Producers Finance & Investment Ltd v. Charp Wah Textile Co Ltd

HCA009637/1983

Liberty of the subject- practice and Procedure - Enforcement of Judgments- Rules of Supreme Court Order 49B

At the hearing of an application for discharge from prison by a judgment debtor under Order 49B rule 6 it transpired that there had been no order for her committal to prison and that in accordance with the hitherto accepted practice, the Bailiff had arrested her on the bare authority of a writ of execution.

Held:

IN THE HIGH COURT OF JUSTICE

BETWEEN

Coram: Hon. Mantell J.

Date: 17th November, 1983.

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JUDGMENT

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1. It has always been the law of Hong Kong that a money judgment could be enforced by imprisonment of the judgment debtor. Up to 1967, it was done by sealing and issuing a writ of execution in a form cobbled together from the writs of fieri facias, attachment and capias ad satisfaciendum. It appears to have issued without leave and certainly without order of the court. Therefore, the judgment debtor was imprisoned as a result of secret, administrative process for good reason or bad or for no reason at all. It was a deplorable practice. Sometimes its judicial apologists would point by way of example to the English Debtors Act of 1869; but whereas that Act perpetuated imprisonment for debt in a limited number of cases, the judgment debtor was only liable to arrest following an order of committal or under writ of attachment issued with leave of the court. In 1967, the law of Hong Kong was changed. Since then no imprisonment of a judgment debtor has been lawful unless it was by order of a judge. What is surprising, to say the least, is that the former unattractive practice of securing the arrest and imprisonment of judgment, debtors has continued, not by order of the court or even by writ issued pursuant to leave, but by administrative procedures carried out privately.

2. In this case, the plaintiff and judgment creditor is a deposit taking company which advanced money to a company of which the defendant and judgment debtor is a director. The loan was secured by deed of mortgage under which both the defendant and the company undertook to repay on demand. Demand was made and the defendant either refused or failed to repay. In subsequent proceedings, the defendant did not give notice of intention to defend and judgment was entered under Order 13 on 16th September 1983 for $1965,192.63 with interest running at $961 per day from 30th June 1983. There was reason to think that the defendant might leave the jurisdiction, so, prior to judgment, the plaintiff invoked the provisions of Order 44A under which the defendant was ordered to be arrested and brought before the court to show cause why she should not give security for her appearance to answer judgment. In the event, it was ordered that the defendant's name be placed on the stop list but that upon surrendering her travel documents to the court, the defendant should be released. On 5th September 1983, the defendant took out a summons returnable on 26th September 1983 by which she sought the removal of her name from the stop list and the return of her travel documents. In her supporting affidavit, she deposed to the fact that she had admitted liability in the action and, as was the case, that the plaintiff was at liberty to enter judgment against her. She claimed to have very small means, and assets which consisted almost entirely of the mortgaged property. The application came on for hearing on the return date, that is some ten days after judgment. It was opposed on the same grounds as are put forward in the present proceedings. The application was adjourned to 30th September when the defendant, by now the judgment dobtor, obtained the relief asked for. In the meantime, the judgment creditor had taken out a praecipe for a writ of fi fa which was sealed on 28th September and executed by arrest of the judgment debtor on the same day as the adjourned hearing. Whatever I have said about the practice in general, in this case it would be quite wrong to suggest that the judgment creditor moved covertly to obtain the writ of fi fa. The intention was broadcast at the hearing on 26th September and it rather looks as though the adjournment was to give the judgment creditor an opportunity to execute the writ before the judgment debtor recovered her travel documents.It is not suggested on behalf of the judgment creditor, however, that at the hearings of either 26th September or 30th September an order of committal was applied for or made, or that leave to issue the writ of fi fa was applied for or given, or that, despite what appears to be a request to the Bailiff to expedite execution of the writ, there could have been or was any order for immediate execution under Order 45 rule 14. At the same time, it should be noted that solicitors for the judgment debtor did not protest the judgment creditor's unconcealed intention to move for the arrest of the judgment debtor by way of writ of execution. Instead, on 11th October 1983, the judgment debtor made an application supported by affidavit for discharge from prison under Order 49B rule 6. The judgment creditor signified an intention to appear and oppose the application and on 20th October, the application came on for hearing in Chambers before me. I proceeded to hear the merits but there came a stage when the judgment debtor's solicitor, thought it right to seek an adjournment in order to obtain some bank statements. The application was restored for hearing on 4th November 1983 to follow the delivery by me of two judgments in which I questioned the propriety of imprisonment under Order 49B without order of the court. See Lee Yip Tang and Lee Shing v. Miss Lee Yu Ying ⁽¹⁾ and Onprofit Co. Ltd. v. Tan Tjin Kik.⁽²⁾ At the resumed hearing, I adjourned into court and indicated to counsel, who by then had been instructed, that I wished to hear argument on a number of issues including the question of whether or not imprisonment under Order 49B was lawful without an order of committal. I did not continue to hear evidence or submissions on the merits, which remain unresolved to this day, but further adjourned until 11th November when not only were the parties represented by counsel but so was the Attorney General at my invitation. In the meantime, I had ordered the release of the judgment debtor pending final determination.

3. It being the submission of counsel for the judgment debtor that the original arrest and imprisonment were unlawful, I enquired as to whether any point was to be taken as to the competence of the court to pronounce upon the question in these proceedings. I had in mind, of course, the alternative open to the judgment debtor of making an application for a writ of Habeas Corpus. No point was taken, and I have come to the conclusion that once seized of the matter upon an application for discharge properly made, I do have jurisdiction. I consider the present circumstances to be distinguishable from those in Attorney General v. Randall ⁽³⁾ where, in any event, the court was not required to rule.

4. I enquired secondly as to whether any point was to be taken upon my having released the judgment debtor pro tempore at the previous hearing. There is no express provision in Order 49B permitting the temporary release of a judgment debtor and it might have been argued that the only power expressly conferred being that of final discharge under rule 6(4) I had spent my jurisdiction. All counsel submitted that there must be power in a proper case to allow what was termed by Mr. Chan "the interim release" of a judgment debtor under the court's inherent jurisdiction, the more so where, as in this case, the judgment creditor raised no objection. I agree.

5. In its present form Order 498 dates from 1967 with the coming into force of the first rules made by the Rules Committee. In the main those rules followed the arrangement and content of the Rules of the English Supreme Court, Order 44A and 49B being two obvious exceptions. Before 1967, the rules had been contained in the Code of Civil Procedure and for present purposes that is as far back as it is necessary to go. Within the 1964 edition of the Code of Civil Procedure as amended in 1966 were to be found all the present provisions of Order 49B. Although it required two attempts (see Legal Notice 160/1967) the 1967 rules simply gathered these provisions together in one differenty numbered order and in substance they have remained the same ever since.

6. Under the Code of Civil Procedure, the provisions for carrying the right of execution against the person into effect were far from satisfactory. Order 17 rule 30 provided for the attachment of property other than debts "in the manner hereinafter provided". "The manner hereinafter provided" had nothing to do with attachment of the person. However, rule 30 and the writ of execution in Form 39 of the Scheduled Table of Forms were cross referenced by reason of margin notes and Order 24 rule 1 of the Code was in these terms:

"The forms contained in the Schedule may be used in the cases to which they respectively have reference, with such variations and additions as the circumstances of the particular case may require, and shall as regards the form thereof, be valid and sufficient."

Form 39 is the hybrid writ to which I have already made reference and includes the words now to be found in parenthesis in Form 53 and which command the Bailiff to arrest the debtor in the event of there being insufficient property upon which to levy execution. Although by Order 19 of the Code, the writ of attachment would only issue with leave, there was no general provision to the effect that leave was required for the issue of writs of execution in aid of other writs of execution as one now finds in Order 46 rule 3. There was certainly nothing in the Code to indicate that an order of committal was a necessary pre-condition to the attachment of the person. No wonder that in 1967, the Rules Committee decided, as the Americans say, to start over.

7. The major change in this area effected by the 1967 rules was under Order 45 rule 1(1):

"Subject to the provisions of these rules, a judgment or order for the payment of money may be enforced by one or more of the following means .....

(g)	an order of committal made under Order 49B".

8. This was an innovative measure. It does not appear, of course, in the English rules from which otherwise Order 45 is lifted. It cannot, therefore, have been included per incuriam. Remembering that in 1966, Order 17 rule 75(3), now Order 49B rule 6(3) was amended to make it clear that a judgment debtor was entitled to be released on his application for discharge unless the judgment creditor proved that he had behaved reprehensibly, the provision operates to give protection to the unfortunate but honest debtor who under the old procedure might find himself in prison until such time as his application for discharge could be heard. Against the presumption that in the absence of clear words to the contrary, the rules are to be read in the sense least inimical to the liberty of the subject, is there any other possible interpretation? The fact that the old procedure contained no such protection for the judgment debtor does not lead me to read "writ" for "order" in Order 45. Order must mean "order of the court" which in turn by virtue of Order 32 rule 11 (b) must mean "order of a judge". Nor does the fact that a writ is not required to carry an order into effect, thus on first consideration seeming to make unnecessary the words in parenthesis in Form 53, drive me to any different conclusion. To begin with the words in brackets were not in the form, suggesting that at one time the Rules Committee also thought that they were not required. But obviously there may be circumstances in which it would be sensible and humane to delay the operation of an order of committal until after execution has been levied against the debtor's goods and that procedure is accommodated by the optional version of Form 53. And it is to be observed that of the alternative versions of Form 53, attachment of the person without fi fa is not one. It may be said that the rules do not provide a specific procedure for obtaining an order of committal. Even if order 52 is inappropriate, I do not see that the absence of a specific procedure presents any difficulty at all. Application must be made in the ordinary way by motion or summons. It is protested that if an order of the court is necessary, the rule will lose its immediacy and a valuable aid to discovery will be lost. One is tempted simply to say, "well, so be it". But in fact, both objections lack merit. If a judgment creditor fears that his debtor will escape before he can obtain an order, he may make use of order 45 rule 14 which is after all what it is there for. Discovery was only ever at best incidental to the procedure on application for discharge. It could never, in my judgment, have been a proper reason for causing the debtor to be arrested. In any event, the machinery for examining judgment debtors and forcing production of documents is all contained in Order 48 which may be enforced apart from or together with Order 49B.

9. Mr. Chan's submission, which he concedes has nothing in the way of commonsense, fairness or expediency to recommend it, is that by virtue of Order 45 rule 12(1) and the terms of Form 53 itself, there are now two methods of enforcing a judgment by imprisonment, Order of Committal and Writ of Fi Fa. In other words, the introduction of order 45(1)(g) achieves nothing in the way of protecting the debtor and, from that point of view, was an exercise in fatuity. I reject the submission whilst acknowledging the courtesy and lucidity with which it was advanced.

10. It follows that the imprisonment of Madam Tse was unlawful and I order her release.

11. Since I have held that under Order 49B, an order of committal is required to secure the imprisonment of the debtor, it is unnecessary for me to rule upon Miss Yuen's further submissions, which are, that in any event, leave must be obtained to issue a writ which seeks to attach the person and that the praecipe should specify with particularity the form of writ requested. I should have been inclined to hold in her favour on both submissions had my conclusion been different with regard to the need for an order. The writs of attachment and capias ad satisfaciendum only ever issued with leave of the court. Order 46 rule 3 makes the obtaining of leave a condition precedent to the issue of any writ of execution in aid of another writ of execution. But the order of committal must include leave and I hold that a separate application is unnecessary. The note to Form 53 appeared sometime between 1967 and now, how and when I have not been told, and it is difficult to know how much weight to give to it. It does not really matter if there has to be an order of the court but otherwise I share the view of Deputy High Court Judge Lee in Supreme Finance Limited v. Wan Hang Trading Limited and Others ⁽⁴⁾ that the praecipe should specify the particular form of writ.

12. There is another matter of fundamental importance which has been canvassed but if I may say so with respect has not been fully argued by counsel for the parties. It is not a matter upon which it is necessary for me to rule and I decline to do so. However, out of deference to the submissions addressed to me by Mr. Stock at my invitation, I shall say something

13. The point is this. Was it or is it within the power of the Rules Committee to make or continue Order 49B. Originally, as we have seen the provisions were part of primary legislation but the Rules Committee derives its authority from section 54 of the Supreme Court Ordinance which reads:

By sub-rule (2), it is provided without prejudice to the generality of what I have just read that the Rules Committee may make rules regulating the execution of the process of the Supreme Court and under a spearate section, the Chief Justice has power to make rules regulating the execution of the orders of the Supreme Court.The argument goes that Order 49B may be ultra vires because:

And possibly as a branch of the same argument:

And as authority for that second proposition, I was referred to the case of In re Grosvenor Hotel, ⁽⁵⁾in particular passages in the judgment of Lord Denning at page 1210 and also to the case of O'Flaherty v. O'Flynn,⁽⁶⁾ a decision of the Irish Supreme Court and in particular to the judgment of Mr. Justice Kingsmill Moore in that case. Both seem to me to be respectable arguments which call for an answer. It may be found in section 54 (2)(i) of the Supreme Court Ordinance which gives the Rules Committee power' to make rules regulating matters which could heretofore be or, which have heretofore been provided for or regulated by rules of court, which would, of course, include rules made under substantive legislation. However, I do not choose to express a concluded view.

(1) unreported 1983 No. 6832

(2) unreported 1983 No. 3145

(3) [1944] 1 K.B. 709 C.A.

(4) H.C.A. No. 11877/82

(5) [1965] 1 Ch.

(6) [1956] 90 Irish LTR 179

Representation:

Warren Chan (Loh & Co.) for Plaintiff.

Miss Maria Yuen (Fairbairn & Kwok) for 1st Defendant/Applicant.

F. Stock & S.H. Franklin, C.C. - Amicus Curiae.