THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. v. WING HONG WOO CO. LTD. and Others

IN THE COURT OF APPEAL

1996, No. 38
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the 3rd defendant, Mr Mak Ping-nam, against the refusal by Burrell J to discharge a prohibition order made against Mr Mak by Mr Registrar Betts on 13th January 1996.

2. It comes about in the following way. The plaintiff bank on 4th December 1995 obtained judgment against Mr Mak in the sum of about $24m pursuant to a guarantee. The bank was not able to secure payment in full and on 13th December 1995 obtained the first of a series of prohibition orders prohibiting Mr Mak from leaving Hong Kong. The order which this appeal is concerned with, as I have said, was that made by Mr Registrar Betts on 13th January.

3. Mr Mak then made an application for that prohibition order to be discharged. The application came before Burrell J on 15th February 1996. As indicated, he refused it. What he said was this:

"The court is conscious of the fact that a Prohibition Order places serious restrictions on a citizen' s freedom of movement and should only be granted when certain conditions are satisfied and it is clearly necessary to do so.

I have read and considered the affidavits and affirmations in this case. Particularly those of Mr Mak himself dated February 5th 1996 in support of this application and those of Elizabeth Brown dated 12th and 13th February on behalf of the Plaintiff, in reply.

I have considered also the submissions made by Mr Kwong for the applicant and by Mr. Harris for the Respondent Plaintiff.

I am satisfied that, in view of

(i) The enormity of the total debt;

(ii) The 3rd Defendant' s acknowledged intentions to travel, particularly to China, and also his probable wish to visit Australia either frequently or even permanently;

(iii) The 3rd Defendant's inactivity in dealing with his indebtedness demonstrated in recent months;

that the discharge of this order would probably result in the serious disruption of the enforcement of the judgment. Such disruption would very probably result in considerable increase in costs which the 3rd Defendant cannot pay and would be added to the already colossal judgment. I therefore dismiss the application to discharge with costs and grant a certificate for counsel."

Burrell J then went on to give certain directions designed to expedite matters.

4. Mr Mak in his notice of appeal relies on two grounds. Before specifically addressing those grounds, it is necessary to note that in discharging the order, the judge was exercising his discretionary power conferred by s.21(B) of the Supreme Court Ordinance, Cap 4. It is well established and not disputed before us that such an exercise of discretion can in the present context only be interfered with by an appeal court if the judge exercises his discretion upon a material misapprehension of the facts or an erroneous inference drawn from there. See for example the following authorities cited by Mr Harris: Halsbury's Laws of England, 4th Edn, Vol 37 paras 656 and Garden Cottage Ltd. v. Milk Marketing Board [1983]3 WLR 143 per Lord Diplock at p. 146A-G.

5. Turning then to the first ground, this is that:

"the learned Judge erred in concluding that the big amount of the judgment debt and the inactivity of the 3rd Defendant are good grounds for dismissing the 3rd Defendant's application;"

The amount of the judgment debt, as I have indicated, was of the order of $24m. However, it has to be noted that about half of that amount was secured in the form of a property, against which the plaintiff is proceeding, worth about some $12m. The balance, some $11m, is nonetheless a substantial amount and that the judge may have made a mistake, in stating that the total indebtedness of the plaintiff as being in excess of $60m in addition to (as opposed to being inclusive of) the $24m, is nothing to the point.

6. As to the inactivity question, this seems to me, so far as the plaintiff's legal advisers had in mind, Mr Mak's failure to contact the plaintiff or to make any progress towards a settlement of the judgment debt, thereby indicating an uncooperative attitude in resolving his existing liabilities.

7. For his part, Mr Mak affirmed that he had been in a very large way of business in the vegetable trade. Its annual turnover, he says, was of the order of $180m. But it collapsed in 1995. He admits he did not contact his creditors to discuss his debts but that, he says, is because the total "is so huge" that he simply cannot make any proposals for repayment that have any hope of being accepted. Equally, he says, the judgment debtors did not contact him. The bank understandably is anxious to examine him to ascertain what happened to the very large sums of money borrowed, in particular regard to tracing any assets which he may yet have and which the bank may be able to realise.

8. I turn at this point to the second ground of appeal which is:

"the learned Judge erred in his finding as a fact that the 3rd Defendant has threatened to relocate to Australia when there were contradictory affirmations filed by the parties and that there was no cross-examination on affirmations nor any other evidence to support the learned Judge's said finding."

The evidence on the matter comes from Mr Perry Choy, a corporate recovery manager in the credit control division of the plaintiff bank. He affirmed that at a meeting of the creditor banks that he, Mr Choy, attended, Mr Mak was asked inter alia what he would do in the last resort if he could not repay his debts. He replied that he would simply return to Australia where his wife, MAK LEE Yim-ping, maintains a private property.

9. In his own affirmation, Mr Mak denies that he has hidden away any assets. He said he is determined to face the result of the failure of his business, adding that:

"I never intended and I do not now intend to relocate to any place abroad of Hong Kong."

Significantly in that affirmation the oblique rejection of Mr Choy's statement is not couched in terms as clear as it might have been.

10. An appellate court should be slow to interfere with a finding of fact of a trial judge, see The Hongkong and Shanghai Banking Corporation Ltd v. Chan Yiu-wah [1988]1 HKLR 457, a decision which is often referred to in this Court in which Fuad JA (as he then was) extensively reviewed the authorities. It is not necessary to recount them here for the judge was in the circumstances, in my view, entitled to take the view of the facts that he did. He relied not merely on his particular findings in isolation but, as is apparent from the passage from his judgment that I have quoted, in the context of all the facts and circumstances before him. These included, as Mr Harris for the respondent bank has pointed out in his written submissions, the fact that Mr Mak conceded that he had no prospect of paying off his huge liability; also, that Mr Mak by his own admissions had made no effort to agree any compromise with his creditors. Furthermore, that there appears to be prima facie evidence that Mak allowed the company to carry on trading when he knew by the middle of 1995 that his business could not pay debts. Above all, there is no explanation of what happened to the huge amount of money advanced. It would have been apparent to the judge as is apparent to us that in those circumstances the bank would be concerned to ascertain what had happened to those sums of money.

11. In those circumstances it seems to me that the judge was clearly entitled to take the view of the facts that he did; and to rely on the three matters he referred to, the enormity of the total debts, Mr Mak's acknowledged intentions to travel particularly to China and also his probable wish to visit Australia either frequently or even permanently; and Mr Mak's inactivity in dealing with his indebtedness in the sense I have averted to. I pause here to say that although there is no direct evidence of permanent departure to Australia, that was a matter, in my view, the judge was entitled to infer in the circumstances.

12. Returning to the first ground, while the amount of the judgment debt outstanding may not be thought to be particularly strong evidence of the likelihood of Mr Mak absconding from Hong Kong nor his inactivity of non-cooperation, in my view, they are matters which the judge could take into account in conjunction with the other matters that he had taken into account. In that overall context they are sufficient to sustain the judge's findings and exercise of discretion. It matters little that this Court might have exercised its discretion in a way different to the way the judge exercised his discretion. It suffices that the exercise of discretion was not so aberrant that it would breach the principles propounded in the authorities I have referred to and by Lord Diplock in Hadmor Production Ltd. v. Hamilton [1983]1 AC 191. It suffices that a judge, as the judge here reasonably directing himself on the facts and making no error of principle, could have exercised the discretion in that way. On that basis, this Court would not be justified in interfering with the exercise of discretion of the judge. The appeal must be dismissed.

13. Before I leave the matter I should mention that both Mr Kwong, who has had to leave us early, and Miss Diana Cheung, who concluded the submissions for the appellant, invited us to provide some guidance on the granting and discharging of prohibition orders. What sort of guidance was not made clear, but it apparently related to their view that the prohibition orders were issued too readily and without their necessity being examined with sufficient care. Their submissions appeared to be that having repeatedly travelled to China in the past, Mr Mak would not abscond now. However that was before his business failed and his admitted present lack of funds. Moreover, it was suggested that the plaintiff bank had not pursued its remedies with expedition during the last seven months straddled by the series of prohibition orders, in particular in setting up Mr Mak's oral examination. But it turns out that application therefor was made as early as 22nd February 1996, remarkably expeditiously given that judgment was obtained on 4th December 1995. As to the care the masters and the judge accorded the granting of what is plainly a drastic curtailment of the fundamental human right of freedom of movement, the application for discharge was referred to a judge by the master concerned, and the judge expressly mentioned the serious restriction on a citizen's freedom of movement involved and that it should only be granted if clearly necessary. If there was indeed any lack of care, sadly, it seems to have been in the preparation of the application for the discharge of the prohibition order. Against the factual background already outlined, it was nevertheless not explained why it was necessary for Mr Mak to visit China, what was the specific business, how long the visit was likely to be, in short no plausible explanation that might have persuaded a court of the necessity of overseas visits was provided. Nor are the facts likely to remain the same given that Mr Mak's oral examination is to take place as early as in July, so that any view expressed by this Court upon the present facts is unlikely to be of future guidance.

14. I have to say that there is no evidence that the applications in this case were not accorded the care they should obviously receive. On the contrary, the masters who addressed the several applications in this case, and indeed Burrell J also, were not provided all the evidence and information that might have assisted by the appellant. For instance, as I have indicated, his application is made upon the basis that he now wishes to restart his business and to visit China in that context. No facts are given of when he might wish to do so, how long he may wish to remain, why he wishes to go to China, whether in fact there are concrete proposals for business. The judge and the masters addressing the matter might have been more impressed with the need to relax the prohibition order if that was necessary and if the need to visit China had been demonstrated. It was not. I do not think any guidelines are warranted or indeed would necessarily be appropriate.

Liu, J.A.:

15. The exercise of discretion under Order 44A r. 3(1) may not be impugned unless the judge applied the wrong principles, took into account irrelevant matters or ignored relevant considerations or unless his decision is plainly wrong. None of these trite criticisms has been made good in this appeal. On counsel's assurance that our decision would serve to resolve all the issues arising from the existing new Prohibition Order granted on 12 April 1996, I, too, would dismiss this appeal for the reasons given by the Vice-President.

Mayo, J.A.:

16. I agree. It is unfortunate that the diaries of the masters are so congested that the first available date for the judgment debtors examination is in July. Having regard to the stringent nature of Prohibition Orders this is regrettable in the extreme.

17. In the present case it has not been demonstrated that the plaintiff was in any way tardy in enforcing the judgment they have obtained. There was ample material before Burrell J for him to exercise the discretion reposed in him in the way he did. It certainly cannot be shown that he was clearly wrong which is what has to be established if this appeal is to succeed.

18. In my view this appeal should be dismissed.