The recent case of CCIG Credit Ltd v Ng Chin Hung(1) is a nice illustration of some of the problems associated with seeking to enforce a judgment debt against money in a bank account. In this case, the defendant judgment debtor was a joint account holder together with his brother. The brother successfully applied to discharge a provisional garnishee order obtained by the plaintiff judgment creditor on the basis that, as a matter of law, money held in a joint bank account could not be attached unless both account holders were judgment debtors. While the decision is only a first-instance one, it does represent conventional thinking among the lower courts in Hong Kong which deal with day-to-day enforcement proceedings.
While the court rules in Hong Kong provide for various enforcement rules (familiar to many lawyers in common law and codified jurisdictions), the onus on enforcing a judgment is on a judgment creditor.
One way to enforce a judgment is by garnishee proceedings. In short, the judgment creditor seeks a court order that a person (a garnishee) who owes a debt to the judgment debtor pays over all or part of that debt (and for no more than the amount of the judgment debt) to the judgment creditor. The debt sought to be attached must be owed to the judgment debtor.
The timing of the application is important because the provisional garnishee order (before being made final) will attach only with respect to the balance standing to the credit of the judgment debtor at the time that the order is properly served on the garnishee (generally a bank). The most common example is a credit balance held in a bank account.(2)
In this case, the judgment creditor obtained a provisional garnishee order with respect to the money in the bank account. The account in question was held in the names of the judgment debtor and his brother. The brother (the applicant) applied to discharge the provisional order before it was made final.
The applicant argued that the money in the account could not be the subject of a garnishee order because he was not a joint judgment debtor and the account was in joint names. A further issue also arose as to whether the money held in the bank account was beneficially owned by the judgment debtor or actually the proceeds of his deceased father's estate being held on trust for the ultimate beneficiaries (there apparently being some other family members potentially entitled).
The judgment creditor argued that (among other things) although the bank account was in joint names, based on the available evidence, the balance in the account represented a debt owed by the bank to the judgment debtor separately in his own right.(3) Further, it was argued that insofar as the judgment debtor held the balance in the account on behalf of any beneficiaries, he too had an identifiable interest with respect to the money, irrespective of the state of the administration of his deceased father's estate.
In an interesting judgment handed down recently, the court held that (based on the prevailing case law) where money is held in a joint bank account and the judgment debtor is only one of the account holders, the money in the account cannot be the subject of a garnishee order.(4)
This was enough to allow the application and to discharge the provisional order.
However, in a further interesting passage, the court considered the judgment debtor's entitlement to the moneys in the account, either as a potential beneficiary of the father's estate or as someone already with a realisable interest.(5) In short, the court considered that, based on the available evidence, the judgment debtor's interest in the money in the account did not amount to a "debt due" to him such that it could be the subject of a garnishee order pending formal administration of the father's estate. This part of the judgment appears to be obiter because the application to discharge the provisional order succeeded on the first point.
In any claim where money is at stake, early consideration of how a judgment might be enforced is essential. There are a variety of methods to enforce a judgment debt under the court rules and they are not mutually exclusive.
Garnishee proceedings are common in Hong Kong (as are equivalent procedures in many other jurisdictions). However, a basic principle in pursuing garnishee proceedings is that the debt sought to be attached must be a debt due to the judgment debtor. Based on prevailing legal principles in Hong Kong, money in a joint bank account cannot be the subject of a garnishee order unless the account holders are all joint debtors.
Garnishee proceedings with respect to bank accounts can be an effective enforcement method, but in practice such proceedings sometimes prove to be fiddly. In this case, the court acknowledged the judgment creditor's apparent frustration that it was, perhaps, being given a bit of a runaround. As for the bank and the judgment debtor, neither made an appearance in this case (which is not unusual) – the dispute formally being between the judgment creditor and a "third person" (ie, the applicant/brother).
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For further information on this topic please contact Michael Maguiness or David Smyth at RPC by telephone (+852 2216 7000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
(1) HCA 1760/2016, December 22 2017. At the time of writing, there is no indication of an appeal from publicly available sources. Appeal courts in Hong Kong can show a marked deference to the lower courts' day-to-day experience in matters of enforcement.