廈門新景地集團有限公司 Formerly Known As 廈門市鑫新景地房地產有限公司 v. Eton Properties Ltd and Others
Read the full judgment text of HCCL 13/2011 on BabelCite. This HCCL judgment was delivered on 21 March 2025.
1. Before this Court are: the application made by the Plaintiff for payment out of money paid into Court by the 1 st and 2 nd Defendants (“ Defendants ”) (“ Payment Out Summons ”); and the application by the Defendants for stay of execution of the judgment and orders of this Court made on 14 May, 9 September, 3 October and 15 October 2024, pending the final determination of their appeal from the judgment (“ Stay Summons ”).
Cites 4 cases
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HCCL 13/2011 [2025] HKCFI 1180 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL ACTION NO 13 OF 2011 (TRANSFERRED FROM HCA NO 961 OF 2008) ____________
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_____________ D E C I S I O N _____________ 1.Before this Court are: the application made by the Plaintiff for payment out of money paid into Court by the 1st and 2nd Defendants (“Defendants”) (“Payment Out Summons”); and the application by the Defendants for stay of execution of the judgment and orders of this Court made on 14 May, 9 September, 3 October and 15 October 2024, pending the final determination of their appeal from the judgment (“Stay Summons”). 2.The Defendants did not object to the Plaintiff’s application to amend the Payment Out Summons (for revising the amounts sought to be paid out), and orders in terms were made on that amendment summons and on the Plaintiff’s application to adduce evidence in response to the evidence of the Defendants. 3.At the hearing on 21 January 2025, arguments were focused on whether there should be a stay of execution of the judgment and orders pending appeal, whether such stay should be unconditional, or subject to payment into court of further amounts representing the damages awarded, pre-judgment interest, further interest, and costs, or whether any part of the payments already made into court should be returned and released to the Defendants, or paid out and released to the Plaintiff. 4.The relevant history of the proceedings is as follows. 5.After trial of the action, judgment was handed down on 14 May 2024 (“Judgment”). By a series of orders made by the Court under the Judgment and on 9 September and 15 October 2024, the Defendants were ordered to pay to the Plaintiff:
6.Notice of Appeal was filed by the Defendants on 11 June 2024 (“Appeal”). 7.On 16 September 2022, the Court had allowed the Plaintiff’s application for interim payment under Order 29 rule 13, and the Defendants were ordered to pay into court RMB 27 million. Payment was duly made. 8.After the Judgment, on 13 September 2024, the Plaintiff applied for payment out (initially of the interim payment of RMB 27 million), and on 26 September 2024, statutory demands were served on the Defendants for payment of the amounts due under the Judgment. 9.On 24 September 2024 the Defendants applied for stay of execution of the Judgment Debt pending the Appeal. On 3 October 2024, the parties agreed that upon the Defendants’ complying with their undertaking to pay into court a sum of RMB 320,064,070.21, the Plaintiff would withdraw the statutory demands served on the Defendants and undertake not to take any enforcement actions against the Defendants pending determination of the Appeal, or the Payment Out Summons and Stay Summons, whichever is the earlier. 10.Hence, the total amount now in court is RMB 347,064,070.21. The Plaintiff claims that the current amount in court does not in fact take into consideration costs and post-judgment interest. Post-judgment interest alone, calculated up to December 2024, is in excess of RMB 35 million. 11.By the Payment Out Summons, as amended, the Plaintiff seeks an order that: (1) the entire sum of RMB 347,064,070.21 in court; alternatively (2) RMB 52,219,051.14; or further alternatively RMB 27 million, be paid out of court to the Plaintiff, in partial settlement of the outstanding Judgment Debt. 12.On the Plaintiff’s case, the alternative sum of RMB 52,219,051.14 sought represents the amount argued by the Defendants at trial to be the net profit ie the damages payable to the Plaintiff for the breach complained of by the Plaintiff, together with pre-judgment interest which should be awarded. 13.The other alternative of RMB 27 million was the interim payment allowed by the Court before trial. 14.The parties are not in disagreement over the legal principles which govern an application for stay pending appeal. 15.It is not appropriate or desirable to go into the merits of the appeal (Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, Ng Yuk Pui Kelly v Dung Wai Man & Ors [2021] HKCA 134), but I am prepared to accept, on broad brush approach, that there are reasonably arguable grounds of appeal. 16.The Plaintiff highlighted that an arguable appeal is only the minimum requirement before a stay can be considered. There must be other circumstances which justify depriving the successful party of the fruits of the judgment, and as the Plaintiff pointed out, there has already been a lapse of 18 years from the date of the arbitral award, in October 2006, which the Plaintiff was seeking to enforce. I accept that there will be grave prejudice to the Plaintiff if execution and enforcement should be stayed, and further delay means further denial of justice to the Plaintiff. 17.As the learned editors of Hong Kong Civil Procedure 2025 highlighted at para 59/13/1 (with the cases cited therein), an appeal does not operate as a stay, and a stay will only be ordered if the Court is satisfied that there are good reasons for doing so. “The court does not ‘make a practice of depriving a successful litigant of the fruits of his litigation, and locking up funds to which prima facie he is entitled’, pending an appeal”. Where the appeal is against an award of damages, a stay will normally be granted only where the appellant satisfies the court that, if the damages are paid, then there will be no reasonable prospect of his recovering them in the event of the appeal succeeding, and if a stay is granted, the court should impose terms which so far as possible can ensure that the respondent is paid without delay if the appeal fails. 18.It is recognized that a stay is likely to be granted where the appeal would otherwise be rendered nugatory. 19.The Defendants’ main complaint and ground to seek a stay and to resist any condition being imposed on the stay is that the Plaintiff in this case is a company incorporated on the Mainland, which has no known assets within the jurisdiction of Hong Kong from which the Defendants can seek to recover any money paid to the Plaintiff, in the event that the Defendants’ Appeal should succeed, such that the Appeal would be rendered nugatory. Its Mainland incorporation and presence is not denied by the Plaintiff, and it has not identified any assets in Hong Kong which can be used to repay the Defendants if and when required to do so. 20.The Defendants further highlighted the fact that there are heightened risks of non-recovery from the Plaintiff in this case, because it has a history of delayed compliance with costs orders, and the fact that the Plaintiff and its branches on the Mainland are subject to multiple litigation and enforcement proceedings on the Mainland (involving judgment sums exceeding RMB 36.9 million). The Defendants further claimed that according to a company search report from a Mainland online platform conducted on 20 December 2024, the Plaintiff has a “poor credit rating”. 21.It was pointed out that the Plaintiff has a history of unexplained and repeated delay in paying the taxed costs in these proceedings for up to 8 months. The Defendants drew attention to the fact that in 2 instances, payment was only made by the Plaintiff after a statutory demand was served upon it. 22.The Plaintiff claims that the delay in payment was necessitated by foreign exchange control policies, but I have to agree with the Defendants, that such policies and procedure should not have resulted in the delays in this case which were in terms of months. As for the explanation that it was reasonable for the Plaintiff to defer settlement of taxed costs until after payment out of court has been determined, again, this cannot be accepted as a valid answer, when costs orders take effect when they are made, and court orders are meant to be complied with by parties. There is no order made by the Court that payment of costs can be deferred until any event. 23.There is force in the Defendants’ submission that the delay in payment means either that the Plaintiff did not have the sufficient and necessary funds to settle the costs orders promptly, or it chose deliberately not to make prompt settlement. On either case, there is room for the Court to conclude that there is a real risk that in the event that the Appeal is successful, the Plaintiff would not make repayment, or repay promptly, any amount paid to it by the Defendants. 24.In the context of the outstanding judgments which were made against the Plaintiff or its branch offices, the Defendants have pointed out that a company and its branch offices are regarded as the same legal entity in the Mainland, and at least one of the Plaintiff’s branch office is subject to 7 enforcement actions for judgment debts in the aggregate of RMB 2,858,118. In addition, the Plaintiff itself has judgment debts exceeding RMB 34,085,155 arising from 5 enforcement actions. The fact that some of the debts are owing from the Plaintiff in its capacity of a guarantor does not reduce the risk of enforcement action being taken by creditors against the Plaintiff. The Plaintiff only pointed out that some of the enforcement proceedings have been stayed, or temporarily withheld. 25.Considering together the Plaintiff’s poor credit rating on the Mainland, the fact that there are litigation and enforcement proceedings against the Plaintiff there, and taking heed of the history of the Plaintiff’s delay in compliance with costs orders made in these hostile proceedings, I accept that there is an appreciable risk that the Plaintiff may not be able to repay the Defendants, in the event that they are successful in the Appeal and amounts of the Judgment Debt have been paid out to the Plaintiff. There has been no evidence from the Plaintiff as to its financial resources, apart from its bare assertion that it is able to pay its outstanding and due debts. 26.The Defendants maintain that on their part, they had been able to make substantial payments into court so far, which should demonstrate that they have the means to do and there is no serious risk that the Plaintiff will not be able to enforce the Judgment after the Appeal is determined. Nor is there any specific evidence of any dissipation of assets on the part of the Defendants. 27.Given the history in these proceedings, and the fact that the Plaintiff’s steps in the action have been resisted by the Defendants on all fronts, I have reservations as to whether the Defendants would cooperate and make prompt payment of the Judgment Debt, if their Appeal should be dismissed, and there is no further money left in Court. The Defendants did make payment into court, but only when ordered to do so in September 2022 when the Court granted interim payment on the Plaintiff’s application, and after Judgment in October 2024, only after statutory demands had been served on them and in order to avoid winding up proceedings. The fact that the Defendants were able to or had access to resources to make payment when compelled to do so, does not persuade me that they will do so promptly and voluntarily in the event that the Appeal is dismissed. 28.The Plaintiff has also drawn attention to the fact that the Defendants are priate companies and their assets and liabilities are unknown to the Plaintiff, and there are uncertainties whether they have substantial assets available for enforcement after the Restructuring referred to in the Judgment. 29.In all the circumstances of this case, I am prepared to grant a stay only on condition that there is an amount remaining in Court, to which the Plaintiff can look for recovery and enforcement of the Judgment should the Appeal be decided in the Plaintiff’s favour. The question is whether this should be the entire amount already paid in, or a lesser sum. 30.The Plaintiff’s case is that the full amount of the Judgment Debt should remain in court, as the Appeal is not arguable and there are no additional reasons to deprive the Plaintiff of the fruits of the Judgment and to stay execution. 31.The Plaintiff in fact claims that additional payment should be made into Court by the Defendants, of sums ranging from RMB 35,119,462.93 to RMB 39,433, 751.55 for post-judgment interest, depending on whether stay of execution is ordered on the entire Judgment Debt, the Defendant Contended Amount or the interim payment ordered. The smallest additional payment for interest, added to the amount currently in court, would bring the sum sought by the Plaintiff to RMB 382,064,070.21. 32.Alternatively, it was argued that the Plaintiff is “indisputably entitled to RMB 52,219,051.14”, which amount should be paid out to the Plaintiff, or at the least, remain in Court. This is because the Defendants had contended at trial that the Plaintiff should only be entitled to receive a sum of RMB 36,533,356.73 (“Defendant Contended Amount”), together with pre-judgment interest to run from 20 October 2017, which would amount to RMB 15,685,694.41. The Plaintiff argued that on the Defendant’s case, the Plaintiff is entitled at least to this total sum of RMB 52,219,051.14, and there is no reason why this amount should not be immediately paid out to the Plaintiff. 33.The Defendants submitted that the Defendant Contended Amount had only been put forward by the Defendants for the sake of argument at trial, not on the basis that the Defendants claimed or accepted that the Defendants should be liable for the amount, but only as a “reality check”, and simply to assist the Court in assessing the reasonableness of the sum claimed by the Plaintiff as damages. On behalf of the Defendants, Mr Yu reminded the Court again, of the point made at trial that the Plaintiff had not adduced any evidence of its own of what its alleged loss was, or would be, and had instead relied on what the Plaintiff claimed to be the case which was apparent from the Defendants’ accounts and documents. The Defendant Contended Amount was explained, in submissions made at trial, to be prepared on a “very rough and ready basis”, and to demonstrate that the figure represented roughly what the Plaintiff itself had estimated in 2003 to be its net profit of around RMB 27 million (the estimate referred to in paragraph 107 of the Judgment), such that the amount claimed and computed at trial was totally unreasonable and unjustified. 34.The parties do not dispute that the Court has a discretion on whether to impose terms and what terms to impose, as a condition of the grant of a stay. The Court may of course take into consideration the grounds and merits of the Appeal in deciding on the terms. In this case, the Appeal is on whether the quantum of damages was correctly assessed, on the basis adopted by the Court. Part of the grounds of the Appeal concern whether pre-judgment interest for over 16 years should be allowed, which on its own came to RMB 174,272,854.28. Merely because this sum can be readily isolated and extracted from the Judgment Sum, if the entire pre-judgment interest is held to be not payable, the principal amount of damages comprising the Judgment Debt is RMB 169,044,298.25. 35.Simply proceeding on the basis that if the Defendants succeed on the Appeal, the amount of damages awarded under the Judgment may be reduced, and taking a broad brush approach on the reduction which may possibly be made, 50% of the amount now paid into court would be in the region of RMB 173,532,035, and not substantially far off from the aforesaid figure of RMB 169,044,298.25 in the context of the case. 36.50% of the amount now in Court, with additional provision for post-judgment interest as referred to at paragraph 31 above, is $191,032,035. 37.Taking a broad brush approach, I will order that RMB 180 million of the amount now in court should be released and paid out to the Plaintiff within 14 days, and the balance should remain in court until the determination of the Appeal. 38.The costs of the application (including any costs reserved) should be in the cause of the Appeal, with certificate for 2 counsel.
Mr James Man and Mr Jonathan Ng, instructed by Anthony Siu & Co, for the plaintiff Mr Benjamin Yu SC, Mr Richard Khaw SC, Ms Bonnie YK Cheng and Ms Astina Au, instructed by Johnson Stokes & Master, for the 1st & 2nd defendants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCCL 13/2011