|
HCCT 59/2019
[2020] HKCFI 2703
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO. 59 OF 2019
____________________
| |
IN THE MATTER of the Enforcement of the Arbitration Award made on 16 October 2017
|
| |
and
|
| |
IN THE MATTER of Section 87 of the Arbitration Ordinance (Cap 609)
|
| |
and
|
| |
IN THE MATTER of Order 73 rule 10(1) of the Rules of the High Court (Cap 4A)
|
____________________
| BETWEEN |
|
|
| |
CHANGFENG SHIPPING HOLDINGS LIMITED |
Applicant |
|
and
|
| |
SINORICHES ENTERPRISES CO., LIMITED |
Respondent |
____________________
| Before: |
Deputy High Court Judge To in Chambers |
| Date of Written Submission of the Applicant: |
28 September 2020 |
| Date of Decision: |
1 December 2020 |
_______________
D E C I S I O N
_______________
INTRODUCTION
1. This is the Applicant’s appeal against the ex parte order of the master made on 14 August 2020, ordered to be determined on paper pursuant to the order of Au-Yeung J. The master ordered the two directors of the Respondent be examined under Order 48 rule 1 (the examination order), but refused to grant leave under Order 11 rule 9(4) to serve the examination order out of Hong Kong on the two directors in the Mainland.
2. The Applicant and Respondent are companies incorporated in Hong Kong. The two directors, Ms Wang and Ms Yang, appear to be residents in Dalian in the Mainland. On 25 February 2017, the Applicant and Respondent entered into a charterparty for the hire of the CF Diamond which provided for arbitration in London. Dispute arose between the parties. The Applicant subsequently referred certain disputes under the charterparty to arbitration. On 16 October 2017, the arbitrator issued an award in favour of the Applicant for US$1,322,535.59 plus certain interest and costs (the “Award”).
3. On 31 October 2019, the Applicant obtained leave under Order 73 rule 10(1) to enforce the Award as a judgment of this court (the “Enforcement Order”). The Enforcement Order was served on the Respondent on 1 November 2019. On 12 December 2019, the Applicant served a statutory demand on the Respondent. Throughout the Respondent ignored the arbitral proceedings and did not satisfy the Award or the statutory demand or took any part in the Hong Kong enforcement proceedings.
4. On 9 March 2020, the Applicant made an ex parte application for leave to examine the two directors of the Respondent pursuant to Order 48 rule 1 of the Rules of the High Court (“RHC”) and for leave to serve the examination order on the two directors out of Hong Kong, pursuant to Order 11 rule 9(4). The learned master granted the examination order but refused leave to serve the order out of the jurisdiction. In refusing leave to serve out, he quoted paragraph 11/9/1H of Hong Kong Civil Procedure 2020 (which is re-written in Paragraph 11/9/17 of Hong Kong Civil Procedure 2021)and expressed the view that the fundamental question is whether the foreign directors of the Respondent are so closely connected to the substantive claim that the Hong Kong court is justified in taking jurisdiction over them. He seemingly followed the Singapore Court of Appeal decision in Burgundy Global Exploration Corp v Transocean Offshore Int’l Ventures Ltd[1] quoted in Hong Kong Civil Procedure 2020 but was not satisfied that the Applicant has shown a close connection between the directors and the claim.
5. The issues raised in this appeal are (1) whether the court has jurisdiction to make examination orders under Order 48 rule 1 against officers of a corporate judgment debtor who is resident outside Hong Kong and is not a party to the action from which the debt arose; and (2) if it has, how the discretion in granting leave to serve such an order out of the jurisdiction under Order 11 rule 9(4) is to be exercised. The master accepted that the court has jurisdiction under issue (1), but refused to exercise the discretion to order service out. The court’s jurisdiction under Order 11 rule 9(4) is intricately related to its jurisdiction under Order 48 rule 1. In order to consider how the discretion under Order 11 rule 9(4) is to be exercised, it would be helpful to understand the court’s jurisdiction under Order 48 rule 1.
Order 48 rule 1
6. Order 48 rule 1 provides as follows:
“(1) Where a person has obtained a judgment or order for the payment by some other person (hereinafter referred to as the judgment debtor) of money, the Court may, on an application made ex parte by the person entitled to enforce the judgment or order, order the judgment debtor or, if the judgment debtor is a body corporate, an officer thereof, to attend before the Registrar or such officer as the Court may appoint and be orally examined on the questions—
(a) whether any and, if so, what debts are owing to the judgment debtor, and
(b) whether the judgment debtor has any and, if so, what other property or means of satisfying the judgment or order,
and the Court may also order the judgment debtor or officer to produce any books or documents in the possession of the judgment debtor relevant to the questions aforesaid at the time and place appointed for the examination.
(2) An order under this rule must be served personally on the judgment debtor and on any officer of a body corporate ordered to attend for examination.”
Order 48 rule 1 expressly provides that an examination order may be served on officers of a corporate debtor who are not parties to the action from which the judgment debt arose. The operation of this rule involves factual issues and presents little problem, save where the judgment debtor or its officer in the case of a corporate debtor, is out of the jurisdiction. Under such circumstances, leave to serve the examination order out of the jurisdiction under Order 11 rule 9 may be required.
7. In Hong Kong, the courts have accepted that Order 48 rule 1 has extra-territorial effect; see for example, Navig8 Chemical Pools Inc v Inder Sharma[2]. The master in this case also proceeded on the basis that the court has jurisdiction over officers of the judgment debtor resident abroad. Whether Order 48 rule 1 has extra-territorial effect is a matter of construction of the rule. In my view, it has. There is nothing in the wording of the rule to suggest that the rule is applicable only to officers of the judgment debtor within the jurisdiction. However, it is trite principle of statutory interpretation that there is a presumption against extra-territoriality: see Masri v Consolidated Contractors Int’l (UK) Ltd and others (No.4)[3]. Under section 19 of the Interpretation and General Clauses Ordinance (Cap 1), an Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit. Order 48 rule 1 is invoked when a judgment debtor failed to pay a debt which is adjudged to be paid after due process and the judgment creditor has no information as to the debtor’s assets which could be made available to satisfy judgment. The underlying purpose of the rule is to enable judgment creditors to obtain information about a judgment debtor’s finances. This purpose could only be served against a corporate judgment debtor by extending the application of the rule to its officers within as well as outside the jurisdiction. Hong Kong is an international commercial centre. There are many foreign or international corporations carrying on business in Hong Kong with officers resident outside Hong Kong. The underlying purpose of the rule and Hong Kong’s background as an international commercial centre are, in my view, strong enough to displace the presumption against extra-territoriality. Having regard to the circumstances in Hong Kong and applying the fair, large and liberal construction and interpretation, I am satisfied that the purpose of the rule would be best served if it is construed to have extra-territorial effect and applicable to officers of corporate debtors resident inside as well as outside Hong Kong. On issue (1), I find that the court has jurisdiction to issue examination order against officers of a corporate debtor who are resident inside as well as outside Hong Kong, despite they are not parties to the action from which the debt arose.
Personal jurisdiction and substantive jurisdiction
8. Before investigating issue (2), it would be useful to point out the distinction between personal jurisdiction and subject-matter or substantive jurisdiction which is relevant to the issue of service. In Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation [4], Hoffmann J (as he then was) pointed out this distinction and quoted with approval the opinion of Dr Mann in his article, “The Doctrine of Jurisdiction in International Law” in Studies in International Law[5]. He said[6]:
“I think that this argument confuses personal jurisdiction, i.e., who can be brought before the court, with subject matter jurisdiction, i.e., to what extent the court can claim to regulate the conduct of those persons. It does not follow from the fact that a person is within the jurisdiction and liable to be served with process that there is no territorial limit to the matters upon which the court may properly apply its own rules or the things which it can order such a person to do. As Dr. Mann observed in a leading article, “The Doctrine of Jurisdiction in International Law”, (1964) 111 Recueil des cours 146:
‘The mere fact that a state’s judicial or administrative agencies are internationally entitled to subject a person to their personal or ‘curial’ jurisdiction, does not by...
| 
