Luen Hing Fat Textile Ltd v. Lam Shing Chin t/a New Cotton Trading Co

HCA000215/1989

1989, No. A215

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H E A D N O T E

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The court held that the power under 0.49B, r. 1B(1)(c) to order that a judgment debtor be imprisoned can only be exercised following his examination and not while it is part heard.

The court left open the question whether a judgment debtor's disobedience of an order under 0.49B, r. l(1)(a) to bring documents to his examination is a ground for committing him for contempt - but observed that such a course, if open, would only be open on the basis that it be attended by all the procedural safeguards devised for contempt proceedings.

1989, No. A215

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Bokhary, J. in Chambers

Date of hearing: December 21, 1989

Date of delivery of judgment: December 21, 1989

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J U D G M E N T

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1. This is an appeal from an Order of Master Beeson made on the 2nd of this month ordering that the defendant - and here I quote from the Order - "be committed to prison for a period of one month."

2. The background to the case, in which the writ was issued in January this year, is one of goods sold and delivered and dishonoured cheques given in purported payment for such goods. In July, the plaintiff obtained summary judgment for $1.07 million. The judgment debt it would appear, remains wholly unsatisfied. The legal advisors of the plaintiff took various steps including applications, which met with success, for orders of prohibition. They also sought an order for the examination of the defendant. In August, Master Jones ordered the defendant to attend an oral examination before Master Cannon on October 6, and to produce - and here I quote from Master Jones's Order - "any books or documents in his possession or power relating to his means or assets."

3. The defendant attended before Master Cannon on October 6, when the matter was adjourned to November 1. Master Cannon made an order in relation to the production of documents. The Order appears to be contained in a sheet setting out a proforma series of orders and directions with blanks to be filled in where necessary. The relevant order opens with these words : "Judgment debtor is warned of requirements to make full disclosure and ordered to produce the following documents at the adjourned hearing of the examination." Then follows the list.

4. When the matter resumed on November 1, it was before Master Beeson, who felt it necessary to order that the defendant produce certain documents within 21 days. The matter was adjourned to December 2. The order pertaining to the production of documents uses this form of words "Judgment debtor is warned of requirement to make full disclosure and ordered to produce the following documents within 21 days." Then comes the list.

5. When the matter resumed on December 2, the defendant had not, it seems produced all the documents required of him. Counsel for the plaintiff is unable to tell me precisely what the defendant did, or did not, produce.

6. One notice that the documents which he was required to produce includes, for example, this : "a comprehensive list of assets and liabilities as existed at 1st November 1989." So the matter had come a long, long way since Master Jones was ordering documents in the defendant's "possession or power". That list is obviously something that the defendant was expected to sit down and draw up.

7. Nobody has been able to tell me precisely what happened on December 2. But it would appear that notwithstanding that the defendant did not - it is said - comply with the order for the production of documents made November 1, the examination went on to some extent; and it was only after it had gone on for some time, and when it did not seem to the Master to be getting very far, that the question of imprisonment arose.

8. It is not clear whether an application for the committal of the defendant was actually made to the Master. But there is some suggestion that such an application was made. If it was, then it appears to have been invited or encouraged by the Master In any event, she sent the defendant to prison, leaving his examination part heard.

9. Mr Ismail says on behalf of the defendant that the Master had no jurisdiction to do so. Mr Ismail believes and his belief is shared by Mr Li who appears for the plaintiff - that the Master was relying on order 49B, rule 1B(1)(c). That provides, in so far as is material, that "Where a court is satisfied following the examination conducted under rule 1A ..." that the judgment debtor "... has wilfully failed to make full disclosure as required under rule 1A(2) ... it may, in its discretion, order the imprisonment of the judgment debtor for a period not exceeding 3 months." Mr Ismail says that this is a power that is to be exercised, if it is to be exercised at all, "following the examination". On the plain wording of the rule, it is difficult to see how the contrary can be argued.

10. In my judgment, Mr Ismail is plainly right. It is also to be noted that this provision talks about ordering the imprisonment of the judgment debtor rather than committing him to prison. It seems to me that the learned Master did not have the relevant provisions in mind or sufficiently in mind. And she seems to have been thinking in terms of disobedience of her specific order rather than failure to make disclosure as a whole. Her choice of the formula "committed to prison" suggests that she was thinking along those lines.

11. I need not decide whether disobedience of an order under Order 49B, rule 1(1)(a) to bring documents to an examination is a ground for committal for contempt. There is of course no question of committal for contempt here. That course must be attended by all the procedural safeguards devised for it.

12. It is necessary, I think, to go right to the beginning of Order 49B Rule l(1)(a) provides, in so far as is material, that the court "... on an ex parte application by the judgment creditor, may order that the judgment debtor be examined under rule 1A" and "... appear before the Court at a time appointed by the Court; with such documents or records as the Court may specify ..." If one looks at the way in which Master Cannon and Master Beeson herself expressed their orders for discovery, one will see that it was in the nature of warning to the judgment debtor of the requirement to make full disclosure and, to some extent assisting him, to his own advantage as well as to that of others, to do so. It seems to me that what Master Beeson did in imprisoning the defendant, well-intention as it no doubt was, was wholly without jurisdiction. That renders what I am about to say about time of no practical importance to the result of this case. But it seems worth mentioning for future reference that rule 1(1)(a) talks about attending the examination with specified documents, while Master Beeson's Order of November 1, 1989, requires production before a resumed hearing. Such a requirement may be open to challenge.

13. While on the question of jurisdiction, I should note that the jurisdiction of a Judge in Chambers to entertain this appeal is questioned by the plaintiff. The plaintiff says that an appeal such as this one must be to the Court of Appeal. The general power of a Judge in Chambers to hear appeals from any judgment, order or decision of a Master is, of course, contained in Order 58, rule 1(1). To that general rule there are exceptions. The exception relied upon by the plaintiff for saying that this appeal should be to the Court of Appeal is the one contained in rule 2(d), which provides that an "... appeal shall lie to the court of Appeal from any judgment, order or decision (other than an interlocutory judgment, order or decision) of a master, given or made....... on the hearing or determination of an application under Order 49B". I am not at all satisfied that the order for imprisonment which the Master made was made on any application at all, if one looks at the matter with any degree of reality.

14. In any event, it seems to me that the Rules of court, in providing that specific matters have to go to the court of Appeal, did not have in contemplation judgments, orders or decisions made wholly without jurisdiction, as I think the present order was. I am quite unable to read the rules so that the matter before me is specifically covered and therefore taken out of the general power of a Judge in Chambers to hear appeals from Masters.

15. I must say that I am happy to be able to come to this conclusion because the liberty of the subject is involved, and it would be a pity if, having decided in favour of the defendant on the merits, I had to say that his appeal had been brought in the wrong court. If I had felt it necessary to adopt such a course, I would have applied my mind to whether or not I had some inherent jurisdiction to make some order in his favour so as to restore his liberty to him. As it has not arisen, I do not wish to say too much on the question. But I will say that I would be very surprised if one of Her Majesty's Judges, seeing one of Her Majesty's subjects imprisoned wholly without jurisdiction, was powerless to act at once to restore the subject's liberty to him. Whatever view I may have taken in regard to my own jurisdiction on the appeal, I do not think that the practical result would have been different.

16. Before concluding this judgment, I would like to express my indebtedness to counsel, both of whom come into this matter on short notice. In the case of Mr Ismail, I understand that it was on one or two hours' notice following an accident - I hope not serious - with which his predecessor met. I am indebted to counsel for their assistance in this matter. The result is that the appeal is allowed. The order for imprisonment is set aside. I need not say anything more about the case beyond observing that the Order for imprisonment or committal, whichever it was, was in a form which does not comply with the Rules of Court, either as a matter of form or, more seriously, as a matter of substance. The appeal is allowed. The defendant is discharged.

[Argument on costs]

17. Mr Ismail asks me to award the defendant the costs before the Master and of this appeal. Very reasonably - upon my suggestion to him that no additional costs were created before the Master by reason of the Order for committal since it seems to have sprung out of an examination which, in any event, had been going on - Mr Ismail withdrew the application in regard to the costs below. Mr Li - matching Mr Ismail's reasonableness - does not resist the costs of the appeal. But he suggests that those costs should not include the costs of certain affidavits, since they were not relied upon as they went to something other than the issues on which the appeal has been decided. I think that the defendant should have the costs of the appeal; and I do not limit them in the way suggested by Mr Li. Had the matter gone that far, those affidavits may have been relevant. It is not the defendant's fault that he won even without relying on them. I order that the defendant be at liberty to proceed to tax his costs of the appeal forthwith, if he considers it worth his while to do so. Clearly, any costs he recovers will only form a very small set-off against the very large sun of money which he owes the plaintiff. Nevertheless, that is his entitlement; and I so order.

Representation:

Mr C.Y. Li instructed by Wong Hui & Co. for the plaintiff

Mr. A. Ismail instructed by Gary Mak & Co. for the defendant