Auto-treasure Ltd. t/a Albert Jewelry Creation v. Pyramid International (A Firm) and Others

CACV000024/1992

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Coram: Hon. Sir Derek Cons, V.P., Bokhary & Kaplan, JJ.

Date of hearing: 22 May 1992

Date of delivery of judgment: 22 May 1992

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JUDGMENT

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Sir Derek Cons, V.P.:

1. This is an appeal against the decision of Liu, J., by which he discharged a prohibition order against one Philippe Hababou which had been granted earlier by Jones, J. He did so on the ground that there had been material non-disclosure in the ex-parte application and that in any event the merits did not make it appropriate for the order to be continued. He ordered the plaintiff to pay the costs of the application o discharge to Mr. Hababou on an indemnity basis.

2. The plaintiff is a jewelry manufacturer. Between January and September 1989 it carried on business through a Mr. Tsang with the 1st defendant in the proceedings below, i.e. Pyramid International, a French firm, of which Mr. Hababou appears to be a member. The business was carried on by him as far as it related to the plaintiff. It consisted of taking jewelry on consignment, i.e. for sale or return, either returning it or paying the proper price for it.

3. There would appear to have been some difficulties in the business between the two firms. By September there was a sum of something like $879,000 due from the 1st defendant to the plaintiffs. Nevertheless in September of that year, when Mr. Hababou was in Hong Kong from France where he appears normally to reside, a further agreement was made whereby the plaintiff would supply $5,500,000 worth of jewelry, some 118 items, which would be taken away similarly on sale or return. That agreement was set out, or crystallized as it has been put, in a memorandum of agreement which was signed by Mr. Hababou later in France. At the same time he and another gentleman, who does not enter into these proceedings, signed a personal guarantee in respect of all duties which would be owed under that agreement by the 1st defen^dant to the plaintiff. The goods were taken accordingly. They have not been returned, nor has there been any payment made. Some of the goods meanwhile were seized by the French customs at some stage due to difficulty over certificates of origin or some forms which the customs required and which had not been made available. 65 items were kept in that way.

4. Eventually in 1990 the plaintiff sued the 1st defendant in France. It recovered the $869,000-odd, or at least recovered judgment for it, and it obtained an order that the 65 items in the custody of the French customs should be returned, which I believe has happened.

5. It is mentioned in the French judgment that the memorandum of agreement was, according to the French law, null and void. That mention however was not included in the part of the judgment which was translated for the benefit of the plaintiff's solicitors by their counterparts in France when forwarding the whole of the French judgment. The part that was translated is sufficient to show that, as far as the plaintiff is concerned, they had won the action in France. As I said, that action had been taken only against the 1st defendant company, but further proceedings initiated in France under the penal code, proceedings we understand to be in the nature of a claim in fraud, do include Mr. Hababou and are still pending.

6. In January 1992 the plaintiff sued in Hong Kong on the guarantee, obtaining ex-parte a prohibition order against Mr. Hababou, who happened to be in Hong Kong at. the time, apparently having coming here to do more business. That is the order which Liu, J., discharged.

7. There were, in the judge's view, two material items of non-disclosure. The first were the French proceedings, in particular the decision of the court that the memorandum of agreement was null and void. For my part I find it difficult to accept how a party can be held to blame for not disclosing something which he did not in fact know, unless for good reason he ought to have known. The judge thought that there was good reason why the plaintiff should have known what was contained in the untranslated part of the French judgment, but unfortunately the judge did not disclose what that reason was.

8. Be that as it may, the second item provides more important considerations and takes us into an area which is not entirely satisfactory. The burden of the affidavit by

Mr. Tsang, upon which the plaintiff obtained the ex-parte prohibition order, was tha^t the defendant was in Hong Kong, that he was avoiding meeting Mr. Tsang and that he was about to leave without notifying Mr. Tsang that he was here, the implication being that it was urgent that he should get his order before Mr. Tsang departed. In his judgment given on 29th January this year the judge dealt with that aspect. He said this:

"There was also non-disclosure of the discussions between the 2nd defendant and the plaintiff in Hong Kong together with the 2nd defendant's business associate. It is true, as indicated by Mr Chan, counsel )for the plaintiff, that when the first affirmation of the director of the plaintiff was in preparation, such discussions hadn't materialized. But by the time matters together with the papers were presented to the ex-parte judge, the discussions had taken place."

Quite clearly that was a mistake. Both sides agree that no discussions took place between Mr. Tsang and Mr. Hababou before at least the 16th, or perhaps the 17th, and then, although with slight disagreement as to the exact days, up to the 20th when the order was served upon Mr. Hababou.

In his preface to the judgment on 29th January the learned judge said this:

"Time is pressing and it is getting late. I don't propose to go to the facts which I propose to include comprehensively in a decision in writing which I shall in due course produce. What I propose to do this evening is to give the main reasons for my decision."

He produced the comprehensive judgment, with commendable speed, on the 31st of the same month. But we find in that judgment no reference to non-disclosure of discussions which had taken place before the ex-parte application. What the judge does instead is to rely on the discussions which had

taken place between the granting of the order on the 16th and its service on the 20th. As to these he said:

"    Further, the information placed before the ex-parte judge did not include the admitted discussions between the 2nd defendant and Mr Tsang in Hong Kong prior to the service of the Prohibition Order These discussions are highly relevant to what must now be regarded as a false impression that there was attempted concealment on the part of the 2nd defendant of his current Hong Kong visit. It must be accepted that when the first affirmation of Mr Tsang was filed, there had not been such meetings between the 2nd defendant and himself, but the plaintiff owed a duty to the ex-parte judge to make full disclosure of these meeting and conversations which must be of relevance to the ex-parte judge in his deliberation as to whether there was such an intention on the part of the 2nd defendant to conceal his current Hong Kong visit."

The point is taken up in the respondent's notice:

"Having obtained the Prohibition Order, the Appellant/Plaintiff thereafter owed a continuing duty to disclosure to the Court, before serving the Order, any material facts occurring after the Order was made, so as to give the Court the opportunity of considering the new material facts and deciding whether in the light of them the Order should be continued or discharged."

With respect, it seems to me that the respondent's notice on this point was unnecessary. In my reading of the maturely considered judgment the judge clearly did rely upon it.

In my view where a plaintiff obtains an ex-parte order there is imposed on him, as long as that order remains ex-parte, the duty to disclose to the court any change in circumstances which is relevant to, the application. The duty must be particularly heavy when the order obtained ex-parte is of such a serious nature as the order obtained in this instance. What occurred between the 16th and 20th,

i.e. the discussions between Mr. Tsang and Mr. Hababou, are clearly relevant to the earlier impression which, obviously to the knowledge of the plaintiff, had been deliberately given to the ex-parte judge. In my view there was a clear duty for those discussions to be brought to the notice of the earlier judge. It is suggested that this point was not strongly pressed in argument below. However it is accepted now that it was raised during the course of the submissions. It is in itself a very significant matter. The judge was perfectly entitled to take it, as he did, in the course of his more considered judgment. For my part I am content to dispose of the appeal on this ground alone, without going into the vexed question of the materiality or the effect of the French decision or the comment made during the course of that judgment.

9. There remains the question of costs. Costs are very much a matter in the discretion of the judge below. This court would only interfere if he has gone wrong in principle or was plainly wrong. It is not a question, as is frequently emphasised, of what we in this court would have done in similar circumstances. It is a question of whether we are entitled to say that the judge in this instance was plainly wrong in the order which he imposed. I have in particular regard to the conduct of the plaintiff who, however he may have been advised by counsel retained the prohibition order for four days and did not serve it until the time suited him. For my part I am unable to say that the judge was plainly wrong.

Bokhary, J.:

10. I respectfully agree that the learned judge was clearly right to discharge the prohibition order. And as far as his order for costs on an indemnity basis is concerned, I do not think that he strayed beyond the limits of the discretion which was for him to exercise.

Kaplan, J.:

11. I also agree. A plaintiff who obtains a prohibition order is in my judgment under a duty to take reasonable step to serve it immediately. If he decides for

whatever reason, that he does not wish to serve it immediately then he is under obligation to return to the ex-parte judge and inform him and explain why service is not to be effected immediately. This will entail giving the judge further information as to what has happened since he made the order and will assist him in deciding whether he is of the opinion that the order should stand or be discharged. The notion of a plaintiff keeping such a drastic order of this nature up his sleeve for some four days is quite unacceptable. Further in this case, as my Lord has made clear, the plaintiff was obliged to tell the judge that the impression he had given in his first affidavit, para. 20, was in fact not correct. I would agree entirely with the observations of Saville, J., in Commercial Bank of the Near East plc v. A & Others, The Times, 17th March 1989, that there is a continuing obligation of disclosure. That was a Mareva case but the principle applies equally to all ex-parte orders.

12. On the question of costs I do not think that in all the circumstances of this case I personally would have made an order for indemnity costs. I think the learned judge was wrong to rely on the French judgement point when he considered costs. However I am persuaded that there was other material before him which justified his exercising his discretion the way he did. In those circumstances I do not see how we can interfere with the exercise of the judge's discretion on costs.

Representation:

Mr. Denis Mitchell, Q.C., and Mr. Anthony Chan (M/s. Chan, Lau & Wai) for plaintiff / appellant

Mr. Michael Bunting (M/s. Denton Hall Burgin & Warrens) for 2nd defendant/respondent