Re The Grande Holdings Ltd

HCCW 177/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 177 OF 2011

___________________

__________________

________________

D E C I S I O N

________________

1.This is the application of the former Provisional Liquidators (PLs) of The Grande Holdings Ltd (Company) for an interim stay of the Order of Master Hui dated 4 May 2017 (Order), which provided for the production of documents by the PLs relating to a taxation of their costs. Those costs have been referred to as the 1^st Taxation Package. The interim stay is required because there is an appeal by the PLs against the Order which will be heard in January 2018, and the application for stay pending appeal (Stay Application) before the Judge hearing the appeal will only be heard in September 2017 and by then the time for compliance with the Order will have long expired.

2.The Notice of Commencement of Taxation of the 1^st Taxation Package was filed on 22 December 2014.  It is apparent from the Chronology (Annexure B) provided by Mr Wood, who appeared for the PLs, that the taxation process has proceeded slowly.  The Order was made after the Company’s creditor, Sino Bright Enterprises Co Ltd (SB), who is liable for a substantial part of the PLs’ costs, had filed its 3^rd List of Objections to the 1^st Taxation Package. 

3.The evidence before the court adduced by the PLs is that the discovery provided under the Order involves some 90 full-size box files of papers.  One of the key arguments in the intended appeal is that the Order is disproportionate and oppressive.  It is not possible to fully evaluate the argument for the present purpose because the Company and SB have yet to file their evidence to oppose the Stay Application. 

4.However, both the Company and SB oppose this application.  Appeared on behalf of the Company, Mr Lee argued that this application is the fourth attempt by the PLs to obtain an interim stay, and it is vexatious in that it seeks to re-litigate the same issue time and again.  Mr Shum, who appeared for SB, adopted a similar position as Mr Lee. 

5.With respect, I am unable to agree with the submission.  It is evident from the Chronology that the PLs have actively been trying to obtain a stay of the Order, whether by agreement with the other side or an order of the court, pending their appeal.  In terms of the efforts made, I do not believe that a fair-minded person can be critical. 

6.However, I regret to say that much of such efforts were the result of an erroneous understanding that a Master has no jurisdiction to grant a stay pending appeal once a Notice of Appeal to a Judge in Chambers has been filed in respect of the order in question.  Mr Wood informed the court that the view was based upon a footnote (Footnote) of Practice Forms No.132 (see Hong Kong Civil Procedure 2017: Court Forms, p.402) which stated as follows :

“Until the notice of appeal is served, the Master still retains the power to order a stay of execution, but thereafter the power may only be exercised by the Judge.”

7.It should be pointed out that Practice Forms are not part of the High Court Ordinance, Cap 4 or prescribed thereunder.  They appear to have originated from Queen’s Bench Forms, and are set out in the Court Forms to assist court users (see Court Forms, p.121).

8.With the benefit of Mr Lee’s helpful research, it can be seen that the proposition contained in the Footnote also found its way into footnote 12 of Halsbury’s Laws of Hong Kong, 2^nd edn (2013), vol. 11 [90.1229].  However, the authority which was cited after the proposition (Tung Chi Wing Co Ltd v Far East Structural Steelwork Engineering Ltd, unrep., HCA 56/01, 29 March 2001) is not relevant or supportive of it.

9.I am incline to agree with Mr Lee that a correct understanding of the provisions of O.58, which govern appeals from Masters, suggest the contrary.  Order 58, rule 1(4), provides that :

“Expect so far as the Court may otherwise direct, an appeal under this rule shall not operate as a stay of the proceedings in which the appeal is brought.”

[emphasis added]

10.Under O.1, r.4(2), it is provided that :

“In these rules, unless the context otherwise requires, ‘the Court’ (法院、法庭) means the Court of First Instance or any one or more of the judges thereof whether sitting in court or in chambers or the Registrar or any master but the foregoing provision shall not be taken as affecting any provision of these rules and, in particular, Order 32, rule 11 by virtue of which the authority and jurisdiction of the Registrar is defined and regulated.”

11.Order 32, rule 11 governs the jurisdiction of the Registrar and Masters.  In simple terms, such judicial officers have similar power as a Judge of the Court of First Instance, subject to exceptions.  None of the exceptions is relevant for the present purpose. Hence, there is no valid reason to support the proposition contained in the Footnote.

12.Further, I struggle to find any reason or logic as to why the jurisdiction of a Master to grant a stay should cease upon the service of the Notice of Appeal.  In my view, the Stay Application should have been brought before Master Hui, who was familiar with the matter.  It would be conducive to the efficient deployment of judicial resources: see Hong Kong Civil Court Practice, Div VI, [460]-[491].

13.Finally, this court has been referred by Mr Lee to a case where apparently a Master had dealt with a stay application after the issuance of a Notice of Appeal: see Ever Hero Holdings Ltd v Yau Kwong Chi Kelvin, HCA 758/10 (25 January 2011), §§3-4. 

14.In this case, with an erroneous understanding of the jurisdiction of a Master, the PLs took out an application before Master Ho seeking a time extension for the compliance of the Order until 14 days after the determination of the Stay Application.  It was, in effect, an interim stay application.  However, the learned Master was informed that the PLs were of the view that he had no jurisdiction to grant a stay.  The learned Master allowed a 14 day extension and directed the PLs to seek to obtain an earlier hearing date for the Stay Application.

15.In my view, even with their erroneous belief, the PLs ought to have taken out the present application after they failed to obtain an earlier hearing for the Stay Application.  Instead, they chose to go before the Duty Judge.  That application was declined before it was not an appropriate matter to be dealt with by a Duty Judge.  Mr Wood has fairly conceded that he was inclined to agree with the learned Duty Judge. 

16.However, there is no doubt in my mind that the PLs have not had an opportunity to make an interim stay application, and there is no basis for any argument of vexatious conduct or res judicata.     

17.In my view, the interim stay is justified.  On the face of the evidence before the court, the issues of proportionality and oppression have to be examined.  I accept the submission that the appeal will be rendered nugatory without a stay because, without the stay, the PLs would have to expend enormous manpower and other resources to comply with the Order. Further, no prejudice arising from the interim stay has been suggested by either Mr Lee or Mr Shum. 

18.In the premises, I make an order in terms of paras 1 and 2 of the PLs’ Summons filed on 14 July 2017.

19.In respect of costs, I order that the costs of this application be in the cause of the Stay Application.  However, there are 2 sets of reserved costs incurred for the hearings before Master Au-Yeung and Master Hui on respectively 5 and 14 July 2017.  I am satisfied that those costs were unnecessarily incurred due to the erroneous understanding of the PLs on the correct procedure.  I order that those costs be paid by the PLs, to be taxed if not agreed.

Mr Daniel Shum of K & L Gates, for Sino Bright Enterprises Co, Ltd

Mr Jason Lee, instructed by Johnnie Yam, Jacky Lee & Co, for the Company

Mr James Wood (solicitor advocate) of Lipman Karas, for the former Provisional Liquidators