HUNG KAI FINANCE CO LTD v. THE HAN KING

IN THE COURT OF APPEAL

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J U D G M E N T

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Clough, J. A. :

1. This is an appeal by a judgment creditor against the order made by a master against the judgment debtor requiring him to pay the costs, on an indemnity basis, of hip examination proceedings before the master under Order 49B.

2. The judgment creditor is not satisfied with that order and contends that the master should have exercised his power under Order 49B Rule 1B(1) to send the judgment debtor to prison for a period not exceeding three months because the master had found that the defendant had wilfully failed to make full disclosure as required under rule 1A(2) and had procured his wife to lie to the court and there was do reason not to commit the defendant to prison.

3. The circumstances under which the master came to make his order are unusual. The examination proceedings involved hearings on three days, namely the 27th May, the 15th June and the 18th August 1988 during which the judgment debtor and his wife and three other witnesses called by the judgment creditor hat been examined about the debtor's affairs. The  judgment creditor was represented by a solicitor, Mr. Samuel Luk. The debtor appeared in person. On the 13th August, at the conclusion of the evidence Mr. Luk is recorded in the transcript of the proceedings recorded by shorthand writers provided by the judgment creditor to have been asked if he had any application to make and to have replied:

"Master, from the examination of the Defendant and witnesses today, there is no evidence to prove that the Defendant has told any lies or has disposed his assets to avoid payment to the judgement debt. Besides, from the evidence the Defendant is not able, for the time being, to repay any part of the judgement debt. In the circumstances, I will just apply to you for the costs of examination to be added to the judgement debt."

4. This was an application for the costs of the proceedings only on the basis that the judgment creditor was not applying for a prison order under rule 1B(1) or for an order under rule 1B(2) that the debtor satisfy the whole or any part of the judgment debit. The master so understood the application and explained the position to the debtor, asking him if he had any objection to the order for costs sought by the judgment creditor.

5. When the debtor showed reluctance to agree to submit to such an order the master accused him of being calculating and adopting a bargaining attitude. He told him he was very fortunate that the judgment creditor's solicitor had not applied for an imprisonment order because he would certainly have acceded to an application if is had been made The master added that the debtor had been a most unsatisfactory witness who had lied to him and got his wife to lie to him and went on to say that he was not satisfied with the evidence given by the debtor and his wife regarding the debtor's financial situation.

6. At this stage Mr. Luk appears to have tried unsuccessfully to intervene. Exchanges followed between the master and the debtor in the course of which the master assured the debtor that the judgment creditor had not applied for any order save as to costs and that as far as he was concerned any other relief was a dead issue and whether or not the debtor submitted to an order for costs he would not make an order affecting the debtor's liberty.

7. There followed efforts by Mr. Luk to reserve his client's position and his right to make a further application in due course. He evidently submitted to the master that the master had power to make a prison order on his own motion when satisfied that the debtor had wilfully failed to make full disclosure. The master indicated that he did not consider it fair to entertain at that stage any order other than an order as to costs and he ordered costs against the debtor on an indemnity basis because he was convinced the debtor had lied, adding that he Was very fortunate to escape imprisonment.

8. It has been submitted in this court today by Mr. Cheung, who appears for the judgment creditor, inter alia that the master failed to exercise his discretion under rule lB to make an imprisonment order, but it seems to me to be clear that this is precisely What the master did. He did exercise his discretion and he refused to make the order.

9. The situation that has given rise to this appeal would have been avoided if the master had not permitted himself to make such injudicious observations on the issue of imrpisonment to the debtor when addressing him on the question of costs. However Mr. Luk, who had full knowledge of all the evidence and all the material procedural and forensic implications had unequivocally abandoned the judgment creditor's claim to any relief under Order 49B other than costs.

10. As soon as he heard the master's observations to the debtor Mr. Luk sought to revive the judgment creditor's claim to an Order for imprisonment. In this connection it is by no means clear that Mr. Luk actually applied for such an order but he appears to have been trying to re-open the issue and at least he tried to persuade the master to make an order on his own motion.

11. It is well settled in the context of pleading in a civi1 action that the court has a discretion to permit a party to revive an abandoned claim by amendment. It is equally well settled that this court will not override the exercise of that discretion by a tribunal of first instance unless it had been exercised on wrong principles.

12. However proceedings under order 49B are quasi criminal in nature. The debtor's liberty is at risk.    Where, as in the present case, the master has exercised his undoubted discretion against permitting the judgment creditor to revive an unequivocal abandonment of a claim for an order of imprisonment, such attempt at revival being based on nothing more than the master's injudicious expression of his own views on the evidence when dealing with the issue of costs, I consider that there are no grounds for faulting the master's exercise of his discretion.

13. In my judgment it borders on an abuse of the process for a solicitor in proceedings of this nature to blow cold unequivocally on the issue of imprisonment when in possession of all the relevant facts and then to blow hot when he discovers chat he has misjudged the view of the court. It also seems to me to be wholly wrong to contend (and this was the nub of the Mr. Cheung's argument for the judgment creditor in this appeal) that when the judgment creditor's solicitor abandoned any claim to an order for imprisonment the master should nevertheless have taken it upon himself to imprison the debtor and thereby render the judgment creditor liable to pay up to $150 per day for the support and maintenance of the debtor under Order 49B rule 2.

14. Accordingly, on the grounds that the master cannot be faulted in the exercise of his discretion in all the circumstances of this case, I would dismiss the appeal.

Cons, V.-P. :

15. I agree with my Lord and would add, only because Mr. Cheung has conceded that it is a crucial plank in his appeal, that in my view order 49B rule 1B does not give a master jurisdiction to imprisonment of his own motion. Firstly, there is no express power within the Order as one would if that were intended to be given to a master. Secondly, it seems unlikely, because the exercise of that power imposes positive financial obligations upon the judgment creditor.

16. In the present instance the solicitor for the judgment creditor expressly declined to ask for an order of imprisonment at the close of the questioning of the judgment creditor. As I read the transcript, he did not make any such application during the exchanges that followed between himself and the master, although he did try to extractsome advantage from comments made by the master when attempting to explain, in words that were perhaps stronger than necessary, why he thought the debtor should consent to the order for costs that he had in mind. To allow the judgment creditor to take further advantage at this stage of the appeal would seem to me to be quite wrong.

Hunter, J.A. :

17. I also agree.