Re Male Law Kin Man

HCMP002765/1992

IN THE MATTER OF

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Coram: Hon Sir Derek Cons, V-P, Kempster and Litton, JJA

Dates of Hearing: 14 and 15 October 1992

Date of Judgment: 15 October 1992

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J U D G M E N T

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Kempster, JA:

1. The genesis of the matter in dispute is to be found in a Restraint Order made by Sears J on 29 May 1990 as provided by s 10 of the Drug Trafficking (Recovery of Proceeds) Ordinance 1989 (Cap 405). A number of the 47 respondents to the Attorney General's application were enjoined from removing out of the jurisdiction or otherwise disposing of, charging or dealing with monies standing to their credit or to the credit of accounts which they controlled at the Bank of Credit and Commerce Hong Kong Ltd ("the Bank").

2. By summons dated 10 July of the same year the Bank sought so to vary the order of Sears J as to permit the application of such of the monies restrained as had been held by them as security for advances or subject to rights of set-off in order to reduce the indebtedness to the Bank of three corporate respondents. This relief was granted by Barnett J on 5 July 1991 following a reserved judgment. On 17 July 1991 he appointed the Official Receiver to be the provisional liquidator of the Bank and since that date a winding-up order has been made.

3. The Attorney General wishes to appeal against that judgment and order and now, pursuant to s 35(3) of the Supreme Court Ordinance and of 059 r14, renews his application to extend time for service of a Notice of Appeal. That application was dismissed by Nazareth JA, in chambers, on 25 March 1992. The formal order is dated the 26th. Nazareth JA concluded that an appeal from the judgment of Barnett J would have no real prospect of success. Although this is an ex parte application by motion notice was given to all parties concerned and Mr Faulkner has appeared and addressed us on behalf of the Bank.

4. The Attorney General has 17 grounds to advance if leave is granted. But critical to most of them is the finding of Barnett J that Philip Wong, Manager of the Bank's Kowloon City Branch at the material times, was not acting in that capacity when he facilitated the transactions and prepared the security documents upon which the Bank relied in support of its successful application to vary the Restraint Order. From that finding he went on to conclude that the Bank could not be fixed with knowledge of the tainted source of the monies pledged to secure the advances made and that the signatories of the documents were estopped from so alleging. Sophisticated questions of fact and law arise when these transactions are examined, as they have been before us, both by Miss Hartstein on behalf of the Attorney General and by Mr Faulkner. Several, which might have some merit, were canvassed neither before Barnett J nor Nazareth JA. However, the cardinal finding that Wong was not acting within the course of his employment when he procured the signature of the documents in question is conceded and, the dates apart, there is nothing to suggest that the Bank was aware that the security transactions were engineered for his benefit by the use of the first respondent's money held in trust for him by the signatories to the documents. No more is there anything to suggest that the Bank was aware that tainted money had been paid into accounts, now in credit, which it wishes to offset against accounts of the same customers respectively now in debit. The fact that the first respondent might be able to impugn these transactions if they were executed without his knowledge does not, in my opinion, assist the Attorney General. As the matter has been argued before us and below the Bank is entitled to take the security documents at their face value. No point of principle which requires the intervention of the Attorney general arises from the judgment of Barnett J.

5. In the premises I would dismiss this application to extend time for serving a Notice of Appeal on the same grounds as those relied upon by Nazareth JA; comforted by the thought that none of the monies released from restraint will become available to those alleged to have acquired them by trafficking in dangerous drugs and also by the attitude of the legislature as reflected in s 17(2) of the Ordinance which reads:

"Where, in the case of a company, (a winding-up) order has been made ... the powers conferred on the High Court by sections 10 to 13 shall not be exercised in relation to any realisable property ... held by the company in relation to which the functions of the liquidator are exercisable -

(a) so as to inhibit him from exercising those functions for the purpose of distributing any property held by the company to the company's creditors;

(b) so as to prevent the payment out of any property of expenses (including the remuneration of the liquidator or any provisional liquidator) properly incurred in the winding up in respect of the property."

From the terms of ss 7 and 11(4) "realisable property" must include property held in trust.

6. It is quite fortuitous that the Bank had not been wound up at the material times.]

Sir Derek Cons, V-P:

7. I agree with my Lord that the application should be dismissed. The decision I take may be simply expressed as that although there may be grounds on which the decision of Barnett J could be arguably impugned, none has yet been satisfactorily formulated in such a way as the Bank could reasonably be expected to meet. For my part I am not persuaded in the unusual and possibly unique circumstances and nature of this litigation that this court should interfere with the discretion of the single judge not to extend the time for appeal.

Litton, JA:

8. For the reasons which my Lord the Vice President has just articulated I, too, would dismiss the appeal.

Representation:

Miss V. Hartstein (Crown Solicitor) for the Applicant

R.J. Faulkner (M/s Stephenson Harwood & Co) for the Bank of Credit and Commerce Hong Kong Ltd