Leung Wai Cheung v. Octel Networks Ltd and Another

Case No.DCCJ 4454/2017[2021] HKDC 8

Court

District Court

Date15 Jan 2021

Judge—

Case Document

100%Judiciary

DCCJ 4454/2017

[2021] HKDC 8

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4454 OF 2017

________________________

BETWEEN

	Leung Wai Cheung	Plaintiff
	and
	OCTEL NETWORKS LTD.	1^st Defendant
	MR. MOHAMMED BAVA DIVAN HASAN	2^nd Defendant
	FLOURISH PROPERTY AGENCY (C.I.) LIMITED	Third Party

________________________

Before: Deputy District Judge Barbara Wong in Chambers

Date of Hearing: 15 December 2020

Date of Decision: 15 January 2021

________________________

D E C I S I O N

________________________

INTRODUCTION

APPLICATION FOR STAY OF EXECUTION

1.This is the plaintiff’s application for stay of execution of:-

(1) my judgment on 15 May 2020 (“the Judgment”), and

(2) my decision dismissing his application for leave to appeal to the Court of Appeal dated 14 August 2020 (“the Decision”),

until the plaintiff’s appeal against the Judgment is concluded.

2.This is a case regarding a putative tenancy agreement signed by the plaintiff and the defendants with the third party as the estate agent acting for both parties. The background of the case has been set out in detail in the Judgment and it would not be repeated here.

3.The plaintiff’s action was dismissed, as was the third party action, and judgment was entered in favour of the 1^st defendant against the third party in the sum of HK$1,205, with interest.

4.The court made an order nisi of costs in favour of the defendants to be paid and shared equally between the plaintiff and the third party. Such costs if not agreed shall be submitted to taxation. This order nisi became absolute, there being no application for variation (“the Cost Order”).

5.The third party soon paid the said sum of HK$1,205 (with interest) to the 1^st defendant in satisfaction of the Judgment.

6.Shortly, the plaintiff applied for leave to appeal against the Judgment.

7.The third party sought leave, which was granted, to be excused from attendance of any post-judgment hearings including the hearing of the plaintiff’s summons for application for leave to appeal against the Judgment as well as the present hearing of the plaintiff’s application for stay of execution.

8.On 14 August 2020, I dismissed the plaintiff’s application for leave to appeal with an order of costs nisi of the application to the defendants, to be taxed on the District Court Scale if not agreed. This cost order also became absolute, there being no application for variation is made.

9.Thus, at the present application for stay of execution, only three parties appeared at the hearing on 15 December 2020. The plaintiff continues to appear in person while the defendants, though appearing in person by the 2^nd defendant at trial, chose to be legally represented by a member of the firm of Messrs Wong, Fung & Co, solicitors in the post-judgment application for leave to appeal and also the present application for stay of execution. Written submissions were filed in court by Ms Crystal Leung, of the said firm of Solicitors for the defendants while the plaintiff only made his oral submissions on the date of hearing.

BACKGROUND

10.The facts of this case appear in the Judgment. I do not propose to repeat them in detail.

11.I shall adopt the same abbreviations used in the Judgment in this decision.

DISCUSSION

Applicable principles for stay of execution

12.No doubt the court has discretion to grant a stay or not. In exercising its discretion, it is guided by the following factors:-

(1)  A successful party should not be deprived of the fruits of the judgment in his favour.

(2)  the starting point is RHC Order 59, rule 13(1)(a) i.e. an appeal shall not operate as a stay of execution or proceedings under the decision of the court below except so far as the court below or the Court of Appeal or a single judge may direct otherwise.

(3)  The key legal principles governing the grant of stay of execution of a judgment or order pending appeal are succinctly set out in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84: see paragraphs 6 to 10.

(4)  In general, unless the applicant (mostly appellant) can justify a stay of execution, one will not be ordered. The practice of the court is that justification can be demonstrated only if good reasons exist.

(5)  Good reason can exist in a variety of forms. There is no exhaustive definition of what would constitute good reasons, but, commonly, reference is made to factors such as whether the absence (or existence) of a stay would render an appeal nugatory (thus bringing into focus the relative prejudice that may be caused to the appellant and to the respondent by a stay of execution), and the merits of the appeal.^{^[1]}

13.Ma J (as he then was) in Star Play Development Ltd v Bess Fashion Management Co Ltd (ditto) made the following observations which are of relevance in the present application:-

“9. In the context of as whether the absence (or existence) of a stay would render an appeal nugatory (thus bringing into focus the relative prejudice that may be caused to the appellant and to the respondent by a stay of execution), and the merits of the appeal. I would make the following observations:

(1) In determining the question whether or not an appeal would be rendered nugatory, the court must of course first have regard to the nature of the order that is the subject matter of the appeal. If the order appealed against is a money judgment, the court will require evidence as to why the levying of execution will result in the appeal being rendered nugatory, such as, for example, an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal. Sometimes, though, the nature of the order will by itself almost be determinative of the question. Where the relevant order is, for example, an injunction (and particularly so if it is a mandatory injunction), it may well be that, without a stay, an appeal would be rendered nugatory in the event of a successful appeal. Similarly, where, as in the present case, the relevant order is one for the possession of premises, again it can readily be appreciated that without a stay of execution, more often than not, it is likely than an appeal would be rendered nugatory: see Ketchum International plc v. Group Public Relations Holdings Limited [1997] 1 WLR 4, at 10H.

(2) That said, whatever the nature of the order or judgment appealed from, the court will still require evidence as to why an appeal will be rendered nugatory in the event of a stay not being granted. The requisite quality of the evidence will, of course, depend on the nature of the order or judgment appealed against.

(3) I now deal with a common facet relied on in any argument relating to an appeal being rendered nugatory, namely that of financial ruin or serious financial consequences. Where, as in the present case, it is said that the levying of execution would result in financial ruin or serious financial consequences for the appellant, the court will require good evidence to support this contention, such as the production of accounts or other documents to justify the assertion. A bare assertion is unlikely to meet with much sympathy where more substantial evidence is available: see the observations of Mr Justice Litton, JA in World Trade Centre Group Limited v. Resourceful River Limited, unreported, 12 May 1993, Civil Appeal 70 of 1993, Court of Appeal, at 3-4.

(4) An appeal being rendered nugatory does not mean in all cases that without a stay, the appellant faces financial ruin or the loss of all his property. Demonstrating that the failure to grant a stay would have a serious deleterious effect is enough: see Caine Tai Investment Company Limited v. Ayala International Finance Limited [1983] 1 HKC 163, a decision of the Court of Appeal which made reference to Wilson v. Church (No.2) [1879] 12 Ch. D. 454.

(5) How relevant then is the court’s consideration of the merits or strength of the appeal? In my view, while it is impractical and even undesirable for the court in dealing with an application for a stay of execution, to go deeply into the merits and strengths of an appeal, it must however form a preliminary view of these aspects. This I believe to be an inevitable consequence of the starting point I have earlier mentioned in referring to Order 59, rule 13(1).

(6) The existence of merely an arguable appeal cannot by itself amount to sufficient reason to justify a stay. It can be put this way: the existence of an arguable appeal (that is, one with reasonable prospects of success) is the minimum requirement before a court would even consider granting a stay. In other words, however exceptional the circumstances may be otherwise justifying a stay of execution, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted.

(7) Conversely, however, the existence of a strong appeal or a strong likelihood that the appeal would succeed, will usually by itself enable a stay to be granted because this would constitute a good reason for a stay: see World Trade at 2; Winchester Cigarette Machinery Limited v. Payne (No.2), unreported, 15 December 1993, English Court of Appeal (a case referred to by the Court of Appeal in Fung Wai Kwong William v. The Insider Dealing Tribunal [2001] 1 HKC 44).

(8) In most cases, the court will not be dealing with the extreme situations I have referred to. Often, it will be faced with simply the existence of an arguable appeal. Here, it becomes necessary for the appellant to provide additional reasons as to why a stay is justified. The demonstration of an appeal being rendered nugatory is one example, albeit a common one. Here, where it is demonstrated that an appeal would be rendered nugatory if a stay was not granted, the court may require no more than the existence of an arguable appeal. Correspondingly, where it cannot be shown that an appeal would be rendered nugatory if a stay were not granted, the court will require, in the absence of any other factors, the appellant to demonstrate strong grounds of appeal or a strong likelihood of success. This I understand to be the sentiment found in authorities such as World Trade at 2 (in a passage cited with approval by the Court of Appeal in Fung Wai Kwong William at 48) and Mabul Properties Corporation v. Ahmed, unreported, 24 June 1987, English Court of Appeal.

(9) I have so far referred to the position of the appellant. It is important to stress that the court must not at any stage forget the position of the successful party. It is always relevant to consider the prejudice that would be caused to the successful party (the respondent in the appeal) in the event a stay is granted and if necessary, to impose conditions so as to minimise the prejudice caused to him. A fortiori, the court must consider any contention that the appeal would be rendered nugatory to him (in the event the appeal is dismissed) should a stay of execution be imposed.”

No merit in the appeal

14.By my decision dated 14 August 2020, I dismissed the plaintiff’s application for leave to appeal with an order of costs nisi of the application to the defendants, to be taxed on the District Court Scale if not agreed. By this decision, I have come to the conclusion that there is no merit in the appeal. By this alone, there can be no good reason for any stay of the execution of the costs order in both the Judgment and in the order dismissing the application for leave to appeal. Ma J (as he then was) in Para. 9(6) of Star Play Development Ltd v Bess Fashion Management Co Ltd (ditto) pointed out that “however exceptional the circumstances may be otherwise justifying a stay of execution, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted.”

Would the appeal be rendered nugatory?

15.Even if there had been an arguable appeal (and I have found there is none here), I would have to consider whether the appeal would be rendered nugatory if the plaintiff had no stay of execution of the costs order against him. If the plaintiff were to win in the appeal, he would be entitled to be paid the damages he seeks. The plaintiff does not say that the defendants will not be able to pay the damages he claims. Yet he says that if he had paid the costs ordered against him to the defendants, they will be unable to pay him back these costs. In the course of the hearing of this summons, I did ask the plaintiff why would he, in the circumstances, bother to appeal, to which he answered that he was looking for justice!

16.In support of his application, the plaintiff submitted that the payment of costs, which as he understands via communication with the solicitors for the defendants, ranged from HK$70,000 - HK$80,000 (as a one-off full payment without going for taxation) had later turned out to be about HK$250,000 when he asked for breakdown of the HK$70,000 - HK$80,000. This, the plaintiff further submitted, amounted to:-

(1) a huge burden or financial consequences on him as he can hardly take out such sum; and

(2) a prejudice to him as (he alleges) the 1^st defendant is a company without assets and the 2^nd defendant is not a resident in HK. He said there is no asset from the defendants for him to go after the defendants to get the cost back should he (the plaintiff) win the appeal. By the same token, the court notes, the same would apply for the damages he seeks in the appeal.

17.The court asked the plaintiff on what basis does he say that the defendants have no assets and that the 2^nd defendant is not a resident of Hong Kong. The plaintiff said it is all based on his assumption by reason of the fact that the 1^st defendant is a company of the 2^nd defendant who is an Indian or Pakistan by race. Also, the plaintiff said that the evidence in the case shows that the 2^nd defendant is not a trustworthy or honest person as (he alleges) the 2^nd defendant had reneged on his agreement to rent his premises. Thus, the plaintiff worries he may not be able to get his costs back if he paid the defendants should he win his appeal. Thus, it is obvious that the plaintiff failed to provide any evidence in support for these allegations.

18.Bare assertion is not enough: Star Play Development Ltd v Bess Fashion Management Co Ltd (ditto) see paragraphs 9(3) therein:-

“…the court will require good evidence to support this contention, such as the production of accounts or other documents to justify the assertion. A bare assertion is unlikely to meet with much sympathy where more substantial evidence is available: see the observations of Mr Justice Litton, JA in World Trade Centre Group Limited v. Resourceful River Limited, unreported, 12 May 1993, Civil Appeal 70 of 1993, Court of Appeal, at 3-4.”

Prejudice to the defendants

19.In the Judgment, the court made an order nisi of costs in favour of the defendants to be paid and shared equally between the plaintiff and the third party. Such costs if not agreed shall be submitted to taxation.

20.As acknowledged by the plaintiff, the defendants did approach him regarding the costs to be paid by him as a “full and final settlement on costs” in the range of HK$70,000 to HK$80,000 but the plaintiff did not agree and asked for a breakdown, which the defendants’ solicitors did and came up with a costs figure in a much higher range. Also, Ms Leung, solicitor for the defendants informed the court that but for the plaintiff’s application for stay, the bills would already been filed for taxation.

21.Ms Leung, solicitor for the defendants, submitted that while the third party confirmed that it would not appeal the Judgment or like to appear in any of the subsequent proceedings, it would not be cost effective for the defendants to lodge the taxation bill against the third party only pending the result of the current application for stay taken by the plaintiff. Ms Leung further submitted that this is tantamount to delay occasioned by the plaintiff when the court should bear in mind that the successful party should not be deprived of the fruits of success.

22.Solicitor for the defendants pointed out in her written submissions that “even the taxation has been commenced now without any stay of execution, the plaintiff is entitled to file his objections to the taxation bills of the 1^st and the 2^nd defendants filed under the Judgment and the Decision. The plaintiff is only required to make the payment after the 1^st and 2^nd defendants’ costs have been taxed. If the plaintiff’s appeal has still not yet been concluded, he can then apply for stay of execution of the Allocatur if any good reason can be shown.” This means that the application for stay, while meritless, is also premature.

23.In the course of the hearing, the possibility of a “payment-in” of the costs by the plaintiff pending conclusion of the appeal was initially put forward by Ms Leung, solicitor for the defendants, in response to the plaintiff’s worry for fear of not able to recover the cost (that has to be) paid by him to the defendants should the plaintiff win on appeal. But such idea of payment-in was later retracted, mainly on the grounds that it is difficult for the parties to come up to a sum for payment-in and also the third party may not agree to participate in the “payment-in”.

24.All these were brought to the attention of the plaintiff in the hearing. In fact, the hearing was stood down for a while for the plaintiff to consider the proposal raised by Ms Leung, solicitor for the defendants, as well as whether he may withdraw his application for stay. At the end, the plaintiff made it clear that he decided to proceed with his application for stay and would not withdraw his said application for stay.

25.Upon hearing the submissions from the plaintiff and the defendants, the court indicated that judgment is reserved and will be handed down in due course.

Application for withdrawal

26.On the following day when the court resumed business on 16 December 2020, the court received a fax from the plaintiff with a date marked 15/12/2020 at 19:48:02, which was copied to Ms Crystal Leung, Wong, Fung & Co, Solicitors by post.

27.In this fax, the plaintiff stated “after my careful consideration, I would confirm to withdraw the above application (for stay of execution pursuant to an inter-partes summons) dated the Nov 23, 2020.”

28.The applicable Rules of District Court is Order 21 rule 6 which is cited as follows:-

“Withdrawal of summons (O. 21, r. 6)

A party who has taken out a summons in a cause or matter may not withdraw it without the leave of the Court.”

29.This attempt to withdraw the application appears to the court as an opportunistic ploy. The plaintiff seems to be a person who never ceases to change his position in order to take advantage of any opportunity which could work in his favour. This opportunism is also apparent from the changes of position of the plaintiff as seen from the evidence presented at the trial.

30.Costs have definitely been incurred on the part of the defendants as soon as the inter-partes summons for the present application for stay was served on all parties including the defendants.

31.Written submissions have been filed by the defendants’ solicitors though the plaintiff, being the applicant, did not file any written submissions to court.

32.The case has already been heard including the appearance of the defendants who were legally represented by Messrs Wong, Fung & Co, solicitors for the defendants. Time and costs have already been incurred by reason of the plaintiff’s application for stay since 23 November 2020.

33.It is not unreasonable to assume that the plaintiff must have considered the costs implication for every step taken especially when he has by now gone through the stage of trial, application for leave to appeal. Every step in the procedure has costs implications.

34.As court’s leave is required before a summons (ie present application for stay of execution) may be withdrawn, the court, upon due consideration, including all the factors set out above, refuses to give leave to the plaintiff to withdraw his application for stay.

Subsequent correspondence from Plaintiff

35.When this Decision was about to be delivered, the Court received another fax of 5 pages from the plaintiff again, who seems to think that the Court is at his disposal by his every whim, despite the fact that the hearing has already been concluded a few weeks ago and the Decision of the Court is pending.

36.On this occasion, the fax appeared with a date marked Jan 06, 2021 17:37 (UTC +08), again said to be “c.c. to Ms Crystal Leung, Wong, Fung & Co, Solicitors, (address) (By post)”. This fax only came to the attention of the Court registry on the next business day, when in fact the judiciary is also strictly following the Government practice of social distancing with a considerable contingent of its staff in “Work From Home” mode. Nevertheless, those on duty judiciary staff promptly brought this fax to my attention.

37.In this fax, the plaintiff said:-

“I have noticed that the defendant’s lawyer i.e. Wong, Fung & Co, Solicitors was suspended and in fault.

During hearing for the stay of execution, you have given me court case to prove that my application could not meet the basic requirements which made to send my last letter dated 5^th Dec 2020 (sic). My ground for application was that it is high risk for me to pay the defendant directly and I have a good chance of success in my appeal. I requested that the court in allowing to pay the money in the court for keeping until the final result of my appeal.

The current fact showing that defendant lawyer was legal professional, but could be still in default. How can the court ensure that the defendant would pay back my money if my appeal case was successed (sic). Furthermore, I have an independent witness statement as attached to prove that the main judgment point was untrue. Hence, I have a high chance of 15 May 2020 judgment was wrong. It would by (sic) unreasonable for me to take the high risk to pay the defendant now.

Hoping that you can still approve my application for stay of execution or the court could keep my paid money till the final of my appeal.”

38.As a matter of a fact, the Court is well aware of the Law Society’s intervention in the running of the law firm Messrs. Wong, Fung & Co, with effect from 24 December 2020. This was 9 days after the hearing of the present application for stay of execution on 15 December 2020. Whatever happened to the law firm acting for the defendants, I must presume that the Law Society has already taken or is taking appropriate action to ensure that the interests of the clients of the said firm, including the defendants in the present case and the firm’s duty to the Court, are protected. It remains the Court’s responsibility to deliver its Decision.

39.In this fax, once again, it is demonstrated that the plaintiff spared no effort in making every attempt to advance his own case outside the permitted procedures of the Court.

40.In particular, the plaintiff has attempted to repeat what he has already said at the hearing i.e. he has a good chance of success in his appeal. In order to lend support to this repeated argument that he has a good chance of success, the plaintiff even caused to be prepared a new witness statement purportedly dated 29 December 2020 and therefore prepared after the trial and the hearing for stay of execution. This new statement was purportedly signed by Wong Siu Lai who is in fact the same estate agent Shirley Wong referred in the Judgment and was a witness at the trial. This new statement was purportedly made for the intended appeal (subject to leave to be granted by the Court of Appeal) and is put forward by the plaintiff for the purpose he sets out in his faxed letter reproduced in paragraph 37 above.

41.This is not even the most astounding aspect of the plaintiff’s foray outside the permitted procedures of the Court. The Court notes that the plaintiff concluded his fax letter in a way which is clearly contrary to the message of his previous fax that reached the Court on 16 December 2020, when he sought to withdraw his application for stay of execution. Here, in this second fax, the plaintiff made it clear that he hopes either (1) his application for stay for execution be allowed or (2) “the court could keep any paid money till the final of my appeal”.

42.As noted in paragraph 23 above, the issue of Payment-In was mooted in the course of hearing of stay of execution, but at the end, this issue was no longer pursued.

43.Judging from what the plaintiff now says in his second fax, he apparently wants to re-visit the issue of Payment-In (but did not state clearly how much will be paid by him, if any, to the Court) despite it having been already retracted by Ms Crystal Leung, Solicitor for the defendants at the hearing. In any event, the Allocatur for costs has not been issued by the Registrar and the amount cannot be ascertained at this stage. If there is a payment-in contemplated by the plaintiff, he must deal with that at that point in time.

44.The Court can understand that a litigant in person, who is not schooled in the procedures of the Court, may from time to time find it difficult to comply. However, the plaintiff has time and again, demonstrated that he wishes to take every opportunity to advance his case even after he has been told by this Court that the case has been concluded.

45.The reason why an applicant in a hearing has been given the opportunity to present his final word in his submissions is to achieve finality. This cannot be achieved if a party keeps on writing to the Court after the conclusion of a hearing.

46.The plaintiff has been given the opportunity to present a final word at the hearing. In fact, ample chance had been given to him to make his submissions, including allowing him to repeat as well as to speak in punti as he said he is more comfortable to present his case in punti.

47.All in all, the Court does not find the Law Society’s intervention of the law firm acting for the defendants in this application, has any bearing on the Court’s consideration of the merits of the plaintiff’s application for stay of execution. The legal principles that the Court applies in deciding whether to exercise its discretion, remain unaffected.

48.For the foregoing reasons, I shall disregard this latest letter faxed by the plaintiff.

DISPOSITION

49.In order to get the court to grant a stay of execution pending appeal, the grounds raised would have to satisfy the test for such an application, as set out above, and which would not be repeated.

50.Having tried my best to understand the plaintiff’s case including having heard his oral arguments (which the plaintiff was allowed to make his submissions in punti as per his request), and also having given the opportunity to the defendants to respond, I conclude that the plaintiff has failed to meet the threshold for application for stay of execution and, accordingly, I dismiss, as I must, the plaintiff’s application for stay of execution for the order of costs arising from both the Judgment and the dismissal of his application for leave to appeal. For this application for stay of execution, I make an order nisi for costs in favour of the defendants, to be taxed on the District Court Scale, if not agreed. This order nisi shall become absolute in 14 days in the absence of any application for variation.

CONCLUDING NOTE

51.This is a challenging year worldwide, in view of the fourth wave of the COVID-19 pandemic inflicted upon Hong Kong, social distancing measures are further tightened with the result that judiciary acted swiftly by imposing measures in line with the Government policy to combat for the spread of the virus in the public interest. As a result, this judgment could only be made available to the parties now despite its readiness for delivery shortly after the hearing. We are painfully reminded, yet again, that whilst Man proposes, it is God who finally disposes. May all concerned have a Happy New Year, stay healthy for now and for the times ahead!