BERMUDA TRUST (HONG KONG) LTD. v. SHUM WING TAK, IVAN AND ANOTHER

HCA 14421/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 14421 OF 1998

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REASONS FOR JUDGMENT

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1. This is an application by the defendants for determination by this court of a preliminary issue arising out of the order made ex-parte on 12 July 2001 for the examination of the two defendants, pursuant to Order 49B of the Rules.

2. It is submitted by the defendants that, in the light of the form of the order - and here the order we are concerned with is the order made herein on 8 March 2001 - the court has no jurisdiction to order the examination of the defendants pursuant to Order 49B. It is said that Order 49B only applies to money judgments in favour of a plaintiff, not a third party, and that only a judgment creditor may seek and proceed with an examination under 49B, and, that because of the definition of "judgment creditor" in Order 49B, and because of the form of order, the plaintiff in this case is not, for the purpose of Order 49B, the judgment creditor.

3. I will not recite the full terms of the order, but the order is, in short, an order that the defendants do pay a specified sum of money not to the plaintiff, but to the Commissioner of Inland Revenue by a certain date, which has long since expired without payment.

4. I consider that the application is misconceived and must fail for the following brief reasons.

5. The application raises a question of construction of the rules and, for five reasons, the construction contended for by the defendants is simply unsustainable. First, it requires the court to read into the rules the words "to the plaintiff" after the words "for the payment" in Order 49B, rule (1)(1). I see no basis whatsoever for taking that step. I do bear in mind as a starting point what is said in note 49B/1A/1 as to the nature of this, the proposed examination, namely that it is quasi-criminal in nature, as the debtor's liberty is at risk. Nevertheless, it seems to me that there is nothing in either Order 49B or indeed the series of rules starting at Order 45, concerned with the enforcement of judgments and orders, to suggest that really in any respect under this series of rules, such a limitation should be imposed on the method of enforcement of judgments. As a general principle, the court is concerned to assist parties in the enforcement of judgments against delinquent judgment debtors and whilst every effort should be taken in the course of enforcement to protect the judgment debtor's legitimate rights, it cannot be in the interests of good justice to impose a restrictive interpretation of Order 49B as proposed by the defendants.

6. The defendants rely on two aspects of the commentary to the Hong Kong Civil Procedure 2001. The first (and this is the second of the five points) is the introductory paragraph, the note 45/1/2 which states that Order 45(1) deals with the enforcement of money judgments and, since all such judgments will be expressed in the form that "the defendant do pay the plaintiff X", it does not refer to a judgment or order for the recovery of money from a person, which is dealt with by rule 13(1). Insofar as that paragraph of the commentary seeks to draw a distinction between judgments for the payment of money and judgments or orders for the recovery of money from a person, it seems to me that it is correct in the light of the authorities, and that, it seems to me, is what the paragraph is intended to explain. Insofar as that paragraph seeks to suggest that judgments or orders for the payment of money which fall within Order 45(1) are limited to judgments for the payment of money by the judgment debtor to the judgment creditor, then it is plainly wrong and unsustainable.

7. The phrase, money judgment, is not a term of art, and rather than have reference primarily to the commentary, it is obvious that the court must be guided by the wording of the Rules themselves. As I have already said, I see no basis for applying the restriction proposed by the defendants into the rules, whether that be Order 49B or Order 45(1).

8. Next, and the third reason why it seems to me that this application is wrong and misconceived, the defendants seek to rely upon Order 42(1) which provides that if, in the case of any judgment, a form thereof is prescribed by appendix A, the judgment must be in that form.

9. It seems to me that any argument based on this provision is self defeating. As the opening words of that rule make clear, it simply provides that where a form is prescribed by the appendix A for a judgment, then that form must be used. It does not circumscribe the form in which judgments may be made. I can find no form in appendix A prescribing the format of a judgment for payment by defendants to a third party, and therefore appendix A and Order 42(1) are simply inapplicable. In any event, as the commentary in Order 42(1)(i) makes clear, even in cases which would on the face of it fall under Order 42(1)(i), the court should apply common sense and permit variations in the form of judgments whenever appropriate. It cannot be expected that the forms will cater for every possible circumstance.

10. The fourth reason why I consider the application is misconceived is that, although I was not taken directly to them, there are clear references in the commentary to the Hong Kong Civil Procedure 2001, to authorities primarily concerned with the enforcement of undertakings, which do appear to indicate quite clearly that where an undertaking has been given in substitution for an order, for payment by a party to a third party, i.e. a party who is not the judgment creditor, the court will nevertheless allow enforcement of the undertaking by appropriate means under the rules, notwithstanding the fact that the undertaking is given to a third party rather than the judgment creditor. An example is the Gandolfo v. Gandolfo decision which appear under note 49/1/6. There may be other examples. The case of United Mining & Finance Corporation v. Beecher which appears in the commentary under paragraphs 45/1/2 and 45/5/3 may also be a similar case, although that is not entirely clear from the contents of the commentary alone. I would add, as it was canvassed in argument, that it seems to me absolutely clear, and United Mining & Finance Corporation would appear to be an authority for this, that, depending upon the exact form of an order, it is perfectly possible for an order to fall both under Order 45(1) and Order 45(5) so that the judgment creditor may elect to pursue, bearing in mind Order 45(1)(3), either or both sets of remedies available under those rules.

11. The final and fifth reason why it seems to me the defendants' application as to the construction of Order 49B is misconceived, is really a matter of application of common sense. On the facts of this case, it is quite plain that the substance of the order, or the settlement which is embodied in the order, is that the plaintiff, having applied to the court for relief against the defendants, accepted the imposition of relief by the court in the form of, amongst other things, an order directing the defendants to make payment to the Commissioner of Inland Revenue. It would have been perfectly possible to achieve the same effect by an order of the court requiring the defendants to pay the money in question to the plaintiff on the basis of, for example, an undertaking by the plaintiff upon receipt of the money from the defendants to pay it to the Commissioner of Inland Revenue. But rhetorically, I would ask, why should the court be constrained to make orders in a more convoluted way when a simple and direct order will suffice to achieve the same effect?

12. In my judgment it almost goes without saying that the plaintiff in this case, which sought and obtained the relief from the court in the form of the order or orders for payment to the Commissioner of Inland Revenue, is for the purposes of Order 49B rule 8a, if not, the judgment creditor. Order 49B rule 8 is an inclusive provision. Its purpose quite clearly is to extend the category of persons who in the court will treat as the judgment creditor, for the purpose of Order 49B. It is extended beyond the obvious case of the plaintiff, by which I mean the party who has sought and obtained relief. Obviously, in appropriate cases that might be a defendant or a third party where they are counter-claiming. It may include the sorts of categories of person who are referred to in page 103 of Enforcement of Judgments in Hong Kong by Heilbron, Booth and McCook. We are not concerned here with how wide that category of persons is. It may, for example, include the Commissioner of Inland Revenue himself, but that is not an issue for me today.

13. So, for the reasons I have given, it seems to me the application by the defendants, to seek an order that the original order dated 12 July 2001 should not have been made, fails. I would only add the observation that this strikes me, from reading the papers put before me, as a classic case of judgment debtors doing everything possible by fair means or not, to delay the enforcement of the judgments that have been given.

14. As I have said, for the reasons I have given, this particular application was, it seems to me, misconceived and was bound to fail. It had no merit whatsoever, either from the perspective of construction of the rules or when one looks at what the defendants were in reality seeking to achieve.