MAN PING NAM AND ANOTHER v. MAN FONG HANG

Court: Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Ribeiro PJ, Mr Justice Litton NPJ and Lord Scott of Foscote NPJ

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 J U D G M E N T

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Mr Justice Bokhary PJ :

1.  The Court’s judgment on the issues of repayment and interest and on the costs of those issues will be given by Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:

2.  The respondent was the successful plaintiff at the trial before Lam J (HCA 7935/98).  As amended on 17 March 2004, the judgment stated in its paragraph 1 as follows:

“Judgment be entered for the Plaintiff in the sum of HK$2,756,354.39 by way of equitable compensation together with interest thereon at the judgment rate from 9 December 1997 until payment.” (“Paragraph 1”)

3.  The appellants satisfied that judgment, making payments of $4,607,681.40 and $3,614.88 on 21 and 22 April 2004 respectively, to cover the judgment sum with interest.

4.  The appellants failed in the Court of Appeal (CACV 104/2004).  But on 27 October 2006, this Court unanimously allowed the appeal and ordered, inter alia, that Paragraph 1 be set aside.  There was no express order for repayment of the sums paid in April 2004 nor any order for payment of interest thereon.

5.  On 1 November 2006, the appellants wrote asking for the return of the money and for interest at the judgment rate, which they calculated to exceed $1 million.  Before receiving a reply, they caused the Court’s Order to be sealed on 6 November 2006. 

6.  They then evidently became concerned as to the form of the Court’s judgment and, on 13 November 2006, they wrote asking if the respondent would consent to their having it amended under the “slip rule” (that is, O 20 r 11) to include an express order that the respondent pay the sums in question plus interest at the judgment rate to the appellants. 

7.  The respondent refused, asserting that there had been no “slip”.  Nor did he return the money he had received.   So the appellants issued a summons dated 29 November 2006 seeking relief from the Court.  The parties were directed to file written submissions for consideration by a single permanent judge, which they duly did.

8.  In the light of those submissions, which included a debate as to whether the directions sought were within the jurisdiction of a single permanent judge, the question of what orders, if any, should be made consequential upon the Court’s Order of 27 October 2006 setting aside Paragraph 1, was referred to the Court to be dealt with on the papers.  The parties were also given liberty to file further written submissions relating to the appellants’ claim for interest.  Such submissions were filed by the appellants but not by the respondent. 

Return of the monies paid

9.  The first issue concerns the appellants’ claim for the return of the sums of $4,607,681.40 and $3,614.88 paid to the respondent in April 2004.  The respondent has not put forward any grounds to justify his failure to repay those amounts.  Nor could such grounds be advanced.  Paragraph 1 embodied Lam J’s decision that the respondent was entitled to equitable compensation with interest, given his Lordship’s finding that there had been a sale at an undervalue.  When the Court ordered Paragraph 1 to be set aside, it was giving effect to its decision that such an undervalue had not been proved and that the respondent had no entitlement to be paid those sums.  It obviously follows that the respondent must restore the same to the appellants.  While it would have been desirable (eg, to facilitate execution) for an express order for repayment to have been included, there is no ambiguity nor any ground for doubting that such was the effect of the Order made.

10.  Even if an Order as drawn up is ambiguous, it is well settled that the court (at all levels) has an inherent or implied discretionary power to clarify the original order if the court’s intention appearing from the body of the judgment is manifest.  As Lord Penzance stated in Lawrie v Lees (1881) 7 App Cas 19 at 34-35:

“I cannot doubt that under the original powers of the Court, quite independent of any order that is made under the Judicature Act, every Court has the power to vary its own orders which are drawn up mechanically in the registry or in the office of the Court - to vary them in such a way as to carry out its own meaning, and where language has been used which is doubtful, to make it plain.  I think that power is inherent in every Court.”

See also the cases cited in Hong Kong Civil Procedure 2007 at 20/11/1.

11.  In the absence of any prejudice to the other party (in which event discretionary considerations may come into play), it matters not that an application for such clarification is made after the Court’s order has been sealed since it operates to make plain what the Court has in fact already decided.  It does not involve the Court acting when functus officio.

12.  While the obvious effect of the Order in the present case makes it unnecessary to resort to the aforesaid power, we will for the avoidance of any doubt (and to facilitate any process of execution that may be necessary) order that the respondent do forthwith repay to the appellants the said respective sums of $4,607,681.40 and $3,614.88.  We will also order that interest on those sums be payable by the respondent to the appellants at the judgment rate as from 27 October 2006 (the date when the appeal to this Court was decided) until payment.

Interest on the sums to be recovered from the respondent

13.  I turn next to the question whether any interest should be paid by the respondent on the two sums in respect of the periods between their receipt and the date of this Court’s judgment.

14.  It is clear that the Court has power at common law, possibly as an aspect of its inherent or implied jurisdiction, to make orders for such interest to be paid.  In Rodger v The Comptoir D’Escompte de Paris (1871) 3 LR PC 465 at 475-476 (an appeal from Hong Kong), Lord Cairns stated that it was “one of the first and highest duties of all Courts... to take care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court.”  His Lordship held that injustice would be done to successful appellants as a result of an act of the court “unless the persons who have had their money improperly taken from them have the money restored to them, with interest, during the time that the money has been withheld.”

15.  The principle was summarised by Lord Brandon of Oakbrook in Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] 1 AC 105 at 108, “... as being that, in order to do complete justice between the parties, money paid in satisfaction of a judgment subsequently reversed by this Board should be repaid with interest from the date on which the money concerned was paid.”

16.  The reason why interest was not dealt with in the present case is that the appellants did not ask for it.  As the Court’s judgment has been sealed, the respondent argues that it is now too late to entertain the appellants’ claim for interest.  In any event, it is argued that any interest cannot be awarded at the judgment rate.

17.  There is no reason to doubt that the failure to ask for interest was an accidental omission on the part of those representing the appellants.  On 1 November, a few days after judgment was delivered, the appellants’ solicitors wrote demanding repayment and asking for interest as a matter of course, obviously assuming that interest had been provided for.  When it was realised that this was not the case, they wrote on 13 November 2006, asking for consent to remedy this “slip”. 

18.  Such accidental omissions are understandable since the Court almost invariably reserves judgment so that the oral hearing terminates without the result of the appeal being known.  The judgment is then handed down without any further oral hearing.  The question of interest on monies paid to satisfy a lower court’s judgment naturally arises as a topic prompted by success on the appeal when an entitlement to repayment of those sums is established.   It is not surprising that it is a topic that may not have been addressed before the result was known.  Of course, the parties should ideally make it clear in their respective printed cases precisely what orders, including consequential orders, should be made if they should succeed on the appeal.  However, this is sometimes understandably overlooked by a party intent on achieving success on the appeal in the first place.

19.  The “slip rule” powers exercisable under Order 20 r 11 are available to the Court.  The rule provides:

“Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal.”

20.  It is clear that the failure of the court’s original order to cover a particular matter as a result of an accidental omission of counsel or solicitors or the party is capable of being corrected under this rule: In re Inchcape[1942] 1 Ch 394, approved by the Privy Council in Tak Ming Co v Yee Sang Co [1973] 1 WLR 300 at 304 et seq.  In the Court of Appeal, the rule has been applied in a case where there was an accidental omission to ask for costs and interest: Winston Camera & Radio Co Ltd v Combi (Singapore) Pte Ltd [1988] HKC 156.  The correction can be made by the Court “at any time”, so the fact that correction is sought after the appellants had the Order sealed is not an obstacle. 

21.  Where the “slip rule” applies to any order of this Court, the discretion it confers should be liberally approached to ensure that the Court’s decisions are properly given effect, particularly bearing in mind that there is no appeal from the Court’s decisions.  On the other hand, it must also be borne in mind that persons affected by orders of the Court need to know with certainty and finality what such orders consist of. 

22.  We have no doubt that the discretion should be exercised in the appellants’ favour in the present case.  If interest had been sought at the hearing, the Court would unhesitatingly have ordered the same.  The respondent has had use of the money since April 2004 on a legal basis now shown to be invalid.  There is no suggestion that he would suffer any prejudice if the court were presently to exercise the discretion in the appellants’ favour.

23.  However, we do not accept the appellants’ submission that such interest should be paid at the judgment rate.  As section 49 of the High Court Ordinance (Cap 4) provides, such interest is payable on a judgment debt.  It is charged at a significantly higher rate than applies to commercial borrowings to give the judgment debtor an incentive promptly to satisfy the judgment debt.  But when, in April 2004, the appellants paid the sums to the respondent, that did not make the respondent a judgment debtor.  It was the appellants who were satisfying the judgment then in place against them.  It was only as a result of the judgment of this Court that the respondent became obliged to repay the appellants the sums received.  That justifies an order for payment of interest at the judgment rate, but only after the date of this Court’s decision.  In relation to the preceding period stemming from the dates when the two sums were received, we will award interest at the rate of 1% over the HSBC best lending rate.

24.  The appellants have succeeded in obtaining the relief sought except in relation to the rate of interest claimed.  On the basis of such substantial but partial success, we order the respondent to pay to the appellants two-thirds of their costs of and occasioned by the present application to be taxed if not agreed.

25.  We accordingly make the following Orders, namely, that :

(a) the respondent do forthwith pay to the appellants the sum of $4,607,681.40 with interest thereon:

(i) at the rate of 1% over the HSBC best lending rate for the period from 21 April 2004 to 27 October 2006; and,

(ii) at the judgment rate from 28 October 2006 until the date of payment;

(b) the respondent do forthwith pay to the appellants the sum of $3,614.88 with interest thereon:

(i) at the rate of 1% over the HSBC best lending rate for the period from 22 April 2004 to 27 October 2006; and,

(ii) at the judgment rate from 28 October 2006 until the date of payment; and,

(c) the respondent do pay to the appellants two-thirds of their costs of and occasioned by the present application to be taxed if not agreed.