I. Types of civil judgments in Hong Kong
A litigant who wins the case and obtains a court judgment against the other party could obtain an order from the court for remedies. Some of the common remedies include monetary payment, possession of land and delivery of goods. Besides, it is possible for the winning party to obtain an injunction order, to abstain the other party (individual/ company) to perform a certain act. It would amount to contempt of court if one tries to violate the injunction. Of course, each remedy has its own way of enforcement.


II. Pre-enforcement investigation
One of the main considerations for commencing proceedings in Hong Kong is whether the Defendant owns any assets in Hong Kong for the enforcement of judgment. One could investigate on this issue through law firms in Hong Kong on third-party agency before commencing proceedings and executing any orders. The investigation results on assets will normally include:

1.  Real estate information: One could obtain detailed information regarding the property, such as the land registration record showing all the previous and current owners, the consideration of the transactions and whether there has been any charge or mortgage registered on the listed address, provided that you know the precise address of defendant’s properties. If you do not have any information regarding the defendant’s properties, investigation by conducting a search with his ID card and passports is also possible.

2.  Company and personal information: If the defendant is a Hong Kong registered limited company, company particulars registered on the Companies Registry (CR) including information of shares and directors of the company, articles of association and the address of each director could be found in the database of CR. One could also obtain the defendant’s address from his company’s registered information on CR listing the particulars of directors. If the defendant is an unlimited company (partnerships and sole proprietorships), particulars of the owners could be found on their Business Registration. If the defendant is a listed company, its detailed information will be available on the Stock Exchange of Hong Kong. Further information could be acquired by using the address found from the Stock Exchange of Hong Kong to perform search in the Land Registry.

3.  Shares information: If the defendant is a major shareholder (i.e. holding 5% or more of the shares) or a director (holding less than 5% of shares) of a listed company, his/her personal information and shares information could be acquired from the Stock Exchange of Hong Kong.

4.  Vehicle information: Queries for vehicle information is quite special. Procedurally, it requires one to have knowledge of license plate number of the vehicle and to further confirm with the name and address of the car owner. Thus, it is impossible to make such investigations without knowing the license plate number but only the name and personal information of the defendant.

5.  Litigation records: Civil or criminal litigation record in the past seven years could be found. For certain cases, copy of summons could also be acquired.

6.  Bankruptcy/ winding-up, personal debt restructuring information: Such information could be obtained from the Official Receiver’s Office and Companies Registry. From the past experience, detailed and precise information is difficult to obtained unless one is directly related to the case.


III. Making the presence of the defendant for hearing mandatory
As Hong Kong grants extensive protection for personal privacy, enquires to the defendant’s bank account and transaction record are generally not entertained. In light of this situation, one alternative is to apply to the court to summon the defendant for oral examination. If the defendant is a company, senior employee could attend on its behalf. The judgment creditor could summon the defendant to interrogate regarding information on his assets, liabilities, income and expenses.

Of course, the court will order the defendant to make a full and frank disclosure of his assets during the interrogation. The court could also bring an injunction order to restrain the defendant from leaving Hong Kong if it deems fit based on the application during interrogation. It will amount to contempt of court if one provides false information in the court and could be sentence to imprisonment for no more than 3 months. If the defendant refused to attend the hearing, the court could also order the arrest of the defendant and bring him to the hearing. This may be useful when the asset of the defendant cannot be traced.


IV.   After commencement of proceedings and before judgment - Mareva Injunction
The plaintiff can apply for Mareva Injunction any time after the proceedings begin and before the judgment, in order to preserve the state of the defendant’s assets until the judgment and restrain the defendant from dissipating and disposing his assets. In exceptional cases, court would grant an Mareva Injunction covering all the assets of the defendant, including those overseas.

While this is possible, such order is difficult to obtain, unlike Mainland China. As common law emphasizes on the protection of personal property rights, the threshold for such order is extremely high. The plaintiff must persuade the court that there is a real substantial risk that the defendant would dissipate and dispose of his assets with evidence and proof.

On the other hand, the plaintiff must also make a guarantee to the court saying that he is willing to pay for the costs of the defendant if he is unable to obtain the order. The defendant, of course, is entitled to set aside this order. Further, even if such order is granted, subject to terms of the order, it may not affect withdrawals for the purposes of daily operation or daily expenses. But the defendant may be sentenced to imprisonment if he violates the order.


V.   Enforcement of judgment debts - Charging order
If the defendant does not have cash deposits in Hong Kong but owns properties, one can consider applying for a charging order. The order will impose a charge on the judgment debtor’s properties to ensure the enforcement of the judgment debt. The effect is similar to that of using the debtor’s property as the collateral for a mortgage. Thus, the position of the creditor is comparable to a mortgagee although with certain fine differences. This could be used to land, securities and the deposited money in court.

It should be noted that if the defendant’s property was originally mortgaged, the charging order will bear less priority and ranks second compared to the bank mortgage. Further explanation to the court is also required before the order may be granted. If the defendant does not repay the debt, judgment creditor must take further action to apply the writ of possession and order for sale to take over and dispose the defendant’s assets for enforcement of the judgment.


VI.   Enforcement of judgment debts - Garnishee Order
The relationship between a bank and a customer in relation to the customer’s bank deposits is similar to that of a creditor and debtor under a loan agreement in common law. Upon expiry of the deposit term, similar to a debtor, the bank will need to repay the principal and interest and the customer being the creditor. Therefore, if the defendant holds an account at a certain bank, the defendant in effect is the creditor of that third-party bank. One could transfer the legal responsibility and liability to repay to the third-party bank through a Garnishee Order.

Generally, this order is most commonly used in regard to the defendant’s deposits in bank. The court may order the third party to repay all the judgment debts owed by the defendant to the judgment creditor or to only pay the amount of debt to settle the judgment debt and the legal fees for this application. The plaintiff must make an ex-parte application, with affidavit to support. Once the court issues an Order Nisi, the third-party can object to this application with evidence and affidavit in a subsequent hearing.

One point to make note is that the Order Nisi must be delivered to the bank in order to obtain the confirmation from the third-party bank as to whether there are any deposits left in the bank account. If it is first served to the defendant, the defendant may transfer the deposits in advance.

Upon delivery of the Order Nisi to the bank, the order is immediately binding to the third-party debtor. If the third-party debtor does not attend the court hearing as ordered or do not apply to not contend, the court could make an Order Absolute to the third-party debtor. Once the Order Absolute is issued, the liability of the judgment debtor will be wholly or partially transferred to the third-party debtor.

Indeed, if the third-party debtor disputes against this application, the court would need to further rule on the disputed issue before determining the liability of the third-party debtor.


VII.   Enforcement of judgment debts - Winding-up
Firstly and most importantly, it should be noted that only “limited companies” are able to be winded-up. Through winding-up, all the assets owned by the company can be sold to repay the company’s debts including the judgment debt subject to the amount of assets available and the priority of each debt, which eventually leads to the closing of the company. The judgment creditor needs to issue a written statutory demand to the judgment debtor requiring the company to pay the sum so due. If the company is unable to repay all the debts in 21 days, the judgment creditor can then make the winding-up application to court.

Upon filing the petition for winding-up, any dealings with the company’s assets will be deemed as invalid. In other words, the company’s assets cannot be transferred, the bank will usually freeze the company’s account after the start of the winding-up process.

As this procedure takes a long time, the petitioner could file for the appointment of a provisional liquidator if he believes that the assets of the company are in jeopardy. The provisional liquidator will take all necessary measure to safeguard the assets of the company prior to the hearing of the petition. After the winding-up order, the creditors will be required to attend a creditor’s meeting and the financial statement of the company’s assets and liabilities prepare by the director or owner will be submitted at the meeting. That piece of information will include details of the assets and debts of the company.

The liquidator will apply to court for the discharge of his duty if all the assets of the company are sold, the investigation is completed and the final instalment of debt is being repaid. If the defendant is an unlimited company or partnership, its owner or partners would need to undertake joint liability.


VIII.   Enforcement of judgment debts -bankruptcy
The creditor may file an application for bankruptcy against the debtor in the High Court. Before submitting a bankruptcy application, the creditor needs to issue a statutory demand letter to the debtor. However, if the creditor obtains a court judgment requiring the judgment debtor to repay the debt before filing the bankruptcy application, then the creditor will not be required to issue the said letter.

If the creditor has reasonable grounds to believe that the debtor has absconded or deliberately evade receiving the statutory demand letter, the creditor can publish the letter on one or more local newspapers in Hong Kong.

The creditor must inform the defendant of the date of the court hearing of the bankruptcy application. During the court hearing, if the debtor cannot provide reasonable grounds to object, or the parties to the litigation cannot reach a settlement on the debt issue, the court will issue a bankruptcy order to the debtor.

If the debtor is unable to repay the debt and the court has issued a bankruptcy order to them, the debtor’s assets will be taken over and sold by the trustee. The proceeds of sale will be distributed to all the creditors to repay all or part of the debt. During the effective period of the bankruptcy order, part of the bankrupt's income will also be used to repay debts.


IX.   Enforcement of judgment debts - Writ of Fieri Facias (Writ of fifa)
If the defendant has neither cash nor property, but owns property, he can consider applying to the court for a writ of fifa.

If the debtor’s premises have sufficient properties and assets available for seizure, the Bailiff will seize items similar in value to the amount recorded in the property writ and the cost of executing the writ. The plaintiff must promise to pay the cost of performing the seizure. After the seizure is successful, the bailiff will make a list of the seized items, and will give a copy of the list to the guards responsible for guarding the items to ensure that the items will not be moved without authorization or illegally removed.

The defendant has a time limit of 5 working days to pay off the debt and pay the estimated execution costs. If the defendant still fails to repay the debt, the seized items will be publicly auctioned on the first working day after the expiration of the debt period. The auction proceeds, after deducting the execution costs, will be used to repay the defendant's money.

If the judgment debt is the rent owed, the landlord can apply for a Warrant of distress to seize and sell the properties of the rented property to pay off the rent. The procedure is similar to that of a writ to seize the debtor’s property.


X. Enforcement of judgment debts - Writ of possession
Writ of possession is usually used when tenants fail to pay rents to their landlords, or the mortgagor fails to repay the mortgage loan to the mortgagee (mortgage holder). If the property is subject to charging order and the debtor has not repaid, this writ may also serve the purpose of taking over properties.

The bailiff will notify the property owner to move out 7 days before taking over. If the bailiff cannot enter the premises after two unsuccessful attempts, a break open order can be applied in order to get into the premises.


XI. Prohibition order from leaving Hong Kong
If the defendant tries to avoid repaying the judgment debt through leaving Hong Kong, the plaintiff can apply to the court for a prohibition order from leaving Hong Kong, which prohibits the defendant from leaving Hong Kong so as to facilitate the recovery of the judgment debt. The application for the prohibition order must be supported by an affidavit stating whether the defendant has repaid any of the judgment debt and that the prohibition order can help with the enforcement of the judgment. In addition, evidence showing that the defendant is likely to leave Hong Kong and that the execution of judgment will be hindered must also be presented to court when applying for the prohibition order.

The prohibition order must be served to the Director of Immigration, Commissioner of Police and the defendant. If the defendant still attempts to leave Hong Kong upon receiving such prohibition order, the immigration officer, the police officer or the bailiff can arrest him. The prohibition order only lasts for 1 month. Upon application, the court may extend the prohibition order for 1 month, but not exceeding 3 months.


XII. Case study
A Mainland judgment ordered the defendant, a Cayman Island company, to pay HK$50 million. The Cayman Island company fully owns a subsidiary in Hong Kong. In this case, one can consider applying for recognition of the Mainland judgment in Hong Kong and decide whether to enforce it or not. One may consider applying for a charging order over the shares of the Hong Kong company after obtaining an order on judgment from the High Court of Hong Kong. The court will then assess the company’s value and decide whether to sell its shares or not. However, the court rarely issues order to sell the shares of a non-listed company. If bonds are insufficient to repay the debts, the court may consider other measures such as winding-up.

Please share your articles on wechat by scanning the code on wechat, or through the self-contained sharing function of mobile browser