Tianjin Jinfu Expressway Co Ltd v. Lucky Money Ltd and Others

HCA447/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.447 OF 2006

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BETWEEN

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Before : Hon Waung J in Chambers (Open to Public)

Dates of Hearing : 19 November 2007

Date of Judgment : 19 November 2007

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J U D G M E N T

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1.I have before me an application for a stay of execution of my judgment dated 30 July 2007.  The judgment was for a sum of RMB 176 million odd plus interest.  The contest of the summary judgment is in name between the plaintiff and the defendants but is in reality and in substance between the plaintiff and Kwong Ian, as it can be seen at page 9 of the bundle where I recited the party of the opposition as being Kwong Ian.  I would not go into the details of that judgment.  This is a matter that is clear from my judgment which is under appeal.

2.The application is now made before me in substance by Kwong Ian again, in the name of the defendants, pursuant to the leave granted by the Companies Judge, Madam Justice Kwan, to pursue the appeal.  The appeal will be heard in April 2008 and, after some delay, this application for stay has come before me for determination.  I would try to give as short and brief a judgment as I can in the circumstances expressing my view as to the merits of the application for a stay.

3.First, I think the starting point must be in the context of my judgment.  Having re-read it, as urged by Mr Yu, SC, I am of the view that this is perhaps even more than in the example I had given of 95% of the cases where the judge came to a clear view of what the order should be, and I remained convinced that this is the right decision.  Of course there is an appeal pending.  The grounds of appeal had been read by the parties.  To me, if I can be forgiven for saying perhaps the appeal can be termed politely as “weak”.

4.On that basis, it would require really exceptional ground to be advanced, supported by strong evidence, for the court to exercise the power — undoubtedly the court has the power — to refuse to the plaintiff the fruit of the judgment, that is, to grant an order staying the execution of the judgment merely because of the appeal.

5.The exceptional ground that is now put before me with reference to a large body of authorities really comes to this.  The law that affects the granting of a stay has now largely shifted and the court has a larger discretion, or larger power, in favour of a stay unlike the 19^th century cases.  I totally accept the 19^th century cases no longer provide exclusive code and that the court must look at all the circumstances as is laid down in the rules.  But having said that, the court would only do so in the most exceptional cases and, at the end of the day, having regard to all the authorities, the central question really is : is this an exceptional case?

6.There are really and most importantly two questions : Is this a case where if denied the stay, the defendants would be “financial ruin” — that is one of the expressions used, or the other expression being used by the Court of Appeal in the judgment of Roberts CJ in Caine Tai Investment Co. Ltd v. Ayala International Finance Ltd & Republic National Bank of New York [1983] 1 HKC 163that has “a seriously deleterious effect” on the defendants.  That is the first question.  The second question is whether the appeal cannot be pursued properly if the stay is not granted.

7.I would consider the second question first, because it seems to me the much more important one.  On the second question as to whether the appeal can or cannot be pursued, I have no doubt and I totally agree with Mr Yu’s submissions, that the appeal of course can be pursued.  The reason is very simple : if I refuse to grant a stay, the execution will take its normal course.  At the moment from the time table or program that I have been told, it will seem that it will be some time before the company court would even come to the stage of making a winding-up order.  But assuming that a winding order is made before the appeal is heard in April 2008, what is there to prevent the necessary leave being sought from the companies court to pursue the appeal?  In saying this, I take note of what is being said about the liquidators would probably be much influenced by the plaintiff who is alleged to be the major creditors. 

8.It is further to be pointed out that Kwong Ian has other resourse.  I think there are previous examples of this, of intervention in the Court of Appeal itself, if necessary, by Kwong Ian, asking for leave to intervene and to pursue the appeal.  All they have to show is that they have serious merits and, possibly put up the necessary security for the appeal.  So I do not think any order that I make today refusing the granting of a stay would prevent Kwong Ian from pursuing the appeal.  What is important to bear in mind is Kwong Ian is the one which is interested in pursuing the appeal, and it is not the defendants, it is Kwong Ian.  Kwong Ian has resisted Order 14; Kwong Ian is now the party making the application for a stay and Kwong Ian, if they wish to, they can go before a companies judge after winding-up or a single judge of the Court of Appeal for stay or for leave to pursue the appeal before the Court of Appeal.  So, on the second ground I do not think there is any substance in the objection.

9.So far as the first ground is concerned, without trying to tackle this large question, it seems to me that one must look at the cases of whether Ayala or Linotype-Hell Finance Ltd v. Baker [1992] CA 887 (the decision of Staughton LJ) with the benefit of the facts of the case.  I do not think one can really generalize in terms of a company that is being pursued, that is, the defendant company, for a judgment and where the defendant company is seeking to appeal against that judgment, that one can therefore characterize every such situation as being a case of financial ruin or deleterious effect on the company.

10.Look at this company.  This company is, from the limited information that one has before the court, certainly not a company with lots of assets or business.  It seems to be in such a financial position that it cannot even pay the costs of the judgment that I have given (this was referred to in Madam Justice Kwan’s judgment).  The company may have one or more creditors, it is not clear, but one cannot say therefore that merely because there is no stay and with the possibility of winding-up that this refusal of stay would result in financial ruin or cause serious deleterious effect on the company. 

11.In my view, the application of the principles to the fact of this case certainly does not seem to indicate to me that the execution of the judgment should be stopped or that applying the general rule that strong grounds are required to be advanced that I should decide in favour of such a stay application.

12.The court must of course take into consideration all the circumstances, including, for example, whether any securities are in the hands of the plaintiff, whether there is any prospect of security being put up, as well as all the circumstances.  It seems to me that without going into much further detail of all the circumstances of the case, that this is not a case where I should be granting a stay.  I am comforted by the fact that this is not a conclusive final decision.  Kwong Ian can always seek leave from the Court of Appeal directly.  It is a parallel or concurrent jurisdiction to grant stay of execution of the judgment.

13.In the circumstances, the application is refused with certificate for two counsel. 

14.On gross summary assessment, having regard to all the circumstances, I would assess costs at $400,000 to be paid forthwith by Kwong Ian.

Mr Benjamin Yu, SC & Mr Kenneth Chow, instructed by Messrs Ho & Yip, for the Plaintiff

Mr Winston Poon, SC & Mr Victor Dawes, instructed by Messrs Gallant Y.T. Ho & Co., for Kwong Ian