Chang Lan Sheng v. Attorney General
Read the full judgment text of on BabelCite. was delivered on 5 October 1968.
1. I regret that I should take a different view to the other members of the court.
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CACV000033A/1967 IN THE SUPREME COURT OF HONG KONG (Appellate Jurisdiction) CIVIL APPEAL NO. 33 OF 1967 (On appeal from Original Jurisdiction Action No.1382 of 1965) -----------------
----------------- Coram: Rigby, S.P.J. Date of Judgment: 5 October 1968 ---------------------------------- DECISION ---------------------------------- Rigby, S.P.J.: 1. I regret that I should take a different view to the other members of the court. 2. In his original action the plaintiff claimed, inter alia, a declaration that the rental value of the land in question had not been fixed as required under the terms and provisions of the Crown lease. After a very lengthy hearing before the learned trial judge he gave judgment in favour of the plaintiff in the terms of that declaration. Upon appeal, this court has reversed that decision. It is, I think, necessary to remind oneself very briefly what were the basic facts of the case. 3. In January, 1948, the plaintiff, for a sum of $80,000, purchased by way of assignment the residue of a 75-year Crown lease from the then lessee, a Madam Chu De Yau. That lease was due to expire on the 23rd of June 1963 so that the lease had about 15 1/2 years to run. It is not in dispute that at the time of entering into that lease with the Crown Madam Chu paid a premium of $1,238.38. The lease contained an option to renew ".... for a further term of 75 years without payment of any fine or premium therefor .... at such rent as shall be fairly and impartially fixed by (the Director of Public Works) as the fair and reasonable rental value of the grant at the date of such renewal". 4. The Crown rental was increased from time to time during the time Madam Chu held the tenancy but it is, I think, correct to say that at all material times the plaintiff was in possession as tenant, the rental paid by him was $76 per annum. In February 1963 the plaintiff exercised his option to renew, the lease itself being due to expire in June 1963. However, it was not until December 1964 that the plaintiff was informed that the rent in respect of the new lease was being increased from $76 per annum to $60,764 per annum. Bearing in mind, first, that the lease expired on the 23rd of June 1963 and that it was therefore essential that the plaintiff should exercise his right of option - assuming he wished to renew the lease - before that date and, secondly, that he was not informed until the 2nd December 1964 that the rental had been fixed at $60,764 per annum, it seems to me hardly surprising that the plaintiff resisted what he considered to be an exorbitant increase in the rental of the land, that he considered that a very substantial part of this vastly increased new rental was, in reality, the imposition of a premium decapitalized over the term of years and therefore in breach of the express provision contained in the proviso that no premium should be imposed on the exercise of the option to renew, and that he was accordingly constrained to institute these proceedings. There is the further factor, to which Mr. Bernacchi has referred, that in February 1963 at the time he exercised his option to renew, the plaintiff had pulled down the building already existing on the land and his plan for a new ten-storey building had already been approved. It is at least open to argument in the plaintiff's favour that he would, or might, not have embarked on such an extensive new building project if he had been informed within a reasonable time of exercising his option - and not some 18 months later - what the rental was going to be. 5. It was, I think, admitted in the course of the argument before us that there were a very large number of Crown leases now falling due for renewal at the option of the lessee, each containing a clause for the manner of fixing the new rental - in the event of the option to renew being exercised - in terms precisely the same as the clause under consideration in this case, and that the basis for fixing the new rental value adopted in this case by the Director of Public Works - if that in fact was the correct basis - involved very great financial value and importance to the Crown. In short, Mr. Bernacchi submitted that although this was not a test case in the strict sense of the word in which that expression was used in the case of Healey & Oths. v. Waddington and Sons Ltd. and Oths.(1), it was a case the outcome of which, in so far as the basis of assessment adopted by the Director of Public Works in relation to the common form clause dealing with rental value on a renewed lease, was tested and determined by a court and the decision was, therefore, of the greatest possible importance to the Crown. It involved a novel point of complexity and great importance. For myself, I would have agreed with these arguments, and subject to what I am about to say, I would have thought this a proper case in which to make no order for costs. However, Mr. Leonard, Crown Counsel, has submitted that the plaintiff's case was presented with a great deal of unnecessary prolixity. Even a superficial view of the voluminous record in the trial court does, in my view, amply support that contention. 6. In the result, the order that I would have thought it right to make, and which I would myself have made, would be that the Crown should be entitled to its costs, both here and in the court below, save on such issue of the case as was directed to a consideration of the proper construction of the proviso to the lease and a consideration of whether the rent as fixed by the Director of Public Works in accordance with the proviso was a fair and reasonable rent. As to that issue in the case - which was, in effect, the main issue - I would myself have made no order, both here and in the court below, so that each side should bear its own costs in relation to this issue. Representation: Bern. Q.C. & Sanguinetti (Peter Mark & Co.) for Plaintiff. Leonard, P.C.C. for Defendant. (1) (1954) 1 A.E.R. 861 IN THE SUPREME COURT OF HONG KONG (Appellate Jurisdiction) CIVIL APPEAL NO. 33 OF 1967 (On appeal from Original Jurisdiction Action No.1382 of 1965)
Coram: Blair-Kerr J Date of Judgment: 5 October 1968 ----------------- RULING ----------------- Blair-Kerr J: 7. We were told by counsel that the Crown had paid the respondent his costs in the court below, but that the understanding between the parties was that such costs would be refunded to the Crown in the event of the appellant being successful provided this court directed that the costs should be refunded. The appellant now asks for an order for:-
Mr. Bernacchi for the respondent does not dispute that his client is bound to refund the costs of the proceedings in the court below; but he submits that the court should make no order as regards the costs of this appeal or in regard to the appellant's costs in the court below. 8. It is not in dispute that the court has complete discretion in the matter of costs. On the other hand, it is equally clear that the court's discretion must be exercised judicially, and that the normal rule of practice is that costs follow the event. At page 794 of the (1967) Supreme Court Practice there is a list of cases in which successful appellants, for one reason or another, have been awarded only the costs of the appeal but not costs in the court below, or no costs in either court, or only part of the costs. 9. The respondent does not suggest that the cases cited are authorities for his proposition that the successful appellant in this case should be deprived of his costs of the appeal and in the Court below; nor does he suggest that there was any agreement between the parties and other potential litigants that this should be treated as a test case. Nevertheless, he submits that having regard to the fact that there are a large number of Crown leases in Hong Kong which contain a proviso for renewal framed in precisely the same terms as the proviso in the respondent's lease, his client should be regarded by this court as a sort of "guinea pig" who has fought the battle single-handed not only on behalf of himself but on behalf of all the other Crown lessees who would also have wished to maintain that the "rental value of the ground" should be taken as being synonymous with "zone Crown rent"; and that having regard to the overall financial implications, the Crown was far more interested in obtaining a favourable decision in this matter than the respondent was. Mr. Bernacchi further submitted that whatever the position might be as between citizen and citizen, the same principles should not apply in cases where the Crown is a party and the point involved is a novel one of much general importance and of some difficulty. 10. I find myself quite unable to accede to the suggestion that the Crown should be treated differently from any other litigant in these courts. The modern approach to the question of costs in proceedings to which the Crown is a party is clearly set out in the Supreme Court Practice 1967 at p.801 in these words:-
Proceedings to which the Crown is a party usually do involve points of general importance and a decision in any such proceedings is frequently of interest to persons other than the parties to such proceedings; but unless there is some understanding with the Crown and other potential litigants that the case shall be treated as a test case and the Crown agrees to forego their costs, in my view there is no justification nowadays for treating the Crown differently from any other litigant in the matter of costs. 11. In support of his submission that the court may deprive a successful litigant of his costs if the point involved in the case is a novel one of much general importance and of some difficulty, Mr. Bernacchi cited In re Mersey Railway Company(1) and Commissioner of Inland Revenue v. Wah Feng & Co.(2). In the Wah Feng & Co.(2) case, judgment was given in favour of the appellant, but the Court made no order as to costs. The report of the case does not indicate that this order was made by consent; but I have checked my note of the proceedings, and the note reads as follows:- "By consent: execution of judgment stayed for 2 weeks; no order as to costs in the present appeal". The case, therefore, does not appear to assist the respondent. 12. The ratio decidendi of the Mersey Railway Company(1) case is stated clearly in the headnote, the point being that a judgment creditor gains no priority by obtaining a receivership order under s.4 of the Railway Companies Act 1867. There is no mention of costs in the headnote; and at p.616 Cotton L.J. said:-
13. A judgment creditor of the Mersey Railway Company obtained against the company an order for the appointment of two receivers. Subsequently another judgment creditor (apparently under the mistaken impression that an application for the appointment of a receiver gave a judgment creditor some sort of priority) applied for the appointment of the same two receivers. In granting this second application, Kekewich J. said:-
14. On appeal it was held that s.4 did not give any priority to the creditor who obtains an order for the appointment of a receiver. Cotton L.J. said (p.619):-
15. The vast majority of questions which are litigated involve novel points of difficulty. If there is authority on a point, there is no need for litigation. Furthermore, decisions frequently involve questions of general importance. If, in every case, which involved a novel point of much general importance and some difficulty, the court were to deprive a successful party of his costs, very serious inroads would be made on the general rule that costs follow the event; and I do not think that it was the intention of the Court of Appeal in the Mersey Railway Company(1) case to lay down any such exception to the general rule. All that can be said is that, having regard to the facts of that particular case, the court chose to exercise its discretion in that way. 16. Mr. Bernacchi argues that the respondent has been prejudiced by the conduct of the Crown in that the Crown did not inform the respondent of the amount of the revised rent till December 1964. When the respondent opted for the new term in Feb., 1963 he had pulled down the 1952 5-storey building and his plans for the new 10-storey building had been approved. The suggestion is that he might not have embarked on the erection of the new 10-storey building if he had known what the revised rent was going to be. 17. I do not think there is anything in this suggestion. The Crown was under no obligation to inform the respondent what the revised rent was going to be before he exercised his option; and having regard to the rising value of land (i.e. prior to the fall in land values in 1965) there is nothing in the evidence to suggest that in 1963 the respondent would not have proceeded with the erection of the new building even if he had been informed immediately what the revised rent was going to be. 18. The parties to the lease contracted with their eyes open and their hands unfettered. The respondent considered that the Director of Public Works had not fixed the rent in accordance with the proviso. It is not for us to speculate what the Crown would have done if the respondent had simply refused to pay the revised rent. It would certainly have been open to them to re-enter on the land, and the correspondence indicates that they threatened to do so. The respondent chose to seek a declaration from the Court that the rent had not been fixed in accordance with the proviso. The learned judge in the Court below made the declaration sought. His judgment has now been reversed; and I see no reason why the appellant should not have his costs of the appeal and his costs in the court below; and, in my view, this court should order that the costs already paid by the appellant be refunded to him.
Representation: (1) (1888) 37 Ch.Div. p610. (2) (1960) H.K.L.R. p.94. IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) (On Appeal from O.J. Action No. 1382 of 1965).
Coram: Huggins, J. ----------------- JUDGMENT ----------------- Huggins, J: The appellant asks that costs of the appeal and in the court below should follow the event, but the respondent asks us to make no order other than one for repayment by him of the costs which he has received under the order of the trial judge. The first contention is that because this case had something of the nature of a test case we should exercise our discretion so as to deprive the appellant of the costs which a successful appellant would normally be awarded. I will assume for the moment that this case has something of the nature of a test case, but no case has been cited to us which decides that the costs in a test case should not, in the absence of agreement or of special circumstances, follow the event. The fact that the successful party may be saved the embarrassment of further actions by the other persons who have agreed to be bound is not of itself, as it seems to me, sufficient justification for depriving him of his costs in the test action. What may well happen is that the other persons concerned in the point in issue agree to share the burden of paying the costs of the party who is taking their side in the test action, but I am not persuaded that there is any rule of law or practice applicable only to the costs of a test case. Bogulawski v. Gdynia Ameryka Linie(1), which was cited to us, appears to me to have no relevance to the question we have to decide. 19. That disposes of the first contention, but I would add that I agree with counsel for the appellant that there is in any event no justification for treating this as a test case. The essence of a test case is that the various parties to pending or threatened litigation bind themselves to recognise the decision in one action as effectively deciding the rights and liabilities of those of them who are not parties to that particular action: exercised in favour of the applicant. 20. In this case I ask myself what "execution" the successful party could possibly contemplate and the answer as I see it can only be that there is none and that therefore there is nothing which could be suspended. The effect of a stay of execution was considered by Mr. Justice Denning in Clifton Securities Ltd. v. Huntley(3):
All we have decided is that the declaration made by the learned judge in the court below should not have been made and no process is required to give effect to it. 21. I turn therefore to r.5, which clearly limits the jurisdiction to suspend the execution of a judgment to cases where the judgment "requires the appellant to pay money or perform a duty". The judgment which we have given requires the applicant to do neither of these things: nor even did the judgment of the trial judge. On the face of it, therefore, the rule gives us no jurisdiction to grant a stay. Mr. Bernacchi said that we ought to suspend "the effect" of our judgment and that we ought to give the rule such wide interpretation as would enable us to do so. I cannot agree and am satisfied that no such jurisdiction was in the contemplation of Her Majesty in Council. Our judgment may perhaps have the same effect as a declaration that the rent fixed by the Director is lawfully payable, but even had we made such a declaration the Crown could not levy execution without first instituting other proceedings. It may be that in other proceedings the appropriate court would have jurisdiction to stay execution of any judgment entered against the applicant, although this must not be taken as an expression of the view that if a judgment can be obtained against him the jurisdiction ought then to be exercised in his favour. 22. There was, however, an order for payment of the Attorney General's costs, which was within the four corners of the rule. I was in two minds whether it was right to suspend execution upon that order, but the sum which the applicant is now liable to pay as arrears of rent is very large and the costs payable to the Crown are also heavy. I would have been sorry if refusal of a stay as to the costs were to have any tendency to stifle the proposed appeal and, conditionslly upon the applicant's giving a bank guarantee as security for the payment If there ever was such a right as that which is suggested then I respectfully agree with what Mr. Justice Blair-Kerr said in the course of the argument, that with the passing of the Crown Proceedings Ordinance the Legislature has shown an intention that within certain limits the Crown should be in the same position as any other litigant, one of the results being that the Crown should be in no different position as regards costs. But I do not believe there was previously a right to more generous treatment from the Crown. Counsel for the respondent has referred to two revenue cases, but inquiry has shown that in both of them the orders as to costs were made by consent. It has, indeed, always been my understanding of the matter that the Crown frequently does, as a matter of grace, agree to bear the costs of litigation where it would be a hardship on a subject to pay costs which may be out of all proportion to his interest in the matter in dispute. Courts on the ground of hardship of this kind not infrequently persuade a party asking leave to appeal to agree to pay part or all of the costs of the appeal in any event as a condition of granting leave. In revenue cases one can readily see the justice in limiting the costs of a subject who is reasonably contesting the imposition of a charge which the Crown itself has been instrumental in creating, but where a party enters into a contract with the Crown I can see no basis in law (or, since some hint of immorality was made, in morals) for expecting the Crown to subsidize an action against itself. I readily accept that we have an absolute and unfettered discretion over the costs (Donald Campbell & Co. v. Pollak)(4) but, if I may say so without disrespect, we are no more entitled to refuse to give a party his costs because of some prejudice due to his character as the representative of the Crown than we are because of some prejudice due to the colour of his hair. Such cases as In re Yates' Settlement Trusts(5), which Mr. Bernacchi cited as an example of the application of the principle in Donald Campbell & Co. v. Pollak(4), I find of no assistance: with respect I do not think the practice applied in cases which relate to trusts and which originate in the Chancery Division are comparable. 23. As to the costs of the appeal itself some correspondence has, by consent, been placed before us and it appears that a suggestion was made by the solicitors for the respondent that the appellant should agree to bear his own costs in this court in any event. No agreement was reached because the appellant was prepared to consider the suggestion only if the respondent were willing to limit the argument to the one point which could fairly be regarded as governing the rights of the other potential litigants. The fact remains that the respondent contested the appeal at length in full knowledge that the appellant had indicated his unwillingness to pay his own costs if he were successful. 24. The only factor which has led me to have some sympathy with the respondent is the fact that at the date when he was required to exercise his option he did not know the extent to which the rent would be increased. It seems to be admitted that he did not inquire, but he would no doubt say that he never dreamed of such an increase as that with which he was ultimately faced. In fact he was not informed what the rent would be until many months after the date fixed for the exercise of the option, but the length of the delay is immaterial: his position would have been no better if the delay had been only one day. I do not necessarily criticise him for not inquiring: he might not have been told had he inquired, for the Director was not under any obligation to fix a rent until the option had been exercised. Nor do I criticise the Crown's representatives for not notifying the appellant in advance what the rent would be. The position arose out of the very terms of the lease and the fact that it did arise does not mean that anyone acted discreditably. The respondent has a substantial interest in the result of this litigation and as a matter of legal principle I cannot see that the difficulty in which he found himself is sufficient basis for our exercising our discretion so as to deprive the Crown of its costs. Whether the Crown will see fit to execute in respect of the whole sum which I think must be awarded is a matter which must be left to its advisers. Having said that I ought perhaps to say that had the respondent been successful I think we would have had to consider very carefully to what extent the argument on the appeal was unnecessarily prolonged and I think we might have had to give an express direction to the taxing officer to disallow the costs of copying the very large number of documents which were not even referred to in the course of the argument. Some of the documents are even in duplicate. 25. I cannot leave the case without mentioning the submission that as the Crown had not been compelled to engage additional permanent counsel to contest this case the appellant should not be allowed his costs. In the hope that we shall never hear such an argument again in this court I would say that I see no justification for allowing a private litigant to benefit from the fact that the Crown in Hong Kong sees fit to employ permanent counsel rather than to brief counsel in the ordinary way. 26. I would order that the respondent pay the costs here and below. (1) 1951 2 K.B. 328. (3) (1948) 2 All R.R. 283, 294. (4) 1927 A.C. 732, 811. (5) 1954 1 W.L.R. 564. IN THE SUPREME COURT OF HONG KONG (Appellate Jurisdiction) CIVIL APPEAL NO. 33 OF 1967 (On appeal from Original Jurisdiction Action No. 1382 of 1965) -----------------
Coram: Rigby, S.P.J. Date of Judgment: 5 October 1968 --------------------------------------------------- DECISION --------------------------------------------------- Rigby, S.P.J.: 27. The plaintiff seeks to appeal to the Privy Council on a decision of this court reversing a decision of the trial judge. The decision of the trial judge - giving effect to one of many alternative declarations sought by the plaintiff - was that a new rental of $60,764 per annum fixed by the Director of Public Works, on the exercise of the Crown lessee's right of option to renew a 75-year lease for a further period of 75 years, had not been fixed as required under the terms of that Crown lease. This court, after a very lengthy hearing of the appeal, reversed that decision. 28. The position is, therefore, that the rental as fixed by the Director of Public Works at $60,764 per annum stands as valid. It is perhaps relevant to observe that the Crown rent being paid at the time of the termination of the lease by effluxion of time and at the time of the exercise of the option to renew, was $76 per annum, so that the new rent was an increase of slightly under 800 times the previous rent. 29. It appears to me beyond dispute that the matter in dispute between the parties involves directly or indirectly "some claim or question to or respecting property .... amounting to or of the value of $5,000 or upwards" and that the plaintiff, therefore, has a right of appeal to the Privy Council under Rule 2(a) of the Order in Council regulating appeals from the Supreme Court To Her Majesty in Council. That right of appeal is conditioned only by an order requiring compliance by the appellant with certain procedural matters set out under Rule 4. 30. As is not unusual in such appeals the plaintiff, as appellant, has asked for a stay of execution of the judgment pending the result of the appeal and has offered to give security in the form of a Bank Guarantee for the monies the Crown claims, or would be entitled to claim, as the rent due and owing as fixed by the Director of Public Works. 31. Mr. Leonard, Crown Counsel, submits that upon a proper construction of Rule 5 - which deals with the power of this court to order a stay of execution pending the result of an appeal to the Privy Council - this court has no jurisdiction to grant any such stay of execution in this case. Alternatively, he argues that even if the court has jurisdiction it ought not to grant such a stay. Mr. Leonard even went so far as to suggest, if I understood him correctly, that there would be no certainty of the Bank Guarantee itself being safe and valid in so far as the Bank giving the Guarantee was concerned. 32. Dealing with Mr. Leonard's first argument; Rule 5 provides:-
Mr. Leonard's contention is that the judgment of this court neither requires the appellant "to pay money or perform a duty"; nor is this court capable of directing "that the said judgment shall be carried into execution"; nor is the execution thereof" capable of being suspended. In my view that construction places far too narrow and restricted a meaning on the words of the rule itself. Whilst it is strictly true that the judgment of the Full Court has not specifically and in terms directed the appellant to pay a sum of money, it is manifest that the direct and immediate effect of the judgment is to set aside the judgment of the trial judge and thus restore the decision of the Director of Public Works fixing the new rent at the enormously enhanced value of $60,764 per annum, payable with retrospective effect as from approximately mid-June 1963. The effect of the judgment is to enable the Crown to take immediate steps to recover, by legal process in the courts if necessary, the rent as fixed by the Director of Public Works, which rent may now, as the direct result of our judgment, properly be regarded as arrears of rent. I cannot believe that the words of Rule 5 ought to be construed so narrowly as to achieve such an unjust solution and preclude this court from granting a stay of execution. It is said that there is nothing in our judgment to stay, that it is incapable of execution, and that therefore there is nothing to suspend. But I see no reason why the court should not order that the effect of the judgment - and therefore the judgment itself - should be suspended pending the hearing and determination of the appeal by the Privy Council. 33. Assuming this court has jurisdiction to grant a stay of execution, I am firmly of the opinion that this is a proper case in which it ought to do so. Mr. Bernacchi submitted - and it seemed to me that his submission was not without some justification - that in declining to accept a Bank Guarantee which would safely secure all rent due from the time of the renewal of the lease up to the determination of the appeal by the Privy Council, together with interest of the rate of 8% thereon, and in evincing an intent to press for what, as the result of the judgment of this court, can now legally be regarded as arrears of rent, the Crown seemed to be intent in placing the plaintiff in such a financial position as to preclude his appeal from getting on its feet before the Privy Council. 34. The crucial point raised on the appeal as to whether the Director of Public Works was correct as to the basis upon which he fixed the rent having regard to the terms of the proviso conferring an option to renew, is a point of very great practical and financial importance not only to the appellant, but of even greater importance to the Crown having regard to what we were informed were the very considerable number of other Crown leases conferring a similar right of renewal and containing a proviso as to the fixing of the new rent in terms identical to the proviso which this court has had under consideration in this case. 35. We have not been informed of the precise terms of the Bank Guarantee or of the name of the Bank concerned. But assuming that the terms are such as fully and satisfactorily to secure the interest of the Crown - in the event of the appellant's appeal being unsuccessful or not proceeded with - to recover all rents, and arrears of rents, due, and becoming due, up to the date of determination of this appeal - or the discontinuance of it - together with interest thereon at the rate of 8%, I, for my part, would have no hesitation in granting a stay of execution in such terms. Representation: Leonard, P.C.C. for Defendant. (Judgments handed down) IN THE SUPREME COURT OF HONG KONG (Appellate Jurisdiction) CIVIL APPEAL NO. 33 OF 1967 (On Appeal from Original Jurisdiction Action No.1382 of 1965)
Coram: Blair-Kerr J ----------------- ORDER ----------------- Blair-Kerr J: 36. I shall refer to the parties as 'the plaintiff' and 'the defendant'. 37. The plaintiff instituted an action for a declaration. The learned judge made the declaration sought and this court reversed his decision, that is to say the declaration made by the learned judge has been rescinded and the parties are now in the position they were in immediately prior to the institution of the action. 38. The plaintiff applied for leave to appeal to the Privy Council from the decision of this court. The parties appeared to be in agreement that the matter in dispute on the appeal involved indirectly a question respecting property exceeding $5,000 in value. The Crown did not oppose the application. The court granted leave to appeal; and even if no appeal lay as of right under rule 2(a) of the Rules regulating appeals to the Privy Council(1), in my view it would have been a proper case for the grant of leave to appeal under rule 2(b). 39. The plaintiff then sought an order for what he described as a "stay of execution" pending his appeal to the Privy Council. The court, by a majority, refused this application; and we said we would give our reasons later. I now proceed to state shortly my reasons for coming to the conclusion that the application for a "stay of execution" should be refused. 40. Reference was made to Rule 5, which reads:-
41. I do not think that this rule assists the plaintiff. Clearly the judgment under appeal does not require the plaintiff to pay money or perform a duty. The Crown have not obtained judgment for arrears of rent; and there is no question of the Crown levying execution. They have given an undertaking not to re-enter upon the land pending the decision of the Privy Council; and if the plaintiff does not pay the arrears of rent, the Crown will be forced to sue him - or at least they may do so. If judgment is given against the plaintiff it will then be open to him to put forward his reasons in support of any application he may then make for a stay of execution. But there is no question of the court in these proceedings directing that its judgment "shall be carried into execution" or that the "execution" of the judgment "shall be suspended". 42. For these reasons I was of the opinion that the application should be dismissed. 43. But even if the judgment under appeal had been of such a nature that the court could, in its discretion, have directed that it be carried into execution or that the execution be suspended, I would not have been disposed to agree that in this case execution should be suspended pending the further appeal to the Privy Council. In my view a court of law should not grant a stay of execution unless there is some very good reason for doing so. Order 59 rule.13 states that in the case of an appeal from a single judge to the Full Court, such an appeal does not operate as a stay of execution unless the judge or the Full Court orders otherwise. Order 59 rule.13 is merely declaratory of the principle that a successful litigant should not be deprived of the fruits of the litigation. In The Annot Lyle(2) it was argued by the applicant for a stay that a different rule should apply in Admiralty cases. This was rejected by the Court of Appeal Bowen L.J. said (p.116):-
In Wilson v. Church (No.2)(3) money was ordered to be paid out of a fund and distributed among a large number of persons, many of whom were resident abroad. Cotton L.J. said (p.458):-
The majority of the court in Wilson v. Church(3) took the view that a stay should be ordered; and Cotton L.J. said (p.458):-
I do not think that there is any conflict between the decisions in The Annot Lyle(2) and Wilson v. Church (No.2)(3). It would not be a proper exercise of its discretion if the court were to order a stay in a case in which there was nothing to suggest that the appellant might be prevented from prosecuting his appeal or that there was any real likelihood of the appeal, if successful, being rendered nugatory; and as Lord Esher M.R. said in Atkins v. Great Western Railway(4):-
44. It seems to me that these principles, a fortiori, apply in regard to appeals from this court to the Privy Council. In the absence of some very good reason, why should a successful appellant be deprived of the fruits of the litigation? In my view when a party seeks leave to appeal to the Privy Council there should be no stay of execution unless there is very good reason to believe that if no stay is ordered, the plaintiff will be prevented from prosecuting his appeal or there is a very real likelihood of the appeal, if successful, being rendered nugatory. As regards appeals to the House of Lords from decisions of the Court of Appeal, there is a note in the (1967) Supreme Court Practice which reads:-
In this case the revised rent due by the plaintiff is $60,764 per year. I presume that he has paid no rent to the Crown in respect of the years 1963/68 and that approximately $364,000 is now owing by him. 45. The occupation permit in respect of the new 10-storey building is dated 5th June 1964; and in July 1964, when the building was only partially occupied, it appears from the evidence that the plaintiff was receiving from his sub-tenants $27,000 per month by way of rent. If the building were fully occupied it would appear that the rents obtainable would be in the region of $56,000 per month. But if we take $36,000 as being the average monthly rent which the plaintiff has been receiving during the four years June 1964/June 1968 (this was the figure which Mr. Lyons used for purposes of his land valuation calculations), it would appear that the plaintiff has probably received by way of rent from his sub-tenants during this four-year period at least $1,728,000. This may, of course, be a conservative figure. Be that as it may, as at present advised, it seems to me that this court has no reason whatsoever for thinking that the plaintiff is in any danger of being unable to prosecute his appeal to the Privy Council because of insufficiency of funds. Furthermore, if he should succeed in his appeal any excess rent paid by him will obviously be refunded to him by the Crown. There is no danger, as I see it, of his appeal being rendered nugatory. 46. As regards costs, the court ordered that the plaintiff should repay the costs which were paid to him in respect of the proceedings in the court below. There is no dispute about that; and I understood counsel for the plaintiff to say that the $72,000 (being the plaintiff's costs in the Court below) which were paid to the plaintiff in cash would now be refunded to the Crown in cash. 47. This court has also ordered that the defendant shall have his costs of the appeal and his costs of the proceedings in the court below. In respect of that order the plaintiff sought an order for stay pending the result of his appeal to the Privy Council and the court has ordered that provided he submits to the court a bank guarantee for the payment of the defendant's costs of the appeal and in the court below together with 8% interest thereon in such a form as this court may consider to be satisfactory, there would be a stay as regards payment of these costs pending the appeal to the Privy Council. 48. Having considered this matter more carefully since giving our decision, I cannot but feel that the court has been over-generous to the plaintiff and that the ordinary rule should have operated viz, that all outstanding costs be paid, the defendant undertaking to repay them in the event of the Judicial Committee so ordering. However, we agreed to make a conditional order for stay in regard to costs. I shall not be present when the bank guarantee is submitted for the court's approval. But I feel I ought to say now that having regard to the form of the bank guarantee which the plaintiff submitted last week when he sought a stay in regard to payment of the five years arrears of rent, unless the bank guarantee which he submits to the court in respect of the costs at present owing by him is a document which unequivocally guarantees the payment of the costs incurred by the defendant to date except in so far as the Judicial Committee may order otherwise, it should, in my view, be rejected and the plaintiff should be ordered to pay all costs owing by him immediately upon taxation, the defendant undertaking to repay as may be ordered by the Judicial Committee.
Representation: Bernacchi Q.C. and Sanguinetti (P. Mark & Co.) for Respondent (Plaintiff) Leonard P.C.C. for Appellant (Defendant). (1) Order in Council dated 10th August 1909 as amended by Order in Council dated 27th November 1957 (S.I. 1957, 2059), Laws of Hong Kong Vol.15 Appendix III F3. (2) (1886) 11 P.D. 114. (3) (1879) 12 Ch.454. (4) (1886) 2 T.L.R.400. IN THE SUPREME COURT OF HONG KONG APPELLATE JURISDICTION CIVIL APPEAL NO. 33 OF 1967 (On Appeal from Original Jurisdiction Action No.1382 of 1965) -----------------
Coram: Rigby, S.P.J., Blair-Kerr, J. & Huggins, J. ----------------- JUDGMENT ----------------- Huggins, J: I am clearly of opinion that we ought not to make an order in the terms asked. Counsel has argued, first, that we have jurisdiction under rule 5 of the Appeals to the Privy Council Rules and, secondly, that there is inherent jurisdiction to grant a stay of execution. I will deal with the second contention first. 49. I accept that by virtue of sections 7 & 8 of the Supreme Court Ordinance this court has a wide inherent jurisdiction and that that jurisdiction includes power to grant a stay of proceedings in certain circumstances. Under that power the court might stay an execution which was vexatious or otherwise an abuse of the process of the court, but counsel has not sought to suggest what is the limit of the power and I venture to think that originally it covered only a very exceptional case. In Ellis v. Scott(1) Mr. Justice Sachs said that he thought an application to stay, pending an appeal, execution upon a money judgment had been made under the inherent jurisdiction and that he had refused to grant a stay because that jurisdiction had "always been exercised on the footing that the court applied to R.S.C. O.58 r.12 the principles set out in the notes to that rule in the Annual Practice (1964 Edition) pp.1693 et seq.". The cases cited in those notes were all decided after the passing of the Judicature Act 1875 but I accept that the jurisdiction ought now to be exercised in accordance with the principles stated: see in particular Barker v. Lavery(2). Therefore, even assuming that there is a judgment which could be executed, I am satisfied that the inherent jurisdiction of the court ought not to be exercised in favour of the applicant. 50. In this case I ask myself what "execution" the successful party could possibly contemplate and the answer as I see it can only be that there is none and that therefore there is nothing which could be suspended. The effect of a stay of execution was considered by Mr. Justice Denning in Clifton Securities Ltd. v. Huntley(3):
All we have decided is that the declaration made by the learned judge in the court below should not have been made and no process is required to give effect to it. 51. I turn therefore to r.5, which clearly limits the jurisdiction to suspend the execution of a judgment to cases where the judgment "requires the appellant to pay money or perform a duty". The judgment which we have given requires the applicant to do neither of these things: nor even did the judgment of the trial judge. On the face of it, therefore, the rule gives us no jurisdiction to grant a stay. Mr. Bernacchi said that we ought to suspend "the effect" of our judgment and that we ought to give the rule such wide interpretation as would enable us to do so. I cannot agree and am satisfied that no such jurisdiction was in the contemplation of Her Majesty in Council. Our judgment may perhaps have the same effect as a declaration that the rent fixed by the Director is lawfully payable, but even had we made such a declaration the Crown could not levy execution without first instituting other proceedings. It may be that in other proceedings the appropriate court would have jurisdiction to stay execution of any judgment entered against the applicant, although this must not be taken as an expression of the view that if a judgment can be obtained against him the jurisdiction ought then to be exercised in his favour. 52. There was, however, an order for payment of the Attorney General's costs, which was within the four corners of the rule. I was in two minds whether it was right to suspend execution upon that order, but the sum which the applicant is now liable to pay as arrears of rent is very large and the costs payable to the Crown are also heavy. I would have been sorry if refusal of a stay as to the costs were to have any tendency to stifle the proposed appeal and, conditionally upon the applicant's giving a bank guarantee as security for the payment of the costs with interest, I was disposed to think it "just" to adopt a somewhat lenient approach to this matter. I do not wish to prejudge the adequacy of the security which may be offered but having regard to the terms of the guarantee offered in respect of the arrears of rent I think it right to say that for my part I shall expect the security to be unequivocal. (1) (1964) 2 All E.R.987 (2) (1885) 14 Q.B.D.76. (3) (1948) 2 All E.R. 283, 294. |