SUBASH CHANDRA and Another v. MICHAEL JOHNSON

1995, No. A900

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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R U L I N G

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1. This is an application to discharge the Order of Leonard J made on Saturday, 30th March 1996, prohibiting the defendant from leaving Hong Kong.

2. I have considered the submissions by Mr Allman-Brown that the order should be discharged firstly, because of the failure of the plaintiffs to make immediate attempts to serve the defendant with a copy of that Order and merely attempt to communicate the Order to the defendant by telephoning the Marriott Hotel in the morning of 1st April when it was discovered apparently that the defendant had already checked out. And secondly, because the failure to communicate to Leonard J the variation by Sears J on 10th April of the terms by which the defendant had been given leave to defend the action.

3. While there is validity in these criticisms of the conduct of the plaintiffs' solicitors, neither of these matters persuade me that it is appropriate to discharge Leonard J's Order on that basis. I am satisfied that neither of these omissions were as a result of bad faith on the part of the plaintiffs' solicitors, or as it happened, prejudiced the defendant.

4. The issue raised before Leonard J on 18th April of lack of jurisdiction to make an order on the grounds of failure to establish the condition under s.21B(3)(b)(i) has not been gone into in great detail before me. I find, prima facie, that on a proper construction of the document, by virtue of the written agreement (a copy of which is exhibited as SC-1 to the plaintiffs' 2nd affidavit) the defendant's liability to repay the sum of US$300,000 arose at the time that sum was transferred to him, on 6th December 1993, and that only upon signing the formal documentation by 15th January, would the sum not be repayable. I am satisfied that the defendant was in Hong Kong on 6th December 1993 at the material time. I find that the plaintiffs have discharged the burden upon them for the purpose of these proceedings of showing that the defendant would be under an obligation to repay the $300,000 even if the agreement, Exh.SC-1, had not been signed until after the payment on 6th December. In view of my satisfaction as to that point, it is unnecessary for me to go on to consider whether the plaintiffs have established the condition under s.21B(3)(b)(ii).

5. The most serious argument advanced on behalf of the defendant is that the effect of this order would be to deprive the defendant of the right to defend the action at all. It is argued that he can only raise the instalments (that is the two instalments of $50,000) by working, and that his work necessitates him travelling overseas. By prohibiting the defendant from leaving Hong Kong, the defendant is precluded from raising the funds necessary for meeting the condition of having leave to defend the action.

6. The main issue before Sears J on 10th April was the capacity of the defendant to raise sums of money to be paid into Court. There is nothing to suggest that Sears J took the view that the defendant would have to earn the first instalment of US$50,000 to be paid into court. There was nothing on the evidence to suggest that the defendant would be capable of earning $50,000 in the approximately six weeks between 10th April and 22nd May, when the money had to be pay into court. Sears J expressed the view which he has recorded on the file and it is a view that I share, having seen all the evidence before me and heard submissions upon it, that he considered that the defendant had some substantial sums available. I can only assume that Sears J took the view that the assets in question were not in Hong Kong and he might need until 22nd May to realise such a sum. There may be some basis, particularly in the light of paragraph 12 of the defendant's 2nd affidavit, for assuming that Sears J took the view that the defendant might not be able to raise the whole of the remaining portion of the $100,000 other than through his ongoing business ventures but would be able to do so in the following five months prior to 1st September.

7. It would be wrong for this court to make an order that would deprive the defendant of the chance of fulfilling the condition necessary in order for him to have leave to defend. In view of my findings that the defendant has access to substantial assets that he has failed to disclose, such situation would not arise in relation to the condition that the defendant pays $50,000 into court on or before 20th May. But there is a possibility that the defendant might be prejudiced in raising the second instalment to $50,000 by 1st September if he is deprived of the opportunity of his pursuing his business activities overseas. I should add that I am satisfied that in addition to the condition under s.21B(3)(b)(i), I am satisfied that the conditions under S21B(3)(a)(c) and (d) are satisfied.

8. I accordingly dismiss the application that the Prohibition Order of Leonard J be discharged. I do, however, vary the conditions under which the Order is to lapse by substituting US$50,000 for the figure US$150,000.

(Court adjourns to 24th April at 9:30am to consider form of order and costs).

24th April 1996

9. Court makes order in following terms :

1. The defendant's application that the Order of Leonard J dated 30th March 1996 prohibiting the defendant, Mr Michael Johnson, from leaving Hong Kong be discharged is dismissed.

2. The Order of Leonard J made on 30th March 1996 prohibiting the Defendant from leaving Hong Kong be varied as follows :-

The Order shall lapse after the expiry of one month from 30th March 1996 (unless extended or renewed) and shall have no effect if :-

(i) The defendant make payment into Court of the sum of US$50,000 or its equivalent in Hong Kong currency at the time of payment in accordance with paragraph 1(a) of the Order of Sears J made on 10th April 1996 and security for such costs as may be due for the obtaining and execution of this Order in the sum of US$12,500; or

(ii) The defendant makes payment of the above sum as security or provides bail in that sum by a surety or sureties.

Plaintiff's costs in this application including the costs of the hearing on 24th April 1996 be costs in the cause.

(P.K.M. Longley)

Deputy Judge of the High Court