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

HCCL 13/2011

[2025] HKCFI 2005

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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BETWEEN

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D E C I S I O N

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1.Pursuant to a judgment handed down on 14 May 2024 (“Judgment”), and by a series of orders made under the Judgment and on 9 September and 15 October 2024 (“Judgment Orders”), this Court ordered the 1^st and 2^nd Defendants (“Defendants”) to pay to the Plaintiff:

(1) Damages in the amount of RMB 169,044,298.25;

(2) Pre-judgment interest in the amount of RMB 174,272,854.28;

(3) Further interest at the rate of prime +1% on the sum of RMB 169,044,298.25 from 15 May 2024 to 9 September 2024;

(4) Interest on the judgment debt (ie the total sum due under sub-paragraphs (1)-(3) above) at the judgment rate from 10 September 2024 until full payment; and

(5) Costs of this action for assessment of damages, including any costs reserved, with Certificate for 3 Counsel

(collectively, “Judgment Debt”).

2.Notice of Appeal was filed by the Defendants on 11 June 2024 to appeal against the Judgment (“Substantive Appeal”).

3.In the course of these proceedings, following the Court’s order on 16 September 2022 and by agreement amongst the parties on 3 October 2024, the Defendants have paid into court an aggregate total of RMB 347,064,070.21 (“Paid-In Amount”). Subsequent to the Judgment and Judgment Orders, the Plaintiff applied on 13 September 2024 for payment out of the Paid-In Amount.

4.In the interim, the Defendants applied for stay of execution of: the Judgment, the Judgment Orders and another order made by this Court on 3 October 2024, pending final determination of the Substantive Appeal.

5.Pursuant to a decision handed down on 21 March 2025 as corrected by corrigendum dated 24 March 2025 (“Payment Out Decision”) and by an order drawn up and sealed under the Payment Out Decision (“Payment Out Order”), this Court ordered that RMB 180 million of the Paid-In Amount should be released and paid out to the Plaintiff within 14 days of the date of the Payment Out Decision, and the balance should remain in court until the determination of the Substantive Appeal.

6.On 25 March 2025, the Defendants made another application to the Court of Appeal for stay of execution of the Judgment and Judgment Orders (“Renewed Stay Application”).

7.In the Renewed Stay Application, the Defendants’ case is that the Judgment and Judgment Orders should be stayed on condition that the entirety of the Paid-In Amount should remain in court pending the determination of the Substantive Appeal, without any payment being released and paid to the Plaintiff. Alternatively, if the Court of Appeal decides that a portion of the Paid-In Amount should be released to the Plaintiff, the Defendants contend that such portion should be substantially less than RMB 180 million.

8.On 25 March 2025, the Defendants also applied to this Court for leave to appeal against the Payment Out Decision and the Payment Out Order (“Leave to Appeal Application”). Directions were made on 27 March 2025 for paper disposal of the Leave to Appeal Application. On 28 March 2025, the Defendants wrote to this Court to seek, unilaterally, an interim stay of the Payment Out Order, which was not granted by the Court by correspondence.

9.The Defendants therefore made the application for interim stay to the Court of Appeal. On 1 April 2025, Chu VP granted the interim stay pending the determination of (i) the Leave to Appeal Application, or (ii) the Renewed Stay Application, whichever is earlier.

10.This Court will now determine the Leave to Appeal Application pursuant to the directions given.

11.There are two grounds for the Defendants’ intended appeal against the Payment Out Decision. They contend that:

(1) Having accepted that (i) the Defendants have reasonably arguable grounds in the Substantive Appeal (see paragraph 15 of the Payment Out Decision) and (ii) 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 Substantive Appeal and amounts of the Judgment Debt are paid out to the Plaintiff (see paragraphs 23 and 25 of the Payment Out Decision), it was wrong in principle for the Court to order any of the Paid-In Amount to be released and paid to the Plaintiff; and

(2) In any event, the amount of payment ordered, ie RMB 180,000,000, is arbitrary, unprincipled and plainly wrong. There was no reasonable basis which supported the determination of the appropriate quantum of the sum to be paid to the Plaintiff.

12.In essence, the Payment Out Decision is a refusal of a full stay of execution as sought by the Defendants, and a decision to allow payment out of a part of the Paid-In Amount pursuant to the Plaintiff’s application. Such a decision is clearly an exercise of the Court’s discretion, which is unfettered (Caline Tai Investment Co Ltd v Ayala International Finance Ltd [1983] 1 HKC 163) – as the Plaintiffs have rightly pointed out.

13.It is trite, that an appeal against an exercise of discretion will not be entertained unless it can be shown that the judge exercised his/her discretion under a mistake of law, or under a misapprehension as to the facts, or that the Court took into account irrelevant matters or failed to exercise the discretion, or the conclusion which the judge reached in the exercise of his/her discretion was outside the generous ambit within which reasonable disagreement was possible (Hong Kong Civil Procedure 2025 para 59/0/54).

14.As highlighted in DP World Dijbouti FZCO and Others v China Merchants Port Holdings Co Ltd at §22, the Court of Appeal may only interfere with the exercise of the judge’s discretion in limited circumstance, which are:

"(1) where the judge has misdirected himself with regard to the principles in accordance with which his discretion had to be exercised; (2) where the judge, in exercising his discretion, has taken into account matters which he ought not to have done or failed to take into account matters which he ought to have done; or (3) where his decision is plainly wrong. See The Abidin Daver [1984] AC 398, 420B–C, per Lord Brandon of Oakbrook, which has been followed in a number of cases in Hong Kong, such as China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd (CACV 14/2016, [2017] HKEC 171, 3 February 2017) at §7.13.”

15.In Stabilad Ltd v Stephens & Carter Ltd (1999) 1 WLR 1201 at 1206B-D, the English Court of Appeal also explained that the court’s exercise of its discretionary power must take account of the particular circumstances of the specific case before it.

16.As pointed out in the Payment Out Decision, an appeal does not operate as a stay of execution. In considering whether a stay of execution should be granted, the applicant has to demonstrate not only that there are grounds in the proposed appeal, but that there are good reasons to deprive a successful litigant of the fruits of the litigation, locking up funds to which the successful plaintiff is prima facie entitled pending an appeal.

17.The relevant legal principles which were considered were outlined at paragraphs 16 to 18 of the Payment Out Decision.

18.As Counsel for the Defendants have pointed out, the issues of the stay of execution and the payment out are two sides of the same coin. Reading the Payment Out Decision as a whole, it should be appreciated that the substance of the decision is to release a part of the Judgment Debt, and to stay execution only on the remaining balance of the Judgment Debt. This was the result of a balance of the injustice to the Plaintiff of locking up the Paid-In Amount representing at least part of the Judgment Debt when the merits of the Appeal are not entirely in favor of the Defendants, against any injustice to the Defendants in the event that the Judgment Debt should, on appeal, be reduced on any of the grounds relied upon by the Defendants, and the conclusion that there is at least some risk of the Plaintiff not being able to repay the entire Judgment Debt to the Defendants. Implicit is an evaluation of both the merits of the Appeal and the risks alleged by the Defendants as to the appeal being rendered nugatory as a result of the entirety or a substantial portion of the Judgment Debt being reduced.

19.As the Court explained in the Payment Out Decision, it was not necessary to go into the merits of the arguments already rehearsed before the Court and rejected in the Judgment, and the Court simply accepted that the Defendants can establish the threshold of there being arguable grounds of appeal.

20.As to how much of the Paid-In Amount should be released, and in deciding on the 50% referred to in paragraph 35 of the Payment Out Decision, the Court adopted a broad-brush approach, on the basis of the prospects of success of the Appeal.

21.I do not agree that the Payment Out Decision was either wrong in principle, or was arbitrary or plainly wrong. The appellate court may consider that if the discretion had to be exercised by that court, they might have ordered a higher, or lower sum, to be retained or paid out, but that is not sufficient for the court to allow the Appeal. As the Court of Appeal re-iterated in New Sparkle Roll International Group Ltd & anr v Sze Ching Lau & anr [2024] HKCA 336 (at para 68), for an appeal against an exercise of discretion of the court, the well-established principles are that the appeal court must defer to the judge’s exercise of discretion and will not interfere with it merely on the ground that it would have exercised the discretion differently.

22.It cannot be said that it was plainly wrong to allow payment out of RMB 180 million on the facts and in the circumstances of this case, bearing in mind the fact that the Defendants’ liability has already been established, only quantum is in dispute, the long lapse from the date of the judgment on the Award and the commencement of this action, and the sizeable amount of interest which may be payable.

23.The Court had duly taken into consideration the merits of the Appeal, the possible risks to the Defendants that the Judgment Debt may be reduced, and the prejudice of further delay to the Plaintiff. I am not satisfied that relevant factors had not been considered, or that irrelevant factors had been taken into consideration.

24.In the premises, I am not satisfied that the intended appeal has reasonable prospects of success and refuse leave. I make an order nisi that the costs of the Leave to Appeal Application are to be paid by the Defendants to the Plaintiff, with certificate for two Counsel.

Mr Bernard Man SC, Mr James Man and Mr Jonathan Ng, instructed by Anthony Siu & Co, for the plaintiff

Mr Jat Sew-Tong SC and Ms Astina Au, instructed by Johnson Stokes & Master, for the 1^st & 2^nd defendants