Foreign Exchange and Investment Ltd v. Abdul Rahim

HCA001455/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1455 OF 1971

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Coram: Blair-Kerr S.P.J.

Date of Judgment: 3 November 1971

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JUDGMENT

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1. In these proceedings, the defendant has filed a number of affidavits, from which it appears that he is domiciled in India; that he came to Saigon in 1969; that he is in partnership; that the firm name is Deeners and Co.; and that their business, at least in part, consists of purchasing, at a discount, cheques drawn by persons in Saigon on American and other foreign banks and selling those cheques in Hong Kong. He states that between November 1970 and March 1971 his firm sold to the plaintiffs for approximately $800,000 a number of cheques the face value of which totalled approximately $1,000,000.

2. The plaintiffs are suing on a number of cheques which they purchased from the defendant all of which were dishonoured on presentation. The writ was issued on 6th July 1971. The plaintiffs' claim is for $232,718.37.

3. It appears that the defendant came to Hong Kong on 11th February 1971 on a visitor's visa which entitled him to stay here for 3 months. His visa was extended; but he would have been required by the Immigration authorities to leave Hong Kong not later than the 10th July.

4. The plaintiffs became aware of this; and they immediately applied to Mr. Commissioner Morley-John under O.44A r.1 for an order calling upon the defendant to furnish sufficient security for his appearance to answer any judgment that might be given against him in the action. It is not known what investigation was made by the Court pursuant to r.2. Clearly, the defendant was "about to leave the jurisdiction". If he had not departed of his with the order made under O.44A r.3(2) that he give $150,000 bail. It is not clear to me why the Commissioner did not dismiss the summons under O.49B. Instead he adjourned it "sine die with liberty to restore".

5. To date there has been no execution of the judgment (presumably because the plaintiffs have not found any property of the defendant in the Colony to execute on) although the praecipe for the writ of execution is dated 3rd August, and counsel tells me that the writ is lying on the Bailiff's desk.

6. The defendant now applies to me under O.44A r.4(2) for his release from prison, the basis of his application being the concluding words of the order of the 20th July viz. "until such further order of the court".

7. Order 44A appears to be modelled on various rules forming part of O.38 of the Rules contained in the First Schedule to the Indian Code of Civil Procedure Act No. 5 of 1908. (vide Sarkar's Law of Civil Procedure 4th Ed. pp. 705/713); but the Hong Kong provisions differ from the Indian provisions in a number of respects. Rules 2(1) and 4 of the Indian O.38 read:-

Rules 3(2) and 4(2) of O.44A read:-

8. When the order of 20th July was made, judgment had been given against the defendant. Unlike the Indian rule, rule 3(2) does not enable a Hong Kong court to order a defendant "to deposit in Court money or other property sufficient to answer the claim"; and the Commissioner, in effect, ordered that the defendant give bail in the sum of $150,000"for his appearance" at any time when called upon until the execution of the judgment which had been given against him.

9. Mr. Ching appeared for the plaintiffs. His first submission, as I understood it, was that a defendant is not entitled to make repeated applications for release under O.44A; that the defendant in this case had made one application under r.5(1) of that Order; and that this court is now functus officio in the matter unless the defendant can produce some new material which would justify the court entertaining a further application.

10. I am unable to agree with this submission. If a plaintiff does not prosecute his action with diligence, the Court is empowered under r.5(1) to release the defendant even although he has failed to give such bail as has been ordered under r.3(2). But, the Court's jurisdiction under r.5(1) is quite independent of any jurisdiction it may have to entertain an application, or applications, under r.4(2).

11. Mr. Ching's main submission was that if, under r.4(2), a defendant has been committed to prison "until the execution of the judgment", the court has no jurisdiction to release him for any reason other than that the judgment has been satisfied - in particular that the court has no jurisdiction to entertain an application for the defendant's release on the ground that he is unable to satisfy the judgment.

12. I am also unable to accept that submission. As I read r.4(2), the court is empowered to do one or other of three things:-

In my view an order for committal "until the further order of the Court" may be made either before of after the decision of the action; and if, when committing a defendant for the first time, or when dismissing his application for release, imprisonment, or continued imprisonment, is ordered but only "until the further order of the Court", unquestionably the Court retains jurisdiction to entertain the defendant's repeated applications for his release. The Court may release him at any time even if there has been no execution of the judgment, or for that matter, prior to the decision of the action.

13. Mr. Ching made the startling submission that under this rule, it is arguable that the Court could keep a defendant in prison even after the judgment had been executed. I agree that it is arguable. But, in my view, the purpose of r.4(2) is coercive (not punitive); and I feel that any submission on the lines that a defendant should be kept in custody after the judgment has been satisfied, would get short shrift from this Court.

14. Be that as it may, what is the position if the order is simply that the defendant be committed to prison "until the decision of the Court" or "until the execution of the judgment" as the case may be, and the Court does not reserve to itself the right to vary such an order? If the order were simply "until the decision in the action", it does appear that compliance with the order under r.3(2) would not give the court jurisdiction to release the defendant; and that consenting to judgment (which is a decision of the action) is a necessary prerequisite to the defendant's release. And if the order were simply "until the execution of the judgment", compliance with the order made under r.3(2) (i.e. giving bail for his appearance) would not give the court jurisdiction to release the defendant, and that (subject, of course, to his right to appeal) the defendant would have to remain in prison until execution of the judgment. To this extent I agree with Mr. Ching's interpretation of this extraordinary rule.

15. But, this is all rather academic so far as the present case is concerned. The order made on 20th July included the words "until the further order of the Court". I do not think it matters that the actual order ran "until execution of the judgment or until the further order of the Court". I have not the slightest doubt that this Court has jurisdiction to release this defendant at any time.

16. In Sun Ming Shan v. Moran⁽¹⁾ the then Chief Justice described the procedure of arrest and attachment before judgment as

"a barbarious practice, a relic of the dim ages of jurisprudence, only preserved in the Colony on account of an unfortunate habit among Chinese defendants of taking the night boat to Canton when litigation is pending against them."

From time to time during the last 25 years there have been suggestions that the rules relating to personal attachment before judgment ought to be revoked; but such suggestions have found little favour with the legal profession or indeed with the business community. This attitude is understandable. With the development of international trade and the tremendous improvement in methods of intercontinental transport, no doubt it is necessary in a territory such as Hong Kong to have some coercive procedure so that pressure may be brought to bear on "fly by night" merchants and others to ensure that they answer to the commands of this court and bona fide plaintiffs may have in advance some prospect of recovering the value of any judgments which they may subsequently obtain in their favour. But the provisions regulating such a procedure should be framed with care. If the object of the exercise is to force a "fly by night" defendant to put at a plaintiff's disposal some concrete security, it is not clear to me why the Hong Kong rule does not give the Court jurisdiction to order such a defendant to "deposit in court money or other property sufficient to answer the claim against him." [vide the Indian O.38 r.4]. Bail for one's "appearance" [O.44A r.3(2)] is quite a different thing from "money or other property sufficient to answer the claim."

17. Furthermore, it is not clear to me why the Hong Kong rule does not place a limit on the length of time a defendant may be imprisoned (as in the Indian rule). Again, why does the Hong Kong r.4(2) not have a proviso (as in India) that no person shall be detained after he has put up security? I suppose it was thought that the words "until the further order of the Court" gave the Court complete discretion in any event. But it seems to me that this is dependent upon the Court ordering that a defendant's imprisonment, or continued imprisonment, shall be only until the further order of the Court; and this is quite unsatisfactory. There is ample room for legislative tidying-up in O.44A.

18. Turning now to the facts of this case. In his affidavit of 19th July, the defendant said that he did not know the persons who drew the cheques in Saigon. In his affidavit of 10th August, he said:-

"All the monies received from the plaintiff company were sent by me to Saigon by unofficial means ...... my company expected to make about 3%-5% commission only."

But in his affidavit of 19th October, he says that the money was

"paid to the representatives in Hong Kong of the persons from whom the said cheques were originally purchased ...... so that it may be sent back to Saigon."

He also refers to "my office".

19. Apparently, he refuses to give the names of his partners in Saigon or the address of his office or the names and addresses of the "representatives in Hong Kong of the persons from whom the said cheques were originally purchased". In fact, his affidavits in support of his application for release are just about as non-committal as any documents could be. He is seeking the Court's indulgence. He says he has no means to repay the $232,000 odd which he obtained from the plaintiffs. Yet he does not choose to be frank with the Court, nor has he given the plaintiffs any information which might enable them to sue, either here or elsewhere, other individuals into whose hands this large sum of money may have come.

20. Of course, his story does not even ring true. According to him, persons in Saigon sold cheques to him at a discount. He sold the cheques to the plaintiffs at a further discount; and (so he alleges) he gave the proceeds to the representatives in Hong Kong of the persons from whom the cheques were originally purchased in Saigon! It does not make sense.

21. The defendant will have to be a great deal more frank with this Court before he again seeks its indulgence. It might assist him if he were to submit himself for cross-examination. But that is entirely up to the parties.

22. I dismiss this application. The defendant will remain in prison until the further order of this Court.

23. The defendant must pay the plaintiffs' costs of this application. Certified fit for counsel.

Representation:

Charles Ching (Ford, Kwan & Co.) for Plaintiff.

Kemal Bokhary (H.A. Hoosenally & Co.) for Defendant.

(1) (1910) H.K.L.R. p.216 at p.218