PT BANK PEMBANGUNAN INDONESIA (PERSERO) v. TAN EDDY TANSIL AND OTHERS

IN THE COURT OF APPEAL

1995, Nos. 171 & 190
(Civil)

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J U D G M E N T

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Bokhary, J.A.:

1. By an Order made on July 5 this year, but wrongly dated the 20 of that month, Mr Justice Yam ordered that the plaintiff, a bank, be at liberty to enter judgment against the 1st defendant, a businessman, unless he complied by 4.00 p.m. on August 2 this year with paragraph 1 of the Order made by Mr Justice Findlay on May 12 this year, the effect of which paragraph had been to require him, the 1st defendant, to file within 28 days of May 10 this year an affidavit making and authorising disclosure in aid of a Mareva injunction. The effect of the unless order was to give the 1st defendant a second 28 days' extension which second extension had been opposed, an earlier 28 days' extension having been ordered by consent by Mr Justice Waung on June 6 this year.

2. An application for a third extension, also of 28 days, to file such an affidavit was heard by Mr Justice Barnett on the very day on which time for filing it was due to expire, namely August 2 this year. Some time before 4.00 p.m. on that day, which was the hour at which time was going to expire, Mr Justice Barnett refused an extension. He also refused to stay the unless order pending an appeal from his own Order.

3. On the same day, the 1st defendant applied to a single judge of this Court for such a stay. And the Chief Justice, who heard the application, likewise refused to stay the unless order.

4. The deadline for filing a disclosure affidavit having passed without any having been filed, the plaintiff, by a notice of motion taken out on August 17 this year and returnable before Mr Justice Findlay on the 25th of that month, moved on the basis of such default for judgment against the 1st defendant for US$351.645 million or US$309.54 million or US$297.1 million.

5. When the motion came before him on the return day, Mr Justice Findlay refused the 1st defendant's application for an adjournment of the same until after the determination of his appeal against Mr Justice Barnett's refusal of an extension.

6. Having refused an adjournment, Mr Justice Findlay heard the motion and reserved his decision to the 30th of the month: when he entered judgment for the plaintiff against the 1st defendant in the sum of US$282 million and such further sum, taking into account that sum of US$282 million, by way of damages to be assessed.

7. The 1st defendant now appeals to this Court against Mr Justice Barnett's refusal of an extension and Mr Justice Findlay's refusal of an adjournment. He says that if he succeeds on the extension, then he must succeed on the adjournment too. At the same time, he concedes that if he fails on the extension, than he must fail on the adjournment too.

8. Mr Justice Barnett's reasons are contained in a note prepared by both sides and approved by him. They read as follows:

"I understand the difficulties faced by the 1st defendant in conducting the proceedings (a) from another country and (b) from in prison. But, I am not persuaded that either he or his advisors have demonstrated that degree of urgency that was required since Mr Justice Findlay gave direction on the 13th May and which were emphasised Mr Justice Yam on 5th July - there has been no activity apart from a metaphorical wringing of hands.

I dismiss the summons with costs."

9. The test to be applied here is, in my judgment, the one laid down by Sir Nicolas Browne-Wilkinson V-C. giving the leading judgment in the case of In re Jokai Tea Holdings Ltd [1992] 1 W.L.R. 1196 when he said this at p. 1203 B:-

"In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an "unless" order, the relevant question is whether such failure is intentional and contumelious. The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded But if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed."

10. As I see it, that test has not been changed by anything that was said in the case of Carribean General Insurance v. Frizzel [1994] 2 Lloyd's Rep. 32 once the context in which the statements in that case were made has been taken properly into account.

11. Here the extraneous circumstances were, shortly stated, these. The 1st defendant was in prison in Indonesia. In the absence of a special permit from the Indonesian courts, his Hong Kong legal advisers could not visit him for the purpose of preparing an affidavit and no notary public could visit him for the purpose of the swearing of the same. There was delay in the obtaining of such a permit. None was obtained until only two clear days before the expiry of the deadline. And, as it turned out, an affidavit was available for filing within the extended period for which Mr Justice Barnett was asked but had refused.

12. For the 1st defendant, Mr Warren Chan, Q.C. has conceded that the 1st defendant's Hong Kong solicitors, and possibly his Indonesian lawyers as well, were incompetent in not managing to obtain a permit earlier. But that, he says, is not the 1st defendant's own fault and should not be visited upon him if that can be avoided without injustice to the other side. In such a situation, there is, as I pointed out in the course of the argument, the well-known statement of Lord Denning M.R. in Doyle v. Olby (Ironmongers) Ltd [1969] 2 QB 158 where the Master of the Rolls said (at p. 166C):

"We never allow a client to suffer for the mistake of his counsel if we can possibly help it. We will always seek to rectify it as far as we can. We will correct it whenever we are able to do so without injustice to the other side."

13. I see no difference here between counsel and solicitors. That is made clear, if it needs to be made clear, by the approach of this Court in Chiu Butt-york v. Chiu Kwok-lim [1980] HKLR 459 where Mr Justice Li JA, giving the judgment of the court, said this at p. 465:

"We see no injustice if the appellant is not penalized for the mistake of his solicitor subject to the question of costs."

In that case any injustice of the opposite party could be removed by an order as to costs.

14. In opposing the appeal against Mr Justice Barnett's refusal of an extension and the appeal against Mr Justice Findlay's refusal of an adjournment, Miss Audrey Eu Q.C. for the plaintiff has taken six points which may be summarised thus :

(1) The history of this matter shows that there has been no conscientious effort on the 1st defendant's part to comply with orders of the court.

(2) The point raised on the 1st defendant's behalf as to a permit is a red herring.

(3) There would be prejudice to the plaintiff if the case is allowed to go on.

(4) This is a case of fraud, and discovery is important.

(5) The judges had exercised their discretion and their exercises of discretion ought not to be interfered with.

(6) The affidavit ultimately proffered is palpably insufficient.

15. It seems to me very difficult, on the material we have in this interlocutory appeal which had its origins in a draconian order against him, to condemn the 1st defendant to pay hundreds of millions of United States dollars by reference to Ms Eu's first, second or fourth points.

16. As far as her third point is concerned, what the plaintiff was seeking is an affidavit; and really the case ought to turn on whether it received something capable of constituting what was ordered even though the same is not everything which it might have been hoping for. That it has obtained default judgment in the absence of compliance may be something which it is happy about. And that judgment is one which I have no doubt it is very keen to retain. But we have to keep our eye on the fact that the real complaint can only be failure on the 1st defendant's part to make discovery in aid of Mareva. So the sixth point seems to me to be the most important. The second point is tied in with the sixth. And of course the sixth point has to be considered in the context of the fifth, which has to do with discretion.

17. Another way of putting the sixth point - and it is one of the ways in which Ms Eu did put it - is: that (i) the affidavit ultimately proffered can be seen to be one which did not require any prison visit by the 1st defendant's Hong Kong legal advisers; and (ii) that such affidavit falls so far short of what was ordered that it was in truth no better than a total absence of any affidavit.

18. Those are very strong things to say. True there is not the slightest doubt that the form of the affidavit is far from satisfactory. The "affidavit" is made up of a principal affidavit and other affidavits to which it incorporates by reference and even to other material which it is said the plaintiff has or can easily get. So there is no doubt that there is much in the affidavit which is open to criticism. But is it as bad as Ms Eu says, justifying the very strong order made against the 1st defendant for judgment in an enormous sum as a result of failure to make discovery pursuant to a draconian interlocutory order against him? That is the crucial question.

19. Our ability to go through the various affidavits referred to in the principal affidavit was somewhat hampered by the fact that there are insufficient copies of the various affidavits referred to. There is only one copy for the three of us to share.

20. The 1st defendant certainly does not mind in the least that the various affidavits referred to in the principal affidavit be subjected to the closest possible scrutiny. And at one stage, Mr Chan sought an adjournment in order to make sufficient copies. But that adjournment was strongly resisted by Ms Eu. And there came a time in the course of his application for an adjournment when Mr Chan saw that the adjournment was perhaps as much needed, if not more needed, for Ms Eu's purpose than his. And he withdrew his application for an adjournment.

21. So we have to do the best we can on what we have in the way in which it was presented to us. It seems to me that it is plainly far too strong a thing to say that the affidavit in question is palpably insufficient, that it demonstrates that the quest for a permit was a red herring or that the affidavit fell so far short of what was ordered that it was in truth no better than no affidavit at all.

22. In my judgment, the appeal against Mr Justice Barnett's Order refusing an extension must be allowed because it is clear that the extension should have been granted. It is difficult to see how if that appeal is allowed the appeal against Mr Justice Findlay's refusal of an adjournment can be resisted. But it has been; and we have considered such resistance.

23. At the end of the day, I am clearly of the opinion that with the reversal Mr Justice Barnett's refusal of an extension there must be a reversal of Mr Justice Findlay's refusal of an adjournment. Accordingly, I would allow both appeals.

Godfrey, J.A. :

24. If the order on the 1st defendant here, to swear and serve on the plaintiff's solicitors within a certain time an affidavit making disclosure of assets in aid of a Mareva injunction, is properly to be regarded as a mere procedural order (like an order to give particulars, or make discovery in the action), then the question is whether the 1st defendant's alleged failure to do so was intentional and contumelious : see In re Jokai Tea Holdings Ltd [1992] 1 WLR 1196, already cited by my Lord, Bokhary, J.A. I am satisfied, in all the circumstances of this case, that the real or alleged failure on the part of the 1st defendant to comply with the order was not intentional and contumelious and for that reason I, too, would allow the appeal.

25. However, I would suggest that the order under consideration was not a mere procedural order. It was a mandatory order; an order in the nature of an injunction, a failure to comply with which would constitute a contempt of court. It is not, then, merely a matter for an "unless" order, leading inevitably to a judgment against the defendant in the event of a failure to comply with it. It may well be a matter for punishment by committal or sequestration of assets. For proof of a contempt of court the test is of course even more stringent than that prescribed, by the Vice-Chancellor in the case cited, for proof of failure to comply with a mere procedural order. But since this matter was not subject of any argument before us, I will say no more about it. It is sufficient, in my judgment, for us to allow these appeals on the grounds stated by my Lord, Bokhary, J.A.

Liu, J.A.:

26. I agree. It is only with respect to one aspect that I wish to say a word of two of my own. It is the submission of Ms Eu that the filing of the 1st defendant's affirmation in compliance with the disclosure orders, if extension were granted, would be an illusory discovery. On the other hand, Mr Chan submits that the 1st defendant's affirmation ready to be filed would be a compliance, in substance, with the disclosure orders. There seems to be much room for improvement in the 1st defendant's affirmation, but it does verify the facts in the 4th affirmation of Mr Singh which in turn confirms the nature, value and location of the 1st defendant's assets set out in the 8th and the 9th affirmations of Wong Yuk-ying dated 31 May 1995 and 3 July 1995 respectively.

27. For my part, I am prepared to accept Mr Chan's statement as counsel that reference to the facts in the said 8th and 9th affirmations of Wong Yuk-ying would be, but for Ms Eu's criticism as to form, a good compliance. I would focus on substance rather than form. Moreover, Ms Eu has not sought to argue that reference to the facts in the said 8th and 9th affirmations of Wong Yuk-ying, if properly made, would not constitute a good compliance with the discovery orders. In my opinion, the 1st defendant's affirmation to be filed would not be, as it stands, palpably inadequate.

[Argument as to the length of the extension and costs]

Bokhary, J.A.:

28. The result is:

(1) Both appeals are allowed.

(2) The extension is to 4.00 p.m. on November 28, 1995.

(3) Costs below are left undisturbed.

(4) There will be no order as to the costs of either appeal.

The fifth thing is, of course, to thank counsel on both sides for their assistance.