Essilor Manufacturing (Thailand) Co., Ltd v. Wong Kam Wai & Ors [2020] HKCA 351; (Unreported, CACV 71/2020, 17 April 2020)

27 July 2020

1. In Essilor Manufacturing (Thailand) Co., Ltd v. Wong Kam Wai & Ors [2020] HKCA 351; (Unreported, CACV 71/2020, 17 April 2020), the Court of Appeal considered the proper approach to construing injunction orders. This case is a useful reminder that it is always important to carefully read the specific wording used in a court order, and that one should not lightly make assumptions about an order’s precise effect.

Factual context

2. In Essilor, the plaintiff is a Thai manufacturer of spectacle lenses which fell victim to a fraudulent scheme perpetrated by one of its employees. As a result of the fraud, a total sum of approximately US$39.3 million was transferred without authorization from its bank account to unrelated third parties.

3. On 24 January 2020, the plaintiff made an ex parte injunction application before Mrs. Justice Campbell-Moffat (the “Ex Parte Judge”) and obtained proprietary and Mareva injunctions against all 45 defendants (the “Injunction Orders”).

4. Each of the Injunction Orders contained a provision regarding its duration taken from the standard form in Practice Direction 11.2:

This Order will remain in force up to and including 7 February 2020 (“the return date”), unless before then it is varied or discharged by a further order of the court”.

5. Each of the Injunction Orders also contained a number of usual undertakings given by the plaintiff, including the one that it would as soon as practicable serve on each defendant a summons to be heard on the return date (the “Undertakings”).

General adjourned period

6. Due to the general adjourned period (“GAP”), from 29 January 2020 onwards, all court hearings were adjourned and court registries were also closed. On 1 February 2020, the Judiciary issued an announcement stating that the courts would handle “urgent and essential” applications during GAP in accordance with the established mechanisms, such as the Duty Judge system.  

Failure to take out inter partes summons

7. Despite the Undertakings, the plaintiff did not take out an inter partes summons to be heard on 7 February 2020, the return date as stated in the Injunction Orders. Instead, the plaintiff proceeded on the assumption that the Injunction Orders would remain in place until the actual return date hearing, and that the plaintiff should wait until the reopening of the Court Registry to issue an inter partes summons for securing such a hearing.

8. Between 6 and 11 March 2020, the plaintiff’s solicitors made enquiries with the clerk to Ng J, the Summons Judge designated for 7 February 2020. By a letter of 13 March 2020, Ng J pointed out that if the plaintiff wished to continue the Injunction Orders, it was their duty to honour the Undertakings, including the issue of a summons in the usual way and to re-fix the hearing date of the summons.

9. Acting on Ng J’s indication, the plaintiff’s solicitors issued a summons on 13 March 2020 (the “Summons”) seeking, amongst others, an order that the Injunction Orders be continued until trial or further order. The Summons did not ask for a fresh injunction.

The decision of the Judge

10. The Summons came before DHCJ MK Liu (the “Judge”) on 20 March 2020. The Judge refused to continue the Injunction Orders because they had “expired immediately after 7 February 2020” and therefore “there is nothing which can be continued now”. He also refused to grant any new injunctions on the same terms as the Injunction Orders because (i) the plaintiff did not apply for any new injunction in the Summons but only sought to continue the Injunction Orders; and (ii) there was neither urgency (since the Injunction Orders had already lapsed for 1.5 months) nor secrecy (since all the defendants had already been notified of the action) to justify granting any new injunction on an ex parte basis.

The decision of the Court of Appeal

11. The plaintiff made an urgent appeal against the decision.

12. On the construction of the Injunction Orders, the plaintiff submitted that they did not expire on 7 February 2020 but continued until 20 March 2020. On the plaintiff’s approach/construction, the starting point in construing a court order is the context and purpose, rather than the natural and ordinary meaning of the words used. Reading the Injunction Orders in context, the plaintiff contended that in granting the Orders, the Ex Parte Judge presumed and intended that the matter would come back for a return date and the Injunction Orders should continue in the meantime. The Ex Parte Judge could not possibly have meant that the Injunction Orders should lapse on 7 February 2020 regardless of whether any return date hearing took place.

13. The Court of Appeal rejected these arguments. It held that in interpreting a court order, the starting point is the natural and ordinary meaning of the words in light of the syntax, context and background in which they were used. Further, because of the penal consequences of breaching a freezing order and the need for the defendant to know where he stands, such orders should be clear and unequivocal, and should be strictly construed. Having regard to the plain wording of the Injunction Orders and the serious consequences of breaching those Orders, the Court of Appeal held that it was clear beyond doubt that the Injunction Orders lapsed on 7 February 2020. The Court also noted that the plaintiff’s construction would lead to absurdity – it would entitle the plaintiff to unilaterally extend the duration of the Injunction Orders by refusing to take out an inter partes summons for a return date hearing.

14. The Court of Appeal also considered the plaintiff’s argument that the Injunction Orders were automatically extended due to the common law rule in Pritam Kaur v. S Russell & Sons Ltd [1973] 1 QB 336. According to this rule, when a time is prescribed for doing any act, and that act can only be done if the court office is open, then, if it turns out that the deadline for doing the act in question is a day on which the court office is not open, the time shall be extended until the next day on which the court office is open. The Court of Appeal held that the rule in Pritam did not assist the plaintiff. Central to the rule is the notion of “impossibility” – for the rule to apply, it must be impossible for the relevant party to carry out the required act on the prescribed deadline. Here, it was not impossible for the plaintiff to take out an inter partes summons returnable on 7 February 2020, as such a summons would clearly fall within the scope of urgent business which could be conducted during GAP. It was also not impossible for the plaintiff to seek a continuation of the Injunction Orders before 7 February 2020 through the Duty Judge system. The only logical conclusion, therefore, was that the Injunction Orders lapsed on 7 February 2020.

15. Nonetheless, the Court of Appeal held that the Judge had erred in failing to properly consider the plaintiff’s application for a new injunction on the merits. In particular, it was wrong for the Judge to take the view that the plaintiff was only seeking to “continue” the Injunction Orders rather than the grant of new injunctions. In the view of the Court of Appeal, the Summons must be approached by looking at its substance and not its form. As a matter of substance, it was plain that the plaintiff was also seeking injunctions on the same terms as the Injunction Orders from 20 March 2020 until trial or further order.

Conclusion

The Court of Appeal’s decision in Essilor illustrates the importance of construing a court order, especially ones which have potential penal consequences, strictly, and to err on the side of caution in the event of any ambiguity. Just because a particular construction is thought to be reasonable or consistent with practice does not mean that it is the correct interpretation of the order – given the draconian consequences the Court would generally construe any ambiguities in favour of the defendant. If in doubt, further directions should be sought from the Court, if necessary, on an urgent basis.

Alan Kwong, Alexander Tang and Howard Wong represented the 10th Defendant in this case.

    

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