HMM (HONG KONG) LTD (formerly known as HYUNDAI MERCHANT MARINE (HONG KONG) LTD) v. MA CHUN KIT AND OTHERS

HCA 619/2016

[2022] HKCFI 3798

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 619 OF 2016

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BETWEEN

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DECISION

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INTRODUCTION

1.  This is the adjourned hearing of the Plaintiff’s summons dated 21 June 2022 (the “Summons”) for payment out of a sum of HK$500,000, which was deposited by the Defendant as bail money in HCCC 20/2018.

2.  The Defendant appears in person.

MATERIAL FACTS

3.  On 27 April 2022, Deputy High Court Judge Winnie Tsui handed down judgment in favour of the Plaintiff (the “Judgment”). The learned Deputy High Court Judge found that the Defendant had acted dishonestly and had misappropriated a “colossal sum of money” over 262 transactions carried out between 2009 and 2016. The Defendant was found liable for breach of fiduciary duties, breach of the implied duty of fidelity, breach of confidence and conversion. He was ordered to pay damages to the Plaintiff in the amount of HK$387,655,303.70 with interest and costs (the “Judgment Sum”). (See Judgment, §§52, 58-61, 64, 69).

4.  The Judgment Sum remains largely unpaid. The Plaintiff took out various applications and has obtained 11 garnishee orders absolute by 25 October 2022. Ms Ng for the Plaintiff informed this Court that the Plaintiff has so far recovered only about HK$2 million.

5.  The Defendant was also prosecuted in HCCC 20/2018 for four counts of theft based on the 260 of those 262 transactions (the “Criminal Proceedings”). As part of the Defendants bail conditions in the Criminal Proceedings, he had paid HK$500,000 into the High Court (the “Bail Money”).

6.  Following the Defendant’s conviction, Messrs. MinterEllison was informed by the Police that the Bail Money remained with the High Court.

7.  On 18 January 2021, following the Defendant’s conviction in the criminal proceedings and pursuant to the direction of Madam Justice Remedios, Messrs. MinterEllison served the Re-re-re-Amended Injunction Order herein (the “Injunction Order”) on the High Court Accounts Office, with the result that the Bail Money has not been released to the Defendant or anyone else.

APPLICABLE LEGAL PRINCIPLES

8.  The Plaintiff applies for the release of the Bail Money pursuant to Order 49, rule 9(1) of the Rules of High Court, Cap 4A.

9.  This is a manner of equitable execution, with the Court making the type of order that the old Courts of Chancery would to lend assistance to a judgment creditor so that he may obtain the fruits of his judgment. See Hong Kong Civil Procedure 2023, §49/9/1 and London County Council v Monks [1959] Ch 239, at 243-244 per Danckwerts J.

10.  Order 49 rule 9(4) of the Rules of High Court, Cap 4A provides that upon such an application, the Court “may make such order with respect to the money in court as it thinks just” (emphasis added).

11.  The Court of Appeal held in YBL v LWC (No 2) [2017] 2 HKLRD 783, at §29 that bail money that is due to be returned to a judgment debtor constitutes “money … standing to the credit of [the judgment debtor in court]” for the purposes of Order 49 rule 9(1) of the Rules of High Court, Cap 4A. A judgment creditor is therefore entitled to apply for an order under Order 49 rule 9(1) of the Rules of High Court for release of such bail money in satisfaction or partial satisfaction of what is owed to him. (See also: Kot See For v Chan Leong Hang (No 2) [2021] 5 HKC 679, at §5 per Lisa Wong J.)

12.  In relation to the exercise of this power on an application under Order 49 rule 9(1) of the Rules of High Court, the Court of Appeal further held in YBL v LWC, (supra) at §26 that,

“… the disposal of bail money is not to be fettered by constraints imposed by whatever arrangement between the person putting forward the cash bail and his financier (except perhaps in the context of a dispute between these two persons). The court does not hold the money on trust for any person and the person on bail only has a chose in action to seek the return of the bail money.”

See also: ibid, at §28; and Kot See For, (supra) at §8.

13.  Specifically, the aforesaid chose in action is subject to the Court’s legitimate power to dispose of the bail money otherwise than by returning it to the same person who answered bail. Such power was expressly held to include the Court’s power to order payment to judgment creditors pursuant to Order 49 rule 9(1) of the Rules of High Court (See YBL v LWC, (supra) at §28.)

ANALYSIS

14.  I am of the view an order should be made in terms of the Summons in view of (i) the substantial time and costs incurred by the Plaintiff to date in prosecuting its claims and now in trying to enforce the Judgment; (ii) the added difficulties posed by the Defendant’s dishonesty and contempt of court in continuing to dissipate his ill-gotten gains whilst an injunction was in place; and that (iii) to date the Judgment Sum remains substantially unsatisfied.

15.  The Defendant advanced 4 grounds of opposition. I am of the view that all of them are unmeritorious.

16.  First, the Defendant submits that he is entitled to the return of the Bail Money, as the purpose of putting up cash bail had been spent. However, the Defendant only has a chose in action to seek the return of the Bail Money, which is subject to the Court exercising its power, inter alia, to make any payment out pursuant to Order 49 rule 9(1) of the Rules of High Court, Cap.4A. The Defendant’s entitlement does not prevent the Court from exercising its powers to make a payment out to the Plaintiff pursuant to Order 49 rule 9(1) of the Rules of High Court.

17.  Secondly, Defendant asserts that he had put together the Bail Money from loans that he obtained from unspecified friends and relatives. Hence he claims that the Bail Money does not belong to him. That is incorrect. Once he borrowed the money, the money belonged to him. He owes a debt vis-à-vis his friends and relatives. Courts have consistently explained that arrangements between the judgment debtor who put up the cash bail and his creditors who put him in funds to do so, will not fetter the Court’s power to dispose of the bail money.

18.  Thirdly, Defendant submits that the Bail Money should not be released pending his appeal against his conviction. It is to be noted that the Bail Money was part of the Defendant’s conditions of bail, which bail was revoked subsequently. The purpose of the Bail Money being spent, it was open to the Defendant to collect it.

19.  Indeed, the Defendant’s representative did try to collect it on 12 January 2021 and would have succeeded had it not been for the service of the Injunction Order on the High Court Accounts Office on 18 January 2021. The Plaintiff, as judgment creditor, is entitled to enforce the Judgment Sum against any money or assets which were to be released or made available to the Defendant.

20.  Fourthly, the Defendant argues that the Plaintiff is sufficiently protected by the Injunction Order. This is a bad point. The Injunction Order preserves the status quo. The Judgment being entered in the Plaintiff’s favour, the Plaintiff is entitled to execution, and not just a preservation of sufficient and/or relevant funds out of which the Judgment might be satisfied in the future.

21.  The Defendant’s fourth contention also ignores the purpose of Order 49 rule 9(1) of the High Court, Cap 4A which is a manifestation of the Court’s equitable jurisdiction to aid execution so that a judgment creditor may obtain the fruits of his judgment.

DISPOSITION

22.  For all the reasons stated above, I make an order in terms of the Summons.

23.  The Plaintiff is also entitled to costs of this application, to be taxed if not agreed, on a party to party basis, against the Defendant.

24.  Finally, I thank Ms Ng for the Plaintiff for her helpful assistance.