Following the recent episode “Garnishee Proceedings and Charging Orders”, Jonathan Gray continues discussing the topic of enforcements of judgments in respect of oral examination and prohibition orders.
Oral examination is a procedure by which a judgment creditor can gather information about the judgment debtor’s financial position and assets. This process allows the creditor to obtain information regarding the debtor’s assets, including disclosure of all bank accounts and bank statements, accounts/financial statements (for corporate debtors), tax returns, wage slips for individual debtors, shareholdings, real property and other relevant information. The oral examination is conducted in court, where the judgment debtor is required to answer questions under oath. The purpose of this examination is to ascertain the debtor’s ability to satisfy the judgment debt and identify any assets that can be seized for enforcement purposes.
Prohibition Orders are court orders that prevent a judgment debtor from leaving Hong Kong where their departure is or would be likely to obstruct or delay the enforcement of a judgment. These orders are often sought in conjunction with applications for oral examination where there is a risk that the debtor may attempt to leave Hong Kong in order to avoid the oral examination. Prohibition orders are obtained ex parte, which means without notifying the debtor in advance to prevent the debtor from leaving Hong Kong before the order is made.
Both oral examination and prohibition orders play significant roles in the enforcement of judgments in Hong Kong. They provide effective means for judgment creditors to gather information about the debtor’s assets and prevent the dissipation of those assets. However, it is important to note that these mechanisms are subject to certain legal requirements and limitations.
Enforcing a judgment can be a complex and challenging process, but with the right legal strategies and guidance, judgment creditors can increase their chances of successful enforcement in Hong Kong.
SHOW NOTES:
00:25 Assessing the value of funds
02:04 What happens if the debtor ignores the order?
03:18 Avoiding the debtor from leaving Hong Kong
TRANSCRIPT
Enforcement of Judgments: Oral Examination and Prohibition Orders
In the previous episode we talked about garnishee proceedings and charging orders. Today we discuss oral examination and prohibition orders in the context of enforcement of judgments.
If a judgment creditor does not have information about a judgment debtor’s assets are there any options available to help find out such information?
Yes. Firstly, there are a number of public searches that can be conducted, including eg Land searches at the Land Registry and company searches at the Companies Registry. A judgment creditor may also engage a private investigator. But in many cases, there may be little or no information available.
One useful method of enforcement is to apply for the oral examination of the judgment debtor on oath (or a director of the judgment debtor if it is a company).
This requires the judgment debtor or the director, as the case may be, to attend Court in in order to be examined about their assets and financial position.
The rules are slightly different depending on whether the judgment debtor is an individual or a company – in broad terms the scope of examination is wider for individual judgment debtors and the sanctions that may be imposed are more severe.
Where the Court makes such order, at the first hearing the Court will make standard directions requiring the judgment debtor to disclose all documents regarding his assets and financial position, including:
- Bank account passbooks and statements for a specified number of years;
- Accounts for a specified number of years for a corporate judgment debtor or for any business of which an individual is sole proprietor or partner;
- All tax returns and assessments for a specified number of years;
- All share certificates held;
- All deeds or land registry entries for properties owned by the judgment debtor whether legally or beneficially;
- Registration details of all vehicles owned;
- Wage or salary slips.
That sounds good. But what if the judgment debtor simply ignores it?
The order requiring the judgment debtor to attend Court for oral examination should have what is called a Penal Notice on it – essentially warning him that he must attend the examination whenever required and that if he fails to attend without good reason he will be:
- liable to face contempt of court proceedings (for an officer of a corporate debtor); or
- liable to arrest for an individual debtor.
Further, in the case of an individual judgment debtor, following examination the Court may order his imprisonment if satisfied that the judgment debtor:
- was able to satisfy the judgment debt wholly or partly;
- has disposed of assets with a view to avoiding enforcement;
- has willfully refused to make full disclosure or answer questions under oath.
In my experience, oral examination can be a powerful tool for enforcing a judgment. It forces individual or corporate debtors to disclose assets available to satisfy the judgment debt – with the possible sanction of imprisonment for individuals, while, in many cases, corporate debtors in particular will be willing to settle or pay the outstanding judgment debt rather than disclose sensitive financial information.
I’ve heard that in some cases you can get an order stopping a debtor from leaving Hong Kong. Can you tell me more about this?
Yes – in appropriate cases a judgment creditor may apply for what is called a prohibition order stopping an individual judgment debtor from leaving HK.
In appropriate cases, a prohibition order may even be made in intended actions or pre-judgment – although they are easier to obtain after judgment.
Often, in fact, prohibition orders are used in conjunction with applications for oral examination – in other words to stop the judgment debtor from leaving HK before the examination can take place in order to secure his attendance – but can also sought in other cases.
How do you apply for one and what do you need to show?
The application is made ‘ex parte’ – that is, without notice to the debtor – to avoid tipping them off and leaving HK before the order is made.
The application must be supported by an affidavit which must set out the reasons for believing that the judgment debtor is about to leave HK as a result of which satisfaction of the judgment debt is likely to obstructed or delayed.
The prohibition order, if made, must be served on the Director of Immigration, the Commissioner of Police and the Court Bailiff. It should also be served on the judgment debtor if he can be found.
Where possible, the Immigration Department should also be provided with the judgment debtor’s date of birth, HKID number, passport number and any known aliases
What happens if the judgment debtor still tries to leave Hong Kong?
If a judgment debtor who has been served with a copy of the order tries to leave Hong Kong he may be arrested by any immigration officer or police officer.
If a judgment debtor attempts to leave Hong Kong before has been served with a copy of the order he cannot be arrested but will be prevented from leaving Hong Kong.
A prohibition order can be a useful tool in appropriate cases to ensure compliance with an order for the judgment debtor’s oral examination where there is reason to believe that the judgment debtor may otherwise leave Hong Kong in order to avoid the oral examination.
This video is for informational purposes only. Its contents do not constitute legal or professional advice.
