2000 Folio No 859

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
In the Matter of
	Section 4 of the Civil Jurisdiction and Judgments Act 1982
And in the Matter of
	a Judgment of the Commercial Court of Brest, France in action.
Royal Courts of Justice
Strand London
WC2A 2LL

23rd January 2001

Before:
THE HON MR JUSTICE TOMLINSON
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BETWEEN

SOCIETE ERAM SHIPPING COMPANY LIMITED
(a body corporate)
Judgment Creditor

And

(1) COMPAGNIE INTERNATIONALE DE NAVIGATION
(2) SOCIETE OCEAN LINK LIMITED
(a body corporate)
(3) MR YOON SEI WHA
Judgment Debtors

THE HONG KONG AND SHANGHAI BANKING COPORATION LIMITED
Garnishee
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Mr Hugo Page (instructed by Messrs Penningtons) appeared on behalf of the
Judgment Creditor
Mr Christopher Harrison (instructed by Messrs Stephenson Harwood)
appeared on behalf of the Garnishee

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JUDGMENT

I direct pursuant to CPR Part 39 PD6.1 that no official shorthand note shall be taken of this judgment and that copies of this version, subject to editorial corrections, may be treated as authentic.

1.	The court has before it an application to make absolute a garnishee order to show cause made on 4 April 2000. This case raises an interesting and important issue as to the circumstances in which a garnishee order can or should be made against a foreign bank in respect of a debt due on a foreign bank account.

2.	On 11 July 1997 the Judgment Creditor obtained judgment against the three Judgment Debtors in proceedings in the Commercial Court of Brest, France, for US $101,248.84 and FF5,000.  On 5 November 1998 that judgment was registered in England as a judgment of the Queen’s Bench Division pursuant to the provisions of the Civil Jurisdiction and Judgments Act 1982.  Notice of registration was sent to the Judgment Debtors, although for some reason this was not done until 25 January 2000.

3.	The Judgment Creditor believes that the second and third Judgment Debtors, a company registered in Hong Kong and a Hong Kong resident respectively, maintain accounts with the Hong Kong and Shanghai Banking Corporation Ltd at its Head Office which is at 1 Queens Road, Central, Hong Kong.  I shall refer to the Hong Kong and Shanghai Banking Corporation Limited hereafter as “the Garnishee”.  The Judgment Creditor believes that the second and/or third Judgment Debtors maintain at least one account at that Head Office branch of the Garnishee under account number 002.66.372.64.

4.	The Garnishee is a wholly owned subsidiary of HSBC Holdings plc.  The Garnishee is a company incorporated and registered in Hong Kong, where it carries on banking business.  The Garnishee also carries on banking business in London from its offices at Lower Thames Street and Gerrard Street.  Having thus established a place of business in England, it has pursuant to its obligation under section 691 of the Companies Act 1985 notified the Registrar of Companies of the name and address of a person in Great Britain who is authorised to accept service of proceedings on its behalf.  The Garnishee is thus in a similar position to many other overseas banks which have established a place of business in London.  It is undoubtedly subject to the jurisdiction of the court.

5.	On 4 April 2000 the Judgment Creditor obtained against the Garnishee, on an application made in the usual way without notice, a garnishee order to show cause in respect of the accounts of the second and third Judgment Debtors believed to be held at the Garnishee’s branch at 1 Queens Road, Central, Hong Kong.  The order attached all debts due or accruing due from the Garnishees to the Judgment Debtors in the sum of US $101,248.84 and FF5,000.

6.	The order to show cause was made, in the usual way, by a Queen’s Bench Master but after various directions had been made the application to make the order absolute was first by consent of the parties adjourned to the Judge and then, on the application of the Judgment Creditor, transferred to the Commercial Court.  I heard full argument on 8 December 2000 and the parties made further submissions in writing subsequent to the hearing.

7.	There is apparently no reported case in which a garnishee order has been made attaching a debt falling due from a bank registered within the jurisdiction on an account maintained with it by the Judgment Debtor at a branch outside the jurisdiction. By the same token however there is also apparently no reported case in which a garnishee order has been refused in the absence of proof by the garnishee of a real risk of double jeopardy, i.e. a real risk that notwithstanding payment to the Judgment Creditor by order of the English court, he might nonetheless be required by a foreign court, particularly that of the situs of the debt, to make payment of the debt to the Judgment Debtor, thus being required to pay the debt twice over.

8.	Where the debt in question is an English debt, i.e. a debt payable in England, RSC Order 49 rule 8, which survives in Schedule 1 to the new Civil Procedure Rules, and which embodies the effect of legislation going back to section 61 of the Common Law Procedure Act 1854, provides that payment of the attached debt by the garnishee pursuant to the garnishee order absolute has the effect of discharging that debt.

9.	In the present case the debt sought to be attached, which for present purposes is assumed to exist, is if it does exist a debt which is owed in Hong Kong.  The debt is situated in Hong Kong.  The relationship between the Garnishee and the Judgment Debtor is governed by the law of Hong Kong as is therefore the question of the recoverability of the debt.

10.	The Garnishee has placed before the court evidence as to the law of Hong Kong.  For the purposes of this application the Judgment Creditor does not dispute this evidence as to the effect of the law of Hong Kong.  That evidence may be summarised as follows:-
(i)	An order of the English court has no automatic effect under Hong Kong law;
(ii)	Accordingly the Garnishee’s obligation to make payment to the Judgment Debtors in respect of any account maintained in Hong Kong cannot be affected by an order of the English court unless the order becomes enforceable under Hong Kong law by (i) the operation of reciprocal enforcement procedures or (ii) the making of a Hong Kong order based on the English order;
(iii)	A Garnishee order made by a foreign court is not a type of order to which effect would be given by the Hong Kong courts under such procedures; and
(iv)	Accordingly if the Garnishee were to freeze the account or pay the balance to the Judgment Creditor, the Garnishee would be in breach of contract and there would be a real risk of a claim by the Judgment Debtors.

In other words, there would be a real risk of double jeopardy.  If the order to show cause were to be made absolute, the Garnishee would have to pay any balance on the account to the Judgment Creditor here in England, up to the limit of the judgment debt, but would be at risk of still having to pay that same balance to the Judgment Debtors in Hong Kong.

11.	The undisputed evidence also explains that there is an alternative remedy in Hong Kong which is, on the face of it, readily available to the Judgment Creditor and which, if invoked, would not involve any risk of double jeopardy for the Garnishee.  Thus the Judgment Creditor can bring proceedings in Hong Kong to enforce the judgment it has obtained against the Judgment Debtor either (1) by applying to the court of First Instance in Hong Kong for registration and enforcement of the judgment of the Brest Commercial Court pursuant to the Reciprocal Enforcement Ordinance; or (2) by commencing proceedings in Hong Kong based on the judgment which it has obtained in England under the Civil Jurisdiction and Judgments Act 1982.  Thereafter the Judgment Creditor could take execution procedures against the assets of the Judgment Debtor in Hong Kong, such as garnishee proceedings against any bank accounts in Hong Kong.  Mr Page for the Judgment Creditor did not accept that the evidence goes so far as to show that these procedures are readily available to the Judgment Creditor.  He submits, accurately, that there is no evidence as to the relative ease or difficulty of invoking these procedures.  By way of example he points out that the Judgment Creditor might be required to furnish security for costs before being able to proceed in Hong Kong.  The availability of an alternative remedy is not in the event relevant to my decision although it informed that of the Deputy Judge, Mr Patrick Bennett QC, in the only case apparently on all fours with the present- Zoneheath Associates Limited -v- China Tianjin International, [1994] CLC 348.  If the availability of an alternative remedy were a relevant consideration then Mr Page’s submissions in that regard might be germane if the burden of showing the existence of a readily available alternative remedy lies on the Garnishee.

12.	The evidence to the effect that compliance with an English garnishee order will not in Hong Kong provide to the Garnishee a defence to a claim brought for recovery of the debt, or to a claim alleging breach of contract, does not however, the Judgment Creditor contends, present an insuperable obstacle to the making of an order absolute.  Mr Page’s argument proceeds in two stages. Firstly, he submits that there is no reason in principle why a debt generated by a foreign bank account cannot be the subject of a garnishee order.  In that regard he relies on observations in Halsbury’s Laws of England, 4th edition Reissue, Volume 3 (1) at paragraph 200 where it is stated:-

“It is not a requirement that the garnishee be indebted within the jurisdiction, but the fact that the garnishee is not so indebted may be relevant to the exercise of the court’s discretion.”

The case relied on in support of this proposition is S.C.F. Finance Co Ltd -v- Masri [1987] QB 1028. There is undoubtedly a passage to this effect in the judgment of the Court of Appeal at pages 1043 H-1044C although it should be noted that that was in fact a case in which the court went on to hold that the debt sought to be attached should be treated as properly recoverable in England and capable of being discharged under English law.  Mr Page’s submission does however derive support from the width of RSC Order 49 rule 1 itself, which contains no qualification as to the location of the debt which may be attached.  The rule provides:-

“(1)	Where a person (in this order referred to as “the judgment creditor”) has obtained a judgment or order for the payment by some other person (in this order referred to as “the judgment debtor”) of a sum of money amounting in value to at least £50, not being a judgment or order for the payment of money into court, and any other person within the jurisdiction (in this order referred to as “the garnishee”) is indebted to the judgment debtor, the court may, subject to the provisions of this order and of any enactment, order the garnishee to pay the judgment creditor the amount of any debt due or accruing due to the judgment debtor from the garnishee, or so much thereof as is sufficient to satisfy that judgment or order and the costs of the garnishee proceedings.”

Finally I note in this regard that in Interpool Limited -v- Galani [1988] 1 QB 738 at 741 Balcombe LJ giving the judgment of a court consisting of himself and Lloyd LJ remarked that whereas Order 49 rule 1 required that the garnishee must be in the jurisdiction, there is no similar limitation that the garnished debt must be properly recoverable within the jurisdiction.  That was not in fact a garnishee case.  Balcombe LJ went on to observe, at page 741:-

“It is true that, as a matter of discretion, the court will not garnish a debt where the garnishee, although within the jurisdiction, is not indebted within the jurisdiction, if to do so might expose the garnishee to the risk of having to pay the debt or part of the debt twice over.  It may also be true, as Mr Jones submitted, that there is no reported case where this discretion has been exercised so as to garnish a debt which is only recoverable outside the jurisdiction.  Nevertheless, if the court has jurisdiction to garnish a debt recoverable outside the jurisdiction, even though as a matter of discretion it is unlikely to exercise that jurisdiction, it seems to us that there must be power under Order 48 to discover the existence of such debts.”(Emphasis supplied.)

That leaves open the question on whom lies the burden of proof or persuasion on the question of double jeopardy and I will return to that point.  For present purposes however the case is persuasive authority, if it be needed, that Order 49 rule 1 contains no limiting qualification as to the situs of the debt sought to be attached.  Nonetheless, in relation to the undoubted jurisdiction to garnish debts recoverable outside the jurisdiction, there is equally the persuasive authority of that decision for the proposition that as a matter of discretion it is a jurisdiction which the Court is unlikely to exercise.

13.	The second stage of Mr Page’s argument  was to the effect that the Court should, on the facts of this case, exercise its discretion.  He submitted that it was not incumbent upon the Judgment Creditor to show that the Garnishee would not, if the order were made absolute, be exposed to a real risk of being required by the Hong Kong court to pay the debt again and in that regard he relied on a passage in the judgment of Hobhouse J at an early stage of the Deutsche Schachtbau -v- Shell litigation reported in [1988] 2 Lloyds Reports 294 at 301, cited by Lord Goff of Chieveley in the same case when it reached the House of Lords at [1990] 1 AC 295, at page 347 G-see also the passage in Lord Goff’s speech at pages 357 H to 358 A in which he expressed his agreement with the approach of Hobhouse J on the relevant question.

Mr Page submitted that pursuant to elementary restitutionary principles a person who pays another person’s debt under legal compulsion may claim restitution from the debtor-see Goff and Jones, the Law of Restitution, 5th edition 1998 at pages 437-8.  Those learned authors set out, at page 438, three conditions for recovery in these terms:-

“To succeed in his claim for recoupment, the plaintiff must satisfy certain conditions.  He must show:
(1)	That he was compelled, or was compellable by law to make the payments;
(2)	That he did not officiously expose himself to the liability to make the payments;
(3)	That his payment discharged a liability of the defendant.”

Mr Page submitted that, were the garnishee order to be made absolute in the present case, those conditions would be met.  He pointed out also that it was held by Donaldson J in Liberian Insurance Agency -v- Mosse [1977] 2 Lloyds Reports 560 at 562 that, as a matter of English law at any rate, compulsion by operation of a foreign legal system is sufficient to bring the restitutionary principle into play.

14.	Turning to the contractual relationship between the Garnishee and the Judgment Debtors, Mr Page pointed first to the bank’s general terms, applicable to all accounts opened with it, which provide:-

“the institution shall have the right... to refuse to repay when demanded ... any of the institution’s indebtedness to the account holder if and to the extent that the account holder’s aggregate liabilities [including all liabilities whether they are actual, present, future, deferred, contingent, primary, collateral, several, joint or otherwise] at the relevant time are equal to or exceed the institution’s indebtedness to the account holder at that time”.

Furthermore the Garnishee had in the present case provided, without prejudice to banking confidentiality, an account opening mandate which it seems likely may be in a form executed by one or other of the Judgment Debtors.  The contract evidenced by the standard form mandate provides:-

“...the Bank may at any time and without prior notice;

(a)	apply ... any monies held in any currency to the credit of the customer ... against any indebtedness of any type whether actual, contingent, present or future ...and/or

(b)	refuse to repay when demanded ... any of the said monies to the customer if and to the extent that the said indebtedness at the relevant time is equal to or exceeds the said monies at that time.”

Thus, submitted Mr Page, not only would the Garnishee as a matter of English law have a restitutionary claim against the Judgment Debtors in the event of the garnishee order being made absolute but furthermore the Garnishee’s contractual arrangements with its customers expressly entitled the Garnishee to set off such a claim against its own indebtedness to those customers.  It had not been demonstrated or even sought to be suggested by the Garnishee that the law of Hong Kong was in this regard any different from English Law.  For good measure the garnishee could, submitted Mr Page, if Hong Kong law were the same as English law, exercise a common law right of lien and set-off in relation to the debtors’ liabilities-see Misa -v- Currie [1876] 1 App Cas 554 at 569. Finally the Judgment Creditor was prepared, if paid in full, to assign the benefit of its judgment to the Garnishee.  For all these reasons Mr Page submitted not simply that the Garnishee had failed to show, as he contended it must, that there was a real risk of double jeopardy but that the Judgment Creditor had shown, if it needed so to do, that there was in fact no possibility of the Garnishee being required to pay twice in the event that the order was made absolute.

15.	The starting point of this debate is that the Judgment Creditor has in its favour an unsatisfied judgment of this court against the Judgment Debtors.  This court should and will obviously do everything in its power to assist the Judgment Creditor in recovering from the Judgment Debtors what is due to it.  From the outset however it seemed to me that a really crucial feature of the court’s garnishee jurisdiction is the automatic discharge of the garnishee brought about by RSC Order 49 rule 8 to which I have already referred and which provides:-

“8.	Any payment made by a garnishee in compliance with an order absolute under this order, and any execution levied against him in pursuance of such an order, shall be a valid discharge of his liability to the judgment debtor to the extent of the amount paid or levied notwithstanding that the garnishee proceedings are subsequently set aside or the judgment or order from which they arose reversed.”

Once it is accepted that the legal system in force at the place where the debt sought to be attached is recoverable does not give automatic effect to that English procedural discharge of liability it becomes to my mind questionable to what extent the English court should in such circumstances be using what is after all a process of execution in relation to assets of the Judgment Debtors, debts due to them, situate outside the jurisdiction.  It seemed to me from the outset unlikely that the English court would readily expose a garnishee to the near certainty of a contested claim in a foreign jurisdiction where the garnishee could not rely upon an automatic discharge of the liability but was obliged to fall back upon a defect founded on a restitutionary claim, however well-founded that might appear in English law. Reliance upon the familiar assumption that a foreign system of law is presumed to be the same as English law in the absence of evidence to the contrary seems peculiarly inappropriate where the court’s process of execution is sought to be invoked.  No doubt this is why there is apparently no reported case where this discretion has been exercised so as to attach a debt which is only recoverable outside the jurisdiction.

16.	I do not in fact need to decide the wider points as to the circumstances, which must I think be very rare, in which the court will permit attachment of a foreign debt pursuant to the garnishee procedure of RSC Order 49 rule 1.  That is because I am satisfied that, in the present case, the Garnishee has by its unchallenged evidence as to the effect of the law of Hong Kong demonstrated that there is here a real risk that, in the event that the garnishee order were made absolute, it might be required to make payment twice.  I am satisfied that the Judgment Creditor’s reliance upon the restitutionary principle does not eliminate that risk.  It does not do so because I accept Mr Harrison’s submission, for the Garnishee, that it is founded upon a mistaken premise as to the nature of the garnishee jurisdiction.  The process set in train by the making of a garnishee order to show cause is that of attachment.  The order “binds the debt in the hands of the garnishee -that is, creates a charge in favour of the judgment creditor”- see Joachimson -v- Swiss Bank Corporation [1921] KB 110 at 131 per Atkin LJ, cited by Lord Denning MR in Choice Investments -v- Jeromnimon [1981] 1 QB 149 at 155. Lord Denning explained the matter in this way:-

“As soon as the garnishee order nisi is served on the bank, it operates as an injunction.  It prevents the bank from paying the money to its customer until the garnishee order is made absolute, or is discharged, as the case may be. It “binds the debt in the hands of the garnishee- that is, creates a charge in favour of the judgment creditor” ...The money at the bank is then said to be “attached” -again derived from Norman-French.  But the “attachment” is not an order to pay.  It only freezes the sum in the hands of the bank until the order is made absolute or is discharged.  It is only when the order is made absolute that the bank is liable to pay.”

As Lord Denning also pointed out at page 154 of the same report, attachment is a mode of execution. See also Chatterton -v- Watney [1881] 17 Ch D 259 at 260 per Sir George Jessel MR, re General Horticultural Company, ex parte Whitehouse [1886] 32 Ch D 512 at page 515 per Chitty J and Galbraith -v- Grimshaw [1910] 1 KB 339 at pages 343-4 per Farwell LJ.

The proper analysis is therefore in my judgment that a garnishee order at the first stage imposes an equitable charge upon the debt in the hands of the garnishee and then, when made absolute, requires payment of the debt by the garnishee not to the judgment debtor, the garnishee’s creditor, but the judgment creditor.  This analysis is reflected in the prescribed orders.  The prescribed order to show cause, No. 72, directs that the identified debt or debts “be attached” to answer a judgment.  The order absolute, whether Form No. 73 or Form No. 74, directs the garnishee to pay to the judgment creditor £.... “[being so much of] the debt due from the garnishee to the judgment debtor...........”.  It is reflected also in the language of RSC Order 49 rule 3 (2) which provides:-

“Such an order [i.e. an order to show cause] shall bind in the hands of the garnishee as from the service of the order on him any debt specified in the order or so much thereof as may be so specified.”

It is true that RSC Order 49 rule 1 speaks of ordering the garnishee to pay the judgment creditor “the amount” of any debt due or accruing due to the judgment debtor from the garnishee, and Mr Page was obviously right to submit that all of the money which a bank has is its own with its customers enjoying no proprietary rights but merely having the benefit of the debts owed to them by the bank.  Nonetheless the process set in train by a garnishee order is not, in my judgment, properly to be analysed as one which compels the garnishee to pay his own unencumbered funds thereby generating a right to repayment. Rather the essence of the process is that a debt due from the garnishee to the judgment debtor becomes impressed with a charge in favour of the judgment creditor and, ultimately, is required to be paid to the judgment creditor.  The only reason why the garnishee has been exposed to the process is because, by definition, he already owes an amount to the judgment debtor.  His own funds will not be depleted save to the extent of his already existing indebtedness to the judgment debtor.  The fact that it is similarly of the essence of the procedure that the garnishee thereby obtains a good discharge against his own creditor means that he has no need of a restitutionary claim against his creditor- he has only paid away that which he already owed to his creditor and his liability to his creditor is, pro tanto, discharged.  Indeed, it can readily be seen that it would in fact be wholly inimical to the structure of the garnishee jurisdiction if, in the paradigm case, a garnishee were by payment to the judgment creditor to obtain the right to a restitutionary claim against the judgment debtor.  The rationale of the structure is that by payment to the judgment creditor the garnishee is released, pro tanto, from further liability to the judgment debtor. A claim in restitution could only be consistent with the garnishee remaining liable to the judgment debtor and thus having need of a restitutionary claim to defeat that extant liability.  If in the paradigm case no restitutionary claim arises, it would be odd if such a claim could nonetheless arise in the atypical case.  The conclusion to be drawn from such a case is surely not that a restitutionary remedy would in that case, unusually, arise, but rather that the process of execution by way of garnishee order is likely to be unavailable unless it brings about a virtually automatic discharge of liability as between garnishee and judgment debtor. More broadly, why should there be available to a judgment creditor a process of execution which casts onto an innocent stranger to the relationship between judgment creditor and judgment debtor the risk of non-recovery of the judgment debt from the judgment debtor?

17.	I do not therefore have need to resort to the burden of proof or of persuasion. If the burden lies on the garnishee, it has discharged it by reliance upon the law of Hong Kong.  The Judgment Creditor’s argument by reference to restitutionary principles is misconceived.  If the burden lies on the Judgment Creditor it has failed to discharge it.  However since the point was, largely at my instigation, investigated, and since the parties have made helpful submissions on it, I propose briefly to express my views upon it, not least because the point is in my judgment of some importance so far as concerns the proper approach to applications in cases of this nature.

18.	In Deutsche Schachtbau -v- Shell Lord Goff pointed out that statements of high authority appeared to lead to the conclusion that, ordinarily, in garnishee proceedings, the English court proceeds upon an assumption that the English judgment in those proceedings will be one to which foreign courts of justice will give effect.  The criteria which must be fulfilled before that assumption can be made are threefold:-

“(1)	The underlying judgment entered by the English court in favour of the judgment creditor against the judgment debtor has been entered by a court which is, by generally accepted principles of international law, a court of competent jurisdiction.
(2)	The situs of the attached debt, owing by the garnishee to the judgment debtor, is England.
(3)	Payment of the attached debt by the garnishee pursuant to the garnishee order absolute has the effect of discharging that debt.”

[See per Lord Goff in Deutsche Schachtbau -v- Shell [1990] 1 AC 295 at 354.]  
Even in cases where all three criteria are fulfilled, the Deutsche Schachtbau case decides that the English court will not simply make a garnishee order absolute in accordance with the assumption and excludes as irrelevant and inadmissible any evidence that a foreign court will nevertheless not recognise payment under the English order as effective to discharge the attached debt.  Rather, in order to protect the garnishee, if it appears that there is a real risk that the garnishee will be compelled by some other court to pay the attached debt a second time, it will generally be inequitable to expose him to that risk by making the order absolute in accordance with the assumption. In the absence of evidence establishing such a real risk however the assumption will be applied-see again per Lord Goff in the Deutsche Schachtbau case at page 355 H – 356 D.  It seems clear from the way in which Lord Goff expressed his conclusion, and indeed from earlier authority, that in a case where the three necessary criteria are fulfilled, thus giving rise to the assumption, the burden of proof or of persuasion must be on the garnishee to show that he is indeed exposed to a real risk of double jeopardy. Such a regime is reflected in the language of RSC Order 49 rule 1 (2) which provides:-

“An order under this rule shall in the first instance be an order to show cause, specifying the time and place for further consideration of the matter, and in the meantime attaching such debt as is mentioned in paragraph (1) or so much thereof as may be specified in the order, to answer the judgment or order mentioned in that paragraph and the costs of the garnishee proceedings.”

It is reflected also by the language of RSC Order 49 rule 4 (1):-

“Where on the further consideration of the matter the garnishee does not attend or does not dispute the debt due or claimed to be due from him to the judgment debtor, the court may make an order absolute under rule 1 against the garnishee.”

19.	The notes to RSC Order 49 assume that this regime is equally applicable to debts recoverable outside the jurisdiction as it is to debts recoverable within the jurisdiction although it is noted that the reality of the risk of double jeopardy will be more readily assumed where the situs of the debt is outside the jurisdiction. Thus note 49.1.12 reads, in part:-

“...there is no limitation that the garnished debt must be properly recoverable within the jurisdiction.  As a matter of discretion, however, the court will not garnish a debt where, although the garnishee is within the jurisdiction, the debt is recoverable outside the jurisdiction, if to do so may expose the garnishee to the risk of having to pay the debt, or part of it, twice over (Martin -v- Nadel [1906] 2 KB 26; S.C.F. Finance Co Ltd -v- Masri [1987] QB 1028; Interpool Ltd -v- Galani [1988] QB 738).  To resist an order the garnishee must show that such risk is real or substantial; the reality of the risk will be more readily assumed where the situs of the debt is outside the jurisdiction (Swiss Bank Corporation -v- Beohmische Industrial Bank [1923] 1 KB 673).  Insofar as Richardson -v- Richardson [1927] P 228 goes further, and decides that there is no power to garnish a debt situate outside the jurisdiction, it must be taken to be wrongly decided in the light of the Court of Appeal’s reasoning in S.C.F. Finance Co Ltd -v- Masri and Interpool Ltd -v- Galani.”

20.	Mr Page submits that there is no suggestion in any of the authorities that the burden on the issue of double jeopardy is ever other than on the garnishee.  This is quite true but only two cases, Martin -v- Nadel and Zoneheath Associates Ltd -v- China Tianjin International, were in fact concerned with debts the situs of which was foreign.  So far as concerns the first of those cases it is unclear whether there was in fact any evidence to the effect that the law of Prussia or German law would not recognise a payment made under a garnishee order in this country as discharging the German debt but evidently that proposition was, at any rate in the Court of Appeal, accepted as correct.  In Zoneheath the garnishee had produced a substantial amount of evidence on the question of double jeopardy.  In neither case is the question of burden discussed in the judgments.

21.	In my judgment the regime applicable to debts situated outside the jurisdiction should not be the same as that for debts situated within the jurisdiction.  The jurisdiction under RSC Order 49 is at all times discretionary.  It accords with the authorities, with first principle and with common sense that the English court should readily assume jurisdiction for the purposes of execution over an English debt unless the garnishee can show that there is some good reason why it should not.  Very different considerations apply when the debt is situate overseas.  Lord Goff in the Deutsche Schachtbau case asked, but left unanswered, the question whether, in a case where the situs of the attached debt is not England, “... the English court [will] in such circumstances automatically decline to make the garnishee order absolute, on the ground that there is a real risk that a foreign court may, despite payment by the garnishee pursuant to such a garnishee order absolute, nevertheless enforce the attached debt against the garnishee overseas?”  [See at page 354 FG of the report.]  Lord Goff also observed that he doubted whether the answer to his question had much bearing on the question with which the House was concerned, viz, the proper approach to cases where the relevant three criteria are satisfied so as to give rise to an assumption that foreign courts will give effect to the English judgment.  It was therefore fundamental to Lord Goff’s analysis that debts situated outside the jurisdiction give rise to very different considerations from the paradigm case of a debt situated within the jurisdiction, and the manner in which he posed the unanswered question may perhaps give some indication that he would have regarded as exceptional the making of an order absolute in respect of an overseas debt.  The question was whether such an order should automatically be declined, on whether in a proper case it should be made.  It seems axiomatic that if the choice is between automatic refusal and the possibility of exceptional making of the order, the onus must be on the person seeking the order to show that that exceptional course is justified.

22.	First principles lead me to the same conclusion, and in this regard I am indebted to Mr Christopher Harrison, Counsel for the Garnishee,  for his cogent and compelling written submissions tendered after the hearing.  Firstly, as Hoffmann J pointed out in Mackinnon -v- Donaldson Lufkin and Jenrette Securities Corporation [1986] 1 Ch 482 at 493, 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 Hoffmann J put it, personal jurisdiction, i.e. who can be brought before the court, must not be confused with subject matter jurisdiction, i.e., to what extent the court can claim to regulate the conduct of those persons.  Hoffmann J went on to observe that a state should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction.

Secondly, the procedure prescribed for the making of a garnishee order is that the application is in the first instance made without notice- see the notes to RSC Order 49 rule 2.  It is obvious why this is so.  If the garnishee bank were to be notified of the hearing it might feel obliged to tell its customer, who might then withdraw his funds.

Thirdly, in the case of a foreign debt, the assumption must be that there is a real risk of double jeopardy-there is no rational basis upon which an assumption could be made to the contrary effect.  It must follow from this that no order absolute should be made unless the judgment creditor satisfies the court that there is in fact no real risk of double jeopardy.

23.	Furthermore, having regard (1) to the court’s reluctance to interfere with foreign subject matter (2) to the far-reaching extra-territorial effect of an order to show cause made without notice which freezes the debt and thus may impose considerable commercial difficulties on a garnishee bank if its customer were to demand repayment on the basis that the local courts would not recognise the English order and (3) to the fact that the making of an order absolute in respect of a foreign debt must be regarded as an exceptional case, it cannot in my judgment be appropriate that the court should make an order to show cause unless the judgment creditor has at that stage, i.e. at the stage of the without notice application, satisfied the court that interference with the foreign debt by way of an English attachment is in all the circumstances of the case appropriate and without real risk of double jeopardy for the garnishee.  This, as it seems to me, the judgment creditor will ordinarily only be able to do by adducing evidence as to the position under the appropriate foreign law. It will obviously not be sufficient for the judgment creditor to assert the position under English law and to rely upon the presumption that foreign law is the same in its effect as English law in the absence of evidence to the contrary.  There is at this stage of the proceedings only one party in a position to adduce evidence.  The necessity for the evidence arises from the very circumstance that the assumption must be that a foreign court will not, in such a case, recognise any jurisdiction in the English court to achieve a discharge of the foreign debt.  The English court would be most unlikely in similar but converse circumstances to recognise the efficacy of the order of a foreign court to achieve the discharge of an English debt.

24.	For all these reasons I decline to make the garnishee order absolute and I set aside the garnishee order to show cause.  That order should in my judgment not have been made because the Judgment Creditor did not discharge the burden on it of showing that it was appropriate that it should be made.  I recognise of course that both the Judgment Creditor in applying for and the Master in granting the order to show cause may have been proceeding in accordance with a practice which, at that stage of the proceedings, draws no distinction between debts situated within and debts situated without the jurisdiction.  If there is such a practice, it is in my judgment unsatisfied.

25.	Whilst, as I indicated earlier in my judgment, my conclusion in this case is in no way informed by the availability of an alternative remedy in Hong Kong, nonetheless I take some comfort from the fact that there is, it would appear, a perfectly straightforward route pursuant to which the judgment debt can or at any rate could have been enforced by attachment of such debt as may be due from the garnishee to the Judgment Debtors in Hong Kong.