Fargo Shipping Co S.A. v. Hwa Haur Trading (Hong Kong) Co (A Firm)

HCA001959/1978

High Court Action No. 1959/78

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Interest on monies awarded in a foreign currency ought generally to be calculated according to commercial rates of interest prevailing in that currency in Hong Kong.

(Obiter) in the High Court at least rates offered by reputable deposit taking companies might be appropriate.

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Coram: Cons, J.

Date of Judgment: 28 June 1979

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JUDGMENT

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1. This part of these proceedings is concerned solely with the question of whether the plaintiff ought to recover interest upon the judgment of US$23,400, which has already been given in its favour and, if so, at what rate that interest ought to be awarded. It has been agreed by all parties that in order to save costs of yet another hearing this judgment may be delivered by being sent to solicitors of both parties and distributed to the profession and others interested in the usual way.

2. There is little difficulty as to whether interest should be awarded at all. I appreciate that interest is not a matter of right and the court must exercise its discretion in every case. But I see nothing in this case which would incline me not to do so in favour of the plaintiff.

3. As to the rate of interest, it is, as far as I am aware, the first time that the question has arisen in this jurisdiction in relation to a judgment in foreign currency. It has already arisen in the courts of England, in the case of Miliangos v. George Frank (Textiles) Ltd. (No. 2)⁽¹⁾. This was the aftermath of that now well-known judgment in which the House of Lords confirmed the first breach made by the Court of Appeal in the old sterling rule. The plaintiff in those actions was a Swiss resident who sought to, and did, recover in the English courts a debt payable in Swiss francs. The question of interest was eventually referred back to the trial judge, Bristow, J. He decided that interest should be awarded at the rate at which a person could reasonably have borrowed Swiss francs in Switzerland at simple interest, applying what he took to be the basis upon which an English court would exercise its discretion, namely the principle of restitutio ad integrum.

4. In this jurisdiction there is a decision of the Full Court which lays down simply that where damages have been claimed, and are therefore payable, in Hong Kong, the court is bound to have regard to the commercial rates of interest prevailing in Hong Kong: The Oceantramp⁽²⁾. That was an award of damages in tort, not in contract or by way of debt. Yet I do not see why that should make any difference. The English Court of Appeal made no distinction when it discussed the proper rate to be awarded generally: Jefford v. Gee⁽³⁾. And indeed no one in the present case has suggested that there ought to be. I consider myself bound by that decision. It was, of course, made before a judgment could be given in other than Hong Kong dollars. Now that this can be done it seems to me that the natural development of the principle must be to require the court, in those cases where it has been done, to have regard to the commercial rates which prevail here in relation to the particular foreign currency involved. That is in accord with English policy. I would respectfully agree with Bristow, J., when he said at p. 495:

"In my judgment the approach ...... should be: if you opt for a judgment in foreign currency, for better or for worse you commit yourself to whatever rate of interest obtains in the context of that currency."

5. The plaintiff called a witness from a local bank. He told me that, at least so far as his bank is concerned, interest payable is the same regardless of what currency is deposited. This strikes me as remarkable but it is the only evidence I have. He also produced a schedule of interest rates paid by his bank from January 1978 until 20th May this year, and which set them out according to the length of time for which monies were deposited. The average rate, as best I can make it out, over the period 1st March 1978 to 20th May 1979 was 3.55% for monies on seven days' call and 4% on monies deposited for three months. The rates which the witness produced were I think the rates agreed between the leading banks in this Colony and intended principally for the small depositor. For my own part I would have thought that in the High Court at least the rates offered by reputable deposit taking companies would generally be more appropriate. But that is by the way. The plaintiff chose to put forward lower rates. He argued for the "three-month" figure; the defendant for "seven days' call". In Jefford v. Gee⁽³⁾ at p. 148, it is said that the rate should be "realistic". In my judgment the three-month rate is the more realistic of the two.

6. There is one other aspect I should mention. Judgment in this action was reserved and by agreement with counsel this question of interest was adjourned to the date on which the judgment would be delivered. When that day came counsel for the plaintiff drew my attention to the note on Miliangos at p. 40 of the White Book. Yet it was not until this further hearing that the evidence to which I have already referred was adduced. Counsel for the defendant now objects to the introduction of that further evidence. He says that I ought not to have adjourned. Unfortunately he is in a difficult position for he was unable to be present on the last occasion and so far as my note and my memory go, no objection was raised by the counsel who then stood in for him. I take the view that the objection is now too late. In any event I think that if no evidence had been called at all I should, and would, have taken steps to ascertain the proper rates myself. Preliminary research before the last hearing had inclined me towards a figure in the region of 5%.

7. For these reasons interest on the judgment debt of US$23,400 is awarded at the rate of 4% from the 17th February 1978 until the 23rd May this year.

8. The plaintiff did not specifically request the further hearing but accepted it at my instigation. In the circumstances I think it right to make no order as to costs. Each party ought to bear its own.

Representation:

Mr. Patrick Fung (Clayton Wong & Co.) for the plaintiff.

Mr. Ray Faulkner (Johnson, Stokes & Master) for the defendant.

(1) [1977] 1 Q.B. 489

(2) [1970] H.K.L.R. 52

(3) [1970] 2 Q.B. 130