This Court further ordered that the execution of the Committal Order be suspended pending the determination of the defendant’s appeal against the Liability Judgment, on the condition that the defendant paid $500,000 into Court by 4pm on 31 May 2024. She was also ordered to put the sum of RMB8,606,600.43 (or an equivalent sum in Hong Kong Dollars) into an escrow account opened in the name of the plaintiff in an independent law firm.

3.  The defendant’s appeal against the Liability Judgment (“the Liability Appeal to CA”) has since then been dismissed by the Court of Appeal (CACV 341/2022, [2024] HKCA 1067), which has also rejected the defendant’s application for leave to appeal to the Court of Final Appeal (“CFA”) ([2025] HKCA 220). By virtue of a Notice of Motion filed on 1 April 2025, the defendant is now applying to the CFA for leave to appeal, and the decision of which is still pending.

4.  On the other hand, the defendant is also appealing against the Sentencing Decision (CACV 258/2024) (“the Sentencing Appeal”), which has been fixed to be heard by the Court of Appeal on 16 January 2026.

5.  There are 3 summonses before this Court:

(1) The defendant’s summons filed on 15 November 2024 (“D’s 1^st Stay Summons”) for an order that the execution of the Committal Order be suspended or stayed until 28 days after the disposal of the Sentencing Appeal;

(2) The defendant’s summons filed on 5 December 2024 (“D’s 2^nd Stay Summons”) for an order that the execution of the Committal Order be suspended or stayed until 28 days after:

(a) the disposal of the defendant’s application to the Court of Appeal and (if necessary) the CFA for leave to appeal against the Court of Appeal’s Judgment dated 18 November 2024 in CACV 341/2022,

(b) if leave to appeal is granted, the determination of the defendant’s appeal by the CFA, or

(c) further order of the Court; and

(3) The plaintiff’s summons filed on 12 December 2024 (“P’s Activation Summons”) for an order that the Committal Order be activated, and if necessary, a warrant for committal against the defendant be issued; alternatively, if the execution of the Committal Order is to be suspended, various conditions be imposed.

B. D’S 1^ST STAY SUMMONS

B1. Necessity for considering merits of the appeal against sentence

6.  In gist, it is argued on behalf of the defendant that the execution of the Committal Order should be suspended pending the Sentencing Appeal because otherwise such an appeal would be rendered nugatory.

7.  The defendant also heavily relies on the fact that:

(1) this Court took the view in the Sentencing Decision that justice requires that the defendant should only be ordered to serve her sentence upon dismissal of her appeal, as the defendant would have fully served her 4 weeks’ imprisonment by the time of the appeal;

(2) by reason of the Sentencing Appeal, there is, in substance, no material change in circumstances since the Sentencing Decision despite the dismissal of the Liability Appeal to CA.

8.  However, it should be noted that the aforesaid view of this Court was expressed in the circumstances where the plaintiff also agreed with such an approach at the time, and as a result, this Court’s attention was not drawn to those case authorities which Ms Rachel Lam SC and Ms Eva Leung have now cited to this Court. Put it in another way, the stay/suspension of the Committal Order was in effect given by consent.

9.  Having considered those authorities, I agree that a short sentence alone (and the possibility that the appeal would/might be rendered nugatory) does not automatically entitle the defendant to a stay of execution of the imprisonment or an order to that effect.

10.  It is of course trite law in relation to civil proceedings, in respect of which it has been said that the existence of an arguable appeal (that is, one with reasonable prospect of success) is the minimum requirement before a court would even consider granting a stay: Star Play Development Limited v Bess Fashion Management Co. Ltd. [2007] 5 HKC 84. However, taking into account the fact that the execution envisaged in civil proceedings does not concern liberty of any person, one may have doubt as to whether such a legal principle should be applicable to cases such as the present one.

11.  As a result, I think the Court should consider the approach adopted in criminal cases in which the accused is sentenced to a short term of imprisonment.

12.  Mr Wong Yan Lung SC together with Mr Howard Wong and Mr Shaun Elijah Tan disagree, and have referred to the following authorities in support of their contention that the policy consideration of the criminal proceedings and contempt proceedings are fundamentally different:

(1) In Secretary for Justice v Persons Conducting in Acts Prohibited Etc (274/2023, 303/2023) (Use of Protest Song) [2024] 3 HKLRD 32, Poon CJHC stated at [67] that:

“It is settled that contempt proceedings are distinct from criminal proceedings although they may arise from the same facts: Director of Public Prosecutions v Tweddell [2002] 2 FLR 400, per Latham LJ at [14]. Contempt proceedings are founded on the inherent jurisdiction of the court to enforce its orders with the primary purpose of preventing interference with the due administration of justice, which is different from criminal proceedings for maintenance of law and order […]”

(2) In Director of Public Prosecutions v Tweddell [2002] 2 FLR 400, it was held at [14] by Latham LJ that:

“In domestic law contempt proceedings and criminal charges have different purposes. As far as the proceedings for contempt are concerned, as Hale LJ said in Hale v Tanner; Practice Note [2000] 1 WLR 2377, sub nom Hale v Tanner [2000] 2 FLR 879, there are two objectives. First, the court has to mark the court's disapproval of disobedience to its order; secondly, it has to consider how best to secure future compliance with the order. Those are two considerations which are quite different and separate from the considerations which are raised by a criminal charge. Unlike contempt proceedings, which are essentially proceedings between the court seeking to enforce its order and the contemnor, criminal proceedings are between the public and are concerned with different considerations.”

(3) In Arlidge, Eady & Smith on Contempt (5^th edition, 2017), the learned author wrote at §2-15 that:

“The specific duty of the court under the contempt jurisdiction is to protect the integrity of the justice process, whereas the police and CPS are concerned to investigate crime and bring criminals to justice. Moreover, the evidential test under the Code for Crown Prosecutors has no application to contempt proceedings.”

13.  With respect, I do not agree that the authorities are relevant for the present purpose, for the views as quoted above were expressed in entirely different situations:

(1) In the Secretary for Justice case, the issue was whether there were any real and substantial conflicts between contempt proceedings and criminal proceedings such that the injunction application made in that case ought to be refused;

(2) In Director of Public Prosecutions v Tweddell, the Court was considering whether, upon a respondent having been imposed a 3-month sentence of imprisonment for breach of an injunction, to subject him to a criminal charge on the basis of the same set of facts would amount to an abuse of process of the court;

(3) In Arlidge, Eady & Smith on Contempt, the learned author was dealing with the overlap between contempt and the general criminal law.

14.  In the context of criminal law, it has been held by Zervos JA in HKSAR v Chow Yuen-kong[2019] HKCA 1340 that:

“6. It is well settled that there is no right to be admitted to bail pending appeal after a person has been convicted and sentenced to a term of imprisonment. That is fundamentally because a convicted person has lost the presumption of innocence.

7. It follows that to admit an appellant to bail pending appeal is only done in exceptional circumstances and clearly at the discretion of the court. To this end, the court must exercise such discretion judicially and should grant bail pending appeal when it is just to do so.[1]

8. It is accepted that when deciding whether to grant bail pending appeal relevant considerations generally involve the strength of the grounds of appeal and the length of sentence served by the time the appeal is heard. It can be granted where there is a reasonable prospect of success of the applicant’s appeal or where there is a risk that the sentence imposed on the applicant will have been served by the time the appeal is heard, subject to the applicant having a reasonably arguable case on appeal.”

(emphasis added)

15.  His Lordship has reiterated the above in the recent case of HKSAR v Wong Wai Wah[2025] HKCA 540 at [7]:

“Bail pending appeal is an exceptional remedy after conviction which may be granted where it appears that the appeal has a strong likelihood of success (the ‘merits ground’), or where there is a likelihood that all or a substantial part of the sentence would be served before the disposal of the appeal (the ‘time ground’). In considering the time ground, it must also be demonstrated that the appeal is at least reasonably arguable or promising. In other words, the grounds of appeal are reasonably arguable in that they afford some real chance of success.”

(emphasis added)

16.  It can therefore be seen that the approach adopted in criminal cases are similar to that followed in civil cases – the minimum requirement is that there exists an arguable appeal.

17.  In HKSAR v Lau Man Kin [2010] 1 HKLRD 336, Tang VP (as he then was) has explained further that:

“6. Of course as Bokhary JA said in Oscar Lai Ka To, bail pending appeal is not practically inevitable even in cases of relatively short sentences. That is why, for example, in HKSAR v Kwok Chi Fai, CACC 473/2000, unreported, dated 20 December 2000, Stock JA refused bail because the prospect of success was negligible, although the applicant would have served a substantial part of his sentence before the appeal could be heard.

7. Section 83R of the Criminal Procedure Ordinance, Cap.221 gives power to this court to grant bail pending appeal “if it thinks fit”. As Bokhary JA has explained in Oscar Lai Ka To, the jurisdiction of this court to grant bail pending appeal is not fettered. Naturally the discretion must be exercised judicially and the court should only grant bail when it is just to do so. After conviction, bail would be the exception rather than the rule.

8. Ms Wong for the respondent has submitted that even when an application for bail is made on the time ground, bail should not be granted unless the applicant can show that the appeal is highly likely to be successful. With respect, I do not agree. The submission is contrary to authority. The right to appeal (and an application for leave to appeal is effectively the appeal) must not be rendered illusory. That does not mean in a case where the appeal is unlikely to succeed bail should nevertheless be granted. That would encourage unmeritorious appeals and is not conducive to good administration of justice. In a case where the appeal is reasonably arguable. I believe bail may be granted on the time ground as explained above.”

(emphasis added)

18.  The defendant’s counsel team has further referred this Court to Dadra Inc. v Chan Choi Har Ivy[2023] HKCA 707, in which the defendant applied for stay of execution of the order of 6-week imprisonment, in which Chow JA held at [15] that:

“Without a stay, the Defendant’s appeal will likely be rendered nugatory because, by the time that the appeal is heard and disposed of, the Defendant will likely have completed serving the term of imprisonment imposed by the Master.”

19.  However, what Chow JA said at [12] and [14] is also important:

“12. The applicable principles for a stay of execution of an order of judgment pending appeal are well settled and do not require repetition (see Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 §§6-10).

[…]

14. Having read and considered the parties’ submissions and the authorities referred to, we consider the Jurisdiction Ground to be reasonably arguable (ie one with reasonable prospects of success). Having reached this view, it would not be appropriate for us to further discuss the merits of this ground, which will have to be fully argued at the substantive hearing of the appeal. It also becomes unnecessary for us to deal with the merits of the remaining grounds of appeal, suffice it for us to indicate that we would not be minded to grant any stay of execution of the Order on any one or more of those grounds.”

20.  The above is self-explanatory. I cannot see why the same approach should not be adopted herein.

21.  My attention has also been drawn by the defendant to the Court of Final Appeal case of Sher Ali Khan v HKSAR (2006) 9 HKCFAR 791, in which Bokhary Acting CJ emphasised that:

“[...] the Judiciary, always highly protective of liberty, will do whatever it can reasonably do to avoid his applications [for leave to appeal to the Court of Final Appeal and for bail pending appeal] being rendered nugatory by the passage of time” (at [4])

22.  However, that does not mean that the CFA would disregard the merits of the application for leave to appeal. Indeed, in the above case, the Acting Chief Justice expressly stated that the determination of the question of bail required considering whether there were any reasonable prospects of leave to appeal to the CFA being granted to the applicant.

B2. Merits of the appeal against sentence

23.  I would therefore turn to consider the merits of the Sentencing Appeal.

24.  In gist, the defendant’s grounds of appeal against the Sentencing Decision are that:

(1) The findings that the defendant breached the Injunction Order “at least partly for her own benefit” and “had pocketed at least part of Longford’s funds” are not allegations which have been pleaded and therefore should not have been relied on by this Court. Those findings are also not supported by evidence (“the 1^st Sentencing Ground”);

(2) Contrary to this Court’s finding, the Revised Purging Proposal[2] would purge the contempt and remedy any prejudice caused by the contempt (“the 2^nd Sentencing Ground”);

(3) The finding that the defendant’s breach of the Injunction Order was contemptuous is not supported by any plea, evidence or proper reasoning (“the 3^rd Sentencing Ground”);

(4) Taking into account the principle that imprisonment is a sanction of last resort, custodial sentence in the circumstances of this case is manifestly excessive and wrong in principle (“the 4^th Sentencing Ground”);

(5) The imposition of immediate custodial sentence (as opposed to a suspended custodial sentence) is inappropriate and unjustified in light of the personal circumstances of the defendant, namely:

(a) the death of her son;

(b) the medical condition of her husband; and

(c) the fact that the defendant is the only person who can act as caretaker of her husband.

(“the 5^th Sentencing Ground”)

25.  While considering the merits of these grounds, it has to be borne in mind what the Court of Appeal reminded in [8.3] of China Shanshui Cement Group Limited & Others v Zhang Caikui & Another[2021] HKCA 1139 in which the defendant therein appealed against, among others, the sentence imposed on him upon the court’s findings that he had breached certain injunction orders:

“Ultimately the sentence imposed by the Court is an exercise of judicial discretion: SJ v Yuen Oi Yee Lisa [2011] 1 HKC 346 at [9] per Chu J (as she then was). Accordingly, the principles governing an appeal from the Court’s exercise of discretion applies and the Court of Appeal will not interfere unless the judge’s exercise of discretion is flawed under the established principles.”

B2.1 The 1^st Sentencing Ground – the defendant’s own benefit

26.  On the 1^st Sentencing Ground, with respect, I do not think it is wrong for the Court to rely on such matters, since it was the defendant who raised them during mitigation in the first place (see [62] of the Sentencing Decision).

27.  Once the defendant has put those matters in issue, it is not up to the defendant to say that the Court should not consider those matters if they are in fact to her disadvantage.

28.  As to the challenge of this Court’s findings of fact that the Injunction Order was breached “at least partly for her own benefit” and that she “had pocketed at least part of Longford’s funds”, it is trite that the Court of Appeal would not lightly interfere with factual findings of the trial judge.

29.  In this regard, it was submitted on behalf of the defendant that there was no proof or findings that the employees mentioned in [66] of the Sentencing Decision had received funds for the benefit of the defendant or payments to them were somehow channelled to the benefit of the defendant. However, with respect, it is a red-herring to focus on the employees solely. One only has to refer to [66(4)] – [66(8)] of the Sentencing Decision so as to understand why such findings were arrived at[3].

30.  It is therefore my conclusion that this ground is not reasonably arguable.

B2.2 The 2^nd Sentencing Ground – the Revised Purging Proposal

31.  Pursuant to the 2^nd Sentencing Ground, the defendant argued that this Court had overlooked the fact that the Revised Purging Proposal would practically achieve the same result despite the fact that the monies to be paid back by the defendant were not paid to the plaintiff, because the plaintiff would not be in a position to deploy any of the monies except with the consent of the defendant anyway.

32.  With greatest respect, this argument is not understood, because this Court had accepted that the revised proposal could partly purged the contempt.

33.  However, the effect of the Revised Purging Proposal is apparently different from the situation in which the monies were paid back to the place where they came from, otherwise, there was no point in the defendant insisting to limit her purging act to this Revised Purging Proposal. As this Court recorded in [97] of the Sentencing Decision:

“[…] this Court has not forgotten about the defendant’s alleged rationale of the Revised Purging Proposal – she was worried that if she returned the monies to the plaintiff/Longford, such monies would be under the control of the Lams, and there was no mechanism for the protection of such monies.”

34.  Indeed, it was further commented at [98] that:

“With respect, such explanation is simply unacceptable, for there is no evidence that the Lams will misappropriate the monies to be paid back by the defendant. The defendant’s explanation only demonstrated that she placed her own interest over the purging of her contempt.”

35.  As the plaintiff’s senior counsel pointed out, the practical effect of the Revised Purging Proposal is to add an extra layer of administrative inconvenience to the Longford Account Protocol. It therefore lies ill in the defendant’s mouth to say that she had fully purged her contempt.

36.  It is therefore my conclusion that this ground is not reasonably arguable.

B2.3 The 3^rd Sentencing Ground – Contemptuous breach

37.  Under this ground, the defendant argued, inter alia, that:

(1) An allegation of bad faith is a serious allegation which has to be distinctly pleaded and proved;

(2) Yet, neither was it pleaded nor proved;

(3) The Court’s inference of contemptuous conduct was drawn upon incorrect or incomplete consideration of the evidence;

(4) It is a fact that by an email dated 23 October 2017 (“the 2017 Email”), the defendant expressly instructed 唐魯華 (“Tong”), an employee of Longford, that she should timeously seek approval from the ultimate shareholders of Longford. If Tong had followed this instruction, even if she did not know of its terms, the Injunction Order would not have been breached. Hence, the 2017 Email itself is compelling evidence of good faith. Further, there is no plea or proof that the defendant knew or should have known that Tong would not seek the requisite approval from the plaintiff;

(5) While the defendant might not have succeeded in putting in place an effective system to ensure that there was no dealing with the Capital Account[4] except in accordance with the specified signing arrangement, this is not evidence, not to mention evidence beyond reasonable doubt, that the defendant knew or should have foreseen Tong (a) would ignore the 2017 Email, or (b) would go back on Tong’s own promise to the defendant in Tong’s reply, or (c) would stop making the written applications to the plaintiff for approval (as she had been doing), (d) but would instead withdraw funds from the Capital Account and/or the Current Account[5] without first obtaining the plaintiff’s approval. Furthermore, even if defendant could have foreseen more or done more, any failure could have been carelessness at the highest, not contumacious conduct beyond reasonable doubt;

(6) It is evident that the defendant had at the very least made efforts in good faith to ensure that the Injunction Order would not be breached, however inadequate objectively.

38.  Similar arguments on pleading and finding of facts had been made but rejected by the Court of Appeal in the Liability Appeal to CA (see [2024] HKCA 1067, at [103] – [106]).

39.  Furthermore, the defendant had completely disregarded [53] – [55] of the Sentencing Decision, which are quoted below for easy reference:

“53. One of the main mitigating factors relied on by the defendant’s counsel was that there was no finding in the Judgment that the defendant had breached the Injunction Order intentionally or recklessly. Heavy emphasis had been placed on the Court’s finding that she had failed to take reasonable steps to prevent Tong from committing acts which were not compliant with the Injunction Order. It was stated that this is equivalent to a finding of negligence only.

54. With greatest respect, such a line of argument was made in total disregard of the findings made in the Judgment:

(1) Since the defendant’s case was that she had entrusted Tong to comply with the Injunction Order, the test is whether the defendant had taken all reasonable steps to see that her orders to Tong had been obeyed. The relevant legal principles had been cited at [26] of the Judgment, and this Court had considered the defendant’s case by following such guidance. That is the reason why this Court had used the ‘reasonable steps’ test as the yardstick in the Judgment. However, it would be taking the findings made by this Court totally out of context to say that this Court only found that the defendant had been negligent;

(2) Indeed, it has been held in the Judgment that the defendant must be taken to have authorised Tong to deal with the Capital Account in the absence of Yau’s or Will Lam’s signature (as the case may be), and that the defendant must also have foreseen that ‘備用金’ would be transferred from the Capital Account in the absence of the required signature of Yau/Will Lam.[6]

55. The very bold suggestion made by the defendant’s counsel that the defendant had an honest and bona fide intention to comply with the Injunction Order is also totally contradicted by the findings made in the Judgment. For example, the defendant had been found to be in blatant disregard of the Injunction Order as far as the Category B transactions are concerned[7]. It was also found that she had never informed Tong the terms of the Injunction Order[8]. Moreover, it was found that the Injunction Order would be breached even if Tong had acted in full compliance with the defendant’s instructions given by virtue of the 23 October 2017 Email[9].”

40.  I should also add that the defendant’s pleading point is a non-starter, for a contemnor should be punished for the substance of his/her contempt and not for what he/she had originally been charged with: Arboit v Koo Siu Ying (No 2) [2016] 3 HKLRD 154 at [12].

41.  Furthermore, as I pointed out above, I find it unreasonable if the defendant is allowed to run a point (the mitigation that she did not breach the Injunction Order intentionally or recklessly), and then argue that the Court cannot use such a point against her in the circumstances where the Court makes a finding on such a point which is not in her favour.

42.  In any event, as pointed out by the plaintiff’s counsel, the plaintiff has indeed pleaded in §6(f)(2) of the Amended Statement that:

“Therefore, Mary Leong’s decisions to only renew part of the original fixed deposit(s) and not to renew the other part of the fixed deposit(s) constitute deliberate, intentional, and voluntary breaches by dealing with the funds in the Longford ICBC Capital Account. By manipulating the funds between the Longford ICBC Capital Account and the Longford Fixed Deposit Account, Mary Leong was then able to release part of the fixed deposits and transferred the same to the Longford Current Account for other unauthorized uses.”

43.  It is therefore my conclusion that this ground is not reasonably arguable.

B2.4 The 4^th Sentencing Ground – Excessive punishment

44.  The 4^th Sentencing Ground is that custodial sentence in the circumstances of this case is manifestly excessive and an error in principle.

45.  It was emphasised that imprisonment is a sanction of last resort, and that whenever a reasonable alternative is available, that alternative must be taken.

46.  However, this Court had already taken these trite principles into account when the conclusion of short immediate custodial sentence was arrived at.

47.  There is therefore no reasonable prospect for the defendant to argue successfully on appeal that this Court’s exercise of its discretion is flawed under the established principles.

B2.5 The 5^th Sentencing Ground – The defendant’s personal circumstances

48.  This is an additional ground of appeal introduced by the defendant in her Supplemental Notice of Appeal.

49.  However, this ground was not referred to in the defendant’s submissions at all.

50.  It appears that, by this ground, the defendant is not complaining against the exercise of discretion of this Court, because the matters relied on by the defendant (i.e. the death of her son and the latest medical condition of her husband) only took place after the date of the Sentencing Decision.

51.  As I pointed out at [84] of the Sentencing Decision, this is the second time that she breached the Injunction Order. At the material time, she should have appreciated the serious consequences that such a second breach would bring. She only has herself to blame.

52.  I therefore hold the view that this ground is not reasonably arguable.

B3. Conclusion

53.  By reason of the aforesaid, the defendant cannot meet the minimum requirement for obtaining a stay of execution of the Committal Order or an order to that effect.

54.  The D’s 1^st Stay Summons is therefore dismissed.

C. D’S 2^ND STAY SUMMONS

55.  Under D’s 2^nd Stay Summons, the defendant asks for suspension of the execution of the Committal Order, pending her appeal to the Court of Final Appeal.

56.  At the moment, the defendant’s application to the CFA for leave to appeal is still pending.

57.  On 16 April 2025, the Registrar of the CFA issued a summons to the defendant under rule 7(1) of the Hong Kong Court of Final Appeal Rules (Cap. 484A, Laws of Hong Kong), stating that he is of the opinion that the defendant’s application for leave to appeal to the CFA discloses no reasonable grounds, and requiring her to show cause before the Appeal Committee by written submissions to be filed to the CFA by 14 May 2025 and explain why her application should not be dismissed by the Appeal Committee.

58.  On 14 May 2025, the defendant has filed her written submissions accordingly.

59.  Since 12 September 2025, the parties had been informed by the Registrar of the CFA that a hearing before the Appeal Committee of the CFA would be held on 30 October 2025, at which parties will be heard on 2 out of 14 questions raised by the defendant in her Form B (Application for leave to appeal) as well as 2 other matters raised by the Appeal Committee.

C1. The defendant’s preliminary argument

60.  Paragraph 2 of the order made pursuant to the Sentencing Decision reads:

“The execution of the Committal Order be suspended pending the determination of the Defendant’s appeal against the Judgment dated 26 July 2022, on the condition that the Defendant pays $500,000 into Court by 4pm on 31 May 2024. ”

(“the Suspension Order”)

61.  The defendant’s counsel initially submitted that:

“[O]n the proper reading of §2 of the Sentencing Order, the ‘determination of the defendant’s appeal against the Judgment’ means the completion of the entire appellate process including the determination of an appeal to the CFA (as opposed to simply the CA Liability Appeal)”

62.  However, I have been told by Mr Wong SC at the hearing that the defendant would not pursue this argument any further.

63.  I therefore do not have to say anything more on this submission, apart from stating that it was indeed wise for the defendant to abandon this argument, given it cannot be clearer that, according to the Committal Order, the suspension only lasted until “the determination of the defendant’s appeal against the Judgment dated 26 July 2022”.

C2. The plaintiff’s preliminary argument

64.  It was the plaintiff’s submission that this Court simply has no jurisdiction to grant relief to stay pending the determination of application for leave to appeal to the CFA when the CA has already made a determination on the defendant’s appeal on liability. Reliance has been placed on section 26(1) of the Hong Kong Court of Final Appeal Ordinance (Cap.484, Laws of Hong Kong) (“HKCFAO”) which provides that:

“Where a judgment appealed from requires the appellant to pay money or perform a duty, the Court of Appeal or the Court, as the case may be, shall have power, when granting leave to appeal or subsequently, either to direct that the judgment shall be carried into execution or that the execution shall be suspended pending the appeal.”

65.  The defendant counter-argued that, by virtue of Order 52 rule 7(1) of the Rules of the High Court (Cap.4A, Laws of Hong Kong) (“RHC”), this Court still has power to suspend the Committal Order.

66.  Order 52 rule 7(1) of the RHC reads:

“The Court by whom an order of committal is made may by order direct that the execution of the order of committal shall be suspended for such period or on such terms or conditions as it may specify.”

67.  I do not accept the defendant’s argument. This is because all the proceedings in the High Court in relation to the liability part of the contempt proceedings (i.e. the first instance trial and the appeal therefrom to the Court of Appeal) have been completed. Therefore, I have great doubt as to whether the RHC should still be applicable to the liability part of the proceedings.

68.  On the other hand, I agree with the plaintiff that section 26(1) of the HKCFAO is the only source of power to grant a stay of execution pending an appeal to the CFA. As this sub-section vests such a power in the Court of Appeal and the CFA only, the Court of First Instance does not have such a power. In this regard, it must be borne in mind that the only pending application in relation to the liability part of the contempt proceedings is the defendant’s application for leave to appeal to the CFA.

69.  Even if the wordings of Order 52 rule 7(1) of the RHC allow this Court to impose a further order to suspend the 4-week imprisonment (which I do not agree), I do not think such a power should be exercised in the present circumstances, because that would be equivalent to granting a stay of execution order which is incompatible with the provisions under the HKCFAO.

70.  The defendant submitted that section 26(1) of the HKCFAO is not applicable to the suspension of a committal order made under Order 52 (i.e. penal punishment by imprisonment) because the Committal Order is not an order “requiring the appellant to pay money or perform a duty”. That may be so. However, that would not provide power to this Court which it does not have.

71.  Furthermore, in my view, the conclusion that any application for stay of execution must be made either to the Court of Appeal or the CFA makes much better sense than the conclusion which the defendant would like this Court to reach, because, as aforesaid, when considering any application for stay of execution (even in relation to a short term of imprisonment), the Court has to consider the merits of the appeal. In the present scenario, the Court of Appeal has already dismissed the defendant’s appeal on liability, and the defendant is applying for leave to appeal from that Court of Appeal’s Judgment. Hence, if this Court were to consider the defendant’s stay of execution application, it has to consider whether it is reasonably arguable that the Court of Appeal is wrong. It simply does not make sense for a lower court to comment on the Judgment of the Court of Appeal. The defendant’s argument that this Court is not asked to pronounce whether the Court of Appeal’s Judgment was right or wrong but to make an objective and judicious assessment on her reasonable prospect of success is, with greatest respect, unrealistic and wrong in principle.

72.  A special feature of the present case, as contended by the defendant, is that one of the grounds of appeal (Ground No.2) which is relied on by the defendant in her application for leave to appeal to the CFA was not raised in the Liability Appeal to CA. Insofar as it is her submission that, as a result, there is nothing which renders it inappropriate for this Court to assess the merits of such a new ground, such a submission is rejected. If the present application for stay/suspension should as a matter of principle be made to the Court of Appeal or the CFA, I see no reason why the defendant should be allowed to single out one of the grounds of appeal and on the basis of which make an application to this Court.

73.  The defendant also submitted that her current application was made pursuant to what Kwan VP said in the hearing for the Liability Appeal to CA. The defendant alleged that, at the end of the appeal hearing, after her senior counsel’s submission that in the event the Liability Appeal to CA is dismissed, the Court of Appeal should consider granting an immediate stay of execution of the Committal Order, Kwan VP stated that the defendant should consider making the appropriate application to the Court of First Instance.

74.  The plaintiff disputed that assertion as a matter of fact. The plaintiff stated that what Kwan VP said at the hearing was that:

(1) A stay is not automatic;

(2) The defendant must make the appropriate application, be it before the Court of First Instance or the Court of Appeal, and it would be for the defendant to figure out.[10]

75.  I have listened to the recording of the substantive hearing. It is clear that the version asserted by the plaintiff is correct. Kwan VP did not state that the defendant should make a further application at the Court of First Instance. What is clear is that Her Ladyship asked the defendant to make her decision on the matter.

76.  There is therefore no merit in the defendant’s submissions.

77.  The defendant’s fall-back argument was that even if what the plaintiff stated was right, the Court of Appeal “obviously contemplated the likelihood of this Court (as the court making the committal order) retaining jurisdiction to suspend the said order pending appeal. The Court of Appeal did not immediately consider the usual stay of execution principles in civil proceedings to be applicable to preclude the CFI of the power to suspend”[11].

78.  With respect, I do not think it is right to read too much into what Kwan VP stated at the time. It is apparent that Her Ladyship was simply asking the defendant to consider what to do herself and take out an appropriate application. It should not be taken as if Her Ladyship had expressed any view on the matter.

79.  On this ground alone, the D’s 2^nd Stay Summons should be dismissed.

80.  Without disrespect to counsel, despite their comprehensive arguments on the merits of the defendant’s appeal to the CFA, I am not minded (as I think it is not right) to give my view on the matter. This is something which can only be done by the Court of Appeal and the CFA.

D. P’s ACTIVATION SUMMONS

81.  By P’s Activation Summons, the plaintiff asked for an order that the Committal Order be activated, and if necessary, a warrant for committal against the defendant be issued; alternatively, if the execution of the Committal Order is to be suspended, various conditions be imposed.

82.  Although the Committal Order was suspended only up to the determination of the Liability Appeal to CA, I agree with the plaintiff that, procedurally, an activation order would be required before the defendant is deprived of her liberty. On this matter, attention may be drawn to the case of G v G [2001] 1 HKLRD 580, in which Keith JA opined at [25(ii)] that:

“Deputy Judge Geiser ordered that ‘a warrant of committal be issued’ upon the Respondent’s solicitors filing an affidavit of non-compliance with the conditions which had to be satisfied if the order for the Petitioner's committal to prison was to continue to be suspended. I do not think that such an order can be made. There may be a dispute as to whether the Petitioner has failed to comply with the conditions for the suspension of the order. Moreover, the court may think that even if the conditions for the suspension of the order have not been satisfied, it would not be appropriate for the order of committal to be activated. In my view, the order of committal should not be capable of being activated except by the court, and only then if the court is persuaded that no other course is appropriate. Accordingly, for my part, I would in addition have varied Deputy Judge Geiser’s order by removing the paragraph relating to the issue of a warrant of committal.”

83.   Although his Lordship’s view was at the end of the day not reflected in the ultimate decision of the Court of Appeal in that case, that view was confirmed to be correct (though only as obiter) by the Court of Final Appeal in G v S (2001) 4 HKCFAR 419 (appealed from the aforesaid Court of Appeal’s Judgment in G v G) in which Nazareth NPJ had the following to say at [22]:

“It remains to note that the effect of paragraph 5 seems to be that a warrant of committal would be automatically issued upon the filing of an affidavit of non-compliance. It cannot be right that a judgment debtor in default should be simply deprived of his liberty and subjected to a term of imprisonment in that way. There might by that time be good reason why he should not be imprisoned. To take examples that are entirely conceivable even in the present case, the judgment debtor may have made payment that was not received or otherwise dispute the allegation of non-payment, or his health may make incarceration unreasonable or hazardous. The proper course would be at least for a judge of the Family Court to assess the propriety of and to sanction the warrant. This could be achieved by requiring the warrant to be obtained by judgment summons; but the matter would not end there. Suffice it to say that the considerations in point were touched upon in Mubarak v Mubarak [2001] 1 FLR 698. It would be prudent for those concerned with prescribing and carrying into effect the procedures which might result in deprivation of liberty in the circumstances discussed, to have them carefully examined.”

84.  In BT v CBY (Committal for Contempt) [2020] 3 HKLRD 287, [2020] HKCA 426, similar view has also been expressed by Cheung JA at [8.3]:

“As to the proper procedure to activate a properly obtained suspended committal order, the point has not been fully argued before us. What is clear is that it is not permissible to rely only on a solicitor’s affidavit stating that the condition suspending the committal had been breached and obtain a warrant of committal on that basis : G v G [2001] 1 HKLRD 580 [CA] and on appeal to Court of Final Appeal, G v S (2001) 4 HKCFAR 419. A full discussion on this topic can only be canvassed in an appropriate case when this issue arises. The present case is a fresh application for committal and not an activation of a suspended committal order.”

(emphasis added)

85.  The plaintiff suggests that an application made by summons is required for the purpose of obtaining an activation order. I tend to think that this is the correct approach. The defendant did not suggest otherwise.

86.  Now that this Court has refused to accede to the defendant’s applications for further stay or suspension of the Committal Order, I see no reason why the Court should not make an order in terms of the P’s Activation Summons. There should also be an order that the “bail money” of $500,000 paid into court be paid out to the defendant.

E. ORDER

87.  I therefore order that:

(1) The Committal Order be activated.

(2) The D’s 1^st Stay Summons and the D’s 2^nd Stay Summons be dismissed.

(3) The sum of $500,000 paid into Court by the defendant shall be paid out to her.

F. COSTS

88.  I order that the defendant shall pay the plaintiff’s costs of the D’s 1^st Stay Summons, the D’s 2^nd Stay Summons and the P’s Activation Summons, to be taxed forthwith on indemnity basis if not agreed, with certificate for two counsel (including all costs reserved).

Ms Rachel Lam, SC leading Ms Eva Leung, instructed by Hugill & Ip, for the plaintiff

Mr Wong Yan Lung, SC leading Mr Howard YH Wong and Mr Shaun Elijah Tan, instructed by P.C. Woo & Co, for the defendant

HCMP 932/2020

[2024] HKCFI 1490

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 932 OF 2020

____________________

____________________

____________________

________________

DECISION

________________

A. INTRODUCTION[1]

1.  By a Judgment handed down on 26 July 2022 (“the Judgment”), the defendant was found guilty of having committed contempt of court in failing to comply with the Injunction Order. 

2.  In [118] of the Judgment, the parties were directed to use their best endeavours to agree on the directions to be sought for the purpose of the sentencing of the defendant.  They were further ordered that, in the event they could not agree on the directions, they shall lodge and serve their respective proposed directions by letter with reasons in support.

3.  By letter dated 16 August 2022, the plaintiff’s solicitors reported to the Court that the parties could not agree on directions.  The main difference between the parties was whether the hearing on sanction should be adjourned pending the defendant’s intended appeal against the Judgment.

4.  By letter dated 26 August 2022, the defendant’s former solicitors (Messrs. Norman M.K. Yeung & Co) proposed to this Court (with reasons in support) that the following order should be made:

“The question of sanction shall be adjourned pending the determination of the Defendant’s appeal against the findings of contempt made in the Judgment.”

5.  By a joint letter dated 7 September 2022, the parties reported to this Court that they still could not agree on the question as to whether the hearing on sanction should be adjourned pending the determination of the appeal against the Judgment.  Parties therefore put forward their respective proposed directions for the Court’s consideration.

6.  By directions dated 15 September 2022, this Court directed that the question of sanction shall be dealt with at a further hearing to be fixed to be heard (not earlier than 28 February 2023).  In effect, this Court has refused the defendant’s proposal to wait until the result of the appeal is known before dealing with the matter of sanction.  The defendant was also specifically directed to file and serve affirmation(s) by 27 October 2022 if she wished to rely on additional evidence on the question of sanction.   It should be noted that the deadline was so fixed because it was the proposal made by the defendant’s own solicitors in the joint letter that she be given 42 days to file such affirmation(s) in the event the Court saw fit to proceed with the hearing on sanction instead of adjourning it pending the determination of the appeal.

7.  The hearing on the question of sanction was subsequently fixed to be heard on 9 October 2023 (“the Original Hearing”).

8.  Hong Kong was hit by typhoon on 9 October 2023. As a result, the Original Hearing had to be adjourned to the following day.  However, the matter could not be heard on 10 October 2023 either because of judicial commitment on the part of senior counsel representing the plaintiff.  By consent, the matter was re-fixed.  The hearing was then adjourned to be heard on 2 May 2024.

B.  THE DEFENDANT’S SUMMONSES

9.  Before I consider the matter of sanction, I will have to put on record the orders made in respect of the defendant’s summonses filed on 4 October 2023 (5 days before the Original Hearing) and 23 April 2024 (9 days before the hearing on 2 May 2024) respectively, and the reasons therefor.  Such orders and reasons have been given verbally at the hearing on 2 May 2024.

10.  By summons filed on 4 October 2023 (“the 1^st Summons”), the defendant applied for the following orders:

“1. The Order granted by Deputy High Court Judge H. Au-Yeung on 26 July 2022 (‘the Contempt Order’) be stayed pending the resolution of the Defendant’s appeal against the Contempt Order by way of the Notice of Appeal dated 23 August 2022 in CACV 341/2022;

2. Notwithstanding paragraph 3 of the Order granted by Deputy High Court Judge H. Au-Yeung on 15 September 2022, time be extended and leave be granted to the Defendant to file and serve additional affirmation evidence on the question of sanction;

3. Costs be provided for.”

11.  On the same day (4 October 2023), the defendant filed her 3^rd Affirmation (without leave).

12.  By summons filed on 23 April 2024 (“the 2^nd Summons”), the defendant further applied for leave to file and serve her 4^th Affirmation for the purpose of the hearing on sanction.  The 4^th Affirmation was filed and served (without leave) on the same day (23 April 2024).

13.  The plaintiff’s stance on these applications was as follows:

(1)  The plaintiff did not object the filing of the defendant’s 3^rd Affirmation out of time;

(2)  The plaintiff took the view that it was premature for the defendant to apply for stay of the contempt order. However, the plaintiff accepted that if the defendant were committed to prison, such a committal order should be stayed pending the determination of the defendant’s appeal which shall be heard by the Court of Appeal on 1 November 2024;

(3)  The reliance of part of the defendant’s 4^th Affirmation was strenuously opposed.

14.  I will deal with the above matters in turn below.

B1.  Leave to file and serve the defendant’s 3^rd Affirmation

15.  As the plaintiff raised no objection, retrospective leave was granted for the defendant to file and serve her 3^rd Affirmation out of time on 4 October 2023.

B2.  Stay of the order dated 26 July 2022

16.  Upon taking further instruction, Mr Ng informed this Court at the hearing on 2 May 2024 that the defendant had decided not to proceed with the application for stay. 

17.  I therefore say no more on this application.

B3.  Leave to file and serve the defendant’s 4^th Affirmation

18.  The defendant’s 4^th Affirmation comprised of the following content:

A.	§§1 – 5	Introduction
B.	§§6 – 13	Application for leave to file and serve affirmation
C.	§§14 – 16	No urgency to proceed to sentencing
D.	§§17 – 23	The tragic car accident encountered by the defendant’s son
E.	§§24 – 27	Purging the contempt/payment into court
F.	§§28 – 33	Additional factors for mitigation
G.	§§34 – 74	Longford’s legitimate expenses
H.	§75	Conclusion

19.  The plaintiff did not object the admission of sections A – E and H of the defendant’s 4^th Affirmation.  However, the reliance of sections F and G thereof on the part of the defendant was strenuously opposed, on the ground that the matters which were covered therein (particularly the usage of funds transferred from the Capital Account) should have been made clear long time ago rather than being contained in this very late affirmation.

20.  Having considered submissions from both sides, I agreed with the plaintiff that, as a matter of principle[2], the defendant should not be granted leave to rely on Sections F and G of her 4^th Affirmation, for the reasons which I will explain below.

21.  It was undisputed between the parties at the substantive hearing for contempt of court held in mid-2022 that the respective destinations and purposes of the various transfers of monies away from the Capital Account are relevant to the seriousness of the breaches of the Injunction Order on the part of the defendant. 

22.  It may be recalled that, by directions dated 15 September 2022, this Court directed the defendant to file and serve affirmation(s) by 27 October 2022 if she wished to rely on additional evidence on the question of sanction.   The 42-day time period was given at the request of the defendant herself. 

23.  However, the defendant did not file any affirmation at all by the said deadline. 

24.  It was only on 4 October 2023 (almost a year later and 5 days before the Original Hearing which was scheduled to be held on 9 October 2023) that she took out a time summons (the 1^st Summons) and filed her 3^rd Affirmation (without leave).  In this affirmation, the defendant blamed her former solicitors for misleading her in believing that there was nothing that she nor her legal team could do pending the resolution of the plaintiff’s security for costs application (which had in fact been disposed of already on 11 September 2023 when the Court of Appeal handed down its decision).  She also said she was assured by her former solicitors that the paperwork regarding mitigation had already been settled. 

25.  I had great reservation on these explanations offered by the defendant.  It must be borne in mind that this was the second time when she was found guilty of contempt of court.  She must have known that she was required to make an affirmation in support of her mitigation.  Even if she had forgotten about her experience back in August 2017 when she tried to justify (by way of an affirmation) some of the transactions which were the subject matters of another contempt proceedings for the purpose of sentencing by Chow J (as he then was), she had no excuse to say that she had no idea of what should be done in the light of this Court’s directions dated 15 September 2022 (in respect of which she did not allege that she had no knowledge). The fact that she had never been asked to execute any affirmation in September and October 2022 should have alarmed her.  Yet, there was total inaction on her part.

26.  Since the plaintiff fairly accepted that leave should be granted for the defendant to file and serve her 3^rd Affirmation (despite the fact that it was late for almost a year), the filing of that 3^rd Affirmation was not controversial.  However, it should be borne in mind that by the time this 3^rd Affirmation was prepared, the defendant has already engaged a new solicitors’ firm to represent her.  In this 3^rd Affirmation, the defendant did, for the purpose of mitigation, assert that there was no finding in the Judgment nor evidence that she had misappropriated or pocketed Longford’s funds.  She also alleged, among other things, that the transactions marked under the description of “備用金” were used to pay off Longford’s legitimate business expenses and that Longford had not suffered any loss or damage as a result of the transactions under complaint.  These show that she knew perfectly well that the destinations and the purposes of the usage of the subject funds are relevant as far as her sentencing is concerned.   Yet, she did not say that she needed more time to gather more materials in support of her mitigation. 

27.  As aforesaid, the Original Hearing had to be adjourned and re-fixed to 2 May 2024 because of tropical typhoon signal and unavailability of the plaintiff’s senior counsel.  One would expect that if the defendant was really minded to take advantage of this adjournment period to further make good her case on mitigation, she would act fast.  Yet, the defendant only sought to adduce her 4^th Affirmation 9 calendar days (6 working days) before the adjourned hearing.

28.  She explained such lateness by stating in her 4^th Affirmation that:

(1)  The transactions complained of happened many years ago and the underlying documents are voluminous.  The preparation of the affirmation therefore took a lot of time;

(2)  More importantly, such preparation was delayed by her attendance of her elder son’s urgent and critical medical condition which was caused by a tragic car accident.

29.  As far as the first explanation is concerned, given the defendant’s and her legal team’s clear knowledge and acknowledgement (as the case may be) all along that the purposes of the transferred funds are relevant to the Court’s consideration of sanction, they (particularly the defendant herself whose liberty is at stake) are reasonably expected to start preparing for an affirmation setting out such purposes and explanations on the use of the funds transferred out of the Capital Account once the Judgment has been handed down (if not earlier).  One must bear in mind that the Judgment was handed down on 26 July 2022 (i.e. more than 1 year 9 months before the substantive hearing on sanction on 2 May 2024).  Therefore, it is simply inexcusable for the defendant not to make this 4^th Affirmation earlier (not to mention that she should have included the content on usage of funds in her 3^rd Affirmation).

30.  At the hearing, when Mr Ng for the defendant tried to persuade this Court that the plaintiff would not be prejudiced by the admission of such evidence and that the plaintiff had had enough time to respond, he emphasised that all the materials relied on by the defendant in fact came from the trial bundle for the substantive hearing for contempt of court. This assertion in fact reinforced my view that the defendant should have prepared this 4^th Affirmation long time ago because all that she was required to look at was the evidence which she had already gathered for the purpose of the substantive contempt of court hearing.

31.  In relation to the second explanation, while this Court has great sympathy for the defendant’s son, it should be noted that her son encountered the car accident only on 1 March 2024.  In other words, the unfortunate incident could at most only explain the delay of the last two months (March and April 2024).  In my view, that is not sufficient.

32.  The admission of such very late evidence would amount to, as the plaintiff’s senior counsel put it, an extremely belated ambush upon the plaintiff.  I agreed with the plaintiff that it would be patently unfair and should not be condoned.

33.  As mentioned above, it was the submission of the defendant that the plaintiff would not be prejudiced by the admission of the 4^th Affirmation, because all the materials relied on by the defendant, it was said, could be found in the trial bundle used in mid-2022.  It was further highlighted that the plaintiff had been able to make written submissions on the 4^th Affirmation in its 2^nd Reply Submissions dated 30 April 2024.  With respect, I do not agree with such arguments:

(1)  As Ms Rachel Lam SC explained, within the very limited time, while the plaintiff had been able to pick up a few forensic points, the plaintiff’s legal team could not undergo any thorough exercise to look through the evidence;

(2)  The plaintiff had also been deprived of adequate time to consider whether any application to cross-examine the defendant further should be made;

(3)  Pursuant to the directions given by this Court on 15 September 2022, the plaintiff was supposed to have 4 weeks to file and serve its affirmation upon perusal of the defendant’s affirmation.  The plaintiff had been deprived of this right by reason of the late filing of the 4^th Affirmation;

(4)  It is also unreasonable for the defendant to submit that the plaintiff had had adequate time to consider her 4^th Affirmation on the alleged basis that all that the plaintiff was required to do was to go through the trial bundle.  This submission was made on the basis of an erroneous limitation (and assumption) that the plaintiff could only rely on evidence already placed before the court. 

34.  The defendant argued that she would suffer irreversible and serious prejudice if this Court were to refuse leave to admit her 4^th Affirmation into evidence, since it is possible that she would face immediate custodial sentence and deprivation of liberty is a serious matter.  However, it is clear that she only has herself to blame in the light of the circumstances which have been set out above.

35.  As a fallback position, Mr Ng for the defendant asked the Court to allow the admission of paragraph 29 and the first part of paragraph 30 of the defendant’s 4^th Affirmation in any event because:

(1)  Paragraph 29 only sought to expand what had already been mentioned in the defendant’s 3^rd Affirmation by exhibiting a summary of Transpac Capital Group’s investments and asset management portfolio;

(2)  The first part of paragraph 30 only sought to place a new exhibit (LML-13) before the Court for the purpose of replacing another exhibit (LML-5) attached to the defendant’s 3^rd Affirmation which was incomplete. 

36.  I accepted that the defendant should be allowed to rely on LML-13.  However, I did not accept that the said paragraph 29 should be allowed to be adduced, as there was no reason why that summary could not be produced earlier. 

37.  I therefore granted retrospective leave for the defendant to file and serve her 4^th Affirmation on 23 April 2024 with the limited purpose of relying on paragraphs 1 – 27 and 75 thereof together with the exhibit marked “LML-13” only.

38.  The defendant was seeking indulgence from the Court.  Given the nature of contempt proceedings, the defendant should bear indemnity costs.  I therefore ordered that the plaintiff’s costs of the 1^st Summons and of the 2^nd Summons shall be borne by the defendant, with certificate for two counsel, to be taxed on indemnity basis if not agreed.

C. RELEVANT LEGAL PRINCIPLES ON SENTENCING

39.  The relevant principles in relation to sentencing for contempt of court are well established. 

40.  In Arboit v Koo Siu Ying [2016] 3 HKLRD 154, Au-Yeung J held that:

“2. The starting-point is to acknowledge that contempt of civil court orders is a serious matter and that court orders are made to be obeyed. A prime consideration of the court in sentencing contempt is to ‘signal importance of demonstrating to litigants that the orders of these courts are to be obeyed’. By ‘litigants’, it is clearly referring to litigants in general and not just the contemnor himself. See Questnet Limited v Wilfred Royce Lane, HCA 1475/2006, Chu J (as she then was), 23 June 2008 (on sentence).

3. The object of the sentence is both to punish conduct in defiance of the court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do: Crystal Mews Ltd v Metterick & ors [2006] EWHC 3087, §8, Collins J; re Barrell Enterprises [1973] 1 WLR 19, at 27C-D, English CA. The court has to balance the 2 objects.

4. The sentence for contempt may range from a fine to a term of imprisonment. The UK Contempt of Court Act 1981 imposes a maximum term of 2 years’ imprisonment but Hong Kong does not have that statutory limit.

5. Imprisonment should be regarded as a sanction of the last resort. Any custodial sentence should be as short as possible consistent with the circumstances of the case. Willwin Development (Asia) Co Ltd v Wei Xing, HCMP 2946/2014 (unreported, 16 November 2015), B Chu J, §4(f); CMA CGM v Ng Chip Choi Maurice, HCMP 2988/2014, 12 March 2015, Au-Yeung J,§24(1).

6. The court may suspend a term of imprisonment for such period or on such terms as the court deems fit: CMA CGM v Ng Chip Choi Maurice, §24(2); Order 52, rule 7. This is an ‘absolute discretion’ but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order: Hong Kong Civil Procedure 2016, Vol 1, §52/7/2.

7. The court will consider if there are:

(a) Aggravating factors: Hao Xiaoying v Wong Yiu Lam William & Ors, HCMP 1968/2014, 2 March 2015, Anthony Chan J;

(b) Mitigating factors: Ge Transportation (Shenyang) Co Ltd v Lu Jinxiang, HCMP 1792/2013 (unreported, 22 January 2014) (DHCJ Marlene Ng); and

(c) Acts to purge the contempt, ie acts to atone for a contempt, eradicate it or cleanse it of its previous ill-effect which, in the case of a mandatory order, may be fulfilled if the contemnor thereupon does the act or causes it to be done: CJ v Flintshire BC [2010] EWCA Civ 393, at §6.

8. Relevant factors (which are not exhaustive) include:

(a) The nature of the order and breach in question, and the extent of the breach: Questnet Limited v Wilfred Royce Lane.

(b) Whether the contempt was contumacious or unintentional, the reasons, motives and state of mind: Hong Kong Civil Procedure 2016, Vol 1, §52/9/2.

(c) Whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy: Crystal Mews Ltd v Metterick, §13.

(d) Whether the contemnor appreciates the seriousness of the deliberate breach: Crystal Mews Ltd v Metterick, §13.

(e) Whether the contemnor has cooperated: Crystal Mews Ltd v Metterick, §13.

9.  […]

10. As circumstances of contempt vary greatly, there is little mileage to be gained from the citation of other cases: AXA China Region Insurance Co Ltd & anor v Li Yu Ping Ellen [2002] 3 HKC 339, 362 H-I, Stock JA.”

41.  In La Dolce Vita Fine Dining Co Ltd v Zhang Lan [2019] 2 HKLRD 341, [2019] HKCFI 618, Mimmie Chan J also had the following to say at [8]:

“The legal principles applicable to sentencing for contempt of court have been summarized in Suzanne Ruth Henderson v Scott Henderson HCMP 2016/2014, 14 April 2016 and Wilwin Development (Asia) Co Ltd v Wei Xing, HCMP 2946/2014, 16 November 2015. In Suzanne Ruth Henderson, the court emphasized that contempt of civil court orders is a serious matter. A prime consideration of the court in sentencing contempt is to signal the importance of demonstrating to litigants that orders of the court are to be obeyed. The jurisdiction of the court in contempt proceedings arises out of its inherent jurisdiction to enforce its own orders. The purpose of the law of contempt is not to protect the dignity of judges but to prevent interference with the due administration of justice. As succinctly pointed out in RACP Pharmaceutical Holdings Ltd v Li Xiaobo HCA 490/2007:

‘The first principle is that court orders are made to be obeyed. They are not guidelines, to be ignored or paid lip service to at the behest of the parties affected. They are the building blocks by which the administration of justice is made workable. Litigants who willfully breach orders at the expense of their opponents to their advantage do so at the risk of losing their liberty for being in contempt of court.’ ”

Her Ladyship continued at [14] and [15]:

“14. There is a strong public interest to ensure that orders of the court should not be flouted, although the individual circumstances of each case must always be evaluated. Imprisonment should be regarded as a sanction of last resort.

15. Subject to mitigating factors, if any, the starting and primary penalty for contempt of court in breaching an order in the nature of an injunction is imprisonment.  The normal penalty for breaches of injunction orders is imprisonment measured in months (Asia Islamic Trade Finance Fund v Drum Risk Management Ltd [2015] EWHC 3748 (Comm), Bunge SA v Huaya Maritime Corporation of the Marshall Islands [2017] EWHC 90 (Comm), Law Lai Lan v Tamang Prem Candr[2018] HKCFI 536).” 

D. SENTENCING – AGGRAVATING AND MITIGATING FACTORS

42.  Both parties have put forward quite a number of factors which are said to be relevant to the question which this Court has to resolve herein, namely, the sentencing of the defendant.  I will discuss those factors in turn below.

D1.  Repeated offence

43.  It is undisputed that this is the second time that the defendant breached the Injunction Order.  She is therefore a repeated offender. The plaintiff submitted that this must be an aggravating factor which the Court must take into account.

44.  I agree with this submission.

45.  On the other hand, Mr Ng and Mr Wong for the defendant emphasised that each case should be decided on its own facts.  While I accept that the Court should of course sentence the defendant on the basis of the ways that she had breached the Injunction Order on this occasion, I do not think that means that the Court should ignore the fact that she has been convicted once already in the past in respect of the very same Injunction Order.

D2.  Seriousness of the breach

46.  I agree with the plaintiff’s submissions that the defendant’s breaches of the Injunction Order are of a serious nature. 

47.  First, there were quite a number of transactions involved.  In other words, the breach was not one-off.

48.  Second, I do not agree with the defendant’s counsel that the transactions grouped under Category B only constituted technical breaches.  With greatest respect, I do not understand why counsel thought fit to rely on such an argument even though it had been expressly rejected in the Judgment (see [19] – [23] thereof). Particular attention should be drawn to the Court’s finding that the defendant has been in blatant disregard of the Injunction Order[3].

49.  Third, the defendant’s attempt to rely on the 23 October 2017 Email in her submission that the breach was not serious is futile.  It is only required to make reference to [46] to [54] and [59] of the Judgment to illustrate why:

“46. Leong alleged that, to avoid breaching the Injunction Order again, she had notified Tong by virtue of the 23 October 2017 Email that she would cease to participate in the daily operations of Longford, and thereby also instructed Tong to seek the approval of both shareholders for all of Longford’s expenses. […]

47. On the basis of my finding that Leong had not informed Tong about the terms of the Injunction Order by telephone conversation as alleged, there was no evidence that Tong had any knowledge about the requirements imposed by the Injunction Order at all.

48. I also reject Leong’s evidence which was given during her cross-examination that she had persistently reminded Tong to ask for Yau’s approval. I hold that she had just made this evidence up during the trial, for she had never mentioned about this in her Affirmations.

49. In such circumstances, there is no doubt that Leong could reasonably have foreseen the possibility of Tong failing to comply with the Injunction Order, and Leong had plainly failed to take all reasonable steps to prevent such acts on the part of Tong. How could Tong be expected to comply with the terms of the Injunction Order when she did not even know what they were?

50. Furthermore, in relation to Category A transactions, it is important to bear in mind the modus operandi adopted by Leong and Tong at the material time. As reflected by Longford’s bank statements, whenever the balance in the Current Account was running low, funds would be transferred from the Capital Account to the Current Account, usually in the sum of RMB300,000 under the description of ‘備用金’. The funds would then be used to pay for the alleged expenses of Longford. In other words, under this modus operandi, the transfers from the Capital Account were to be used to pay off expenses yet to be claimed. According to Leong, she was well aware of this modus operandi at the material time.

51. However, in the 23 October 2017 Email, what Leong instructed Tong to do was: ‘關於梁富公司營運日常支出，請按時與雙方股東申請’. It is evident and undisputed that a large number of those daily operating expenses were paid by the “備用金” in the Current Account. In other words, before Tong sought approval from Yau as instructed by Leong, Tong had already transferred funds from the Capital Account to the Current Account in anticipation of future expenses.

52. Leong did not instruct Tong specifically in the 23 October 2017 Email not to transfer monies away from the Capital Account to the Current Account as ‘備用金’ unless Yau or Will Lam (as the case may be) had signed.

53. Given Leong’s admission of her knowledge about this mode of operation at the material time, she must be taken to have authorised Tong to deal with the Capital Account in the absence of Yau’s or Will Lam’s signature (as the case may be). Leong must also have foreseen that ‘備用金’ would be transferred from the Capital Account in the absence of the required signature of Yau/Will Lam.

54. In other words, the Injunction Order would be breached even if Tong had acted in full compliance with Leong’s instructions given by virtue of the 23 October 2017 Email.

[…]

59. Hence, since:

(1) Leong was well aware that it was all along the practice that ‘備用金’ (usually in the sum of RMB300,000) would be transferred from the Capital Account before any approval was sought from Yau/Will Lam in respect of any specific items of expenses;

(2) Leong must have been fully aware of the terms of the Injunction Order;

(3) Leong admitted that she had knowledge and understood the Previous Contempt Judgment;

(4) Leong only instructed Tong to seek approval from Yau in respect of expenses which incurred subsequently,

Leong must be taken to know that it would be a contempt even if Tong had followed her instructions closely.”

50.  Fourth, it is apparent that at least part of the sums transferred away from the Capital Account had been used for the defendant’s own purposes rather than for the benefit of Longford.  I will discuss this matter further below under section D7.

D3.  The defendant’s rejected evidence

51.  This is not a factor raised by the plaintiff.

52.  In my view, the Court should also take into consideration, as an aggravating factor, the fact that the defendant has made up evidence while defending the contempt proceedings:

(1)  During cross-examination, the defendant alleged that she had explained the terms of the Injunction Order to Tong in a telephone conversation, and therefore Tong had been given clear instructions that she was to seek the approval of Yau for transactions below RMB1 million and Will Lam for transactions of RMB1 million or above.[4] However, it was found that the alleged telephone conversation did not take place, and that she had just conveniently made it up when she was cross-examined on the matter[5];

(2)  The defendant also stated during cross-examination that she had persistently reminded Tong to ask for Yau’s approval.  However, again, it was found that she had just made this evidence up.[6]

D4.  Not deliberate/intentional/reckless breach

53.  One of the main mitigating factors relied on by the defendant’s counsel was that there was no finding in the Judgment that the defendant had breached the Injunction Order intentionally or recklessly.  Heavy emphasis had been placed on the Court’s finding that she had failed to take reasonable steps to prevent Tong from committing acts which were not compliant with the Injunction Order.  It was stated that this is equivalent to a finding of negligence only.

54.  With greatest respect, such a line of argument was made in total disregard of the findings made in the Judgment:

(1)  Since the defendant’s case was that she had entrusted Tong to comply with the Injunction Order, the test is whether the defendant had taken all reasonable steps to see that her orders to Tong had been obeyed.  The relevant legal principles had been cited at [26] of the Judgment, and this Court had considered the defendant’s case by following such guidance.  That is the reason why this Court had used the “reasonable steps” test as the yardstick in the Judgment.  However, it would be taking the findings made by this Court totally out of context to say that this Court only found that the defendant  had been negligent;

(2)  Indeed, it has been held in the Judgment that the defendant must be taken to have authorised Tong to deal with the Capital Account in the absence of Yau’s or Will Lam’s signature (as the case may be), and that the defendant must also have foreseen that “備用金” would be transferred from the Capital Account in the absence of the required signature of Yau/Will Lam.[7]

55.  The very bold suggestion made by the defendant’s counsel that the defendant had an honest and bona fide intention to comply with the Injunction Order is also totally contradicted by the findings made in the Judgment.  For example, the defendant had been found to be in blatant disregard of the Injunction Order as far as the Category B transactions are concerned[8]. It was also found that she had never informed Tong the terms of the Injunction Order[9]. Moreover, it was found that the Injunction Order would be breached even if Tong had acted in full compliance with the defendant’s instructions given by virtue of the 23 October 2017 Email[10].

D5.  Vicarious liability

56.  Another emphasis made by the defendant was that the defendant was not found to be liable as a primary actor but only indirectly via Tong as her agent. It was said that since the defendant is only vicariously liable for her agent, this is a strong mitigating factor.

57.  I am of the view that it is quite unhelpful to rely on a label such as “vicarious liability” when assessing the seriousness of the breach and hence the appropriate sentence.  Put it in another way, it is quite wrong to say that since the breach was committed via an agent, the breach must be treated with leniency.  It all depends on the particular circumstances of the case.

58.  The present case serves as a good illustration that even in the case where the contemnor is held to be vicariously liable, the breach can still be regarded as serious.   One only has to refer to [33] – [36] and [46] – [59] of the Judgment to appreciate such seriousness.  There is no room in this case for the defendant to blame her agent at all.

D6.  No personal benefit

59.  The defendant’s counsel submitted that:

“62. In the Judgment, this Court divided the transactions into 4 categories. None of these transactions were for Leong’s own benefit or self-interest, and there was no finding to such effect. This was also a factor which Chow J took into account in §10(1) of the Previous Sentencing Decision.

63. There is no finding or evidence that Leong misappropriated or pocketed Longford’s funds. Again, this was a factor which the Court took into account in the Previous Sentencing Decision (at §10(2)).”[11]

60.  With greatest respect, it is quite unfair for Mr Ng and Mr Wong to make such a point.  This is because even though they were newly instructed to act for the defendant and did not represent her at the substantive contempt of court hearing in mid-2022, they must be aware (by reading the Judgment[12]) that it was the defendant’s then team of counsel who submitted to the Court (which was accepted) that the ultimate destinations and purposes of the monies which had been transferred away from the Capital Account were irrelevant as far as liability for contempt was concerned.  Indeed, the defendant’s then senior counsel went on to submit that “in determining liability, the Court plainly [did] not need to investigate and make findings on how the funds were applied in the Current Account”[13]. It was for this reason that the Court did not make any findings in this regard in the Judgment.  It is thus regrettable that the defendant’s current team of counsel thought fit to take advantage of such a situation.

61.  As to whether the defendant is indeed entitled to rely on the mitigating factor that she did not derive any personal benefit from the transactions complained of, I will deal with the same in the following section.

D7.  Legitimate business expenses

62.  The defendant alleged that all the transactions which are said to constitute her contempt were for Longford’s legitimate business expenses and that this would amount to a mitigating factor.

63.  When assessing this argument, it must be borne in mind that while the relevant transactions took place between 29 April 2016 and 23 July 2020[14], the defendant admitted that Longford had no substantive business since 2016, and that all stores previously operated by Longford (for Will Lam’s other companies) had been gradually closed down from 2014 to 2015[15]. 

64.  However:

(1)  Category A comprised 30 transactions in the total sum of RMB7,492,916[16];

(2)  Category C covered 7 transactions in the total sum of RMB484,007[17];

(3)  Category D comprised 7 transactions in the total sum of RMB731,972.34 [18].

65.  These figures immediately lead to the question as to why, even if it was necessary to keep Longford “alive” from 2016 onwards, such large sums of expenses had to be incurred.

66.  A closer look at the actual expenses which had been incurred would reinforce the plaintiff’s case that this alleged mitigating factor should be rejected.  To cite a few examples:

(1)  It has been shown in Longford’s Table of Wages for January 2018 and the corresponding bank statement[19] that Longford had paid wages to 5 employees, namely, 唐魯華, 許鈴, 段春寶, 倪永梅 and 馬兆龍 in the said month. It is difficult to understand (and there is no admissible evidence explaining) why keeping a company “alive” necessitated the employment of so many staff members;

(2)  It is even more difficult to understand why Longford would have to pay year-end bonus to 4 out of those 5 staff members in 2018[20] if all that they were asked to do was to keep Longford “alive”;

(3)  Even if it was necessary to keep Longford “alive”, no justification had been provided as to why it was necessary to employ a driver (段春寶);

(4)  Some of the funds had been used to pay off maintenance fees of a car.  There is no evidence on why Longford needed to keep a car for use when it had no business at all. In fact, the defendant’s current counsel accepted that the car belonged to the defendant.  This shows that the defendant had used Longford’s funds for her own benefit;

(5)  Some of the expenses were paid for Mr Feng Jun’s personal expenses such as purchasing medicine and coffee[21].  It is evident that Mr Feng was a director of Besthope International Limited which was a company owned by the defendant’s family;

(6)  A sum of RMB40,000 had been paid towards legal fee incurred by the defendant when she was sued in her own capacity to return Longford’s chops to the then legal representative of Longford.  This legal fee apparently is not legitimate business expenses of Longford;

(7)  A total sum of RMB975,703.68 had been transferred to the defendant’s personal account;

(8)  There were also a lot of expenses incurred for flight tickets and hotel accommodation fees for the defendant’s other businesses, such as the Changsha Project[22]. There is simply no justification provided by the defendant at all.

67.  I therefore do not accept the defendant’s allegation that she had obtained no personal benefit from the subject transactions at all[23]. Quite the contrary.

D8.    No risk of further breach

68.  The defendant submitted that there is no risk that she will breach the Injunction Order in the future.

69.  This is undisputed, because, among other things, the defendant is no longer the CEO of Longford, and she has surrendered Longford’s legal representative chop.

70.  However, insofar as it is the defendant’s submission that the plaintiff has no legitimate interest in such circumstances in the enforcement of the Injunction Order, and that a custodial sentence will not serve any practical purpose other than to aggravate the defendant’s present suffering[24], I totally disagree, for it is trite that the object of the sentence is both to punish conduct in defiance of the court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do[25].  The inapplicability of the second object does not necessarily mean that it is meaningless to punish the defendant at all.

D9.  Impracticable to obtain Yau’s signature

71.  In the defendant’s skeleton submissions dated 4 October 2023, the defendant’s counsel argued that the Court should take into account the fact that it was impossible for Yau’s signature to be obtained for the purposes of the Injunction Order.

72.  At the hearing, the defendant’s counsel informed the Court that the defendant would no longer rely on such an argument.

73.  With respect, such a concession must have been correctly made, because this Court has clearly rejected the defendant’s case in this regard in the Judgment[26].

D10.  Anxiety and pressure arising from delay

74.  The defendant stated that the underlying civil proceedings were commenced back in 2014.  Further, she said that on top of such civil claim in which she was a defendant, two committal proceedings had been commenced against her.  She asked the Court to consider that these matters have brought her great pressure and anxiety, and that she has been forced to spend substantial sums in legal fees on those matters.

75.  These arguments are totally unmeritorious.

76.  First, as explained in [105] – [106] of the Judgment, pursuant to an order made by consent by Master M Wong on 23 January 2015, the defendant was supposed to take the next step in the Underlying Proceedings (by filing and serving her Defence) but she had never done so.  It therefore lies ill in her mouth to complain that the plaintiff had delayed the matter.

77.  Second, it is ridiculous for the defendant to complain that the plaintiff had initiated two committal proceedings against her when it is now clear that these committal proceedings are totally justified.  If she did not breach the Injunction Order in the first place, she would not have to face these committal proceedings. She should blame herself rather than anyone else.  She has no sympathy from this Court despite the anxiety and pressure which she had allegedly suffered.

D11.  Impact on the defendant’s reputation

78.  The defendant’s counsel urged this Court to consider that the defendant has had a distinguished career in business and she has received awards in the Mainland which publicly recognised her contributions.  She has also had a distinguished career in public service in the PRC.  It was therefore said that the findings of contempt in the Judgment and in the Previous Contempt Judgment have had an enormous deleterious impact on her reputation.

79.  In the circumstances of the present case, where the defendant has been found guilty of contempt of Court once already by virtue of the Previous Contempt Judgment, I do not think the Court should place weight on the so-called “enormous deleterious impact on her reputation” at all.  In my view, the defendant should have known such impact, if any, after she had been found guilty on the last occasion.  Yet, she proceeded to breach the very same Injunction Order for the second time (and for a long period of time).  Again, she only has herself to blame if her reputation is adversely affected.

D12.    Critical health condition of the defendant’s son

80.  By way of her 4^th Affirmation, the defendant informed the Court that her elder son has sustained severe injuries in a car accident in Dongguan on 1 March 2024, and that he is now hospitalised in the Critical Care Unit of Gleneagles Hospital.  It was said that she would need to be on his side to make medical decisions and accompany him during his final days.

81.  This Court must emphasise that it has every sympathy for the defendant’s son.

82.  However, since any custodial sentence would only be served after the determination of the appeal which will not be heard until 1 November 2024 (see section F below), the practical impact of this factor on sentencing is minimal, if any.  I will therefore not treat this as a mitigating factor.  Indeed, Mr Ng for the defendant also accepted at the hearing on 2 May 2024 that, strictly speaking, this is not a mitigating factor.

D13.  Personal and family circumstances

83.  The defendant has drawn this Court’s attention to the fact that:

(1)  her younger son has autism, which has always been a source of concern for her and her husband;

(2)  her mother is now 93 years old;

(3)  her husband is now 80 years old,

and submitted that if an order for committal is made, she would be robbed of her ability to take care of her husband and/or her mother during her sentence.  It was also said that they would be heartbroken if she were sent to prison.

84.  I do not accept that these matters would assist the defendant at all.  As mentioned, this is the second time that she breached the Injunction Order.  At the material time, she should have appreciated the serious consequences that such a second breach would bring.

D14.  Purging of contempt

85.  In the defendant’s 4^th Affirmation which was filed only 6 working days before the adjourned hearing on 2 May 2024, she, for the very first time, suggested that she would pay into Court a sum of RMB 7,575,198.04 (or an equivalent sum in Hong Kong Dollars) as an act of purging the contempt, pending further directions of the Court (“the Original Purging Proposal”).

86.  However, in the same Affirmation, the defendant also had the following to say:

“I reserve my right to demonstrate at the appropriate juncture that the vast majority, or most, of the funds transferred from the Current Account were indeed for Longford’s legitimate expenses.”[27]

87.  The Original Purging Proposal together with the above caveat had indeed caused this Court some concerns:

(1)  The defendant did not propose that the sum be paid back to where it came from (i.e. Longford’s account) but into Court.  In other words, Longford would not be repaid right away any part of the money which had been transferred from its account;

(2)  Worse still, it was suggested that the sum should remain in Court unless otherwise directed by the Court.  However, by “pending further directions of the Court”, what “directions” is the defendant referring to?  It should be noted, as aforesaid, that the defendant’s counsel had expressly stated that it was not necessary for the Court to make findings on the usage of the subject funds herein;

(3)  As confirmed by the parties, the plaintiff has not sought any monetary relief in the Underlying Action.  The issue of “legitimate business expenses” is therefore currently not before the Court in any court action. 

88.  Against such background, this Court raised the query at the hearing on 2 May 2024 as to under what circumstances would the Court give a direction on payment out (other than by consent of the parties) without a ruling on the purposes of the usage of the subject funds.

89.  Mr Ng for the defendant could not give any satisfactory answer at all apart from saying that:

(1)  Chow J had accepted the defendant’s “payment into court” as a means of purging the contempt on the previous occasion;

(2)  He would be very surprised if the plaintiff would not amend its Statement of Claim in the Underlying Action.

90.  This Court was not satisfied with the above answers because:

(1)  Without any further directions of the Court, the monies to be paid into Court by the defendant will stay in the Court forever, and the plaintiff could not get its hand on the same;

(2)  Taking the defendant’s case to the highest, Chow J only stated that the payment into court went “partly towards purging those breaches”[28];

(3)  It appears that no one had ever raised the same query (that the payment in court may stay in the court forever) before Chow J and as a result this aspect was not considered by his Lordship at all;

(4)  In any event, as accepted by the defendant’s counsel, this Court is not bound by Chow J’s decision;

(5)  It is difficult to understand why the plaintiff should be forced to amend its claim in the Underlying Action.

91.  The plaintiff also raised the question as to why the payment into court should be limited to the sum as proposed by the defendant, rather than the full amount of RMB8,606,600.43 which had been transferred from the Current Account to third parties (including the defendant).

92.  In addition, the plaintiff’s senior counsel stated that the plaintiff should not bear the burden of placing the issue of “legitimate business expenses” before the Court.  It should be the defendant who should bear such a burden.  For example, if the defendant pays the full sum back into Longford’s account, she may, if she desires, bring an action for reimbursement of any “legitimate business expenses” which she had paid for Longford.

93.  The defendant’s counsel, having heard the Court’s concerns and the exchange between the Bench and the plaintiff’s senior counsel, asked for time to take further instructions from the defendant, and eventually came up with another proposal for the consideration of the Court. It was suggested that the defendant shall put the sum of RMB8,606,600.43 into an escrow account opened in the name of the plaintiff in an independent law firm (to be nominated by both parties) pending further directions of the Court or mutual consent of the parties (“the Revised Purging Proposal”).  It was said that this proposal was different from the original one because the monies would be placed under the name of the plaintiff. 

94.  In substance, apart from the fact that the monies under the new proposal would be placed under the name of the plaintiff, the Revised Purging Proposal could not deal with the concerns raised by this Court:

(1)  While the monies are placed legally under the name of the plaintiff, the plaintiff or Longford can still not get their hands on the monies;

(2)  In order to get back the monies, the burden would be placed on the shoulder of the plaintiff/Longford to commence a new action or to amend the claim made under the Underlying Action.

95.  Hence, the Revised Purging Proposal would only partly purge the contempt.

96.  The plaintiff submitted that the purging proposals came in so late that it is doubtful as to whether the defendant was truly remorseful.  I agree.  However, it does not mean that the Court should disregard those proposals altogether.  In my view, the Court should still take into account any purging of the contempt even if the contemnor is not remorseful at all.

97.  On the other hand, this Court has not forgotten about the defendant’s alleged rationale of the Revised Purging Proposal – she was worried that if she returned the monies to the plaintiff/Longford, such monies would be under the control of the Lams, and there was no mechanism for the protection of such monies. 

98.  With respect, such explanation is simply unacceptable, for there is no evidence that the Lams will misappropriate the monies to be paid back by the defendant.  The defendant’s explanation only demonstrated that she placed her own interest over the purging of her contempt.

E. SENTENCING OPTIONS

99.  On the basis of the various aggravating factors herein, the plaintiff suggested that the appropriate sentence in the present case should be custodial in nature, in the range of 1 to 3 months.

100.  On the other hand, the defendant submitted that a fine should be imposed in the circumstances of the present case. 

101.  With greatest respect, in my view, it must be wrong to impose a fine only in the present case.

102.  In the present circumstances where:

(1)  This is the defendant’s second breach of the very same Injunction Order;

(2)  The breaches were serious;

(3)  The defendant had breached the Injunction Order at least partly for her own benefit;

(4)  The defendant had pocketed at least part of Longford’s funds;

(5)  The defendant had only partly purged her breaches; and

(6)  The defendant was not remorseful at all and she even made up evidence at the trial in her attempt to defend the claim,

an immediate custodial sentence must be fully justified.  It is so even if there is no risk of further breach on the part of the defendant (in other words, the sanction would only serve the purposes of punishing the defendant for breaching a court order and demonstrating to other litigants that the orders of the Court are to be obeyed).

103.  Furthermore, while the defendant has proposed to partly purge the contempt, I hold the view that this would not have the effect of making an immediate custodial sentence inappropriate.  At most, this factor would reduce the length of custodial sentence (see further below).

104.  The conclusion of immediate custodial sentence may be tested against the sentencing decision reached by Chow J when the defendant breached the Injunction Order on the previous occasion.

105.  In the Previous Contempt Proceedings, Chow J took the view that it was a borderline case on whether an order of imprisonment should be made.  At the end, a fine in the total sum of $550,000 was imposed to mark the seriousness of the breaches of the Injunction Order and the defendant’s own undertaking respectively when:

(1)  Chow J accepted that the defendant did not breach the Injunction Order for her own benefit;

(2)  There was no suggestion that the defendant breached the Injunction Order so as to pocket Longford’s funds;

(3)  The defendant had partly purged her breaches of the Injunction Order, and the breach of her own undertaking had been fully purged;

(4)  The defendant had put in place certain safeguards to prevent further breaches of the Injunction Order; and

(5)  The defendant had tendered a genuine and sincere apology.

106.  It can be seen that the circumstances herein are much more serious.  If the breach considered by Chow J was a borderline case on whether an order of imprisonment should be made, then the serious circumstances herein must have brought this case to the other side of the line. 

107.  As a matter of completeness, I should add that I have considered the Court of Appeal’s Judgment in Solar System International Company Limited v Unison-Watch Manufacturing Limited & Another (CACV 3523/2001, unreported, 7 February 2002), in which it had been held at [24] that:

“[…] Once the court has reached the conclusion that a contempt was not deliberate or not contemptuous, it would be in very rare circumstances that a sentence of imprisonment would be appropriate.” (emphasis added)

108.  It was urged upon this Court by the defendant’s counsel that, applying the above principle, an immediate custodial sentence would be inappropriate. 

109.  I disagree with this submission, as there is no doubt that the defendant’s breach of the Injunction Order was contemptuous.

110.  Having considered all the circumstances of the case including the aforesaid aggravating factors, I am of the view that the appropriate starting point should be 6 weeks’ imprisonment. 

111.  The defendant has partly purged her contempt, in respect of which I would give a discount of 2 weeks.  I would therefore sentence the defendant to 4 weeks’ imprisonment.

112.  The defendant’s counsel argued that even if an order for committal is granted, the Court should suspend the sentence. 

113.  I should say right away that it is inappropriate to make any order of suspended sentence in the present case, because, as advocated by the defendant’s counsel, there is no risk that the defendant may breach the Injunction Order again, since (1) the Lams had caused a very large part of the balance in the Capital Account to be transferred to another account of Longford, and (2) the defendant has left her position as Longford’s CEO and has surrendered the legal representative chop. 

114.  In other words, there is no need to make sure that the defendant would comply with the Injunction Order in future. 

115.  Further, since it is certain that the defendant cannot breach the Injunction Order again, it is certain that the suspended sentence, if imposed, would not be activated.  That means if the defendant is only visited with a suspended sentence, in effect she would be unpunished (apart from having to pay indemnity costs of these proceedings).  It would therefore be meaningless for suspended sentence to be imposed herein.

116.  Indeed, in Arboit v Koo Siu Ying (supra), it has been stated that:

“6. The court may suspend a term of imprisonment for such period or on such terms as the court deems fit: CMA CGM v Ng Chip Choi Maurice, §24(2); Order 52, rule 7. This is an ‘absolute discretion’ but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order: Hong Kong Civil Procedure 2016, Vol 1, §52/7/2.”[29] (emphasis added)

117.  Mr Ng for the defendant disagreed that a suspended sentence would have no utility in such circumstances at all.  He highlighted the stigma which by virtue of a suspended sentence would attach to a successful businesswoman like the defendant.  He also said that such stigma would be carried by the defendant for the rest of her life.  Such submission is rejected.  In my view, such stigma was brought by her conviction of contempt of court rather than by the suspended sentence.  I should also emphasize that the sanction which this Court shall impose must be serious enough to give a clear signal to the society that court orders are meant to be obeyed.

118.  Mr Ng further suggested that, if necessary, the Court may consider imposing a fine together with suspended sentence.  I do not accept that it is appropriate to consider suspended sentence at all on the ground that it is meaningless as explained above, whether it is imposed together with a fine or not.  Given the seriousness of the breaches concerned, I am of the firm view that immediate custodial sentence is the only appropriate option.

F. SUSPENSION OF EXECUTION OF THE COMMITTAL ORDER

119.  As aforesaid, the defendant has lodged an appeal against the Judgment, which will be heard by the Court of Appeal on 1 November 2024. 

120.  Hence, the defendant would have fully served her 4 weeks’ imprisonment by the time of the appeal.

121.  For this reason alone, justice requires that the defendant should only be ordered to serve her sentence upon dismissal of her appeal.  The plaintiff also fairly accepted that this approach should be taken.

122.  The only remaining question is in what form the order should take – whether this Court should make an order to stay the execution of the court order, or to grant her bail pending appeal or any other form of order.

123.  The legal principles governing stay of execution are trite.  In Star Play Development Limited v Bess Fashion Management Co. Ltd. [2007] 5 HKC 84, it was held by Ma J (as his Lordship then was) that the existence of an arguable appeal (that is, one with reasonable prospect of success) is the minimum requirement before a court would even consider granting a stay. However exceptional the circumstances may be otherwise justifying a stay of execution, if there exist no arguable grounds of appeal, no stay will be granted.

124.  However, as aforesaid, in my view, the short custodial sentence alone should be enough to justify a court order permitting the defendant to serve her sentence only upon dismissal of her pending appeal, irrespective of the merits of such an appeal.

125.  Considered in this light, it is arguable that the above view does not sit well with the legal principles set out in Star Play Development Limited.

126.  The better route therefore seems to be “bail pending appeal”. 

127.  However, this alternative route is not without its own difficulties. 

128.  As pointed out by the plaintiff’s senior counsel, Order 59 rule 20 of the Rules of the High Court (Cap.4A, Laws of Hong Kong) (“RHC”) provides that:

“(1) In the case of an appeal to the Court of Appeal against an order of committal or other punishment for contempt of Court made by a judge of the Court of First Instance, the notice of appeal must be served on the Registrar as well as on the party or parties required to be served under rule 3. (See App. A, Form 99)

This paragraph shall not apply in relation to an appeal to which rule 19 applies.

(2) Where, in the case of such an appeal as is mentioned in paragraph (1), the appellant is in custody, the Court of Appeal may order his release on his giving security (whether by recognizance, with or without sureties, or otherwise and for such reasonable sum as that Court may fix) for his appearance within 10 days after the judgment of the Court of Appeal on the appeal shall have been given, before the court from whose order or decision the appeal is brought unless the order or decision is reversed by that judgment.

(3)  An application for the release of a person under paragraph (2) pending an appeal to the Court of Appeal must be made by motion, and the notice of the motion must, at least 24 hours before the day named therein for the hearing, be served on the Registrar and on all parties to the proceedings who are directly affected by the appeal.”

129.  The above provisions stipulate the procedure for an appellant to apply to the Court of Appeal for bail pending appeal.  However, those rules do not provide for any procedure by which the appellant may apply to the first instance Judge for a similar relief.  It may therefore be argued that the first instance Judge does not have power to grant such bail.

130.  However, I consider that Order 52 rule 7(1) of the RHC should be applicable. This rule provides that:

“The Court by whom an order of committal is made may by order direct that the execution of the order of committal shall be suspended for such period or on such terms or conditions as it may specify.”

131.  I have not lost sight of the fact that this rule is normally relied on by the court to make an order of “suspended sentence” in the sense that the custodial sentence would only be activated upon the contemnor breaching an earlier order of the court again or failing to comply with such an earlier order, as the case may be.  Be that as it may, the wordings of the said rule, in my view, should be wide enough to provide power to the first instance Judge to grant bail pending appeal or an order to that effect.

132.  Even if I were wrong in my interpretation of Order 52 rule 7(1) of the RHC, this Court must have inherent jurisdiction to make such an order.

133.  The view that this Court has power to grant bail pending appeal is also supported by section 50 of the High Court Ordinance (Cap.4, Laws of Hong Kong) which provides that:

“[…]

(3) The Court of Appeal may on appeal reverse or vary the order or decision of a court, and make such other order as may be just; and without prejudice to the powers of any court to grant bail, provision may be made by rules of court for authorizing the release on bail of an appellant under this section.

(4) In this section—

(a) court (法庭) includes any tribunal or person having power to punish for contempt; […]”

(emphasis added)

134.  In my view, the emphasized part shows that the first instance judge must have power to grant bail.

135.  My attention has been drawn to the case of Secretary for Justice v Yuen Oi Yee Lisa (HCMP 2390/2008, unreported, 27 October 2010) in which it had been held that the first instance Judge does not have power to postpone or stay the execution of an order of committal.  However, the learned Judge in that case did not have assistance from the contemnor therein as she was unrepresented.  In any event, I am not bound by that decision. 

136.  I hold that this is an appropriate case in which the execution of the Committal Order should be suspended pending the determination of the defendant’s appeal against the Judgment, on the condition that the defendant pays $500,000 into court.

G.   ORDER

137.  To conclude, it is ordered that:

(1)  The defendant be committed to prison for a period of 4 weeks (“the Committal Order”);

(2)  The execution of the Committal Order be suspended pending the determination of the defendant’s appeal against the Judgment, on the condition that the defendant pays $500,000 into Court by 4pm on 31 May 2024;

(3)  The defendant shall, within 28 days hereof, put the sum of RMB8,606,600.43 (or an equivalent sum in Hong Kong Dollars) into an escrow account opened in the name of the plaintiff in an independent law firm (to be nominated by both parties) pending further directions of the Court or mutual consent of the parties.  In the event that the defendant fails to make such payment within the stipulated deadline, she shall be brought back to the Court for sentencing again.

H.   COSTS

138.  I order that the defendant shall pay the plaintiff’s costs of these proceedings (including the hearing originally scheduled for 9 October 2023), to be taxed on indemnity basis if not agreed, with certificate for two counsel. 

HCMP 932/2020

[2022] HKCFI 2234

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 932 OF 2020

________________________

________________________

________________________

________________________

J U D G M E N T

________________________

A. INTRODUCTION

1.  This is the substantive hearing of the Amended Originating Summons filed on 15 October 2020[1] by which the plaintiff seeks a committal order against the defendant (“Leong”)  for her contempt of court in failing to comply with an order in HCA 1953/2014 of Chow J (as his Lordship then was)  (“the Injunction Order”)  made by virtue of his Decision dated 5 December 2014 (“the Decision”).

B.     BACKGROUND

2.  The general background to the parties’ disputes has been summarised in the Decision which I would respectfully adopt as follows:

“3.    […] [High Fashion New Media Corporation Limited (“New Media”)] is a joint venture company set up by High Fashion Apparel Limited (“HFA”)  and Hansen International Limited (“Hansen”).

4.     HFA and Hansen are the only two shareholders of New Media, holding 65% and 35% respectively of the entire issued share capital of New Media.

5.  HFA is controlled and ultimately owned by Lam Foo Wah (“Lam Senior”), Lam Gee Yu, Will (“Will Lam”), and Lam Din Yu, Well (“Well Lam”).  Lam Senior is the father of Will Lam and Well Lam.  The three of them will hereinafter collectively be referred to as “the Lams”.

6.  Hansen is indirectly wholly owned by Leong.

7.  [Longford Information and Technology Co Limited (“Longford”)] is a PRC corporation and a wholly owned subsidiary of New Media.  It has four directors, namely, Lam Senior, Will Lam, Well Lam and Leong.  Apparently, Leong is also the legal representative and chairman of the board of directors of Longford.

8.  According to the Lams:

(1)  On 23 April 2014, a protocol (“the Longford Account Protocol”)  was agreed in the course of a telephone conversation between Will Lam and Leong in relation to the operation of (inter alia)  [Longford’s bank account with ICBC Shanghai, numbered 1001xxxxxxxxxxxx908 (“the Capital Account”)], on terms that:

(a)  all transactions in that account for less than RMB1 million would require (i) the joint signatures of Leong and Angela Yau and (ii) Longford’s finance chop; and

(b)  all transactions in that account exceeding RMB1 million would require (i) the joint signatures of Leong and Will Lam and (ii) Longford’s finance chop.

(2)  Subsequently, Lam Senior and Well Lam also agreed to the Longford Account Protocol.

(3)  However, on or about 28 April 2014, Leong made herself the sole signatory of the Longford ICBC Capital Account without the consent of or authorization by the other directors of Longford or New Media.

(4)  On or about 25 and 26 August 2014, Leong attempted to withdraw the sums of RMB300,000 and RMB10 million respectively from the Longford ICBC Capital Account without the consent of or authorization by the other directors of Longford or New Media.

(5)  The acts of Leong mentioned in (3)  and (4)  above were committed in breach of her fiduciary duties owed to Longford and New Media and contrary to their interests, and show that Leong intended to steal or misappropriate the funds in the Longford ICBC Capital Account.

9.  Pausing here, it would appear that when the parties referred to a signature of a person being required in the context of operating a bank account in the PRC, it was understood to mean the application of the personal seal of that person.

10.   On the other hand, Leong’s case, in summary, is that:

(1)  She was in principle agreeable to an arrangement whereby the Longford ICBC Capital Account could only be operated by two groups of signature (which was different from the Longford Account Protocol as alleged by the Lams).  However, on 23 April 2014 when Angela Yau and two other staff from the accounts department of Longford attended the Xintiandi branch of ICBC in Shanghai for the purpose of setting up a bank mandate for the Longford ICBC Capital Account, the proposed form of bank mandate was rejected by the bank because (inter alia)  it was considered to be too complicated.

(2)  Subsequently, in view of the refusal of Will Lam and Angela Yau to leave behind their personal seals in Shanghai with Leong to enable her to set up the bank mandate, it was agreed by Angela Yau that Leong should handle the bank mandate in respect of the Longford ICBC Capital Account herself, which she did on or about 25 April 2014.

(3)  The eventual form of the bank mandate for operating the Longford ICBC Capital Account, as approved by the bank and evidenced by a seal specimen card dated 28 April 2014, required only “Longford’s Dedicated Finance Chop” and Leong’s personal seal.

(4)  It was known to the Lams, from the very start since April 2014, that the Longford ICBC Capital Account could be operated by her personal seal and Longford’s Dedicated Finance Chop only, and neither Will Lam nor Angela Yau was ever a signatory to the Longford ICBC Capital Account.

(5)  There was a transfer of RMB300,000 from the Longford ICBC Capital Account on 26 August 2014 for normal operational needs of Longford, but there was no attempt whatsoever to withdraw RMB10 million from the Longford ICBC Capital Account as alleged by the Lams.

11.   The above disputes of fact cannot be resolved in the current interlocutory application on affidavit evidence alone.  Neither do I consider it necessary to do so for the purpose of disposing of the present summons.

12.   On 18 September 2014, HFA commenced proceedings, HCMP 2336/2014, under sections 732 and 733 of the Companies Ordinance (Cap 622)  for leave to bring a derivative action on behalf of New Media (suing in its personal capacity or, in the alternative, suing on behalf of itself as the sole shareholder of Longford)  against Leong to seek an injunction to restrain her from operating or dealing with the Longford ICBC Capital Account except in accordance with the Longford Account Protocol.

13.    On the same date, ie 18 September 2014, HFA made an urgent application, ex parte with notice to Leong/Hansen, in HCMP 2336/2014 seeking an interim injunction against Leong to restrain her from operating or dealing with the Longford ICBC Capital Account except in accordance with the Longford Account Protocol.  That matter eventually came before me on 26 September 2014.

14.   After hearing submissions from counsel for the parties, I made an order restraining Leong from operating or dealing with the Longford ICBC Capital Account except in accordance with the Longford Account Protocol “or any further arrangement as subsequently determined by a resolution of the board of directors of [New Media]” upon the undertaking of HFA to “pay all legitimate business expenses in the ordinary course of business as they fell due of [New Media] and its subsidiaries (on behalf of [New Media])  upon presentation of invoices or relevant documents”.

15.  At that time, I was informed that the purpose of the interim injunction sought in the proceedings in HCMP 2336/2014 was essentially to hold the ring until New Media could pass and implement a board resolution to confirm the Longford Account Protocol and authorize the commencement of proceedings on its behalf.

16.  Eventually, a board resolution of Longford (ie the Resolution)  was passed on 26 September 2014 resolving, inter alia, that:

(1)  Longford shall adopt the Longford Account Protocol;

(2)  Will Lam and Well Lam shall execute and arrange all relevant procedures on behalf of Longford in relation to the implementation of the Resolution; and

(3)  Leong, as the legal representative of Longford, must strictly comply with the Resolution, and execute and change all documents in relation to the list and rules of signatories of Longford’s bank accounts.

17.    As can be seen from the minutes of the board meeting held on 26 September 2014, that meeting was attended by all four directors of Longford, with Lam Senior and Will Lam attending in person and Well Lam and Leong attending by telephone.  It is also recorded in the minutes of the board meeting that the Lams all agreed with the Resolution, and Leong “expressed no opinion” on the Resolution.

18.   By letter dated 2 October 2014 from Leong’s solicitors (Winston & Strawn)  to New Media’s solicitors (Oldham, Li & Nie), Leong made it clear that she considered the calling of the board meeting held on 26 September 2014 was unlawful and therefore the Resolution passed at that meeting was null and void.  In that letter, Winston & Strawn referred to an earlier letter dated 16 September 2014 sent by Leong’s lawyers, Zoomlaw Attorneys-At-Law, to Lam Senior, which I shall return to later in this decision.

19.   On 3 October 2014, New Media commenced the present action (suing on behalf of itself and also in its capacity as the sole shareholder of Longford)  to seek an order that Leong do act in accordance with the Resolution and an injunction to restrain her from operating or dealing with the Longford ICBC Capital Account except in accordance with the Resolution.”

3.  Having considered parties’ respective submissions, Chow J considered it just and appropriate to grant the Injunction Order against Leong.  Such an order provided, inter alia, that:

“[Leong] be restrained by herself, her servants, her agents or on her own behalf or on the behalf of any other person, firm or company, whether as employee, officer, agent or otherwise howsoever dealing with the capital bank account which Longford maintained with ICBC Shanghai (account no […]), except in accordance with the following arrangement […]:

(i)  For transactions involving less than RMB1,000,000, the signatures of [Leong] and [Angela Yau] must be obtained, in addition to the application of the Finance Chop of Longford; and

(ii)   For transactions involving RMB1,000,000 or above, the signatures of [Leong] and [Will Lam] must be obtained, in addition to the application of the Finance Chop of Longford.”

4.  The Injunction Order was granted upon, inter alia, HFA’s undertaking to pay all legitimate business expenses in the ordinary course of business as they fall due of the plaintiff and its subsidiaries (on behalf of the plaintiff)  upon presentation of invoices or relevant documents (“the HFA Undertaking”).

5.  After the Injunction Order was granted on 5 December 2014, New Media discovered that Leong had breached the Injunction Order by dealing with the Capital Account without following the Longford Account Protocol.  New Media therefore commenced two sets of committal proceedings against Leong, namely, HCMP 108/2016 and HCMP 1707/2016 (“the Previous Contempt Proceedings”). 

6.  Pursuant to the Judgment of Chow J dated 8 August 2017 (“the Previous Contempt Judgment”), Leong was found to have deliberately, intentionally and voluntarily acted in breach of the Injunction Order in relation to some of the transfers out of the Capital Account, and therefore committed a contempt of court.

C.     LEONG’S ALLEGED BREACH OF THE INJUNCTION ORDER

7.  In the present proceedings, New Media alleged that Leong, as the sole signatory of the Capital Account, had operated either by herself or through her agent(s)/employee(s)  the said account in breach of the Injunction Order during the period between 29 April 2016 and 23 July 2020.  It was said that the breaches may be classified into the following 4 categories:

(1)  Category A comprises 30 transactions in the total sum of RMB7,492,916 which involve transfers under the description “備用金” from the Capital Account to Longford’s bank account with ICBC Shanghai, numbered 1001xxxxxxxxxxxx618 (“the Current Account”).  It was said that the funds transferred were used to pay certain alleged expenses of Longford or to third parties;

(2)  Category B includes 7 transactions in the total sum of RMB 56 million, comprising transfers without any description.  It was alleged that the monies concerned were transferred to Longford’s fixed deposit account (“the Fixed Deposit Account”).  It was further alleged that some of the fixed deposits were not renewed upon maturity and had been released to the Current Account for other unauthorised use;

(3)  Category C covers 7 transactions in the total sum of RMB 484,007, comprising transfers from the Capital Account to third parties which are said to be complete strangers to New Media;

(4)  Category D comprises 7 transactions in the total sum of RMB 731,972.34 which were alleged to have been transferred from the Capital Account to other accounts of Longford.

D.    LEONG’S DEFENCE

8.  There is no dispute on the part of Leong that the 51 transactions which were relied on by the plaintiff herein had indeed taken place as shown by the relevant bank statements and other documents placed before the court.

9.  Neither is it disputed by Leong that the Longford Account Protocol was not followed in respect of those transactions.

10.  Leong’s case was summarised by her counsel in their opening submissions as follows:

“2. Leong opposes the Amended OS. In summary, it is Leong’s case that:

(1)  After the Previous Contempt Judgment, in order not to breach the Injunction Order again, Leong ceased to participate in the daily operation of Longford. Instead, she gave clear instructions to [唐魯華(“Tong”)], an employee of Longford, to apply to the two shareholders for approval of Longford’s business expenses before she operates the Capital Account. Tong was not Leong’s servant or agent, but Longford’s employee. Even if Tong failed or neglected to obtain Yau or Will Lam’s signature before she operated the Capital Account, this was not intentionally caused or authorised by Leong, who could in the circumstances have had no intention to breach the Injunction Order again.

(2)  HFA has breached the HFA Undertaking and had no genuine intention to comply with it.

(3)  New Media has unreasonably delayed in applying for committal, and Leong suffers real prejudice as a result of the delay in that she cannot have a fair trial without the evidence of Tong.

(4)  These proceedings are an abuse of process as New Media (under the control of the Lams)  failed to proceed promptly with the Underlying Action and is only seeking to harass and exert pressure on Leong by the threat of imprisonment.

(5)  In any event, committal should be a weapon of last resort, and the circumstances do not warrant it.  Even if Leong is found to be in contempt of court (which is denied), committal to prison is neither appropriate nor necessary in this case.”

3.   […] an amount of RMB10,940,000 remaining in the Capital Account has since 24 February 2021 been withdrawn by Wong, the purported legal representative of Longford whom the Lams caused to replace Leong.  The Capital Account has therefore already been substantially emptied by the Lams, such that imprisoning Leong does not, in any event, serve any purpose to ensure her compliance with the Injunction Order.”

11.  It was further contended that:

(1)  Since Angela Yau (“Yau”)  (whose signature was required to endorse transactions involving less than RMB1,000,000 pursuant to the Injunction Order)  had ceased to be the Chief Financial Officer of High Fashion Garment Management Limited after 24 May 2019, New Media has failed to prove beyond reasonable doubt that Leong could have complied with the Injunction Order since 24 May 2019;

(2)  There had been material non-disclosure of facts in the ex parte application before Deputy High Court Judge To on 5 June 2020 when leave to commence committal proceedings was sought.

E.     LEGAL PRINCIPLES

12.  The following legal principles are undisputed:

(1)  The approach to committal for civil contempt by reason of a breach of a court order is a three-stage process, namely:

(i)  To construe the relevant court order to ascertain its meaning and operation;

(ii)  To determine whether the defendant has in fact complied with the orders as so construed;

(iii)  To consider whether any failure to comply was accompanied by the state of mind necessary to establish punishable contempt.[2]

(2)  The burden is on the plaintiff to prove a defendant’s contempt beyond reasonable doubt.[3]

(3)  An order should be construed strictly because the court is concerned with an order which has a potentially draconian effect on the commercial and economic freedom of an individual.  What must be ascertained is the meaning which the document would convey to a reasonable person having all the background which would reasonably have been available at the time the order was made.  This includes the purpose for which the order was made.[4]

(4)  Once a failure to comply with an order is found, there is prima facie contempt.  It is for the defendant to show that it has always been impossible of carrying out the terms of the order.  Even in those circumstances, the contemnor should have applied to the court for further time at the first practicable opportunity.[5]

(5)  It is normally not sufficient, by way of answer to an allegation that a court order has not been complied with, for the person concerned to say that he “did his best”.  The only exception to that proposition is whether the court order itself only orders the person concerned to “do his best”.[6]

(6)  In relation to the mental element, it is not necessary to prove that the defendant’s conduct was contumacious, i.e. he/she deliberately intended to disobey the order.  It is sufficient to prove that he/she knew the facts which are said to make his act or omission a contempt and that such act or omission was not accidental.[7]

(7)  To the extent a defendant has appointed an agent to comply with the court order, the agent’s actions and knowledge may be attributed to the defendant, and the defendant may be found to be in civil contempt on the basis of vicarious liability.  The principal is guilty of contempt if (a)  the person who did the acts which constituted the contempt was her servant or agent; (b)  the acts were done in the course of that person’s employment or agency; and (c)  she either authorised the acts or could reasonably have foreseen the possibility of such acts and failed to take all reasonable steps to prevent the acts; in particular, it does not suffice for the principal to merely give orders and then wash her hands of the matter and disclaim any further responsibility.  The principal must take all reasonable steps to see that her orders are obeyed.[8]

13.  While Leong’s counsel had made no argument against the above general principles, they emphasised that the following principles are particularly relevant in this case:

(1)  Contempt proceedings should only be pursued as a matter of last resort.  This approach is equally applicable in cases other than family cases.  In cases of civil contempt, the prime consideration must be the enforcement of the court order in question.  Whilst there are cases where it is necessary (and indeed imperative)  that the court should exercise its power in the punishment of contempt to achieve compliance with its order, there are other cases where lesser options should be explored before one is to resort to the draconian power of committal.[9] 

(2)  Whenever there is a reasonable alternative available instead of committal to prison, that alternative must be taken.[10]

(3)  Where the defendant wishes to put in issue a matter which is potentially exculpatory, an evidential burden arises, but the plaintiff continues to bear the persuasive burden to prove his case.  In such cases, there must be evidence supporting such exculpatory matter which is sufficiently substantial that it raises a reasonable doubt as to the defendant’s guilt.  Unless such a reasonable doubt is removed, the plaintiff fails to prove his case.[11] If there is a hypothesis which might reasonably be consistent with the defendant’s innocence, then he is also entitled to be acquitted.[12]

(4)  Impossibility is a defence, and the burden lies on the plaintiff to prove beyond reasonable doubt that the defendant has the ability to comply.[13]

(5)  No adverse inference against the defendant may be drawn from his failure to call one or more witnesses or adduce certain evidence.[14]

(6)  An alleged contemnor can only be found guilty of contempt on a charge that is properly particularized in the originating summons and the accompanying statement.[15]

F.     CREDIBILITY OF WITNESSES

14.  When I consider the credibility of various witnesses who had given evidence in court, I shall take the following matters into account[16]:

(1)  Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3)  The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4)  The court should consider a witness’ motive for deliberately not giving truthful testimony.  For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5)  It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected.  A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6)  On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility; 

(7)  While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.

G.    DISCUSSION

G1.   The purposes of the transfers

15.  As aforesaid, the subject bank transactions have been classified by the plaintiff into 4 categories.  The common feature of these transactions is that they all involved the transfers of monies away from the Capital Account.  The only differences are the destinations and purposes of such transfers:

(1)  Category A comprises 30 transfers of monies described as “備用金” from the Capital Account to the Current Account;

(2)  Category B includes 7 transactions which are admittedly transfers from the Capital Account to the Fixed Deposit Account;

(3)  Category C covers 7 transfers from the Capital Account to third parties;

(4)  Category D comprises 7 transactions which were admittedly transfers from the Capital Account to other accounts of Longford.

16.  It was submitted on Leong’s behalf that the respective ultimate destinations and purposes of these transfers are only relevant to the seriousness of the alleged breaches, but they have no bearing on the issue of liability for contempt, and hence irrelevant for present purposes.  Ms Lam accepted that this assertion is basically correct, but Leong’s knowledge about how Longford’s bank accounts were operated would be relevant to the Court’s consideration of her state of mind at the material time.  I agree.  I will come back this point later.

17.  In the light of the above, I will not go into the details of the usages of the funds transferred from the Capital Account at this stage, save that I think I should say a few words on the Category B transactions in respect of which Leong submitted that they were only technical breaches of the Injunction Order. 

18.  In the following sections, I will firstly deal with the Category B transactions, and then I will consider the different lines of defence put forward by Leong.

G2.   Category B transactions

19.  Relying on paragraph 34 of the Previous Contempt Judgment, Mr Nip submitted that the Category B transactions were, at most, technical breaches, and that they do not add anything to the seriousness of any other breaches of the Injunction Order (if any)  or lead to any increase in the sanction to be imposed.  The said paragraph of the Previous Contempt Judgment reads:

“In respect of the 6 remaining payments from the Capital Account to the 5784 Fixed Deposit Account for placing new fixed deposits, I consider that they constitute technical breaches of the Injunction. The breaches were technical because it was anticipated that the relevant funds would go back to the Capital Account upon maturity of the fixed deposits. In the context of the present case, I do not consider that those transactions would add anything to the seriousness of the breaches of the Injunction in respect of the Part A and Part D transactions, or lead to any increase in the sanction to be awarded.”

20.  I can totally understand why Chow J would adopt such a view back in August 2017.  I agree with his Lordship that the matter could be looked at in such a way back then.

21.  However, I do not think this Court should look at similar transactions which took place after the handing down of the Previous Contempt Judgment in the same way. 

22.  Although Category B transactions were described in the Previous Contempt Judgment as “technical breaches”, it cannot be denied that they were still breaches, and there is no doubt that Leong knew and understood this ruling of the Court.  In these circumstances, any further similar transfers to the Fixed Deposit Account which were done with such clear knowledge of the ruling in the Previous Contempt Judgment must be treated more seriously, because it would be a blatant disregard of the Injunction Order and of the ruling in the Previous Contempt Judgment.  This would be so even if the placing of any monies on fixed deposit would not cause any financial loss to Longford by reason of the fact that the relevant funds would go back to the Capital Account upon maturity of the fixed deposits.

23.  I therefore reject Leong’s argument that in the event she is held guilty of having committed a contempt of court in respect of the Category B transactions, such breaches should not lead to any increase in the sanction to be imposed.

24.  On the other hand, I should also make it clear that I do not accept New Media’s argument that the breaches in relation to the Category B transactions should be treated more seriously on the basis that the amount placed on fixed deposit had been progressively reduced, such that Leong was able to release part of the funds and transfer the same to the Current Account.  This is because there is no dispute that upon the maturity of the fixed deposit, the monies must be transferred back to the Capital Account by the bank, and they could not be transferred elsewhere directly from the Fixed Deposit Account.  That is why New Media accepted that “the Category B and Category A breaches overlapped”[17]. Hence, New Media’s suggested approach would amount to considering the same matter twice, which is unfair to Leong. 

G3.   The “no dealing” defence (the agency issue)

25.  The first line of defence which I will consider is the “agency issue” raised by Leong.  In a gist, Leong’s case in this regard is that:

(1)  Tong had been employed by Longford as its financial controller since 20 February 2017;

(2)  In view of the Previous Contempt Judgment, “and the ongoing disputes between the two camps of shareholders which rendered it impossible for her to properly and meaningfully carry out [her] then role and duties”[18], Leong had informed Tong by virtue of an email dated 23 October 2017 (“the 23 October 2017 Email”)  that she (Leong)  would not participate in the daily operation of Longford, and that she had also instructed Tong to apply to the two shareholders for approval of Longford’s business expenses;

(3)  She had explained the gist of the Injunction Order to Tong in a telephone conversation, and therefore Tong had been given clear instructions that she was to seek the approval of Yau for transactions below RMB1 million and of Will Lam for transactions of RMB1 million or above;

(4)  Since then, Tong had faithfully discharged her duties and complied with Leong’s instructions in that she had persistently tried to seek Yau’s approval for Longford’s expenses;

(5)  Tong had dealt with the Capital Account in the course of her employment with Longford;

(6)  New Media could not prove beyond reasonable doubt that Tong had dealt with the Capital Account in the course of her employment or agency with Leong.

26.  In China Metal Recycling (Holdings)  Limited (in compulsory liquidation)  & Another v Chun Hei Man & Others (HCMP 3396/2015, unreported, 18 November 2016), B Chu J had the following to say at paragraph 57(7):

“To the extent a defendant has appointed an agent to comply with the court order, the agent’s actions and knowledge may be attributed to the defendant, and the defendant may be found to be in civil contempt on the basis of vicarious liability. The principal is guilty of contempt if (a)  the person who did the acts which constituted the contempt was her servant or agent; (b)  the acts were done in the course of that person’s employment or agency; and (c)  she either authorised the acts or could reasonably have foreseen the possibility of such acts and failed to take all reasonable steps to prevent the acts; in particular, it does not suffice for the principal to merely give orders and then wash her hands of the matter and disclaim any further responsibility. The principal must take all reasonable steps to see that her orders are obeyed.”

27.  I will consider Leong’s case by following the above guidance.

G3.1  Tong’s employment

28.  The first matter which I should decide is whether New Media had proved beyond reasonable doubt that Tong was an employee of Longford at the material time.

29.  Leong relies on various contemporaneous documents (including the employment contract (返聘協議)  (“the Employment Contract”)  entered into between Longford and Tong under which Tong was employed as the financial controller (財務總監)  of Longford since 20 February 2017 and the 23 October 2017 Email)  to show that Tong was Longford’s employee.  It was argued that if Tong was Longford’s employer, that would be a very strong indicator that she was not Leong’s agent.

30.  While Ms Lam accepted in her oral closing submissions that Tong’s alleged employment with Longford might not necessarily be a sham, she had drawn this Court’s attention to a number of features of this alleged employment relationship.  For example:

(1)  The Employment Contract was “incomplete” in the sense that it was partially redacted and was not signed;

(2)  The Employment Contract only covered the period between 20 February 2017 and 19 February 2018;

(3)  Tong had been using an email account provided by Besthope International Limited (百合國際有限公司)  (“Besthope”);

(4)  Yau, being the Head of Finance who was responsible for the financial matters of New Media and Longford, was never informed of the recruitment of Tong;

(5)  Neither were the Lams nor HFA informed about Tong’s recruitment.

31.  I hold the view that New Media did not prove beyond reasonable doubt that Tong was not Longford’s employee, because:    

(1)  As pointed out by Mr Nip who acted for Leong, during cross-examination, there was no suggestion made to Leong that the Employment Contract was a sham document;

(2)  While the Employment Contract was not signed and the address of Tong thereon was redacted, there is no evidence to show that these features would invalidate the contract under PRC law;

(3)  Although the Employment Contract shows that Tong’s employment would only last for one year (up to 19 February 2018), it is undisputed that Tong had continued to deal with the Capital Account after 19 February 2018.  Further, New Media did not adduce any expert evidence on PRC law to the effect that the employment relationship could not be validly extended by conduct and in the absence of a written agreement;

(4)  It was not suggested by New Media that Leong, as Longford’s legal representative, had no authority to employ any staff for and on behalf of Longford;

(5)  While Yau gave evidence that the employment of any finance/account staff would have to be approved by her, she could not recall if there was any company policy as such;

(6)  Although Tong was using Besthope’s email domain while she was allegedly working for Longford, it is the unchallenged evidence of Leong that Longford had never provided any email account for use of its staff.

32.  I will therefore proceed with my analysis herein on the basis that Tong was an employee of Longford at all material times.

G3.2  Leong’s instructions to Tong

33.  Leong relied heavily on the 23 October 2017 Email and alleged that instructions had been given to Tong that she had to seek approval from both shareholders for approval of Longford’s business expenses.

34.  The said email reads:

“至上海梁富財務總監唐魯華

由於梁富的母公司香港達利新媒體股東雙方在經營權層面存在極大的分歧 ，我們雙方在香港高等法院進行了一系列的維權訴訟，最終結果還未揭曉。因梁富是一間在中國內地的獨立法人企業，為保全公司財產，維護公司權益及我個人的聲譽，我個人不再參與梁富的日常營運，但仍是公司的法人及股東，會合理合法的繼續維護公司權益。關於梁富公司營運日常支出，請按時與雙方股東申請。

梁馬利”

35.  It can be seen that the 23 October 2017 Email did not mention about the Injunction Order at all.  However, Leong alleged during cross-examination that she had explained the terms of the Injunction Order to Tong in a telephone conversation, and therefore Tong had been given clear instructions that she was to seek the approval of Yau for transactions below RMB1 million and Will Lam for transactions of RMB1 million or above.

36.  I should say right away that I do not accept Leong’s evidence that she had informed Tong in a telephone conversation about the Longford Account Protocol (which was incorporated as the terms of the Injunction Order)  at all.  Given Leong’s defence that she had entrusted Tong to act in accordance with the Injunction Order when she dealt with the Capital Account, it is of utmost importance that Leong would explain to the Court when and by what means that she informed Tong of the requirements laid down by the Injunction Order.  However, Leong did not mention about the alleged telephone conversation in any of her affirmation filed herein at all.  In my view, this is because the alleged telephone conversation never took place.  Leong just conveniently made it up when she was cross-examined on the matter.

37.  Leong further explained that she did not attach the Injunction Order to the 23 October 2017 Email because Tong did not know English at all and therefore she could not understand the terms of the Injunction Order anyway.  While this may well be a good reason as to why Leong did not show Tong the actual terms of the Injunction Order in their original form, there was nothing which stopped her from setting out such terms (i.e. the Longford Account Protocol)  in Chinese in her email to Tong.

G3.3  Agency relationship between Leong and Tong

38.  Recognising that there is no single test for determining whether a relationship of agency exists, Mr Nip submitted that the Court has to consider whether the usual characteristics of agency relationship are present in this case.  He referred to Lam VP (as his Lordship then was)’s Judgment in Bright Gold Ltd v Mega Well Development Ltd [2020] 4 HKLRD 26 as follows in this regard:

“94. In our judgment, as reiterated in the recent English Court of Appeal decisions in Haringey LBC v Ahmed and UBS AG (London Branch)  v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567, [82]–[91], in the assessment of whether a relationship constituted agency in the legal sense, it would be useful to start from some basic propositions concerning agency. In this connection, the definition of agency in Bowstead and Reynolds on Agency (21^st ed.)  at para.1-001 provides a good starting point:

(1)  Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly manifests assent that the other should act on his behalf so as to affect his legal relations with third parties, and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation…

(2)  In respect of the acts to which the principal so assents, the agent is said to have authority to act; and this authority constitutes a power to affect the principal’s legal relations with third parties.

(3)  …

(4)  …

95. In Haringey LBC v Ahmed at [28], Hamblen LJ (as he then was)  had this to say after quoting this passage:

The usual characteristics of an agency relationship may be said to be authority for the agent to affect the principal’s relationship with third parties, a fiduciary duty owed by the agent to the principal, and an ability on the part of the principal to exercise a degree of control over the agent. As this court observed in UBS AG (London Branch)  v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567 at [91]: ‘the absence of any of these main characteristics must … be a significant pointer away from the characterisation of a particular relationship as one of agency, even though there may be rare exceptions.’”

39.  Before I discuss whether Tong was Leong’s agent when Tong dealt with the Capital Account, I should first of all refer to a few important matters which are undisputed:

(1)  Leong was the legal representative of Longford up to 28 May 2020 (when she was replaced by Wong Siu Mui Julisa (“Wong”));

(2)  In order to withdraw money from the Capital Account, two chops had to be used, namely, the Finance Chop of Longford (“the Finance Chop”)  and another chop which bears the Chinese name of Leong (梁馬利)  (“Leong’s Chop”);

(3)  Leong handed over both the Finance Chop and Leong’s Chop to Tong so that the latter could operate Longford;

(4)  Although Leong had ceased to be the legal representative of Longford since 28 May 2020, there is no evidence which shows that the bank mandate given by Longford to ICBC Bank had been changed right away;

(5)  Although Wong had replaced Leong as the legal representative of Longford since 28 May 2020, she only took over the control of Longford’s account on 23 July 2020.

40.  With the above in mind, I have come to the conclusion that Tong was acting as Leong’s agent when she dealt with the Capital Account, for the following reasons.

41.  Firstly, as accepted by Mr Nip, even if Tong was an employee of Longford, it would not make it impossible for her to be Leong’s agent at the same time.

42.  Secondly, it is noted that any withdrawal from the Capital Account must be done with the affixing of Leong’s Chop, which Leong had handed over to Tong.  When Tong used that chop for the purpose of dealing with the Capital Account, she must be doing that in her capacity as Leong’s agent, because she was doing it for Leong, who was the sole signatory of the Capital Account.  It is also apparent that Tong was using Leong’s Chop with Leong’s authority and under her instructions. The fact that Tong was also the Financial Controller employed by Longford at the material time would not have any impact on such an agency relationship between Leong and Tong.

43.  Thirdly, in fact, the same conclusion had been reached by Chow J in the Previous Contempt Judgment.  In paragraph 16 thereof, his Lordship had the following to say:

“Leong was at all material times the legal representative and chairman of the board of Longford, as well as the sole signatory of Longford’s bank accounts with ICBC Shanghai, including the Capital Account.  As mentioned in paragraph 9 of the HCA 1953 Decision, it is common ground that when the parties refer to the signature of a person being required in the context of operating a bank account in the PRC, it is understood to mean the application of the personal seal of that person.   Although it would appear, on the evidence, that it was Longford’s staff, instead of Leong, who applied Leong’s seal (ie the legal representative chop)  to the relevant bank instructions authorising the transfers of funds from the Capital Account, there is no dispute that Longford’s staff worked under Leong’s instruction or direction generally, and that the relevant transfers could not have taken place without Leong’s approval and consent.  Further, the Injunction restrained Leong, whether “by herself, her servants or agents”, from dealing with the Capital Account except in accordance with the signing arrangement as specified in the Injunction.  Leong could and should have taken possession of her personal seal, or put in place an effective system to ensure that there was no dealing with the Capital Account except in accordance with the specified signing arrangement.  In the circumstances, Leong must be regarded as being legally responsible for the Part A and Part D transactions.  This is not, I understand, seriously disputed by her.”

44.  I have not lost sight of Leong’s evidence given in the present proceedings that a legal representative chop is the property of the company but not the legal representative’s personal asset that could or should be carried around rather than being kept in the company’s premises.  However, I do not think this evidence can assist her because:

(1)  Leong’s assertion that the “legal representative chop” was not the legal representative’s personal asset is neither here nor there.  The indisputable nature of such a chop is that the affixation of which is an indication that the transaction concerned is authorised by the legal representative;

(2)  In other words, there cannot be any dispute that the legal representative’s chop must not be affixed without the authorisation of the legal representative;

(3)  Hence, there is nothing wrong for Chow J to describe Leong’s Chop as a “personal seal”, and such a description would not affect the soundness of Chow J’s analysis.

45.  Fourthly, I do not accept Leong’s argument that the usual characteristics of agency are lacking:

(1)  Leong had apparently authorised Tong to affix her legal representative chop on the withdrawal slips of the Capital Account on her (Leong’s)  behalf that affected Leong’s relationship with third parties (i.e. ICBC Bank)  in that the bank accepted the withdrawal requests on the basis that the transactions were authorized by Leong as legal representative;

(2)  Tong owed fiduciary duties to Leong when she used the legal representative chop;

(3)  There is no doubt that Leong had the ability to exercise control over Tong as to the usage of Leong’s Chop.

G3.4  Culpable state of mind

G3.4.1  Category A transactions

46.  Leong alleged that, to avoid breaching the Injunction Order again, she had notified Tong by virtue of the 23 October 2017 Email that she would cease to participate in the daily operations of Longford, and thereby also instructed Tong to seek the approval of both shareholders for all of Longford’s expenses.  It was submitted that:

“32. […] Whilst Leong can be taken to know, after the Previous Contempt Judgment, that she would be in contempt of court if she continued to direct Longford’s employees to operate the Capital Account, she cannot without more be taken to know that her ceasing to participate in the daily operations of Longford and instructing of an employee of Longford to seek the approval of both shareholders for all Longford’s expenses would be a contempt if the employee, for some reason, did not comply with her instruction.

[…]

35. There is ultimately no objective evidence or circumstances from which it can be proved, or inferred, that Leong knew that it would be a contempt even if she instructed Longford’s accountant to seek both shareholders’ approval for all of Longford’s expenses. At the very least, the circumstances give rise to a reasonable doubt as to whether she so knew”[19]

47.  On the basis of my finding that Leong had not informed Tong about the terms of the Injunction Order by telephone conversation as alleged, there was no evidence that Tong had any knowledge about the requirements imposed by the Injunction Order at all. 

48.  I also reject Leong’s evidence which was given during her cross-examination that she had persistently reminded Tong to ask for Yau’s approval.  I hold that she had just made this evidence up during the trial, for she had never mentioned about this in her Affirmations.

49.  In such circumstances, there is no doubt that Leong could reasonably have foreseen the possibility of Tong failing to comply with the Injunction Order, and Leong had plainly failed to take all reasonable steps to prevent such acts on the part of Tong.  How could Tong be expected to comply with the terms of the Injunction Order when she did not even know what they were?

50.  Furthermore, in relation to Category A transactions, it is important to bear in mind the modus operandi adopted by Leong and Tong at the material time.  As reflected by Longford’s bank statements, whenever the balance in the Current Account was running low, funds would be transferred from the Capital Account to the Current Account, usually in the sum of RMB300,000 under the description of “備用金”.  The funds would then be used to pay for the alleged expenses of Longford.  In other words, under this modus operandi, the transfers from the Capital Account were to be used to pay off expenses yet to be claimed. According to Leong, she was well aware of this modus operandi at the material time.

51.  However, in the 23 October 2017 Email, what Leong instructed Tong to do was: “關於梁富公司營運日常支出，請按時與雙方股東申請”.  It is evident and undisputed that a large number of those daily operating expenses were paid by the “備用金” in the Current Account.  In other words, before Tong sought approval from Yau as instructed by Leong, Tong had already transferred funds from the Capital Account to the Current Account in anticipation of future expenses. 

52.  Leong did not instruct Tong specifically in the 23 October 2017 Email not to transfer monies away from the Capital Account to the Current Account as “備用金” unless Yau or Will Lam (as the case may be)  had signed. 

53.  Given Leong’s admission of her knowledge about this mode of operation at the material time, she must be taken to have authorised Tong to deal with the Capital Account in the absence of Yau’s or Will Lam’s signature (as the case may be).  Leong must also have foreseen that “備用金” would be transferred from the Capital Account in the absence of the required signature of Yau/Will Lam. 

54.  In other words, the Injunction Order would be breached even if Tong had acted in full compliance with Leong’s instructions given by virtue of the 23 October 2017 Email.

55.  In these circumstances, Leong must be held responsible for Tong’s act.

56.  Moreover, based on the following analysis, I am of the view that even if the Category A transactions involved withdrawals of monies from the Capital Account directly for settlement of Longford’s alleged operating expenses, New Media has proved beyond reasonable doubt that Leong had not taken all reasonable steps to prevent Tong from acting in breach of the Injunction Order. 

57.  It is evident that:

(1)  Leong was copied with Yau’s email dated 27 October 2017 in which Yau reminded Tong that:

(a)  Tong did not provide any invoice or document in support of her previous applications for expenses;

(b)  The Excel tables attached to Tong’s previous emails could not be regarded as documents in support of the applications for payment of Longford’s expenses;

(2)  Leong was copied with Tong’s email dated 27 October 2017 in which Tong, in her document “關於上海梁富資金申請的答疑”, told Yau, among other things, that no invoice could be produced before expenses were incurred;

(3)  Leong was copied with Yau’s email to Tong dated 6 November 2017 in which Yau reiterated, among other things, that while HFA was minded to comply with the HFA Undertaking, it would only do so if Tong could provide documents in support;

(4)  Leong was copied with Tong’s email to Yau dated 7 November 2017 by which Tong applied for Longford’s expenses.  One of the items asked for was the salaries payments for staff for the month of October 2017.  In this email, again, only an Excel table was attached, without any other documents in support; 

(5)  Leong was copied with Yau’s email to Tong dated 8 November 2017.  The content of this email was nearly identical to that contained in Yau’s email dated 6 November 2017.

58.  In the light of Leong’s knowledge[20] of:

(1)  Yau’s repeated requests for the production of supporting documents;

(2)  Tong’s argument that no invoice could be produced;

(3)  Tong’s reply which showed that Tong was not prepared to produce any document in support,

in my view, Leong must be reasonably expected to remind Tong that she must not withdraw any money for any sum of less than RMB 1 million from the Capital Account unless Yau had agreed and signed to indicate her endorsement with such withdrawal.  However, Leong had failed to take such reasonable steps.

59.  Hence, since:

(1)  Leong was well aware that it was all along the practice that “備用金” (usually in the sum of RMB300,000)  would be transferred from the Capital Account before any approval was sought from Yau/Will Lam in respect of any specific items of expenses;

(2)  Leong must have been fully aware of the terms of the Injunction Order;

(3)  Leong admitted that she had knowledge and understood the Previous Contempt Judgment;

(4)  Leong only instructed Tong to seek approval from Yau in respect of expenses which incurred subsequently,

Leong must be taken to know that it would be a contempt even if Tong had followed her instructions closely.

60.  In the course of parties’ argument, much time had been spent on whether Leong had as a matter of fact ceased to participate in the daily operation of Longford since 23 October 2017.  New Media relied heavily on Leong’s express approval (by emails)  of a large number of alleged expenses of Longford and submitted that her assertions that she would cease to operate Longford was self-serving and was just a window-dressing exercise.  This Court was asked to find that Leong in truth had not handed Longford over to Tong.

61.  I agree that Leong’s conduct was indeed highly suspicious.  However, on the other hand, since her signature was required to be obtained before the Capital Account could be properly dealt with pursuant to the terms of the Injunction Order, it was natural for Tong (and various other staff)  to request for her approval before Longford’s ICBC Accounts were dealt with. In my view, New Media could not prove beyond reasonable doubt that Leong was still participating in the daily operation of Longford.  Having said that, I do not think this is a matter which would affect the outcome on the question of whether Leong was in breach of the Injunction Order.

G3.4.2  Category B transactions

62.  There is undisputed evidence that Leong and Tong had never asked for Will Lam’s approval or signature in relation to the Category B transactions (which were all over RMB 1 million).

63.  In the 23 October 2017 Email, Leong did not give any instruction to Tong that she had to obtain Will Lam’s signature before she transferred any money of more than RMB 1 million from the Capital Account to the Fixed Deposit Account at all.

64.  It is also undisputed that Leong knew about Longford’s practice of placing its idle cash in the Capital Account on fixed deposit.[21]

65.  In these circumstances, New Media has proved beyond reasonable doubt that Leong had authorised Tong’s carrying out of the Category B transactions.  Even if I am wrong on this, there is no doubt that she did not take all reasonable steps to prevent Tong from acting in breach of the Injunction Order as far as the Category B transactions are concerned. There is also no doubt that Leong could have foreseen that Tong would proceed with the Category B transactions even in the absence of Will Lam’s signature.

G3.4.3  Categories C and D transactions

66.  The first Category C/D transactions took place on 18 September 2019.  It cannot be disputed that these were done without Yau’s approval or signature.

67.  There is also absolutely no evidence that any approval had been sought at all in relation to these transactions.

68.  I have held above that even if the Category A transactions involved withdrawals of monies from the Capital Account directly for settlement of Longford’s alleged operating expenses, New Media has proved beyond reasonable doubt that Leong had not taken all reasonable steps to prevent Tong from acting in breach of the Injunction Order.  Those reasonings are equally applicable here.

69.  Leong has raised an argument on “impossibility” on the basis that Yau had resigned on 24 May 2019 and as a result it was alleged that it was impossible for the Injunction Order to be complied with.  I reject this argument.  I will deal with this point separately below.

70.  To conclude, I reject Leong’s “no dealing” defence altogether.  I hold that the transactions in Categories A to D constituted breaches of the Injunction Order on the part of Leong.

G4.   New Media’s delay in commencing committal proceedings

71.  On New Media’s own case, the Lams were already aware since January 2019 of the fact that there were withdrawals from the Capital Account without their consent or approval, which they considered as further breaches of the Injunction Order.  However, the ex parte application for leave to commence committal proceedings was not made until 5 June 2020. 

72.  It was therefore submitted on Leong’s behalf that there had been a substantial delay on the part of New Media to commence these proceedings.  It was said that this delay had deprived Leong of a fair trial. In the words of Leong’s counsel:

“55. More importantly, by the time New Media commenced these proceedings, Tong had already resigned. It cannot be disputed that Tong is an important witness, and any statement or account from her would be particularly material to Leong’s defence.

56. It is also undeniable that had New Media commenced these proceedings shortly after January 2019, Tong would still have been employed by Longford, and Leong could have secured her assistance to make a statement or give evidence in court. New Media’s delay has therefore deprived Leong of Tong’s testimony.

57.   As stated above, one of the main issues in these proceedings is whether Tong was Leong’s servant or agent.  Whilst the documentary evidence points towards the conclusion that Tong was Longford’s employee, if the Court considers that the evidence somehow falls short of proving that fact, whether because of the matters raised by New Media or otherwise, then it is unfair to Leong that the delay had deprived her of the chance to obtain Tong’s evidence and/or secure her attendance at the hearing.”

73.  The importance of Tong’s evidence was further reiterated in Leong’s reply submissions:

“41. […] As Tong cannot be presumed to be Leong’s servant or agent (but must be proved to be so by way of credible evidence adduced by New Media), it is incumbent upon New Media to at least attempt to call Tong as a witness or otherwise secure some evidence or statement from her.

42. New Media completely neglected to do so because it is acting entirely out of prejudice and distrust. As it had already presumed that Tong was Leong’s servant or agent, it conducted its case so prejudicially that it overlooked its own “blind spot”, viz. the absence of any evidence from the alleged servant or agent.

43. Moreover, the dearth of any evidence or statement from Tong (from which inferences might be drawn even in the absence of viva voce evidence)  was wholly or substantially caused by New Media’s delay in commencing these proceedings and its outright dismissal of the fact that Tong was Longford’s employee. It was New Media’s own stance which caused its representatives (such as Yau and Will Lam)  to have never had any constructive dialogue with Tong from which any proper or compelling inference might be drawn that she was in fact Leong’s employee or agent.

44.   It simply cannot be denied that Tong’s evidence would be relevant and material to the determination of the Agency Issue, particularly if the enquiry must go to the questions as to whether Tong did not do certain things (e.g. attempt to contact Yau after she resigned)  or whether Leong gave her clear enough instructions orally in addition to what is stated in the email of 23 October 2017.  There can be no fair trial on the Agency Issue as such in the absence of any evidence from Tong.”

74.  First of all, I do not accept that there was any delay on the part of New Media to commence these proceedings:

(1)  Although New Media had admittedly obtained concrete evidence against Leong back in January 2019, such evidence was incomplete, and it was not until 11 November 2019 that New Media got all the evidence produced in these proceedings after repeated requests made by New Media;

(2)  Given the volume of bank statements and other documents involved, reasonable time ought to be given to New Media for the analysis of the information received;

(3)  The Court has to take into account the General Adjournment Period (“GAP”)  of the Courts in Hong Kong from late January 2020 to 6 May 2020 such that the ex parte application for leave to commence these proceedings could only be filed when the Registry reopened.  In this regard, I reject Leong’s argument that the leave application should have been filed during GAP on the ground of urgency.  By the nature of committal proceedings, I do not think the Registry would have accepted the filing of the application back then;

(4)  As for the alleged delay in the period between May and October 2019, Lam Senior explained that it was caused by the significant changes of key personnel of New Media.  It is undisputed that Yau had resigned on 24 May 2019.  Given the volume of the documents and transactions involved, I accept that it would cause disruption to the on-going investigation.  While it might be said that the disruption caused should not be as long as 6 months, I do not agree that the difference of a few months would make much difference.

75.  In any event, I do not think the alleged delay (if any)  had deprived Leong of a fair trial:

(1)  Leong admitted during her oral evidence that she was able to contact Tong by telephone in April 2022 and asked her to give evidence.  Leong said that she was able to find Tong’s contact number from a contact list kept by the company, and as a result she could get in touch with her by WeChat.  Leong did not say in cross-examination that the alleged delay had affected her ability to locate Tong earlier.  Given what Leong told this Court, I hold that she could have got in touch with Tong much earlier if she had tried to look for Tong’s contact number in the company earlier;

(2)  Despite Leong’s invitation, Tong declined to testify in these proceedings because she (Tong)  was worried that she would be sued by Lam Senior.  In other words, Tong’s refusal to testify herein had nothing to do with the alleged delay in the commencement of these proceedings;

(3)  It can be seen in Leong’s evidence as quoted above that the main issue which she would like Tong to give evidence on is the employment relationship between Tong and Longford.  Given my ruling thereon in the earlier part of this Judgment, Tong’s absence in these proceedings has no impact on the result of this case at all.

76.  Leong’s argument on delay is therefore rejected.

G5.   Impossibility

77.  Regarding the defence of impossibility, it is Leong’s case that New Media has failed to prove beyond reasonable doubt that she could have complied with the Injunction Order since 24 May 2019 after Yau resigned.  It was said that after Yau had resigned, she ceased to be the person assigned to oversee the financial status of Longford, and was in no position to consider or approve anything on behalf of HFA or New Media.  It was thus submitted that it was impossible for the Injunction Order to operate in accordance with its strict meaning and construction.

78.  Mr Nip further argued that New Media has not adduced any evidence to prove beyond reasonable doubt that Tong had not attempted to seek Yau’s signature or approval at any time after 24 May 2019.

79.  With greatest respect, the above arguments are totally misconceived.  In my view, even if Leong was right in that she could not have obtained Yau’s signature anyway because the latter had resigned, taking Leong’s case to the highest, that only means it was impossible for Leong to withdraw money from the Capital Account in accordance with the mechanism stipulated in the Injunction Order.  However, this is totally different from the concept of being impossible to comply with the Injunction Order.  As Chow J pointed out (while he was dealing with Leong’s argument on “impossibility” in paragraph 19(6)  of the Previous Contempt Judgment):

“The Injunction is negative in nature.  It is difficult to see how it can be said that it was “impossible” for Leong to refrain from doing what she was prohibited from doing under the Injunction (namely, dealing with the Capital Account except in accordance with the specified signing arrangement).”

80.  I also totally agree with Chow J when his Lordship stated that:

“On the assumption that (i)  there were legitimate business expenses of Longford to be paid, and (ii)  Will Lam and Angela Yau refused to “co-sign” the relevant payment instructions, it was open to Leong to apply to the court for further directions, including (where necessary)  an appropriate variation of the Injunction. There is no dispute that Leong did not do so.”[22]

81.  In my view, this must be equally applicable to the situation where Leong/Tong could not locate Yau who no longer worked for HFA.

82.  Mr Nip disagreed with this and submitted that:

“It is no answer to say that Leong should have applied to vary or discharge the Injunction Order. The fact that Yau had resigned was only known to New Media, which in the circumstances ought to have ensured, if it were truly concerned about the enforcement of the Injunction Order at the time, that another person is assigned or designated to replace Yau, and make an application to the Court for variation of the Injunction Order to that effect. New Media should not be entitled to do nothing and then complain that Yau’s signature was not obtained.”[23]

83.  With respect, I do not accept such an agreement. 

84.  If “the fact that Yau had resigned was only known to New Media”, that actually shows that neither Leong nor Tong had ever attempted to contact Yau for the purpose of obtaining her signature in relation to transactions which were less than RMB 1 million. This demonstrates that Leong was an opportunist to take this point. 

85.  I am of the view that this defence of “impossibility” has no merits at all and must be rejected.

G6.   Abuse of process – alleged breaches of the HFA’s Undertaking

86.  On behalf of Leong, it was argued that HFA had no genuine intention to comply with the HFA Undertaking.  Mr Nip had referred to a number of matters in support of this proposition.  They include:

(1)  It is the Lams’ case that Longford had no business, and therefore had no legitimate business expenses;

(2)  Yau had set out to play a “cat and mouse” game with Tong by going round in circles with her by making all sorts of excuses, and without, even for once, approving a single expense of Longford;

(3)  It was impossible to get Yau to approve any payment of salaries to Longford’s employees, because Yau’s evidence was that Longford did not have any employee according to her knowledge;

(4)  It was also impossible to get Yau to approve any payment of common expenses (such as rent, social security (五險一金)  and utilities)  in the ordinary course of business, because Yau’s evidence was that all of Longford’s business had already stopped at the time according to her knowledge;

(5)  Will Lam even said during cross-examination that since the business plan of Longford had been suspended, they would not approve Longford’s expenses in these years.

87.  It was then submitted that:

“72. In the premises, it is simply inconceivable that HFA would have approved any expenses whether or not they were supported by invoices or relevant documents. […]

73. On that basis, New Media must have known that the Injunction Order would create a catch-22 situation for Leong, i.e. on the one hand, she as the legal representative of Longford had a legal obligation under PRC law to pay its ordinary business expenses, but on the other, HFA could pull out all the stops to delay giving approval and ultimately refuse the same in view of the fundamental dispute as to whether Longford has any expenses to begin with. At the very least, the inoperability was something known to New Media and it exploited the difficulty or impracticability of compliance with the Injunction Order.”[24]

88.  With greatest respect, I am of the view that this argument is totally unhelpful to Leong’s defence.  Even if it could be established that HFA had no intention to comply with the HFA Undertaking (which I do not agree – see further below), that would not justify Leong’s breaches of the Injunction Order anyway.  In fact, the situation remains the same even if there had been any actual breach of the HFA Undertaking on the part of HFA[25].

89.  Neither do I think it could fairly be said that HFA had no genuine intention to comply with the HFA Undertaking.  It can be seen from the email exchanges between Tong and Yau that, upon her receipt of Tong’s request for payment of various expenses, Yau had requested Tong to provide invoice or documents in support of such expenses.  In particular, in relation to payment of social security expenses in respect of various alleged staff members of Longford, Yau asked Tong to produce their respective employment contracts and the relevant documents issued by the Government in support.  However, Tong had never complied with such requests.  She only kept sending Yau Excel tables (which set out the items of expenses and the amounts thereof)  month after month[26]. In such circumstances, Leong could not even begin to complain that HFA was “playing cat and mouse” game, or that Tong was “going round in circles by making all sorts of excuses”. 

90.  Insofar as it is said that the lack of genuine intention on the part of HFA is proved by Will Lam’s evidence that they would not approve Longford’s expenses since the business plan of Longford had been suspended, with respect, I disagree:

(1)  Such an argument has totally disregarded the evidence of Lam Senior who stated in Court, which I accept, that his side would have agreed to pay expenses if such expenses are legitimate and supported by documents, and quoted the expenses of “business licence” as an example. However, he pointed out rightly that no supporting document had ever been received;

(2)  Leong’s argument has also ignored Yau’s evidence.  Yau told this Court, which I accept, that she might approve the expenses applied for if supporting document could be provided;

(3)  While Will Lam did suggest that no expenses should be approved for the last few years because Longford had no business at all, it should be borne in mind that:

(a)  Will Lam was not the person who was responsible to approve expenses of less than RMB1 million;

(b)  There was no evidence at all that Will Lam had ever instructed Yau that no expenses whatsoever should be approved;

(c)  To the contrary, it was Yau’s evidence (which I accept), that she had not been given any criteria of approval by the Lams. 

91.  Leong’s counsel had been trying hard to persuade this Court that the point argued herein is different from that taken in the Previous Contempt Proceedings in that the complaint there was that there was actual breach of the Injunction Order and the “absence of genuine intention” point was not run therein.  I do not accept that there is any difference in substance in the arguments as alleged.  The crux of the matter remains the same even though Leong does not label HFA’s conduct as “breach” herein and artificially calls it something else.

92.  On the basis of the above reasons, I am of the view that what Chow J said in the Previous Contempt Proceedings as quoted below is equally applicable to the present case:

“19. [… It was submitted on Leong’s behalf that] (i)  the Injunction was premised on the HFA Undertaking which, to the knowledge of the Lams, was essential for Longford to continue its business (because the majority of Longford’s funds were deposited in the Capital Account which was subject to the Injunction), (ii)  HFA had failed to honour the HFA Undertaking (as well as a similar undertaking given by HFA on an interim basis in September 2014), and (iii)  it was unlikely in those circumstances that Will Lam or Angela Yau would agree to co-sign payments out of the Capital Account to settle Longford’s business expenses. Mr Chan further says that Leong, as the CEO of Longford, had the duty to run Longford and its business, and she had no alternative but to do what she did in respect of the Part A and Part D transactions. In my view, this defence of “impossibility” plainly has no substance:-

(1)  […]

(2)  In so far as the HFA Undertaking is concerned, I am by no means satisfied on the evidence that HFA acted in breach of it either.  It is apparent from the exchange of emails between 31 December 2014 and 7 January 2015 that HFA/New Media was seeking relevant and necessary information from Hon to verify the amount of wages properly payable by Longford […]. The explanation, information and documents sought by HFA/New Media were not provided.  Under the HFA Undertaking, HFA was required to pay only the “legitimate business expenses” of New Media and its subsidiaries (including Longford).  It is, in my view, inherent in that undertaking that HFA was entitled to require Leong to provide reasonable proof that the wages which it was called upon to pay were wages properly payable by Longford to its employees.  This, I consider, Leong failed to do.

(3)  In so far as it is alleged that HFA failed to pay other legitimate expenses of Longford in breach of the HFA Undertaking, there is similarly a lack of evidence of such failure on the part of HFA.

(4)  In any event, even if HFA had acted in breach of the HFA Undertaking, that would not have constituted a lawful justification or excuse for Leong to breach the Injunction (see Grasberg Capital Asia Limited v Huchun Joseph Yung, HCMP 727/2014, 8 May 2015, at paragraph 26 per To J).

(5)  On the assumption that (i)  there were legitimate business expenses of Longford to be paid, and (ii)  Will Lam and Angela Yau refused to “co-sign” the relevant payment instructions, it was open to Leong to apply to the court for further directions, including (where necessary)  an appropriate variation of the Injunction.  There is no dispute that Leong did not do so.

(6)  […]”

93.  In the present case, Yau’s requests for documents in support of the alleged expenses were totally justified and reasonable. However, no such document had ever been provided by Tong.  Hence, even if HFA’s compliance with the HFA Undertaking is in any way relevant in these committal proceedings, I am satisfied that HFA had not acted in breach of such undertaking.

G7.   Abuse of process – material non-disclosure

94.  It was submitted by Leong’s counsel that:

“75. In the ex parte application before DHCJ To made on 5 June 2020, New Media did not disclose the fact that it had already obtained the new business licence of Longford issued by the Statement Administration for Industry and Commerce on 28 May 2020. This fact was only disclosed, for the first time, in LFW 1^st §6 [A2/31/316], which was filed on 4 August 2020.

76. By replacing Wong as the legal representative of Longford, it was expected by the Lams that Leong could no longer deal with the Capital Account: see LGY 4^th §§8-9 [A2/42E/405S]. In other words, there was no longer any concern about any future breaches of the Injunction Order due to New Media’s actions taken in the PRC.

77. This is a material fact relevant to whether the Court ought to have granted leave to commence committal proceedings. New Media ought to have made full and frank disclosure of the fact that it had sought to obtain, and had successfully obtained, the new business licence of Longford with Wong as the new legal representative. The significance of this material fact is that (1)  the purpose of the Injunction Order was spent and it ceased to be necessary going forward, such that future enforcement of the Injunction Order was no longer a concern, and (2)  a range of options became open to New Media as Wong could then commence proceedings on behalf of Longford in Hong Kong and in Mainland China to pursue any wrongful application of Longford’s capital funds.

78.   This matter was therefore wrongfully concealed from the Court, in breach of New Media’s duty of full and frank disclosure.  There is no explanation for such breach.”

95.  The reliance by Leong on Will Lam’s evidence that it was expected by the Lams that Leong could no longer deal with the Capital Account is misplaced because:

(1)  It is evident that despite the fact that Leong was replaced by Wong as the legal representative of Longford on 28 May 2020, it was not until 23 July 2020 that Wong could take over the control of Longford’s bank accounts.  Indeed, there were admittedly 3 alleged unauthorised transactions which involved transfers out of the Capital Account on as late as 22 June 2020;

(2)  Leong herself knew that her staff member known as “Joe Yeung” who worked for “Transpac” (匯亞資金管理有限公司)  could still have access to the internet banking facility in relation to the Capital Account such that he could print the bank statements of the account even on as late as 26 March 2021.

96.  In other words, the position as at the time when New Media made the ex parte application remained unchanged.  Leong’s arguments herein were made without any valid factual basis and should therefore be rejected.

G8.   Abuse of process – New Media’s secret transfer of money

97.  By consent, Leong was granted leave to file the 4^th Affirmation of Yeung Norman Man Kin (her solicitor)  shortly before the trial of the present proceedings for the purpose of exhibiting her own 2^nd Affirmation.  By her 2^nd Affirmation, Leong informed the Court that a sum of RMB10,940,000 was transferred out from the Capital Account on 24 February 2021 to an account of Longford in Standard Chartered Bank (“the SCB Account”).  She also drew the Court’s attention that another sum of RMB4 million had been placed as time deposit on 7 April 2020 for 1 year, but she could not tell whether this sum of money remained in the Capital Account upon the maturity of the time deposit on 7 April 2021.

98.  In reply, Will Lam explained in his 4^th Affirmation that the transfer of Longford’s money to the SCB Account (including the RMB4 million upon the maturity of the said time deposit)  was done for the purpose of protecting Longford’s assets, as it was feared that Leong might try to regain access to the Capital Account.

99.  On the basis of such transfers, Leong submitted that:

“In view of the fact that in cases of civil contempt, the prime consideration is the enforcement of the court order in question, it is inexcusable for New Media (which was at all material times legally-represented)  not to have promptly informed the Court about (a)  Leong having ceased to be the legal representative of Longford and in control of the Capital Account and (b)  the relocation of the funds into an account beyond Leong’s reach. Such matters mean, at the very least, the (sic)  there is no longer any purpose to be served by maintaining the Injunction Order, which is liable to be discharged. Taking a step further, they also exemplify the fact that New Media should get on with the Underlying Action and pursue any remedies for “past breaches” in the Underlying Action or other civil proceedings. However, New Media is plainly guilty of want of prosecution of the Underlying Action.”[27]

100.  In Sino Wood Investment Ltd v Wong Kam Yin (No 2) [2004] 2 HKLRD 324, Deputy High Court Judge Saunders held that:

“49. In relation to Ms Wong, Mr Griffith made the further submission that the jurisdiction in civil contempt was such that the only orders that could be made were orders designed to secure compliance with the order that had been breached. As Ms Wong had not left Hong Kong and was still in Hong Kong he said that therefore no further orders need be made as she was in compliance with the order.

50. There is clearly a duality of purpose in punishing civil contempt. It is right that orders can be made compelling obedience to a court order but there are many examples of the imposition of a penalty for a contempt that has already been committed, even if there is no threat of repetition, in order to uphold the authority of the Court and for the sake of the proper administration of justice. If authority for the proposition is required it may be found in cases such as A-G v Times Newspapers Ltd [1974] AC 273 at pp.307H–308A; Lightfoot v Lightfoot [1989] 1 FLR 414 and Re Grantham Wholesale Fruit, Vegetable & Potato Merchants Ltd [1972] 1 WLR 559 at p.565F.” (Emphasis added)

101.  Ms Lam had also drawn my attention to the case of Re Grantham Wholesale Fruit, Vegetable & Potato Merchants Ltd [1972] 1 WLR 559, in which Megarry J held that a motion for committal is not only a means of putting pressure on the contemnor to obey the order, but also a means of imposing any penalty thought proper in respect of the contempt that has already been committed.

102.  Indeed, during his oral opening submissions, Mr Nip accepted that it would not be correct to say that the purpose of contempt proceedings is only for the enforcement of court orders.  In my view, that must be correct.

103.  I therefore hold that there is no abuse of process for New Media to proceed with these proceedings at all even if no further order is required to be made for the purpose of ensuring compliance of the Injunction Order.

G9.    Abuse of process – want of prosecution of the underlying action

104.  Mr Nip then submitted that since there had been serious and inordinate delay on New Media’s part in prosecuting the underlying action of the Injunction Oder (i.e. HCA 1953/2014)  (“the Underlying Action”), New Media’s prosecution of these committal proceedings amounts to an abuse of process, and as a result these proceedings should be struck out.

105.  Although it is true that no progress had been made in the Underlying Action for more than 7 years, one needs to appreciate the reason why that was so.  For this purpose, it is only required to make reference to the order of Master M Wong which was made on 23 January 2015.  It provided, among other things, that:

“BY CONSENT, IT IS ORDERED that:

The 1^st Defendant [Leong] be granted a general extension of time for filing and serving her Defence herein terminable upon 14 days’ notice in writing either by the Plaintiff [New Media] to the 1^st Defendant or by the 1^st Defendant to the Plaintiff.”

106.  It is apparent that it was Leong who was supposed to take the next step in the Underlying Proceedings.  She had never done so.  I do not understand why Leong’s counsel kept emphasising that New Media could have terminated the extension and that it did not explain why it did not do so all along. 

107.  This argument is therefore rejected.

G10. Abuse of process – Ulterior motive

108.  It was submitted for Leong that these proceedings were commenced for a collateral or ulterior motive, namely, to exert pressure on Leong to give up her interests in New Media and Longford and for personal vendetta.

109.  As Ms Lam pointed out, these allegations had not been put to New Media’s witnesses at all.

110.  While Mr Nip seemed to recall that he had cross-examined Will Lam about this, I have confirmed upon listening to the recording that all Mr Nip had put to Will Lam was that “given the dispute between [him] and Leong was just a shareholder dispute, it was an abuse of court process for contempt proceedings to be commenced”.  It was a very general statement and as a matter of fairness, I do not think it should be treated as if Will Lam had been given an opportunity to answer the allegation on ulterior motive.

111.  In any event, I am not satisfied that, on the basis of the evidence placed before the court and my ruling on the alleged delay, Leong has established that it was an abuse of the process of the Court for New Media to commence these proceedings.

G11.  Transactions conducted after Leong ceased to be legal representative of Longford (Transaction Nos.49-51)

112.  It is undisputed that Wong had replaced Leong as Longford’s legal representative on 28 May 2020.

113.  Relying on Will Lam’s evidence in his 4^th Affirmation that the records of ICBC Shanghai would have been duly updated and all devices in Leong’s possession had become inoperative, Leong’s counsel submitted that there is, at least, a reasonable doubt as to whether the transactions which were conducted on 22 June 2020 were operations of the Capital Account by or on behalf of Leong.

114.  Such an argument was made in total disregard of the following unchallenged evidence:

(1)  Will Lam stated in paragraph 32 of his 3^rd Affirmation that:

“First, it is indisputable that since or about 28 April 2014, Leong made herself the sole signatory of the Longford ICBC Account. […] Until around 23 July 2020, no one was able to withdraw money from the Longford ICBC Account without the Defendant’s notice or approval. [...]”

(2)  Lam Senior deposed in paragraph 6 of his Affirmation that:

“For the Court’s information, Longford’s new legal representative, Ms. Wong Siu Mui Julisa (王少梅)  (‘Ms Wong’), managed to obtain the new business licence of Longford issued by the State Administration for Industry and Commerce on 28 May 2020. Further, upon liaison with ICBC Shanghai, Ms Wong had access to Longford ICBC Capital Account and Longford ICBC Current Account on or around 23 July 2020, and obtained copies of bank statements of Longford ICBC Capital Account and Longford ICBC Current Account for the period from 1 January 2019 to 23 July 2020 […]”

115.  As Mr Nip fairly accepted in Court, there was no evidence that Ms Wong could take over the control of Longford’s accounts with ICBC Bank before 23 July 2020.

116.  I am therefore satisfied that New Media has proved beyond reasonable doubt that the transactions conducted on 22 June 2020 were operations of the Capital Account conducted by or on behalf of Leong.

H.   ORDER

117.  For the above reasons, I find Leong guilty of having committed a contempt of court. 

118.  Parties shall use their best endeavours to agree on the directions to be sought for the purpose of the sentencing of Leong.  If agreement can be reached, they shall file a consent summons within 21 days from the date hereof for the Court’s consideration.  In the event they cannot agree on the directions, they shall lodge and serve their respective proposed directions by letter with reasons in support within 28 days from the date hereof. The Court shall then give directions on paper.

I.   COSTS

119.  I make a costs order nisi that Leong shall bear the costs of New Media, to be taxed on indemnity basis if not agreed, with certificate for two counsel. 

120.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper[28])  within 14 days hereof.

Ms Rachel Lam, SC leading Ms Eva Leung, instructed by Hugill & Ip, for the plaintiff

Mr Norman Nip, SC leading Mr Roger Phang, instructed by Norman M. K. Yeung & Co, for the defendant

HCMP 932/2020

[2021] HKCFI 3466

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 932 OF 2020

________________________

________________________

________________________

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D E C I S I O N

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A.  Introduction

1.  The present application before the court is an interlocutory matter relating to these committal proceedings, brought by the plaintiff concerning the defendant’s alleged breaches of an injunction order dated 5 December 2014, made by Chow J (as he then was)  in underlying proceedings HCA 1953/2014.

2.  The relevant order restrained the defendant from dealing with capital bank accounts of the plaintiff’s wholly-owned subsidiary, unless signatures of both the defendant and a representative of the plaintiff had been obtained.

3.  The defendant has already been found guilty of contempt of that order once before, by Chow J on 8 August 2017 in HCMP 108/2016 and HCMP 1707/2016.  The plaintiff says that further unauthorised transactions have been discovered even after those findings of contempt, and it is those breaches which are the subject of the present committal proceedings.

4.  A prior interlocutory hearing was dealt with by G Lam J (as he then was)  on 25 February 2021.  The proper meaning of orders made on that date are at issue.  The substantive hearing has been fixed for dates in May 2022.

5.  The issue arises on the defendant’s summons dated 25 March 2021, made pursuant to section 48 of the Evidence Ordinance Cap 8 (“EO”), by which the defendant seeks orders that:

(1)  the defendant be allowed to call and cross-examine Yau Oi Kwan (“Ms Yau”), who deposed an affirmation dated 1 August 2020 (“Yau Affirmation”);

(2)  the plaintiff should make the necessary arrangements to secure the attendance of Ms Yau at the substantive hearing of these proceedings; and

(3)  unless the plaintiff secures the attendance of Ms Yau for cross-examination at the substantive hearing, the Yau Affirmation shall be excluded on the ground that it is hearsay.

6.  The plaintiff has no objection to the first paragraph of the summons, and apparently never has had.  However, the other two paragraphs are controversial.

7.  Numerous affidavits have been filed, and significant heat has clearly been generated in these and the underlying proceedings.  I am, therefore, grateful to the succinct written and oral submissions of Mr Roger Phang, Counsel for the defendant, and Ms Eva Leung, Counsel for the plaintiff, for creating less heat and for throwing more light on the arguments.

8.  Ultimately, the proper orders to make on the defendant’s summons seem to me to be clear.

B.  Further Background

9.  By way of further background, prior to the directions hearing on 25 February 2021, the plaintiff served notice under section 47A of the EO that it intends to adduce the Yau Affirmation and its exhibits as hearsay evidence.

10.  In his skeleton argument filed for that directions hearing, Mr Phang reserved the defendant’s right to apply for leave to call Ms Yau as a witness and cross-examine her on the Yau Affirmation pursuant to section 48 of the EO, and suggested allowing 21 days for such an application.  On that basis, Mr Phang submitted that the Court might make directions including for such an application and a direction that:

Save and except the [Yau Affirmation] and the exhibits therein being hearsay evidence, all other affirmations filed herein shall stand as evidence in chief in the substantive hearing.

11.  Mr Phang’s proposals as varied by the Court ultimately became paragraphs 3 and 4 of the Order made by G Lam J on that day.  As they appear on the face of the Order they are:

3.  Save and except the [Yau Affirmation] being hearsay evidence, no affirmation filed herein may be relied upon unless the deponent attends the substantive hearing for cross-examination;

4.  The Defendant, if so advised, do within 28 days hereof take out an application under [section 48 of the EO] for leave to call [Ms Yau] as a witness and cross-examine her on the [Yau Affirmation] and the exhibits therein as if she had been called by the Plaintiff

C.  Relevant Provisions

12.  Section 48 of the EO provides as follows:

Power to call witness for cross-examination on hearsay statement, etc

Rules of court may provide that where a party to civil proceedings produces hearsay evidence of a statement made by a person and does not call that person as a witness –

(a)  any other party to the proceedings may, with the leave of the court, call that person as a witness and cross-examine him on the statement as if he had been called by the first-mentioned party and as if the hearsay statement were his evidence in chief;

(b)  any party to the proceedings may call additional evidence to attack or support the reliability of the hearsay statement or to attack or support the reliability of that additional evidence.

13.  The relevant rule in the RHC is Order 38 rule 21, which provides as follows:

21.  Power to call witness for cross-examination on hearsay evidence and to call additional evidence to attack or support hearsay evidence (O. 38, r. 21)

(1)  Where a party tenders as hearsay evidence a statement made by a person but does not propose to call the person who made the statement to give evidence, the Court may, on application—

(a)  allow another party to call and cross-examine the person who made the statement on its contents;

(b)  allow any party to call—

(i)  additional evidence to attack or support the reliability of the statement;

(ii)  additional evidence to attack or support that first-mentioned additional evidence.

(2)  Where the Court allows another party to call and cross-examine the person who made the statement, it may give such directions as it thinks fit to secure the attendance of that person and as to the procedure to be followed.

14.  As Mr Phang submits, it is not in every case that where a party seeks to adduce hearsay evidence, the other party would be entitled to seek an order from the court directing the former party to procure the attendance of the maker for cross-examination.  The discretion is to be exercised in light of various matters, including the impact of that piece of hearsay evidence, the relationship of the maker with either party, the history of the case, the practicalities as to the procurement of the maker to give evidence, and other relevant considerations.

15.  Mr Phang also points to Order 38 rule 2, which gives the Court the discretion to order an affidavit of any witness to be read at the trial if in the circumstances of the case it thinks it reasonable to so order, and the further discretion to order the production of the deponent for cross-examination as the Court thinks fit.

D.  The Contest

16.  Ms Leung’s opposition to the order sought by the defendant is based on the following reasons:

(1)  on 25 February 2021, the Court has already made the direction that the Yau Affirmation would be adduced as hearsay evidence and the deponent (Ms Yau)  is not required to attend the substantive hearing;

(2)  the defendant’s purpose for calling Ms Yau is to support the defendant’s own case; and

(3)  it would not be in the interests of justice to exclude the Yau Affirmation, as her affirmation has clear probative value and would assist the Court in determining the key issues at trial.

E.  Attempted Re-Argument?

17.  Ms Leung submits that G Lam J’s Order of 25 February 2021 is very clear, that the Yau Affirmation has been accepted as hearsay evidence and Ms Yau has been excused from attending the substantive hearing.  Ms Leung relies on the fact that the order was made by consent – she points to the words proposed by Mr Phang – when the defendant had no objection to the Yau Affirmation being adduced as hearsay evidence, only making reservation that she might consider applying under section 48 of the EO to call Ms Yau for cross-examination.

18.  So, says Ms Leung, the Court should not now entertain the defendant’s change of mind on an agreed direction.

19.  In response, Mr Phang asks for paragraph 3 of the Order to be read in context, and together with paragraph 4.  G Lam J having been plainly aware of the proposed application under section 48, he could not have intended pre-emptively to make any orders restricting the scope of the orders that might be made on such an application.

20.  I am of the view that Mr Phang is correct. Addressing Ms Leung’s first submission, the Yau Affirmation has been recognized as hearsay evidence, but I do not think Ms Yau has also already been excused from attending the substantive hearing.  Of course, it is right that the recognition at the time of making the Order on 25 February 2021 was that the Yau Affirmation was hearsay, but that is precisely what might trigger the application under section 48 which was indeed foreshadowed. Describing it as hearsay could not have been intended to pre-empt whatever orders the Court might ultimately think appropriate on the foreshadowed section 48 application.

21.  Further, the exception carved out in paragraph 3 of the Order seems to me properly to reflect that fact.  Whilst there remained an issue as to how the evidence of Ms Yau might be dealt with on the recognition that it contained hearsay evidence and might be the subject of section 48 application, no such issues remained as regards the affirmations of other deponents, so that the Court could direct that their affirmations would not be able to be relied upon unless the deponents were to attend the hearing for cross-examination.

22.  Put shortly, I do not think G Lam J has already decided that the Yau affirmation should be read at the substantive hearing, regardless of whether or not she attends for cross-examination.

F.  Who Should Procure Ms Yau’s Attendance?

23.  Ms Leung relies on a passage in the evidence filed by the defendant which states that the purpose of calling Ms Yau is that she is a key witness who could give evidence “relevant to the Defendant’s case that there was no genuine intention to honour the undertaking to pay all legitimate expenses of” the subsidiary company.  So, Ms Leung says, if the defendant wishes to call Ms Yau to support her own case, the proper way is to issue a writ of subpoena to secure Ms Yau’s attendance at the substantive hearing.

24.  Mr Phang says this turns the true position on its head.  It is the plaintiff which has adduced the evidence in the Yau Affirmation that the plaintiff had not breached any undertaking.  That is seriously disputed by the defendant, who (as is accepted)  is entitled to cross-examine Ms Yau on the factual basis for her to make that statement. So, says Mr Phang, the defendant is seeking to do no more than cross-examine Ms Yau on her evidence which the plaintiff is relying on, so that the Court can assess her credibility.

25.  Further, Mr Phang points out that the plaintiff has already contacted Ms Yau and secured her assistance in producing an affirmation specifically in support of the Amended Originating Summons in these proceedings.  Therefore, even if Ms Yau no longer works for the relevant subsidiary, it is likely that the plaintiff has maintained or can regain contact with Ms Yau.  Whereas, on the contrary, Ms Yau was never related to the defendant and the defendant has no contact with her. Further, says Mr Phang, where the Yau Affirmation was brought into existence by the plaintiff for the purpose of pursuing the contempt proceedings against the defendant, the burden of securing Ms Yau’s attendance ought to fall on the plaintiff.

26.  Of course, there may be little practical difference if Ms Yau is unwilling to attend without compulsion.  In those circumstances, whether at the request of the plaintiff or at the request of the defendant, it may be that the Court would be asked to issue a subpoena to compel her to attend.  I anticipate that where the parties agree that her evidence is relevant and probative to key issues, there would be no difficulty in obtaining such a subpoena.

27.  Though this issue is slightly more finely balanced, I agree with Mr Phang.  I think it does fall to the plaintiff to make the arrangements to secure Ms Yau’s attendance.

G.  What If Ms Yau Fails to Attend for Cross-examination?

28.  On this point, I agree with Ms Leung that it is well-settled that hearsay evidence is usually admissible in civil committal proceedings.

29.  On that basis, not least having considered the content of the Yau Affirmation and its exhibits, and the fact that both parties consider Ms Yau’s evidence as capable of being relevant and probative, it seems to me that the evidence should be admissible at the substantive hearing even if Ms Yau fails to attend for cross-examination, though of course subject to the weight to be determined by the trial judge with regard to the various features including those set out in section 49 of the EO.

30.  Indeed, how to assess admissible evidence, and what weight is to be accorded, are obvious matters for the trial judge. Therefore, it seems to me that it would be quite wrong for the Court at this interlocutory stage to shut out the evidence altogether on the contingent basis that Ms Yau might not attend the substantive hearing for cross-examination, notwithstanding the grant of an order under section 48 of the EO.

31.  So, even though I do not think G Lam J has already decided the point, as it happens I would independently reach the result that the Yau Affirmation shall stand as hearsay evidence even if Ms Yau does not attend the trial to be cross-examined, without prejudice to the parties being able to make submissions as to the weight to be given to it.

H.  The Result

32.  I make an order in the terms of paragraphs 1 and 2 of the Summons.  However, I refuse the requested order in the terms of paragraph 3 of the Summons.

[argument on costs]

I.  Costs

33.  Mr Phang asks for the costs of the summons, and Ms Leung of course says the opposite, or that there should at least be no order.

34.  I note that paragraph 1 of the summons was never really in dispute, though the Court would still need to be satisfied such an order is apt to the case.  I have found for the defendant on paragraph 2, but against her on paragraph 3 (which in the end Mr Phang did not really press at the hearing).

35.  I have considered whether the costs could simply be reserved to the Judge hearing the substantive application, but it seems to me that it is appropriate to make an order now.  In the circumstances described, and in the exercise of my discretion, I make no order as to costs.

Mr Eva Leung, instructed by Hugill & Ip Solicitors, for the plaintiff

Mr Roger Phang, instructed by Norman M. K. Yeung & Co., for the defendant