Tri-union (International) Development Ltd v. Shum Lee Man

HCA 2723/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2723 OF 2004

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BETWEEN

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Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing: 27 June 2008

Date of Decision: 27 June 2008

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D E C I S I O N

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1.This is an application for stay of execution.  In my judgment of 15 May 2008 I found that the defendant, who was formerly an employee of the plaintiff, had breached various duties to the plaintiff including putting herself in a position of conflict of interest between the plaintiff on the one hand and a particular customer on the other.  She had also breached an express regulation of the plaintiff which prohibited its staff from standing as surety for its customers. 

2.The defendant and her husband had mortgaged their home for banking facilities for use by a customer of the plaintiff.  I accepted the plaintiff’s evidence that if such financial assistance by the defendant and her husband to the customer had been known to it, it would not have continued the business with the customer.

3.I have also found that it was because of the defendant’s position of conflict that she made recommendations to the plaintiff to extend substantial credit to this particular customer.  Such credit was reviewed and increased year after year for four years.

4.This application by the defendant is formulated on two alternative grounds.  The first ground being that the judgment was so wrong and the grounds of appeal are so strong that I do not have to consider whether the lack of stay of execution would render the appeal nugatory.

5.The grounds firstly say that it was wrong for me to have found that the plaintiff had a duty to monitor the account or the credit status of the particular customer.  Secondly, I had not been able to make any concrete finding on what interest the defendant and/or her husband had in the business of the particular customer.  Thirdly, the defendant had not stood surety in favour of the customer as prohibited by the particular regulation.  Fourthly, even if the defendant should have breached her duties to the plaintiff, the breach did not result in the plaintiff’s loss, because there was no causal link between the plaintiff’s loss and the defendant’s breach.

6.I do not find these strong grounds which can provide a good chance of overturning my decision.  I do not find that my judgment was so wrong that I do not have to consider whether the absence of a stay of execution would render the appeal nugatory.

7.I also find that the plaintiff is a company of substance, as revealed in the evidence at the trial, as it is a State-owned company involved in business deals of millions and millions of dollars.  I therefore find that even if I do not stay the execution of the judgment, the appeal, if successful, would not be rendered nugatory. 

8.There is an alternative ground for stay, namely that if no stay is granted, the defendant will suffer financial ruin.  Counsel pointed out that when she was working for the plaintiff in and before 1997, her salary was about $10,000 per month.  She had worked for the plaintiff for about 10 years and was not having great financial means.  However, the judgment sum involved over $6 million with interest accruing from July 1997 and the total sum can well exceed $10 million. 

9.Nevertheless, there is no affidavit by the defendant of her current financial means.  Her mode of conduct when she was working for the plaintiff had been adversely commented by me.  I doubt whether her only income was her salary from the plaintiff.  Furthermore, when she left the plaintiff’s employ sometime in 1997, she also started her business.  It has been more than 10 years now.  She has not said a word and produced not a page of accounting document to show the financial status and condition of her business and of herself.  So I do not think I can rely on her counsel’s submission that if no stay be granted, she will suffer financial ruin. 

10.I do not accept either of the two grounds.  I also refer to the principle governing the determination of applications for stay in the two decisions by the Chief Judge, namely Star Play Development Ltd v Bess Fashion Management Co. Ltd. HCA4726/2001 and Wenden Engineering Service Co. Ltd., v Lee Shing Yue Construction Co. Ltd. HCCT90/1999.  I do not think the defendant has satisfied these principles.  I therefore dismiss her application for stay.

11.There is concurrently a summons by the plaintiff for payment out of certain sums paid into court by the defendant previously in exchange for the lifting of a Mareva injunction.  Those sums are $1,099,000 and $1,146,037.  I accept the plaintiff’s application and order that these sums, together with interest accrued so far, should be released to the plaintiff in partial satisfaction of the judgment I have given.

12.I further order that the defendant shall pay the costs to the plaintiff both for the defendant’s summons for stay of execution and for the plaintiff’s summons for payment out.

Mr T K Leung, of Messrs Siao, Wen and Leung, for the Plaintiff

Mr Edward Poon, instructed by Messrs B Mak & Co., for the Defendant