ANWIDE CO. LTD. v. LAW KIN MAN and Others

IN THE COURT OF APPEAL

1994, No.188
(Civil)

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H E A D N O T E

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Drug trafficking (Recovery of Proceeds) Ordinance 1989 created a statutory scheme which was not to be approached by reference to common law principles.

IN THE COURT OF APPEAL

1994, No. 188
(Civil)

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J U D G M E N T

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Power, V.-P.:

1. This is the judgment of the court.

2. This is an appeal by Anwide Co. Ltd. ("Anwide") against an order of Barnett J. in which he refused an application, made out of time, to discharge an external confiscation order made by Gall J., under s.29(1) of the Drug Trafficking (Recovery of Proceeds) Ordinance 1989, on 25th February 1992. The Attorney General applies to have that appeal dismissed on the ground that Anwide has not provided security in accordance with a consent order of the 5th January 1995 and has otherwise failed to comply with the rules.

3. The issue for our determination, as the matter now stands, is a narrow one which concerns the meaning and effect of that consent order. The order was as follows:

"1. That on or before 16th January 1995 the Appellant shall provide security for the Respondent's costs in this appeal in the sum of HK$400,000, and that in the meantime this appeal be stayed.

2. No Order as to costs for this application"

4. Mr. Barlow, who appears for the Attorney General, contends that as no security was furnished the effect of that order was to stay the appeal and that, as the matter has now come on for hearing on the appointed day, the Attorney General is entitled to have it dismissed.

5. Mr. Dykes, for Anwide, contends that, whatever the parties may have intended, the order, in its terms, did no more than effect a stay until the 16th January 1995. Relying strictly upon the wording of the order he contends that upon that date it, to use his terminology, "self destructs".

6. We have no hesitation in rejecting that contention. The meaning of the order was plain. By it Anwide was ordered to provide security and the parties agreed that in the meanwhile the appeal would be stayed. The order is silent as to what would happen if Anwide should fail to provide security by the date of the hearing of the appeal The matter having now come on for hearing on the appointed dates and no security having been furnished, we have no doubt that this court can properly dismiss the appeal and we have no hesitation in so doing.

7. The only remaining issue is the cross appeal of the Attorney-General against an order that he have only 75% of his costs.

8. The ex parte order made by Gall J. on 25th February 1992 registered two orders of the United States District Court, Eastern District of New York, dated 17th October and 20th October 1991. These orders stipulated that "any application to vary or set aside the registration must be made on or before 13th March 1992". By a summons dated 23rd February 1993, the applicant sought an order discharging the exparte orders. The hearing before Barnett J. of this application occupied seven days and on 10th October 1994 he dismissed the summons and made an order nisi that the Attorney General should have his costs.

9. There was a challenge to the order nisi and after argument Barnett J. held:

"Inter alia, I heard argument on, and dealt with in my judgment of 10th October, four issues:

(1) construction of the ordinance;

(2) the law of U.S.A.;

(3) the impeachment of the forfeiture     orders;

(4) material non-disclosure.

The applicant (Anwide) was successful in relation to issues (2), (3), and (4). It failed in its application to set aside the registration of the forfeiture orders in Hong Kong because I declined to exercise my discretion in its favour.

I accept that the issues were not raised by the Attorney General. They were, however, crucial to the regularity of the registration which the Attorney General principally sought to defend. The Attorney General did not simply rely on the exercise of discretion in his favour which would have been a most dangerous approach. In the event the Attorney General was found wanting on three issues so that he was reduced to the discretion point.

In the unusual circumstances, I think that the substantial success of the applicant cannot be overlooked. I order that the Attorney General should have 75% of his costs."

10. The appeal proper having been dismissed without our having been required to adjudicate upon the correctness of the findings of the judge we must consider the cross appeal upon the basis of those findings. It may be that this court would, had it been considering the matter at first instance, not have made the same findings as did the judge. We are now, however, concerned only, given those findings, with the propriety of the order which he made as to costs.

11. The first question to which Barnett J. addressed himself in his judgment was whether the Hong Kong courts have jurisdiction to register foreign in rem orders. It had been argued by Mr. Daniel Fung Q.C., who then appeared for Anwide, that this question must be answered by the application of common law principles. Mr. Barlow, who appeared for the Attorney General, contended that the Ordinance created a statutory scheme. The judge was satisfied that Mr. Fung's argument was unsustainable holding:

"I am quite satisfied that it was the intention of the legislature to introduce a 'fundamentally new principle' as Widgery J. put it. (Societe Co-operative Sidmetal v. Titan International Ltd. (1966) 1 Q.B. 828 at 846). The legislature did not intend that the new procedure should be approached by reference to common law principles. Had it so intended, doubtless it would have made provisions similar to that contained in s.6 of the FJO which, as I have already mentioned, in its English counterpart has been found not to have introduced a new procedure.

The legislature plainly had in mind to introduce the new and simple procedure set out in s.29. Provided the judge hearing the application is satisfied that the order sought to be registered is one which is aimed at the proceeds of drug trafficking; that where the order is against the person, that person had noticed; and that generally registration is in the interest of justice, the order ought to be registered. There is no warrant, in my view, for the proposition that the judge has to embark upon a consideration of common law principles and the conflict of laws before registering an ECO (External Confiscation Order)".

12. In this way the judge disposed of the first of what he characterized as the four "issues". He, in the words set out above, was, we are satisfied, resolving the real issue before him. He held that the Ordinance created a statutory scheme which was not to be construed by embarking "upon a consideration of common law principles ..."

13. Up to this point the judge had not dealt with the fact that Anwide, its application being very much out of time, required the court's leave to pursue it. It could be pursued only if the judge was prepared to exercise his discretion in Anwide's favour.

14. The judge resolved the other three "issues" in Anwide's favour. He then in turn considered whether, given that each had been so resolved, he should exercise his discretion to allow Anwide to make its application out of time. He was in the outcome satisfied that none was of sufficient weight to warrant such an exercise.

15. When seen in proper perspective the effect of the judgment was to rule in favour of the Attorney General's argument that the Ordinance created a statutory scheme which, to use Mr. Barlow's words "did not and could not exist at common law", and to refuse to exercise the court's discretion to allow an out-of-time application. There were not, as the judge stated, "four issues" for his consideration. There were, in fact, only two. The first was the proper construction of the Ordinance and the second was whether Anwide had been able to raise any matter of sufficient weight to warrant an exercise by the court of its discretion to allow it to pursue its gravely out-of-time application. Indeed the judge himself, early in his judgment, indicated that he was concerned with two "points". The first he characterized as "the jurisdiction point" and the second as "the discretion point". It is true that these two points were not considered in isolation and that they were, to an extent, interlocked both in argument and in the judgment but at the end of the day they were the two broad issues set out above. Anwide succeeded in persuading the judge to hold in its favour as to matters which were not decisive as to either of the two issues which he had to resolve. In the outcome the Attorney General succeeded on both. There was nothing which would warrant a departure from the fundamental principle that if the court were not minded to exercise its discretion under Ord.62 r.3, costs should follow the event. The judge was here plainly wrong not to adhere to his original order.

16. The appeal must be allowed and Anwide is ordered to pay the costs of the Attorney General to be taxed.