YE JINXIANG v. KAM PING KWONG

HCAP 25/2012 and
HCMP 3548/2016
(Heard Together)
[2018] HKCFI 2652

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 25 OF 2012 AND

MISCELLANEOUS PROCEEDINGS NO 3548 OF 2016

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(Heard Together pursuant to the Order of
Master Lo dated 8 December 2017)

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DECISION

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The appeals

1.   There are two appeals before me.  One is under HCAP 25/2012 (“HCAP 25”).  The other is under HCMP 3548/2016 (“HCMP 3548”).  Both relate to the decisions of Master Lo made on 14 March 2018 (the “Decisions”) dismissing the plaintiff’s summonses both dated 1 November 2017 (one in each action, the “Summonses”) for attachment of moneys said to be payable by the Urban Renewal Section of the Lands Department (the “Intended Garnishee”) to the defendant/judgment debtor (“Kam”) under the Lands Resumption Ordinance, Cap 124 (“LRO”).  They raise the same issues, and are heard together.

Relevant background

2.   Under HCAP 25 and HCMP 3548, there are a number of costs orders against Kam which he has not satisfied (the “Costs Orders”).  Save that those orders exist and that they have not been satisfied, we are not concerned with their details.  Nor are they in dispute for the purpose of these appeals.  What these appeals are concerned with are the plaintiff’s attempts to enforce those orders.

3.   Kam used to be one of two tenants-in-common in equal shares of the property located at the Remaining Portion of Kowloon Inland Lot No 1102 (No 541 Shanghai Street) (the “Property”).  That was until the Property was resumed by the Government on 3 April 1997 pursuant to the terms of the LRO.

4.   On 30 April 1997, a letter was issued by the Intended Garnishee to Kam and the other tenant-in-common (the “30 April Letter”).  An offer of compensation (“Compensation Offer”) was made thereby in respect of the resumption of the Property.  It was made pursuant to section 6(1)(a) of the LRO, and was made on a without prejudice basis.  The offered amount was HK$16,550,000.  The half share referable to Kam’s interest was HK$8,275,000.

5.   The 30 April Letter expressly stipulated that the Compensation Offer was only open for acceptance within 28 days, that:

“    The above offer remains open for acceptance for a period of 28 days from the date hereof and will lapse unless written acceptance of the offer is received on or before 28 May 1997.”

6.   No written acceptance had been received from Kam.  The Compensation Offer according to the terms set out above lapsed on 29 May 1997. 

7.   On 6 June 1997, another letter was issued by the Intended Garnishee to Kam and the other tenant-in-common (the “6 June Letter”).  Provisional payment in the sum of HK$14,895,000 (ie 90% of the Compensation Offer) was offered thereby in respect of the resumption of the Property.  It was expressed to be offered pursuant to section 16A of the LRO.  The 6 June Letter contained inter alia the following terms:

“ … As you have not indicated that the [Compensation Offer] is acceptable to you, you may either submit further evidence to substantiate your claim which you may subsequently make or in accordance with section 6(3) of the Crown Lands Resumption Ordinance apply to the Lands Tribunal to determine the amount of compensation to be paid in respect of the land resumed.

   Notwithstanding any application which may be made to the Lands Tribunal, Government is prepared to pay you a sum of $14,895,000.00, being a provisional payment under section 16A of the said Ordinance in respect of the value of the land resumed and any building thereon assessed in accordance with the said Ordinance together with interest on this amount … provided always that such interest and provisional payment shall be taken into account and set off against any compensation and interest awarded by the Lands Tribunal and if such interest together with the provisional payment that have been paid should exceed the amount of compensation and interest determined by the Lands Tribunal in respect of such application, the amount of excess shall be repaid to Government.

   Acceptance of the provisional payment by you would be entirely without prejudice to your right to make any claim to the Lands Tribunal for determination of the amount of compensation payable to you under the said Ordinance in respect of the resumption of the land described above ….”

8.   On 11 June 1997, Kam accepted his share of the provisional payment in the sum of HK$7,447,500 (the “Provisional Payment”).  He did so by signing back the Form of Acceptance attached to the 6 June Letter.  The version he signed back was in Chinese, and was in the following terms:

「   我/我們接納根據收回官地條例第124章第16A條所提議的臨時付款及所計算的利息，但還不會影響我/我們依照上述條例把此事轉交土地審裁處處理。」

9.   That sum of HK$7,447,500 was released to Kam on 9 March 1998.

10.   No claim in respect of the resumption of the Property has ever been submitted by Kam or the Government to the Lands Tribunal.

11.   On 1 November 2017, the plaintiff took out the Summonses.  The one under HCAP 25 was amended once on 1 December 2017.  No issue arises from those amendments. 

12.   The Summonses were taken out pursuant to section 23 of the Crown Proceedings Ordinance, Cap 300 (“CPO”) and Order 77, rule 16(2) of the Rules of the High Court.  The plaintiff seeks thereby inter alia an Order restraining Kam from receiving any money from the Intended Garnishee, and that the Intended Garnishee be directed to pay the plaintiff certain sums in satisfaction of the Costs Orders.

The hearing before Master Lo

13.   As the Summonses raised the same issues, they were on 8 December 2017 ordered to be heard together.  The substantive hearing subsequently took place before Master Lo on 14 March 2018.  Having heard parties, Master Lo dismissed both Summonses with costs.

The Notices of Appeal

14.   On 25 April and 30 April 2018, the plaintiff filed his Notices of Appeal respectively under HCAP 25 and HCMP 3548.  The sole ground put forward in both Notices is that “The offer of compensation in respect of the resumption of the [Property] under Section 6(1)(a) of the [LRO] are statutory compensation and attachable to satisfy any debt of the land owner.”

Whether leave to extend time

15.   The Notices of Appeal were out of time by about one month. The first issue to be considered is therefore whether to grant the plaintiff leave to file his Notices of Appeal late. 

16.   The relevant considerations when considering whether to extend time to appeal are not in dispute.  They are set out in paragraph 58/1/9 of the Hong Kong Civil Procedure 2019.  As summarized by Cheung JA in Menno Leendert Vos v Global Fair Industrial Ltd (HCMP 796/2010, 21 June 2010) (at paragraph 16), they are:

“ (1)   The length of the delay;

(2)   Reason for the delay;

(3)   Merits of this appeal: is there a reasonable prospect of success of the proposed appeal?

(4)   Prejudice to the other party if leave is granted.”

17.   In his affirmation of 24 April 2018, the plaintiff sought to explain the delay by saying that “I was at my home town in Guantung, China, out of Hong Kong for family affair when the [Decisions were] made”, and “it took me some time to decide whether there is merit to appeal”.

18.   In my view, the explanations given by the plaintiff for the delaylack particulars, and are completely inadequate.  However, I note that the delay was not long.  I note that no prejudice would be suffered by the Intended Garnishee if leave is granted.  I also note the underlying objectives.  I am prepared to consider the merits of the proposed appeals also before deciding whether to grant the plaintiff leave to file his Notices of Appeal late.

The plaintiff’s submissions on merits

19.   The plaintiff is represented by Mr Tony Ko of counsel.  His submissions in gist are:

   (a)   under the LRO read together with Articles 6 and 105 of the Basic Law, Kam has the right to be compensated without undue delay;

   (b)   upon proper interpretation of the LRO, the Compensation Offer, once made by the Intended Garnishee, even though not accepted by Kam, and until varied by the Lands Tribunal, remains payable;

   (c)   the release of the Provisional Payment by the Government was ultra vires and invalid as there was at the time no pending Lands Tribunal proceedings on foot in respect of the resumption of the Property; and

   (d)   viewed as such, there is still an attachable debt in the form of the Compensation Offer.

20.   The issues framed by Mr Ko are hence:

“ a)   Whether there is an attachable debt due or accruing due by the Gov’t in favour of Kam?

b)   Whether the provisional payment of HK$7,447,500.00 released to Kam is valid?”

The submissions on behalf of the Intended Garnishee

21.   Ms Jess Chan, Senior Government Counsel, appears for the Intended Garnishee.  Her submission is straightforward, that there is no present or accrued liability on the part of the Government to pay Kam, whether in terms of the Compensation Offer or the difference between that offered sum and the Provisional Payment.   

Attachment of debt due from the Government

22.   Garnishee proceedings are normally pursued under Order 49 of the Rules of the High Court.  However, Order 49 has no application if the garnishee is the Government.  Order 77, rule 16(1)(a) specifically provides that:

“ No order—

(a)   for the attachment of debts under Order 49 …

shall be made or have effect in respect of any money due or accruing due, or alleged to be due or accruing due, from the Crown.”

Instead, the applicable statute is section 23(1) of the Crown Proceedings Ordinance, Cap 300 (“CPO”), which stipulates that:

“ Where any money is payable by the Crown to some person who,under any order of any court, is liable to pay any money to any other person, and that other person would, if the money so payableby the Crown were money payable by a subject, be entitled under rules of court to obtain an order for the attachment thereof as a debt due or accruing due …, the Supreme Court may, subject to the provisions of this Ordinance and in accordance with rules of court, make an order restraining the first-mentioned person from receiving that money and directing payment thereof to that other person …”

23.   The starting words of section 23(1) are important.  The operation of the sub-section is prerequisite upon the satisfaction of the condition that “where any money is payable by the Crown”.

24.   In Da Fong Construction Engineering Co Ltd v Chuen Hing Construction Co Ltd HCA 4734/2001 (unreported, 17 June 2002), Deputy Judge A Cheung (as he then was) held and observed at paragraph 8 of the Judgment that:

“ … At this juncture, I should mention that s.23 of the Crown Proceedings Ordinance which gives the Court the power to makethe relevant order of attachment against the Government providesspecifically that where any money ‘is payable’ by the Government to some person i.e. the judgment debtor, the judgment creditor may make an application to Court for the attachment of the money as a debt due and owing by the Government to the judgment creditor rather than to the judgment debtor.  It is plain to me that the section only applies to a present and accrued liability on the part of the Government to pay.”

25.   I respectfully agree with those observations.  Unless there is a “present and accrued liability”, there cannot be any money which “is payable”.

26.   In this regard, I record that Mr Ko cites to me paragraph 49/1/12 of the Hong Kong Civil Procedure 2019, for the proposition that:

“ Debt of unascertained amount—The fact that the amount of the debt due or accruing due is not ascertained does not prevent a garnishee order nisi being made (Lucy v Wood…; De Pass v. Capital & Industries Corp…).”

Mr Ko also cites to me De Pass v Capital & Industries Corp [1891] 1 QB 216.

27.   I doubt the relevance of that proposition.  It relates only to thegranting of a garnishee order nisi.  In an application under section 23(1) ofCPO, the procedure is not split up into “nisi”and “absolute” stages.  I raised this with Mr Ko in the course of his submissions, which he acknowledged.  Further, Mr Ko’s stance is that the attachable debt in the present case is in fact an ascertained one, namely the Compensation Offer.  The position of an unascertained debt simply does not arise for consideration in this case.

Statutory interpretation

28.   In Yung Chi Keung v Protection of Wages on Insolvency Board (2016) 19 HKCFAR 469, the learned Chief Justice observed and explained at paragraph 22 that:

“ … This Court has on numerous occasions stated that statutory construction requires a purposive approach to be adopted; in other words, the words of a statute must be construed in the light of their purpose.  Context of course also plays an important part.  However, it must always be borne in mind that context and purpose are not to be seen in isolation.  Just as it would be wrong to construe words in a statute without regard to context and purpose, it is equally impermissible to ignore the actual words used in a statute in order to construe its effect.  In China Field Ltd v Appeal Tribunal (Buildings) (No 2), Lord Millett NPJ warned of the impermissibility of adopting an approach which would ‘distort or even ignore the plain meaning of the text and construe the statute in whatever manner achieves a result which they [the courts] consider desirable.’  While the plain or natural meaning of the relevant text may not always be clear cut (hence the obvious need to bear in mind as a starting point context and purpose), the actual words used cannot be ignored.  The Court is after all an ‘interpreter not a legislator’.”

29.   Yung Chi Keung, though not cited to me, was raised by me with Mr Ko in the course of his submissions.  I adopt the same approach when construing the LRO.

Whether any “money is payable” by the Government to Kam

30.   The provisions of the Basic Law raised by Mr Ko are not controversial.  Articles 6, 11 and 105 respectively stipulate, inter alia, that:

“    The Hong Kong Special Administrative Region shall protect the right of private ownership of property in accordance with law.” (Article 6)

“    No law enacted by the legislature of the Hong Kong Special Administrative Region shall contravene this Law.” (Article 11)

“    The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property. 

   Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay.”  (Article 105)

31.   Nor is it controversial that the right to compensation is a statutoryright, governed by the provisions of the LRO—Common Luck Investment Ltd v Cheung Kam Chuen [1999] 2 HKLRD 417, per Litton PJ at 426A.

32.   Whilst the above are not controversial, they fall a long way short of providing any justification for the proposition put forward by Mr Ko, namely any offer for compensation under section 6(1)(a) of the LRO, once made by the Government, even though not accepted by the offeree, and until varied by the Lands Tribunal, remains payable:

   (a)   That is not what is said by the section.In section 6(1)(a), the words used are “an offer of compensation” (emphasis added).  The offeree has the option of whether to accept it.  That is also consistent with the usual concept of offer and acceptance.  If the offer chooses not to accept it, that person has the right to refer the matter to the Lands Tribunal for determination of the amount of the compensation to be paid.

    (b)   Nor does reading LRO as a whole support that proposition. There is no express provision anywhere which supports that proposition.Sections 10, 11 and 12 contain detailed provisions on those matters that are relevant to the determination by the Lands Tribunal of the amount of compensation payable.  There is nothing in those section which remotely suggests that an unaccepted offer somehow remains payable.

   (c)   Mr Ko submits that if an unaccepted offer for compensation does not remain payable, in cases similar to the present one where the offeree does not refer the matter to the Lands Tribunal, the matter would be left hanging in the air for a long time, and that would be inconsistent with Article 105 of the Basis Law.  I do not agree.  A statutory system is in place for an offeree who chooses not to accept any offer of compensation to refer thematter to the Lands Tribunal, so that the amount of compensation can be determined without undue delay.  Once that system is in place, whether to accept any offer, and if not whether and when to refer the matter to the Lands Tribunal, are matters for the offeree.

    (d)   Mr Ko relies heavily on section 18 of the LRO.  He submits that that section completes the mechanism he is contending for.  I do not agree.  That section applies only to those cases specified in the section, namely:

“ When the owner of any land which has been resumed is absent from Hong Kong or cannot be found, or within 6 months from the date when the amount of compensation shall have been determined makes no claim to the same, or is in the opinion of the Chief Executive unable to give an effectual discharge for the same, the Chief Executive may direct payment of the compensation to be made to such other person on behalf of the owner as he shall think proper, …”

It does not give the Chief Executive any general power to direct payment in respect of any unaccepted offer.

   (e)   Nor can I see any basis to say that the purpose of the LRO supports the proposition being put forward by Mr Ko.

   (f)   In my view, Mr Ko’s contention is in effect an impermissible attempt to rewrite the LRO.  I with respect borrow the learned Chief Justice’s words in Yung Chi Keung, that “The Court is after all an ‘interpreter not a legislator’.”

33.   By reason of the above, I reject Mr Ko’s proposition that any offer of compensation, even though not accepted, and until varied by the Lands Tribunal, remains payable.

Whether release of the Provisional Payment ultra vires and invalid

34.   Mr Ko’s submission that the release of the Provisional Payment was ultra vires and invalid is based upon his interpretation of section 16A of the LRO.

35.   Section 16 of the LRO in its entirety stipulates that:

“ 16A  Provisional payment pending determination of compensation

(1)   Where, in the case of land resumed under an order made under section 3 on or after the commencement of the Crown Lands Resumption (Amendment) Ordinance 1984 (5 of 1984), any offer of compensation made by the Authority toany person under this Ordinance in respect of any claim isnot accepted, the Authority may, pending the determinationby the Lands Tribunal of the compensation, if any, payable in respect of such claim under this Ordinance, pay—

(a)   an amount as a provisional payment of the amount payable by virtue of such determination; and

(b)   interest on any payment made under paragraph (a), for the period from the date on which the land reverts to the Government under section 5, until the date on which the payment is made, calculated on a daily basis according to subsection (1A).

(1A)  For the purposes of subsection (1)(b), the rate of interest paid—

(a)   in respect of a working day must not be lower than the lowest of the interest rates paid on deposits at 24 hours’ call by note-issuing banks at the close of business on that day; and

(b)   in respect of a non-working day must not be lower than the lowest of the interest rates paid on deposits at 24 hours’ call by note-issuing banks at the close of business on the last working day before that day.

(2)   Any payment made by the Authority under subsection (1) in respect of any claim shall be without prejudice to the claim or the submission thereof to, or the determination thereof by, the Lands Tribunal under this Ordinance; but the amount of compensation payable by virtue of such determination in respect of such claim shall be reduced by the amount of such payment.

(3)   Where the amount of compensation payable by virtue of adetermination of the Lands Tribunal under this Ordinance isreduced under subsection (2) by the amount of any paymentmade under subsection (1), such compensation shall not as from the date on which the payment is made bear interest except on the amount thereof as so reduced.

(4)   Where the amount of any payment made by the Authority under subsection (1) in respect of any claim exceeds the amount of the compensation determined by the Lands Tribunal in respect of such claim, the amount of the excess shall be recoverable by the Authority as a civil debt.”

36.   To start with, there is nothing in that section which expressly provides that provisional payment can only be made when a claim for compensation before the Lands Tribunal is actually on foot.  The phrase “pending the determination by the Lands Tribunal of the compensation” does not necessarily carry that meaning or have that implication.

37.   More importantly, the express wording of the section is inconsistent with the interpretation which Mr Ko is contending for.  I highlight section 16A(2), that “Any payment made by the Authority under subsection (1) in respect of any claim shall be without prejudice to the claim or the submission thereof to, or the determination thereof by, the Lands Tribunal under this Ordinance”.  The underlined words clearly envisage the case of a claim actually on foot (“without prejudice to the claim”), and the case of a claim not yet on foot but which may be subsequently submitted (“without prejudice to the … submission thereof”).

38.   I also see no reason why the power to offer and release provisional payment should be confined to the scenario where a claim before the Lands Tribunal is actually on foot (as opposed to the parties having the power or entitlement under the terms of the LRO to submit or refer).

39.   For the above reasons, I reject Mr Ko’s submissions in this regard.

No “money is payable”

40.   Having answered the two issues against Mr Ko, the answer to the main issue follows naturally.  In my view, the plaintiff has failed to show that any money is payable by the Intended Garnishee to Kam, or in other words the existence of any present and accrued liability on the part of the Government to pay Kam, or any debt due or accruing due to Kam.  In my view, the facts of the case fall far short of establishing such a liability. The proposed appeals are not reasonably arguable.

Disposal

41.   In the circumstances, I refuse the plaintiff leave to file his Notices of Appeal late.  I would in any event have dismissed any appeal on the proposed grounds set out in the Notices. 

42.   Mr Ko and Ms Chan agree that costs of the appeals are to follow the event.  I order that costs of the appeals be borne by the plaintiff, to be summarily assessed.  The Intended Garnishee is directed to file and serve its submission within 10 days from the date hereof, and the plaintiff to file his reply within 10 days of its receipt.