PANYU CHEMICALS IMPORT & EXPORT CORPORATION v. SUN WAI MAN AND OTHERS

HCA1537/2001
& HCMP2800/2002
(Heard together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1537 OF 2001

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AND

MISCELLANEOUS PROCEEDINGS NO. 2800 OF 2002

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R U L I N G

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1. This ruling deals mainly with costs relating to the 2^nd garnishee application and the hearing before me which is by and large the only outstanding dispute between the parties as a result of the concession made by the garnishee.

Background

2. Panyu Chemicals Import & Export Corporation (“the Judgment Creditor”) obtained judgment against Chen Fang Xiao (“the Judgment Debtor”) in HCA1537 of 2001 on 20 June 2001 for the sum of HK$3,364,630.00 together with interest thereon at the rate of 12.08% p.a.  from 4 April 2001 to the date of judgment and thereafter at judgment rate until payment and costs fixed at HK$1,550.00.

3. No part of that judgment was satisfied by the Judgment Debtor.  As a result, the Judgment Creditor issued execution in an attempt to recover the judgment debt in the form of garnishee proceedings naming the Hang Seng Bank as garnishee (“the Garnishee”) in respect of bank accounts which the Judgment Creditor believed that the Judgment Debtor had with the Garnishee.

4. On 4 July 2001 Master Wong made a Garnishee Order Nisi and ordered the Garnishee to appear on 6 August 2001 and show cause as to why that order nisi should not be made absolute  (“the 1^st Garnishee Nisi”).

5. On 17 July 2001, an affidavit of So Chun Sing was filed on behalf of the Garnishee disclosing a savings account (HK$325), a current account (HK$18,487.22) and a foreign currency account (CAN$1,685.14) under Account No. 258-141597-888, as well as another savings account (HK$4,730.55) under Account No. 289-3-126603 which the Judgment Debtor had maintained with the Garnishee.  No other account was disclosed at that time by the Garnishee.  Indeed, paragraph 5 of that affidavit, it was stated :

“	Save as disclosed in this Affidavit, no other sum of money attachable by the said Garnishee Order To Show Cause was due owing and payable to the said Judgment Debtor by the Garnishee as at the time of service of the said Garnishee Order To Show Cause on the Garnishee.”

6. On 6 August, Master Jones made the Garnishee Order Absolute (“the 1^st Garnishee Absolute”) but allowed the Ganishee to deduct HK$100 as its fixed costs from the money held by the Garnishee before paying over the balance to the Judgment Creditor.

7. The operative words of both the 1^st Garnishee Nisi and also the 1^st Garnishee Absolute was that :

“	all debts due or accruing due from the Garnishee to the Judgment Debtor should be attached to answer the Judgment recovered against the Judgment Debtor by the Judgment Creditor in [HCA1537 of 2001] on 20th June 2001…”

8. The problem arose when on or about 17 December 2001, after the 1^st Garnishee Absolute had been made, the Judgment Creditor got wind of the fact that the Judgment Debtor had four other time deposits with the Garnishee, but which had not been disclosed by the Garnishee previously when the 1^st Garnishee Nisi and/or 1^st Garnishee Absolute were made.

9. Upon subsequent correspondence passing between the solicitors for the Judgment Creditor and solicitors acting for the Garnishee raising the four time deposits, it was ultimately admitted by the Garnishee (through its solicitors) that the four time deposits existed.

10. However, the Garnishee refused to pay over the amounts of the four time deposits to the Judgment Creditor alleging that the four time deposits which were renewed automatically from month to month immediately after maturity was not caught by the 1^st Garnishee Absolute since there was no debt “due or accruing due” to the Judgment Debtor.

11. On 18 July 2002, the Garnishee issued an Originating Summons (HCMP 2800 of 2002) seeking the determination of the Court as to whether the said time deposit accounts were attachable to the 1^st Garnishee Absolute.  In that respect, the parties agreed that the cost order relating to that Originating Summons should be “No order as to costs” as between them (i.e. Garnishee and Judgment Creditor).

12. For reasons unknown, that Originating Summons had not been determined by the court up to April 2007.

13. In the meantime, the time deposit accounts had continued to be maintained in the Garnishee’s bank accruing interest all this time.

14. With a view to expediting matters and/or perhaps to save costs, the Judgment Creditor applied for a 2^nd Garnishee Order on 19 April 2007 in the hope of bringing this matter to an early end.

15. The 2^nd Garnishee Order to Show Cause came before Master Yu on 30 April 2007.  The Master duly adjourned that the 2^nd Garnishee application as well as the Originating Summons to be heard by a judge.

16. Accordingly both those matters came before me on 27 August 2007.

Stance of the Garnishee

17. Counsel for the Garnishee conceded at the start of the hearing before me that the stance hitherto adopted by the Garnishee, namely, that the time deposit accounts of the Judgment Debtor with the Garnishee was not caught by the 1^st Garnishee Absolute because there was no debt “due or accruing due” to the Judgment Debtor, cannot be maintained.

18. It was explained that such a view taken by the Garnishee arose from case law in which the courts had to determine the meaning of the words “due” and/or “accruing due”.

19. Some of those cases relied on by the Garnishee in adopting this view are :

(a)	Yik Keung v. Hongkong & China Gas Co. Ltd [1959] HKDCLR 67;
(b)	Webb v. Stenton (1883) 11 QBD 518 at 527;
(c)	O’Driscoll v. Manchester Insurance Committee [1915] 3 KB 499;
(d)	Atkinson v. Bradford Third Equitable Benefit Building Society (1890) 25 QBD 377 at 382;
(e)	Cowley v. Taylor (1908) 124 LT JO 569;
(f)	Bagley v. Winsome and National Provincial Bank Ltd [1952] 2 QB 236 at 241;
(g)	Music Masters Pty Ltd v. Minelle & Anor and The Bank of New South Wales Savings Bank Ltd [1968] QD R 326;
(h)	Re Australian and New Zealand Savings Bank Ltd [1972] VR 690; and
(i)	Bank of New South Wales Savings Bank Ltd v. Fremantle Auto Centre Pty Ltd and Poland [1973] WAR 161.

20. However, that view arrived at solely by considering what the judgments in those cases decided as to the meaning of the words “due” or  “accruing due” did not take into account the provisions of section 21(1) of the High Court Ordinance which provides :

“	(1)	A sum standing to the credit of a person in a deposit account in an authorized financial institution shall, for the purposes of the jurisdiction of the Court of First Instance to attach debts for the purpose of satisfying judgments or orders for the payment of money, be deemed to be a sum due or accruing due to that person and, subject to rules of court, shall be attachable accordingly, notwithstanding that any of the following conditions applicable to the account, that is to say – …
		(a)	any condition that notice is required before any money is withdrawn;
		(b)	any condition that a personal application must be made before any money is withdrawn;
		(c)	any condition that a deposit book must be produced before any money is withdrawn;
		(d)	any condition that a receipt for money deposited must be produced before any money is withdrawn; or
		(e)	any other condition prescribed by rules of court,
		has not been satisfied.”

21. In the light of the provisions of section 21(1) of the High Court Ordinance, counsel for the Garnishee, conceded that the earlier view taken by the Garnishee that the time deposit accounts were not caught by the 1^st Garnishee Absolute cannot be maintained any more, since, as provided for by section 21(1), the moneys in the time deposit accounts are deemed to be due or accruing due to the Judgment Debtor by the Garnishee.

22. Having made the concession referred to above, counsel for the plaintiff went on to submit that the 2^nd Garnishee application by the Judgment Creditor was unnecessary since the 1^st Garnishee Absolute would already encompass the time deposit accounts of the Judgment Debtor with the Garnishee. 

23. Moreover, the Garnishee ask the court to make the determination sought under the Originating Summons.

24. In so far as costs is concerned, the Garnishee is content that the costs order relating to the Originating Summons be simply “No order as to costs” as agreed between it and the Judgment Creditor.

25. But in relation to costs relating to the 2^nd Garnishee Order, the Garnishee seeks an order that firstly, there be no order as to costs as between the Garnishee and the Judgment Creditor, and secondly, in the event that the court decides that the moneys in the time deposit accounts are attachable, that its costs incurred in the 2^nd Garnishee application be deducted from the monies being attached.

Decision

26. In light of the concession made by the Garnishee at the hearing, it must follow therefore that the two questions posed by the Garnishee for the court’s decision in the Originating Summons must both be answered in the affirmative.

27. As already indicated, there is agreement between the Garnishee and the Judgment Creditor that the cost between them in respect of the Originating Summons be “No order as to costs”.  Since that is already agreed between them, and the Judgment Creditor does not dispute such agreement as binding, I can only reflect their agreement by adopting that cost order for the Originating Summons.

28. As for the 2^nd Garnishee Order to Show Cause, it is now conceded by the Garnishee that the moneys in the time deposit accounts are attachable.

29. What I have to decide is whether or not it is necessary to make an order absolute in respect of the 2^nd Garnishee application since it was submitted by the Garnishee that it will not be necessary because the moneys in the time deposit accounts are all caught by the 1^st Garnishee Absolute made back in 2001.

30. Despite such submission by counsel for the Garnishee, it was confirmed by counsel for the Garnishee that such moneys are still held in the time deposit accounts by the Garnishee and has not been paid over to the Judgment Creditor.  What that simply means is that there is still money held by the Garnishee which the Garnishee admits to be attachable by the Judgment Creditor.

31. Moreover, it would appear that interest has been accruing all the time since the 1^st Garnishee Absolute.

32. Without making the 2^nd Garnishee Order Absolute, there is a risk that it may give rise to further argument between the parties as to the interests that has been accruing to date, if reliance is placed only on the strength of the 1^st Garnishee Absolute. 

33. For these reasons, I am prepared to make an Order Absolute in respect of the 2^nd Garnishee application.

34. In so far as costs relating to the 2^nd Garnishee application is concerned, I take the view that it was quite unnecessary had the Garnishee paid over the money in the time deposit accounts to the Judgment Creditor after the 1^st Garnishee Absolute.

35. The reason that was not done was due to the Garnishee taking an incomplete and therefore incorrect view of the law.  That is not a good reason for not ordering costs against them.

36. Accordingly, I will order the costs of the 2^nd Garnishee application including both the hearing for the order nisi as well as the order absolute to be paid by the Garnishee to the Judgment Creditor.

37. I further decline to make an order that the Garnishee’s cost relating to the 2^nd Garnishee application be paid out of the moneys to be attached.