HBZ FINANCE LTD v. SHANTILAL HARGOVIND AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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DECISION

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Preliminary:    This is an application to discharge a Prohibition order made under Order 44A Rule 2 of the Rules of the Supreme Court. It was heard as a matter of urgency on the 7th May as the applicant's Australian visa was about to expire. I discharged the Order and now give written reasons for doing so.

2. It is not in dispute that the applicant who is the holder of a Fijian passport but is residing at the moment in Australia, was a partner, albeit an inactive one, with his brother Shantilal Hargovind, in a business carried on in Hong Kong. The Plaintiff claims that the partnership owes it $535,627.00 and although the applicant does not concede that is the correct amount as he has not been able to check it from the partnership records, it is clear that a very substantial sum is owing. The Plaintiff is, however, a small creditor compared with other creditors who are either financial institutions or traders. The total amount owing is about $8,000,000. Shantilal Hargovind has vanished from Hong Kong and his whereabouts are unknown. The applicant has never resided in Hong Kong and has never taken any active part in the running of the business.

3. On hearing that the business was in severe financial difficulties the applicant came to Hong Kong in January 1985 for the purpose of trying to reach an agreement with the creditors whereby the firm could continue to operate and possibly eventually repay its debts. He went to Taiwan for a few days on business, and came back to Hong Kong on the 18th January. He went to see the firm's creditors including the Plaintiff, and then left for Australia. He returned on the 18th March by which time a meeting of creditors had been held. The Plaintiff did not attend that meeting nor other meetings held on the 28th of March and the 9th of April. On the 22nd of March the applicant saw a Mr. Shaikh, Managing Director of the Plaintiff, who had told him that the Plaintiff had no faith whatever in the applicant's scheme for repayment and would not agree to it.

4. On the 28th of March the Plaintiff applied for and obtained an order that the applicant be prohibited from leaving Hong Kong.

The Evidence:    Both the applicant and Mr. Shaikh filed extensive affidavits and gave viva voce evidence. From this I was satisfied that:

Decision

5. I agree entirely with the sentiments expressed so cogently by Hunter J. in Dignity Carriers Ltd. v. John A Kistvad. H.C.A. 11466/82. However he found himself bound by the decision of the Court of Appeal in Kirpalani v. Days International Ltd. 1982 H.K.L.R. 534 and whatever one may think of the actions of the Plaintiff it was entitled to an order and to persue its remedies in an effort to achieve priority over the other creditors. That, however, does not mean that the court should assist in those efforts unless obliged to do so. In Kirpalani Cons J.A. said:

"I am not persuaded that honest visitors need fear the operation of the Order. The judges who deal with the Order are capable of dealing with any possible abuse."

6. That was before the Order was amended in 1984 and Rule 4(6) now gives the Court a complete discretion whether it should discharge an Order. I am satisfied that the applicant came to Hong Kong in an honest effort to assist the creditors of his firm, whether or not such efforts have or will bear fruit. I am also satisfied that the Plaintiff is trying to secure preference for itself over other creditors and that the forcible detention of the applicant will be of no benefit to the creditors as a whole.

7. It is in the interest of the creditors that the applicant be at liberty to return to Australia or Fiji to attend to his own affairs and those of the partnership.

8. For those reasons I discharged the Order.