Westpac New Zealand Ltd v. Gao Hui and Others
Read the full judgment text of HCZZ 27/2009 on BabelCite. This HCZZ judgment was delivered on 22 May 2009.
1. On 22 May I discharged two orders dated 19 and 20 May. These are my reasons for having done so. The point at issue in this matter is whether an interlocutory order of a British Commonwealth court, in this case a Mareva- type injunction by the High Court of New Zealand, is registrable and enforceable in Hong Kong under the Foreign Judgments (Reciprocal Enforcement) Ordinance Cap. 319, which from now on I will refer to as “the Ordinance”.
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HC (Intended Action) 27 /2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE INTENDED ACTION 27 OF 2009 ----------------------
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---------------------- Before: Deputy High Court Judge Carlson in Chambers Date of Hearing: 22 May 2009 Date of Ruling: 22 May 2009 Date of Delivery of Reasons for Ruling: 25 May 2009 ---------------------- R U L I N G ---------------------- 1.On 22 May I discharged two orders dated 19 and 20 May. These are my reasons for having done so. The point at issue in this matter is whether an interlocutory order of a British Commonwealth court, in this case a Mareva-type injunction by the High Court of New Zealand, is registrable and enforceable in Hong Kong under the Foreign Judgments (Reciprocal Enforcement) Ordinance Cap. 319, which from now on I will refer to as “the Ordinance”. Background 2.The 1st and 4th Defendants are brothers. The 3rd Defendant is their mother. The 1st Defendant operated a petrol station at Rotorua, the owner of which is the 2nd Defendant, it being a limited company which the 1st Defendant controlled. I will come to the 5th Defendant’s position in a moment. 3.The 2nd Defendant had a bank account with the Plaintiff, a well-known and substantial international bank. By some mistake the Plaintiff’s staff created a NZ$10 million overdraft facility on the 2nd Defendant’s account instead of an agreed overdraft of NZ$10,000. The 1st Defendant was quick to take advantage of that mistake and, according to the report which I have seen from the New Zealand police, the 1st Defendant has made off with NZ$6,730,000 by transferring these funds out of New Zealand to various accounts in Mainland China and Hong Kong. He has been able to do so with the assistance of his mother [3rd Defendant] and his brother [4th Defendant]. The petrol station has been shut down and the three of them have fled New Zealand and are being sought by a number of police forces. 4.One of the accounts into which the 1st Defendant has deposited money is with the 5th Defendant which is an internationally known casino and the resort operator. It has a substantial casino in Macau. 5.In order to preserve as many of its assets as it could, the Plaintiff has obtained ex parte freezing orders [a Mareva injunction as it is still called in Hong Kong] against these five defendants. The first was obtained on 14 May 2009 and on 19 May an ex parte application was made to me to have that order registered pursuant to section 4 of the Ordinance. The New Zealand order of 14 May expired on 20 May. On that day the High Court in New Zealand made another order in identical terms which will now expire on 14 July next and on the same day a further ex parte application was made to me to register that order under the Ordinance, which I did. The present application 6.The 5th Defendant was duly served with my Orders as was the Dah Sing Bank with which it keeps its relevant bank account. Regrettably, it had not been made clear to the Dah Sing Bank that the Order only related to an amount of HK$3,707,211, so that the bank considered that the Order required it to suspend the operation of the entire bank account which is now said to have caused the 5th Defendant considerable losses and has damaged its reputation for which in due course, it will be seeking compensation not only from the Plaintiff but also from its solicitors. 7.The application that is now made is for me to discharge both of my Orders on the basis that these had been made without my having the jurisdiction to do so, so that both were neither valid nor lawful. 8.Put very shortly, and in my judgment this is a short point, it is submitted that the Ordinance only operates in the case of final judgments and only then, to judgments which require the losing party to pay a sum of money to the party that has obtained judgment. It is not intended and does not extend to interlocutory judgments or orders of the type obtained before the New Zealand High Court on these two occasions. Scheme of the Ordinance 9.Mr Hunsworth, on behalf of the 5th Defendant, submits that what came from the New Zealand High Court was not a registrable judgment. The argument proceeds in this way. The long title to the Ordinance is in these terms.
10.Section 3 of the Ordinance provides for the extension of the provisions of the Ordinance to countries which give reciprocal treatment to the judgments of the superior courts of Hong Kong. This is enacted in section 3(1) with the references to “the Governor” and “the Colony” being replaced by “the Chief Executive” and “the Hong Kong SAR” respectively;
11.In this regard New Zealand appears in Part 2 of the First Schedule to Cap. 319A being the Foreign Judgments (Reciprocal Enforcement) Order and under paragraph 4(b) of this Order the High Court of New Zealand is deemed to be the superior court of New Zealand. The First Schedule is in three parts. The first lists all the superior courts of the Commonwealth of Australia and Australian External Territories such as Norfolk and Christmas Islands and Part 2, which is headed “Part of the Commonwealth”, lists 7 countries of that organisation including New Zealand. Schedule 2 lists 7 non-Commonwealth countries such as France and the Netherlands. 12.Section 3(2) which Mr Hunsworth says is determinative of his application says this:
13.This sub-section speaks for itself says Mr Hunsworth. The Orders which had been registered are not “final and conclusive” and are not of the type which require the payment of money. They are Orders which are intended to preserve assets. In support of his contention that these orders are not registrable, he has referred to the judgment of Sakhrani J in Cova Enterprises Ltd v Ruddy Tjanaka [2004] 1 HKC 94 which concerned a judgment of the Singapore High Court, in the nature of an order for specific performance, requiring the head vendor of a property in Hong Kong to sell the property to a named individual. On an application to have that judgment registered under the terms of the Ordinance the judge declined to do so because the nature of the order was not one for the payment of a sum of money. [See para. 29 of the judgment at page 105]. 14.Mr Hunsworth also seeks to reinforce his submission by reference to Order 71 RHC which regulates the procedure for applications under the Ordinance which, unsurprisingly, having regard to the terms of section 3(2) relates to final and conclusive judgments for the payment of a sum of money. 15.In the event that he fails on this limb, Mr Hunsworth also relies on section 6(1)(a)(iii) of the Ordinance which provides for the setting aside of orders of registration in circumstances;
16.The Orders obtained in New Zealand were without notice to the 5th Defendant, which is also the 5th Defendant in the New Zealand action. Mr Hunsworth’s point is that his client is not a judgment debtor and was never served with the proceedings in New Zealand, nor here, and was therefore unable to contest them and for this additional reason the Orders should be discharged. The Plaintiff’s response 17.Mr McCoy S.C. submits that I should give this legislation a purposive interpretation, the purpose being that the legislature appears to have decided that preferential treatment should be given to the superior courts of the Commonwealth, this originally being British and British Colonial legislation and that foreign jurisdictions are given less favourable consideration and treatment hence the appearance in the First Schedule of only Commonwealth countries and only in the Second Schedule is there a short list of foreign countries. He submits that the reference to “foreign judgments” in section 3(2) refers to “foreign” as opposed to “Commonwealth” judgments so that the restriction in section 3(2) is intended to relate only to the Schedule 2 “foreign” countries and not to the Schedule 1 Part 1 and 2 “Commonwealth” countries. From this he has taken me to section 2(1) which defines a judgment as “a judgment or order” and that what has been registered is an “order” within the meaning of section 2(1) and that the registrations that I allowed on 19 and 20 May were therefore perfectly valid under the Ordinance. Section 4(1) which creates the mechanism for registration contemplates an application being made by a judgment creditor under a “judgment” which under section 2(1) means a “judgment or order” and this therefore provides a complete answer to Mr Hunsworth’s summons. Conclusion 18.Notwithstanding the ingenuity of Mr McCoy’s argument, I cannot see how he legitimately is able to draw a distinction in applications between Schedule 1 Commonwealth jurisdictions and Schedule 2 non-Commonwealth jurisdictions. They are all “foreign” for the purpose of the Ordinance and the references to “foreign” in the Ordinance simply means all jurisdictions outside Hong Kong. That is the only meaning and significance of the expression “foreign” in the Ordinance. Moving on from there, section 3(2)(a) is as plain as a pikestaff in its meaning and effect. The power of registration can only be exercised on behalf of a judgment creditor in possession of a final and conclusive judgment which is a judgment for the payment of money by the judgment debtor to the judgment creditor. In this regard I respectfully agree with Sakhrani J supra. These New Zealand Orders are not final judgments nor are they, at this stage of the interlocutory process in New Zealand, judgments ordering the payment of money by a judgment debtor to a judgment creditor. These are interlocutory orders which are not registrable and for this reason the registrations fell to be set aside. 19.That being the case one does not get to section 6(1)(a)(iii), although it is perhaps worth observing that relief under the sub-paragraph is only available to a “judgment debtor” who can only earn that title, if I can so express it, by having a final and conclusive judgment entered against it, which is not the position of the 5th Defendant in this case. This all serves to reinforce Mr Hunsworth’s case that interlocutory orders made in this case against an innocent third party cannot be registered under section 4(1) of the Ordinance. 20.For all of these reasons I decided to discharge my Orders of 19 and 20 May against all five defendants who stand in the same position on this issue. 21.Before I leave this matter I wish to observe that although the court, in this case myself, has the ultimate responsibility for its orders this case perhaps brings into focus the care with which practitioners should approach ex parte applications and in a case such as this not invite the judge to make orders which he has no jurisdiction to make under the Ordinance which is being relied on. Whilst I appreciate that speed is of the essence in such matters, it is of paramount importance that the empowering statute is carefully examined to ensure that the court is able to make the order that is being asked for. The making of an order outside the court’s jurisdiction is a very serious matter. Fortunately, the error has been identified by a recipient of the two Orders and within 48 hours matters have been rectified. The obvious route for the Plaintiff before this court would have been for a domestic Mareva injunction embracing both the 5th Defendant and the Dah Sing Bank where the ill-gotten funds lie. Costs 22.Mr Hunsworth had asked for indemnity costs. I will adjourn that argument to a date to be fixed. There may also be a claim for damages under the undertaking in damages which can conveniently be dealt with at the same time. I will expect the parties to refer these issues back to the court, at least, for directions within the next 21 days.
G. X. McCoy S.C. and James Sherry instructed by Messrs Laracy Gall for the Plaintiff Nicholas Hunsworth of Messrs JSM for the 5th Defendant |
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