DCCJ 2548/00 & 13438/00
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTIONS NOS. 2548 & 13438 OF 2000
|TRADING CONSULTANTS LIMITED
|JOHN STEWART SLOAN
(CONSOLIDATED BY ORDER OF MASTER C K CHAN DATED 1-9-2000)
Coram: Acting Registrar Simon Kwang in Court
Date of Hearing: 30 July & 26 September 2001
Date of Handing Down: 7 November 2001
REASONS FOR DECISION
1. By a Consent Order dated 12 February 2001, Judgment was entered in favour of the Plaintiff against the Defendant for the sum of HK$75,000 inclusive of damages, interest and costs. Under the same order, the parties agreed to a stay of execution of the Judgment provided that the Defendant shall pay the Plaintiff $5,000 on the 12th day of each month commencing from 12 March 2001 which stay would be lifted if the Defendant failed to make 2 consecutive instalment payments.
2. In April this year, as the Defendant Judgment Debtor failed to make 2 consecutive instalment payments rendering the whole Judgment debt unsatisfied, the Plaintiff Judgment Creditor obtained an oral examination order dated 27 April 2001 against the Judgment Debtor under Order 49B of the Rules of District Court. It was provided under the said Order that the Defendant "attend and be orally examined under Order 49B of the Rules of District Court as to whether any and what debts are owing to the Judgment Debtor and whether the said Judgment Debtor has any and what other property or means of satisfying the Judgment dated 12 February 2001,..." At the call over hearing on 23 May 2001, the Judgment Debtor appeared in person and Ms. Registrar Au-Yeung granted usual directions for the Judgment Debtor to produce various documents for the last 2 years.
3. The oral examination was heard before me on 30 July 2001. At the conclusion of the oral examination, Mr. Clarke, appearing for the Judgment Creditor, applied for an order for the imprisonment of the Judgment Debtor for a period of 14 days pursuant to Order 49B 1B(1)(b) and (1)(c) that the Judgment Debtor:
(a) has disposed of assets with a view to avoiding satisfaction of the Judgment; and
(b) has wilfully failed to make full disclosure.
4. As the proposed order asked by the Judgment Creditor carried serious consequence and would affect the liberty of the Judgment Debtor, I informed the Judgment Debtor who appeared in person to seek legal advice and to make submission on the Judgment Creditor's application. The Judgment Debtor indicated that he would seek legal advice after reviewing the transcript of the proceedings. The hearing was adjourned to a date to be fixed to allow the Judgment Debtor to seek legal advice and to make submission and directions were made for the Judgment Creditor to file and serve the transcript of proceedings within 21 days and written submission within 7 days thereafter. The transcript and the written submission of the Judgment Creditor were later filed on 7 and 11 August 2001 respectively.
5. On 26 September 2001, the Judgment Debtor, while acting in person without legal representation, made oral submission in opposing the Judgment Creditor's application for his imprisonment. After hearing Mr. Clarke's reply, I reserved my Judgment pending the filing of the further transcript of the proceedings by the Judgment Creditor. The transcript was later filed on 8 October 2001.
Order 49B Rules of District Court
6. It may be convenient to set out the provisions of the Rules of District Court which are relevant to the application of the Judgment Creditor.
" Order 49B
(HK) Execution and Enforcement of Judgment for Money by Imprisonment
1. Securing attendance at examination
(1) Where a judgment for the payment of a specified sum of money is, wholly or partly, unsatisfied, the Court, on an ex parte application of the judgment creditor, may order that the judgment debtor be examined under rule IA and shall, for the purpose of securing the attendance of the judgment debtor at an examination under rule 1A either-
(a) order the judgment debtor, by an order which shall be served personally upon him, to appear before the Court at a time appointed by the Court, with such documents or records as the Court may specify;
1A. Examination of debtor
(1) Upon appearance of the judgment debtor for examination, he shall give evidence and he may be examined on oath by the judgment creditor and the Court; and the Court may receive such other evidence as it thinks fit.
(2) The judgment debtor shall, at his examination, make a full disclosure of all his assets, liabilities, income and expenditure and of the disposal of any assets or income and shall, subject to the directions of the Court, answer all questions put to him.
1B. Power of the Court following examination
(1) Where the Court is satisfied, following the examination conducted under rule 1A that the judgment debtor -
(a) is able to satisfy the judgment, wholly or partly; or
(b) has disposed of assets with a view to avoiding satisfaction of the judgment or the liability which is the subject of the judgment, wholly or partly; or
(c) has wilfully failed to make a full disclosure as required under rule 1A(2) or at the examination under Order 48 or to answer any question as provided under that rule or Order
it may, in its discretion, order the imprisonment of the judgment debtor for a period of not exceeding 3 months. "
7. The law as it now stands only empowers the court to imprison a judgment debtor on confined grounds as those specified under Order 49B Rule1B(1). The Court should exercise its discretion with care and circumspection so that a judgment debtor would not be imprisoned merely because he has no means to satisfy the judgment debt no matter whether the Judgment was entered by consent or otherwise.
8. Mr. Clarke for the Judgment Creditor accepted that as the relief sought is of a criminal nature, he must prove the grounds on a criminal standard of proof, i.e. the court must be satisfied beyond reasonable doubt before an order of imprisonment will be made (see Bank of India v. Murjani & others  HKLY 819 and Hua Chiao Commercial Bank Ltd. v. Alpha Plus International Development Ltd. HCA 14714 of 1999).
9. The present application for imprisonment of the Judgment Debtor was proceeded under grounds (b) and (c) of Rule 1B(1). Under ground (b), the Judgment Creditor has to show that the Judgment Debtor has disposed of assets. Although the rules do not specify whose assets, it must follow that it should refer to the assets of the Judgment Debtor but not the others. As decided in the case of Luen Hing Fat Textile Ltd. v. Lam Shing-chin t/a New Cotton Trading Company  1 HKLR 737, in order to invoke the rule to imprison a judgment debtor, the wordings of the provision must be construed strictly. Furthermore, the Judgment Creditor has to prove that the disposal was made with a view to avoiding satisfaction of the Judgment Debt.
10. For ground (c), the failure to make a full disclosure must be deliberate and intentional as opposed to accidental and negligent. The failure to make disclosure should be judged as a whole following the examination rather than for disobedience of a specific order (Luen Hing Fat Textile Ltd. v. Lam Shing-chin t/a New Cotton Trading Company, op cite followed).
The Evidence of the Judgment Debtor
11. Before going into the evidence of the Judgment Debtor, I must mention that throughout the examination of the Judgment Debtor, Mr. Clarke apparently focused more on laying foundation for his application for imprisonment of the Judgment Debtor than obtaining evidence to show means of the Judgment Debtor to satisfy the Judgment Debt (which should be the whole object of the oral examination as provided under my Order dated 27 April 2001). Therefore, there is little evidence which touched on the assets of the Judgment Debtor. Rather, the Judgment Debtor had tried to explain out the allegations made by Mr. Clarke against him for disposal of assets and failure to make full disclosure.
12. The Judgment Debtor was and is a 25% shareholder and a director of a company called Asia International Investigations Ltd ("Asia International") from where he derived his major income. However, at the time of the examination, according to the Judgment Debtor, the business of Asia International had ceased and he was unemployed and earned no income. From the documents disclosed by the Judgment Debtor, he maintained 2 bank accounts with the Hong Kong & Shanghai Banking Corporation ("HSBC"): one in joint names with his wife with only a few cents in credit and another one in his sole name with about $3,600 in credit as at 15 April 1999. Mr. Clarke accused the Judgment Debtor for failure to provide bank statements of his account in his sole name or joint name and other documents like bank accounts and accounting records of Asia International for a period from June 1999 to April 2001.
13. The Judgment Debtor explained that he did not have the practice to keep bank statements and has to obtain copies of the previous bank statements. He was told by the Bank that it would charge $50 to $60 per month per statement. He said that at that time, he had financial difficulty to even paying electricity bill so not to say to afford payment of the copying charges to the Bank. Mr. Clarke challenged the evidence of the Judgment Debtor by producing a fee tariff purportedly issued by the Bank which showed that to provide account history report for 2 years, the fees...