AMERICAN EXPRESS BANK LTD. v. CHEUNG KAM FUNG BETTY

CACV 101/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 101 OF 2000

(ON APPEAL FROM HCA 1290/2000)

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J U D G M E N T

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Hon Godfrey VP :

Introduction

1. This is an appeal from an order of H.H. Judge Li, sitting as a deputy judge of the Court of First Instance, made on 17 March 2000.

Background

2. On 14 March 2000, the plaintiff in the action obtained a judgment against the defendant for $54,835.39 together with interest and costs. On 17 March 2000, the plaintiff made an application to the judge for an injunction in the Mareva form in aid of the judgment it had obtained. But the judge did not consider that he ought to deal with the application. He thought that, since the amount involved was well within the jurisdiction of the District Court, it was inappropriate for the Court of First Instance to entertain the application. By the order under appeal, he transferred the action to the District Court, acting pursuant to the provisions in that behalf contained in section 40 of the District Court Ordinance, Cap. 336 ("the Ordinance"). He also ordered that the plaintiff's application for an injunction should, following the transfer of the action, be dealt with by the District Court.

3. The plaintiff now appeals, and asks us to grant the injunction sought.

The plaintiff's case

4. The plaintiff says that section 40 of the Ordinance does not enable an action to be transferred from the High Court to the District Court after judgment has been obtained in the High Court. So it will be helpful now to set out the provisions of section 40.

"40. Transfer to [District] Court from Court of First Instance of proceedings within jurisdiction of the [District] Court

Where an action or matter commenced in the Court of First Instance is within the jurisdiction of the [District] Court or has been brought within such jurisdiction by payment, admitted set-off or otherwise, the Court of First Instance or a judge thereof may, if it or he thinks fit, order the transfer of such action or matter to the [District] Court and thereupon the [District] Court shall have jurisdiction and authority to proceed therein."

Section 44 of the Ordinance, which provides for the procedure on transfer, is also material. It reads as follows :-

"44. Procedure on transfer

(1) When any action, counterclaim or matter is ordered to be transferred from the Court of First Instance to the [District] Court-

(a) any party may lodge with the Registrar of the High Court the order and the writ or other process or copies thereof and such other documents, if any, as the Registrar of the High Court may direct; and

(b) the Registrar of the High Court shall, on the application of that party and on production of the order and the filing of a copy thereof, send to the Registrar of the [District] Court all pleadings, affidavits and other documents filed in the Court of First Instance relating to the action, counterclaim or matter.

(2) On such documents being so lodged or sent, the action and counterclaim if any, or the counterclaim or matter, shall be transferred to the [District] Court and, subject as may be prescribed, all further proceedings therein shall be taken and tried, as if the action, counterclaim or matter had been originally commenced in that Court and that Court shall have jurisdiction to deal therewith notwithstanding any enactment to the contrary:

Provided that the transfer shall not affect any right of appeal in the Court of First Instance or to the Court of Appeal from the order directing the transfer, or the right to enforce in the Court of First Instance any judgment signed or order made in that court before the transfer."

5. The plaintiff invites us to hold that, on the true construction of these statutory provisions, and, in particular, the proviso to section 44(2), it is, as a matter of necessary implication to be taken that, after judgment, there is no jurisdiction in the Court of First Instance to transfer any action or matter to the District Court. The plaintiff says that, even if it is wrong about that, the judge should, nevertheless, have entertained its application for a Mareva injunction, because the proviso to section 44(2) expressly preserved its right as a judgment creditor to enforce in the Court of First Instance the judgment it had obtained, and the decision of the judge had, in effect, deprived it of that right.

Conclusion

6. First, as to the transfer. I am of the opinion that the judge did have jurisdiction, under section 40 of the Ordinance, to transfer the action to the District Court notwithstanding that judgment in it has already been obtained in the Court of First Instance. Contrary to the plaintiff's submission, it seems to me that that is the necessary implication to be drawn from the way in which the proviso to section (44)(2) is framed. The power to transfer the action to the District Court survives any judgment; that, as it seems to me, is the only way to make sense of the preservation of the right to enforce in the Court of First Instance any judgment signed or order made in that court before the transfer to the District Court. So, I would dismiss this appeal insofar as it seeks an order from us the effect of which would be to declare that the judge had no jurisdiction to make the order for transfer which he did make.

7. Secondly, as to the application of the plaintiff to this court for the injunction which the judge held should be made to the District Court. I would uphold the right of the plaintiff to go to the Court of First Instance for such an injunction. This was a right of which the order of the judge deprived the plaintiff. Accordingly, I would uphold the right of the plaintiff to come to this court to renew its application for an injunction, as it has done. But, that said, it remains for us to decide whether or not such an injunction ought to be granted.

8. This is a claim for a comparatively small sum. The Mareva injunction is a draconian remedy. It has been said before, and I would say again, that particular care should be exercised by the court in considering whether Mareva relief is appropriate when a claim is relatively small. In Sions v. Ruscoe-Price, 30 November 1988, a decision of the Court of Appeal in England, CAT 1027 of 1988 (which is so far as I am aware, unreported) :-

"... the judge had refused Mareva relief on the ground (among others) that the sum involved was only ￡2,000. The Court of Appeal upheld the decision of the judge. Woolf LJ observing that in general it was inappropriate for Mareva relief to be granted in respect of a relatively small sum, particularly in view of the costs which might be involved. Staughton LJ emphasised that Mareva relief should not be granted as a matter of routine in every case of an unpaid debt; the risk of removal or dissipation of assets must be viewed in the context of the importance of the case and the sum involved. Accordingly, Mareva relief should not be granted in relation to a relatively small claim unless the court is satisfied that in all the circumstances the possible adverse consequences of the relief sought are in proportion to the objective sought to be achieved."

(I have taken the reference to this case from Gee, "Mareva Injunctions and Anton Piller Relief", 4th Edition (1998) at p.26.) This accords with my understanding of the practice both in England and in Hong Kong.

9. I would, for my part, wish to discourage applications for injunctions in the Mareva form in cases of claims as small as the claim in this case. The Mareva injunction is not an appropriate remedy for banks, or credit card companies, to invoke in such cases. I would not exclude the right of a bank, or credit card company, or any other creditor, to come to the court for Mareva relief where the claim against the debtor is of sufficient size to justify that course. But such a creditor must act with a sense of proportion. When the claim is small, the costs of obtaining a Mareva injunction are out of all proportion to the size of the claim. I am satisfied that the present case is not a proper case in which this or any other court ought to grant a Mareva injunction against the defendant. I would therefore dismiss this appeal on this aspect of the plaintiff's case too.

Hon Keith JA :

10. I agree. The combined effect of section 40 and the proviso to section 44(2) of the District Court Ordinance (Cap. 336) is not to prevent the transfer of an action from the Court of First Instance to the District Court once judgment has been entered. Their effect is to enable the judgment creditor to enforce the judgment either in the District Court (to which the action has been transferred pursuant to section 40) or in the Court of First Instance (because such a right is preserved by the proviso to section 44(2)). In those circumstances, the criticism of the judge should not be that he ordered the transfer of the action to the District Court, but that he either assumed that the transfer of the case to the District Court prevented him from granting Mareva relief, or that he failed to consider whether the Plaintiff should be granted Mareva relief. It is not possible to tell from the judge's notes which of those two possibilities occurred, but I am inclined to think that it was the former.

11. Although, therefore, the appeal against the order for the transfer of the action to the District Court must fail, the Plaintiff has renewed its application for a Mareva injunction pursuant to Ord. 59 r. 14(3). However, for the reasons given by Godfrey V-P, I agree that this is not an appropriate case for the grant of Mareva relief. I recognise that it is less difficult to obtain a Mareva injunction in aid of the execution of a judgment already obtained, but the judgment debt in the present case is just too small to justify the invocation of the draconian remedy provided for by the Mareva jurisdiction. The rationale for that was set out in the Sions case, and that rationale appears to me to apply with equal force to applications for Mareva relief in aid of the execution of judgments already obtained.