Lucky Sun Development Ltd and Another v. Gainsmate International Ltd and Others

CACV 341/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 341 OF 2007

(ON APPEAL FROM HCCT NO. 12 OF 2007)

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BETWEEN:

Before: Hon. Yuen JA in Chambers (open to the public)

Dates of hearing: 18 & 25 October 2007

Date of Decision: 15 November 2007

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DECISION

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Hon Yuen JA:

1.This is an application for a stay pending appeal of an order of Deputy Judge L. Chan given on 2 October 2007.  The order has been stayed pending determination of this application.

2.Before I set out the order, it may be helpful for me to briefly summarize the background as I understand it.

Agreement between the 1^st and 2^nd Defendants and the Plaintiffs

3.The Plaintiffs and the 1^st and 2^nd Defendants are all BVI companies. By a series of agreements made in late 2003 and early 2004 (initially between the 1^st and 2^nd Defendants and the Plaintiffs’ predecessor), the 1^st and 2^nd Defendants agreed to sell the shares of the 3^rd Defendant (a Hong Kong company) to the Plaintiffs. 

4.The 3^rd Defendant’s sole asset was the shares in a mainland company called Shijiazhuang Huigu Ke Ji Cheng Kai Fa Company Limited (“Huigu”) which was the developer of a real estate project in Hebei province of the PRC.

5.A dispute has arisen between the parties which turns on the currency of payment and its possible tax consequences in the PRC, which has led to litigation and a Freezing Order in the PRC involving the parties’ respective associate and subsidiary companies, and an application for an injunction and other orders in Hong Kong.  

6.The parties had agreed in late 2003-early 2004 that the purchase price for the 3^rd Defendant’s shares should be paid in Hong Kong in Hong Kong Dollars.  However it was expressly provided that as the Plaintiffs were then unable to pay the sum in HKD, the 1^st and 2^nd Defendants would temporarily accept payment in RMB - in the PRC,  but they would have the right to require that the whole or part of the purchase price be paid in HKD under certain circumstances (which are set out below).  It was agreed that if by the time the 1^st and 2^nd Defendants called for payment in HKD,  the purchase price (in whole or in part) had been paid in RMB, the 1^st and 2^nd Defendants would return the RMB to the Plaintiffs without interest.

7.The circumstances under which the 1^st and 2^nd Defendants could call for payment in HKD were set out first in cl. 5.6 of the Framework Agreement dated 12 December 2003, and then in cl. 2.5 of the Transfer Agreement dated 1 January 2004. 

8.Clause 5.6 of the Framework Agreement provided:

“5.6   乙方確認，雙方轉讓、受讓股權的PEP公司是一家在香港注冊成立并合法存續的公司，因此乙方應在香港以港幣支付全部股權轉讓金。但是，甲方考慮到乙方在簽署本協議時在香港并沒有充足的港幣支付能力，因此同意暫時以人民幣計價，并由乙方在中國大陸以人民幣暫向甲方支付股權轉讓金。

鑒於：乙方或其關聯公司擬於2004年在香港上市，且乙方目前正在努力在香港通過上市以外的途徑融資，甲方也一直努力協助乙方在香港本地融資，因此，在本協議簽署且乙方融資成功以後的任何時候，甲方均有權要求乙方以港幣支付全部或部分股權轉讓金。

如甲方要求乙方以港幣支付股權轉讓金的，乙方應予同意。如在甲方提出支付要求時，乙方已用人民幣支付了全部或部分股權轉讓金，則甲方將乙方已經支付的人民幣退還給乙方（不含利息），同時乙方應將等額港幣支付至甲方指定帳戶。

雙方確認以港幣進行股權轉讓金的結算。在進行人民幣與港幣的兌換時，匯率按照乙方向甲方支付港幣當日甲方指定帳戶所在銀行公布的人民幣與港幣兌換中間價執行。”

It is clear from this that the 1^st and 2^nd Defendants could call for payment in HKD at any time when the agreement has been signed and the Plaintiffs had successfully raised capital.  However there was no express term as to the period within which the Plaintiffs was expected to raise capital.

9.Clause 2.5 of the Transfer Agreement provided:

“2.5     本协议各方确认，甲、乙方转让、受让股权的PEP公司是一家在香港注册成立并合法存续的公司，因此乙方应在香港以港币支付全部股权转让金。但是，甲方考虑到乙方在签署本协议时在香港并没有充足的港币支付能力，因此同意暂时以人民币计价，并由乙方在中国大陆以人民币暂向甲方支付股权转让金。

鉴于：乙方或其关联机构拟于2004年在香港上市，且乙方或其关联机构目前正在努力在香港通过上市以外的途径融资，甲方也一直努力协助乙方或其关联机构在香港本地融资，因此，在本协议签署、乙方或乙方关联机构融资成功以后，甲方均有权要求乙方以港币支付全部或部分股权转让金。

如甲方要求乙方以港币支付股权转让金的，乙方应予同意。如在甲方提出支付要求时，乙方已用人民币支付了全部或部分股权转让金，则甲方将乙方已经支付的人民币退还给乙方（不含利息），同时乙方应将等额港币支付至甲方指定账户。”

The Plaintiffs say that although there are differences in the language used, cl.2.5 was in substance identical to cl.5.6 of the Framework Agreement.  On the other hand, the 1^st and 2^nd Defendants say that because of the deletion of the character “且” (“and”) and the use of the punctuation mark “、 ”, the parties had thereby agreed that the 1^st and 2^nd Defendants could call on the Plaintiffs to pay in HKD at any time after the agreement has been signed or the Plaintiffs had successfully raised capital. 

10.On the 1^st and 2^nd Defendants’ interpretation, they could call on the Plaintiffs to pay in HKD at any time after the agreement was signed.  Of course one’s instinctive response would be to observe that if that is so, then there would be no need at all to also refer to the specific condition of the Plaintiffs’ success at raising capital. 

11.In this respect, Mr Anthony Chan SC leading counsel for the 1^st and 2^nd Defendants said that there is evidence (elsewhere) about what was agreed orally after the signing of the Framework Agreement and before the signing of the Transfer Agreement.  However it is well-established that agreements should be construed objectively and as a general rule extrinsic evidence is not admissible to contradict written terms.  It is also noteworthy that in a letter dated 9 May 2004, the 1^st and 2^nd Defendants themselves stated that they had agreed to accept temporary payment in RMB and to wait for the Plaintiff to raise capital so as to make payment again in HKD at which time the 1^st and 2^nd Defendants would return the RMB.

12.Returning to the agreement, it was also agreed that if the Plaintiffs in breach of cl. 2.5, should fail to pay the 1^st and 2^nd Defendants HKD, then a default payment would be payable commencing the day after the date of payment set out in the 1^st and 2^nd Defendants’ call for HKD payment. 

13.More importantly for present purposes, it was agreed in the Framework Agreement that if the Plaintiffs failed to pay the purchase price in HKD, causing the 1^st and 2^nd Defendants to incur tax liability in the PRC on account of their receipt of RMB from the Plaintiffs, the Plaintiffs would be liable to pay the tax (cl. 9.3).  In other words, the Plaintiffs’ contractual obligation would be not only the purchase price (RMB600 million) but also payment of tax (RMB600 million + x).  There was no provision in the Transfer Agreement dealing with tax, but cl. 9.4 of the Transfer Agreement provided that it should be read as complementing the Framework Agreement, unless there should be any inconsistency in which case the Transfer Agreement prevailed.  

14.It was also agreed that the shares in the 3^rd Defendant should be transferred by the 1^st and 2^nd Defendants to the Plaintiffs within 3 days after full payment of the purchase price and the performance of the Plaintiffs’ obligations under the agreement (cl. 6.1(2) of the 1^st Memorandum dated 10 March 2004).

15.The purchase price was subject to later adjustments, the details of which are immaterial to this decision. 

Payment of the purchase price in RMB

16.There is no dispute that the Plaintiffs paid the RMB equivalent of the purchase price by April 2004.   

Management of Huigu

17.It is also common ground that the Plaintiffs took over management of the Huigu project at about the same time. 

Retention of 3^rd Defendant’s shares by 1^st and 2^nd Defendants

18.It is also common ground however that the 1^st and 2^nd Defendants did not transfer the shares in the 3^rd Defendant to the Plaintiffs, nor did the Plaintiffs demand it. 

19.The 1^st and 2^nd Defendants say they have a right not to transfer the shares as under the terms of the contract, it had been agreed that the shares would be transferred only after the Plaintiffs performed all their obligations under the agreement, and that included the payment of HKD, and if the Plaintiffs failed to pay HKD, the payment of tax.  Alternatively the shares were security held by the 1^st and 2^nd Defendants for the Plaintiffs’ liability to indemnify them for the tax. 

20.On their part, the Plaintiffs did not demand the transfer of the shares in the 3^rd Defendant until June 2004 when a dispute had arisen between the parties which is set out later in this judgment.  (Indeed in correspondence even as late as 2006, the Plaintiffs demanded that the shares be transferred only after the 1^st and 2^nd Defendants’ acceptance or rejection of payment in HKD).  

21.So the situation was that the shares in the 3^rd Defendant were in the vendor’s hands, but the management of its subsidiary (Huigu) was in the purchaser’s control.

1^st and 2^nd Defendants’ call for HKD

22.In May 2004, one month after the Plaintiffs paid the last instalment of the purchase price in RMB, the 1^st and 2^nd Defendants called on the Plaintiffs to pay the purchase price in HKD before 1 December 2004. 

23.The Plaintiffs’ response was that the call was premature as they had not raised sufficient capital in HKD.

24.That did not matter as far as the 1^st and 2^nd Defendants were concerned.  Their primary position was that as they were entitled to make a call at any time after the agreement was signed, that was not a prerequisite for their call for payment in HKD.

25.However in the alternative the 1^st and 2^nd Defendants say that the Plaintiffs should have raised the necessary capital within a reasonable time of the Transfer Agreement (dated 1 January 2004) and the Plaintiffs would have had 11 months to do so by 1 December 2004, when payment in HKD was required.

26.The parties’ positions led to correspondence between their respective lawyers in the PRC focussing primarily on the tax liability.  A debate over control of the board of Huigu also ensued but it appears that the de facto control of Huigu rested with the Plaintiffs. 

27.Pausing there, I would observe that even if one assumes that the 1^st and 2^nd Defendants’ call for payment in HKD in 2004 to be premature, the position of the parties at that stage did not change.  The 1^st and 2^nd Defendants were still holding the shares of the 3^rd Defendant pending the Plaintiffs’ performance of their obligation to pay in HKD failing which they were obliged to indemnify the 1^st and 2^nd Defendants for their tax liability.

Post-call events

28.It would appear that in 2005, there was a meeting and subsequent negotiations between the parties at which they discussed the share transfer and the tax liability but negotiations were not fruitful.  The 1^st and 2^nd Defendants continued to hold the shares in the 3^rd Defendant and the Plaintiffs continued to run the 3^rd Defendant’s subsidiary Huigu.

29.According to the 1^st and 2^nd Defendants, the RMB paid by the Plaintiffs was eventually utilized in June 2006.

The Mainland Proceedings

30.It is the 1^st and 2^nd Defendants’ contention that in August 2006 they discovered that Huigu has been transferring its funds (otherwise in the ordinary course of business) to one of the Plaintiffs’ associate companies Hebei Sunco. 

31.The 1^st and 2^nd Defendants caused the 3^rd Defendant to start litigation in August 2006 in the Intermediate People’s Court of Shijiazhuang (“the Hebei court”) against Hebei Sunco, asserting that it had received funds unlawfully transferred from Huigu.   

32.The 3^rd Defendant sought an order from the Hebei court freezing RMB150 million of Hebei Sunco’s assets (being units in a development project belonging to Hebei Sunco), offering the shares in Huigu as security.  The Freezing Order was given apparently on the same day.

33.In September 2006 the 3^rd Defendant sued Hebei Sunco and two individuals who had been managers of Huigu in the Mainland Proceedings.

34.An attempt by Hebei Sunco to discharge or vary the Freezing Order was dismissed by the Hebei court and a review was also unsuccessful.  An associate company of Hebei Sunco also offered its assets as security in place of the frozen assets but that was also rejected by the Hebei court. 

35.The litigation has been carrying on since.  I was informed that the trial was scheduled to be held in late October 2007 with a judgment expected soon after.  

Plaintiffs’ offer to pay in HKD

36.Returning to the commencement of the Mainland litigation in August- September 2006, this led in October 2006 to the Plaintiffs offering to pay the purchase price to the 1^st and 2^nd Defendants in HKD.  However the 1^st and 2^nd Defendants (who had received the RMB in April 2004 and utilized it in June 2006) were concerned with their tax liability which the Plaintiffs had agreed to be responsible for under the contract.

37.In November 2006 the Plaintiffs instructed Hong Kong lawyers who demanded that (a) the 1^st and 2^nd Defendants state whether they wanted the payment in HKD, (b) transfer the shares of the 3^rd Defendant to the Plaintiffs and (c) withdraw the Mainland Proceedings.

1^st and 2^nd Defendants’ position

38.In December 2006 the 1^st and 2^nd Defendants’ then lawyers replied that only the 1^st and 2^nd Defendants had the right to call for payment in HKD and that the Plaintiffs had no right to insist on payment in HKD. 

39.The 1^st and 2^nd Defendants refused to return the RMB and to transfer the shares in the 3^rd Defendant to the Plaintiffs as they say the receipt of RMB has brought about a tax liability (or potential tax liability) which has been estimated to be between 20% and 33%  (depending on the type of tax raised), which they say the Plaintiffs should pay.  In effect, the total consideration for the shares (RMB600 million + x) might become as much as RMB800 million. 

40.Although the Plaintiffs have paid the 1^st and 2^nd Defendants RMB600 million, they have been recouping some of that money by transfers out of Huigu, so that the consideration paid has been reduced (to RMB600 million - y).  The transfers out to Hebei Sunco were said to have been as much as RMB300-400 million when the 3^rd Defendant started the Mainland Proceedings. 

41.The 1^st and 2^nd Defendants’ fear is that once the Plaintiffs have so recouped all or part of the money they have paid the 1^st and 2^nd Defendants, the Plaintiffs will default in completing the purchase, leaving the Huigu project uncompleted and the 3^rd Defendant an empty shell; hence the Mainland Proceedings to restore the misappropriated money to Huigu.  Apart from the transfers out to Hebei Sunco, the 1^st and 2^nd Defendants allege that there has also been mismanagement of Huigu resulting in its breaching a contract with a third party (which presumably may lead to further reduction of its value).

The Plaintiffs’ position

42.The Plaintiffs’ position is that they want to complete the share transfer and are prepared to pay the purchase price in HKD (so long of course as the 1^st and 2^nd Defendants return the RMB as provided in the agreement).  They have questioned the liability and quantum of the tax that may be raised.  

Arbitration

43.In January 2007 the Plaintiffs commenced arbitration proceedings in Hong Kong pursuant to the terms of the agreement between the parties.  The issues included whether the 1^st and 2^nd Defendants were obliged to transfer the shares and whether they were right to procure the 3^rd Defendant to commence the Mainland Proceedings and to use the Huigu shares as security for the Freezing Order.  The arbitration has not been completed.

The Hong Kong proceedings

44.The commencement of the arbitration proceedings was followed in February 2007 by the Plaintiffs’ commencement of these proceedings (HCCT 12/2007), asking for various orders against the Defendants under s.2GC of the Arbitration Ordinance Cap. 341 which gives power to the Court to make ancillary orders in support of arbitration proceedings. 

45.The Plaintiffs sought mandatory injunctions that the 1^st and 2^nd Defendants take steps to terminate the Mainland Proceedings (commenced half a year before) and to secure the release of the Huigu shares from being used as security for the Freezing Order.  In a nutshell, the Plaintiffs sought to abort the Mainland Proceedings.  

46.An ex parte order was granted by the duty judge (Deputy Judge D. Pang) on 12 February 2007.  (It would appear that this order was not stayed and committal proceedings were subsequently commenced). 

47.The 1^st and 2^nd Defendants sought to discharge the orders on the grounds of material non-disclosure, mainly the Plaintiffs’ failure to inform the duty judge about the dispute over the tax liability and the principles of law governing anti-suit injunctions, and other grounds including lack of urgency.

48.In May 2007 Deputy Judge Chan heard the 1^st and 2^nd Defendants’ discharge application, at which the Plaintiffs also sought a regrant of the orders should the duty judge’s orders be discharged.  

Deputy Judge Chan’s judgment

49.On 2 October 2007 the judge handed down judgment.  The findings of the judge and the reasons given are relevant to the order which I propose to make and it is necessary to consider these findings and reasons in some detail.

50.The judge noted that the affirmation supporting the injunction “did not say a word about the potential tax liability of the plaintiffs” (para. 9).  He held that despite the insufficiency of expert evidence as to the potential tax liability, he could not rule it out (para. 42).  As such it was an issue that should have been disclosed by the Plaintiffs to the duty judge as it was the “core element of the dispute” and the Plaintiffs’ omission of it “resulted in a distorted picture”.  Accordingly the Plaintiffs were guilty of material non-disclosure (para. 72). 

51.The judge also noted that the Freezing Order had been in place for 6 months before the ex parte application for the mandatory injunction and held that there was no justification for the application to have been made in that way (para. 81).

52.The judge also held that the Plaintiffs “may or may not” succeed in their contention that they should have had the shares of the 3^rd Defendant transferred to them before the 3^rd Defendant commenced the Mainland Proceedings (para. 83).  He held that there was “insufficient justification in this case to justify an interference with the Mainland Proceedings” (para. 84).

53.The judge also held that as the injunction was an anti-suit injunction, the Plaintiffs should have alerted the deputy judge to the principles governing anti-suit injunctions.  In so finding, it is noted that the judge said:

“I cannot see how this court should interfere with the 3^rd Defendant’s attempt to recover in the Mainland its assets from another company incorporated and operated in the Mainland” (para. 86).

54.For those reasons (and others), the judge discharged the orders made by the duty judge with an order that the Plaintiffs pay the Defendants’ costs (para.91). 

Regrant of order

55.The judge then considered whether he should regrant all or some of the orders. 

56.As recounted earlier in this judgment, the judge had held that there was a serious question to be tried on the issue of the tax liability (para. 70) and the issue of who should have the shares of the 3^rd Defendant when it commenced the Mainland Proceedings (para. 83).  More importantly he had also held that the Hong Kong court should not “interfere with the 3^rd Defendant’s attempt to recover in the Mainland its assets from another company incorporated and operated in the Mainland” (para. 86).   

57.However the judge then regranted the order that the 1^st and 2^nd Defendants procure the 3^rd Defendant to release the Huigu shares as security for the Freezing Order.  The regranted order was as follows:

“The 1^st and 2^nd Defendants do within 10 days from the day      of the Order secure the release of the shares held by the ... 3^rd Defendant ... of and in [Huigu] from being used or continued to be used as security for the application by the 3^rd Defendant    in [the Hebei court] for a freezing order which was granted on 9 August 2006, or as security for the continuation of such    freezing order ... until the completion of the arbitration     between the Plaintiffs and the 1^st and 2^nd Defendants in the   [arbitration] or until further order of this Court”.

Effect of regranted order 

58.Since it is common ground that the 3^rd Defendant has no other assets which it can use as security for the Freezing Order, the execution of the regranted order will result in the lapse of the Freezing Order (which has been in place for 14 months) and Hebei Sunco will be free to dispose of its assets.  The 1^st and 2^nd Defendants say there are no other assets which they can provide to the 3^rd Defendant as replacement of  the Huigu shares and that in any event the Hebei court may not accept other security in place of the Huigu shares.

Application for stay before the judge

59.On 5 October 2007 the 1^st and 2^nd Defendants issued a summons before Deputy Judge Chan for a stay of execution pending an intended appeal.  A Notice of Appeal was filed on 8 October 2007.

60.On 9 October 2007 the judge heard the application for stay pending appeal but refused it.  A written decision was given on the same day.

Application to Court of Appeal for stay pending appeal

61.On 15 October 2007 a summons was made to this court for a stay pending appeal under Order 59 alternatively for an order extending time for compliance with the judge’s order under Order 3 rule 5.

62.The 1^st and 2^nd Defendants have filed a number of affirmations in support of the application.  I have also considered the grounds of appeal.

Discussion

63.It is well-established that the lodging of an appeal is not by itself a ground for granting a stay of execution.  Unless a stay can be justified by good reasons, one will not be ordered.

64.It is also well-established that as the judge’s regranted order was made in the exercise of his discretion, an appellate court will not lightly interfere unless there has been an error of law, or a misapprehension of material facts, or the judge has failed to take a relevant matter into account, or has taken an irrelevant matter into account, or his decision was so “plainly wrong” that it must have been reached by a faulty assessment of the weights of the different factors which had to be taken into account.

65.With respect to the judge, it seems to me that he approached the matter as if he were being asked in the first instance in a Hong Kong case to consider whether or not to grant the 1^st and 2^nd Defendants an injunction against the Plaintiffs from disposing of RMB150 million.  It would appear to me that that was not the correct approach.  The application was made under s.2GC of the Arbitration Ordinance – under which ancillary orders are intended to be employed in support of an arbitration.  However in making the regranted order, the judge actually pre-empted the arbitrator’s decision on one of the issues which I have referred to earlier in this judgment (para. 43), i.e. the issue whether the 1^st and 2^nd Defendants were right to use the Huigu shares as security for the Freezing Order.

66.Further the point is that the judge had already accepted that the Hong Kong court should not “interfere with the 3^rd Defendant’s attempt to recover in the Mainland its assets from another company incorporated and operated in the Mainland” (para. 86).  Yet the order he regranted – in effect prohibiting the 3^rd Defendant from continuing to use the Huigu shares as security for the Freezing Order – in fact amounted to such interference.  The Freezing Order (and the security fortifying it) are already in place - they are already part and parcel of the Mainland Proceedings. 

67.Although the regranted order is directed to the 1^st and 2^nd Defendants, it has a direct effect on the proceedings before the Hebei court and may be regarded as an inappropriate intrusion into the integrity of the Freezing Order and the sovereignty of the Hebei court.  The judge seems to have ignored the fact that the Hebei court had already given at least two rulings upholding the Freezing Order - first, it has rejected Hebei Sunco’s application for a review of the Freezing Order, and secondly it has rejected its application that the frozen assets be replaced by another form of security.  

68.The judge said (para. 96):

“The 1^st and 2^nd Defendants want the Freezing Order to keep another RMB150 million worth of assets of Hebei Sunco as additional security for its own protection.  The Mainland Court has allowed it to do so.  I would not interfere with it.  But if the Mainland Court should require security for the Freezing Order, it is for the 1^st and 2^nd Defendants to provide their own security.  The should not use the Huigu shares for such purpose”.  (Emphasis added). 

With respect, the judge has ignored the fact that the Freezing Order and the security provided have been in place for 1 year and 2 months (August 2006 to October 2007), that the Hebei court has already given rulings upholding the Freezing Order and that the Mainland Proceedings were in fact about to conclude. 

69.In the circumstances, I consider that there are strong grounds in the 1^st and 2^nd Defendants’ appeal and a stay pending appeal should be granted.

Costs of hearing on 18 October 2007

70.I shall now deal with the costs of the hearing on 18 October 2007.  As I said, Deputy Judge Chan’s order was given on 2 October 2007.  On 5 October 2007 the 1^st and 2^nd Defendants filed a summons before the judge for a stay of execution.  On 9 October 2007 the judge heard the application.  It was a contested hearing with Leading Counsel on both sides.  The judge refused the stay, giving reasons the same day (a Tuesday).

71.It was not until 6 days later (Monday 15 October 2007) that the 1^st and 2^nd Defendants issued a summons before a single judge of this Court for a stay of execution pending appeal.  The 1^st and 2^nd Defendants’ solicitors gave an estimate for the hearing of 30 minutes only.  On that basis it was fixed for hearing on Thursday 18 October 2007.  

72.On Tuesday 16 October 2007 the 1^st and 2^nd Defendants filed an affirmation (Chan Heung Wing IX) for the hearing on Thursday morning. 

73.On Wednesday evening, a supplemental bundle of documents was sent to the Court by the Plaintiffs including the written Decision of the judge refusing the stay application made to him on 9 October, which had not been included in the 1^st and 2^nd Defendants’ bundle. 

74.At the commencement of the hearing on Thursday morning, Leading Counsel for the 1^st and 2^nd Defendants sought to hand up a new affirmation which counsel for the Plaintiffs had not seen. 

75.In those circumstances it was obvious that it would not have been prudent for me to proceed with the hearing of the application, trying to absorb new facts as the hearing went along.  Practitioners must understand that it is not simply a matter of whether parties are prepared to take the risk of the judge getting a decision wrong due to documents being sent to the court at the last minute.  The judge has an independent duty to the administration of justice to decide an application conscientiously and that cannot be done unless he knows the papers and he cannot know the papers unless they are provided in time. 

76.That said, the recent affirmation from Mr Chan has explained the delay between the judge’s refusal of a stay pending appeal and the present application to this court (which delay led to the rush to obtain the unrealistic hearing date before this court).  The reason was that there was a delay in the sealing of the judge’s order due to an omission in the draft presented to the court.  Of course it is the solicitors’ duty to prepare a correct draft order, but in the circumstances I would accept that the delay was not intentional.

Order

77.For the reasons set out, I would make an order in terms of para. 1 and para. 5 of the 1^st and 2^nd Defendants’ summons filed on 15 October 2007 (the costs of the hearing on 18 October 2007 to be included in the costs referred to in para. 5).

Mr Hectar Pun and Ms Sonia Chan instructed by Fairbairn Catley Low & Kong for the Plaintiffs (Respondents)

Mr Denis Chang SC, Mr Anthony Chan SC and Mr Herbert AuYeung on 18 October 2007, Mr Anthony Chan SC on 25 October 2007 instructed by Mallesons Stephen Jaques for the 1^st and 2^nd Defendants (Appellants).