Questnet Ltd v. Kurt Georg Rocco Rinck and Another

HCA 1475/2006

IN THE HIGH COURT OF THE

HONG KONG ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1475 OF 2006

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BETWEEN

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Coram: Hon Chu J in Chambers

Date of Hearing:  26 August 2009

Date of Decision:  26 August 2009

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DECISION

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1.By summons filed on 20 May 2009, the 2^nd defendant applies for a stay of execution of the order dated 23 June 2008.

2.There are in fact two orders dated 23 June 2008. The first deals with sentencing of the 2^nd defendant’s first conviction for contempt, which was entered on 15 June 2007 and the costs relating to the sentencing. The second order deals with the conviction and sentence of the 2^nd defendant in the second set of contempt proceedings and the costs thereof.

3.On 21 July 2008, the 2^nd defendant issued Notice of Appeal in CACV 206/2008 to appeal against both orders of 23 June 2008. I am given to understand that the appeal has yet to be set down for hearing. In the meantime, the 2^nd defendant had served the two sentences of one month and three months (ordered to run concurrently).

4.Given that the sentences had been served, the present stay application can only relate to the costs orders. The costs ordered for the sentencing part in the first set of contempt proceedings are $200,000 and the costs ordered for the entire second set of contempt proceedings are $600,000.

5.The present stay application is based on three grounds. First, it is said there are strong merits in the appeal. Second, as the plaintiff has commenced enforcement proceedings (relating to the judgment on the plaintiff’s claim) in New Zealand, and also bankruptcy proceedings in Hong Kong (which may lead to reciprocal enforcement in New Zealand), there will be irreparable damage and undue hardship to his family who is accommodated in the properties that form part of his “Family Trust”. Third, if the costs order were not stayed, the appeal would be rendered nugatory.

6.In terms of the applicable legal principles, generally an appeal does not operate as a stay on the order appealed against. It is within the court’s discretion whether to grant a stay of execution. The starting point is that the successful party is not to be deprived of the fruits of his success. The applicable principles governing the exercise of the discretion were succinctly summarized in Star Play Development Ltd v. Bess Fashion Management Co Ltd, unreported, (HCA 4726/2001, 28 May 2002). I need only highlight three points that are of particular relevance to the present application. They are:

(1) In determining the question whether or not an appeal would be rendered nugatory, irrespective of the nature of the order or judgment appealed from, the court will require evidence as to why the levying of execution will result in the appeal being rendered nugatory, such as, for example, an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal.

(2) Where it is said that the levying of execution would result in grave financial consequences or hardship for the appellant, the court will require good evidence to support this contention. A bare assertion is unlikely to meet with much sympathy where more substantial evidence is available.

(3) So far as the merits of the appeal is concerned, if the appellant can demonstrate the appeal has strong merits, a stay is readily granted. Conversely, if the court is not satisfied that there exist arguable grounds of appeal (i.e. an appeal with reasonable prospects of success), no stay of execution will be granted. It should also be noted that the existence of merely an arguable appeal couldn’t by itself amount to sufficient reason to justify a stay.

7.Returning to the present application, the primary position of the 2^nd defendant is that the pending appeal has strong merits. He had provided an opinion from senior counsel (with parts edited), which says there are good grounds for the appeal. Mr Maurellet, on the other hand, pointed out that the appeal has become an academic appeal and there are grave doubts whether it will be entertained by the Court of Appeal, citing the Court of Appeal’s judgment in Tele-Art Inc v. Tam King Ching Kenny & Shum Lap Chi, the Joint and Several Liquidators of Tele-Art Limited (In Liquidation) & Anor, unreported (CACV 234/2007, 13 March 2008).

8.For my part, I need only form a tentative view of the prospects of success of the appeal. I accept there is force in the argument that the appeal has become academic and that the only purpose of the appeal seems to be the overturning of the costs order. In this connection, it is relevant to note that the 2^nd defendant (who was represented by counsel at the hearing on 23 June 2008) did not contest liability for costs on indemnity basis and had only raised arguments on whether a gross sum costs order should be made.

9.As for the grounds of appeal as appeared by the Notice of Appeal, they in fact only relate to the conviction in the second set of contempt proceedings and direct primarily at the factual finding of the 2^nd defendant’s knowledge of the injunction order and the restrictions it imposed. The 2^nd defendant indicated at this hearing that he would be adducing in the appeal expert evidence on Internet connection. This is of course subject to the leave of the Court of Appeal. And as Mr Maurellet pointed out, even if the requirements in Ladd v. Marshall [1954] 1 WLR 1489 are met and the new evidence is allowed to be adduced, this does not necessarily affect the costs order made below.

10.All in all, I am unable to share the view that there are good prospect of the costs order(s) being overturned. In any case, even if the appeal were successful, it would not affect the costs order on the sentence of the first conviction for contempt.

11.In respect of argument that without a stay, there would be hardship to the 2^nd defendant’s family and the appeal would be rendered nugatory, the supporting affidavit gives no detail or evidential support for these contentions. Mr Maurellet further pointed out that it is not the 2^nd defendant’s evidence that apart from the properties in which his family resides, there are no other assets in the “Family Trust”. And indeed the costs orders do not involve very substantial amounts of money.

12.Insofar as the 2^nd defendant drew assistance from Ketchum International Plc v. Group Public Relations Holdings Ltd [1997] 1 WLR 4, 10H and Caine Tai Investments Co Ltd v. Ayala International Finance Ltd & Republic National Bank of New York [1983] 1 HKC 162, the order under appeal in this case is not an order for possession of premises. As noted above, the 2^nd defendant’s evidence falls short of showing that without a stay, the residences of his family will be possessed creating grave hardship and/or that his appeal will be rendered nugatory.

13.In summary, the 2^nd defendant has failed to make out a case for stay of execution. The summons is dismissed.

14.Applying the rule of costs follows event, the plaintiff’s costs are to be paid by the 2^nd defendant.

15.The plaintiff has put in a Statement of Costs for Summary Assessment. The 2^nd defendant disputes the counsel fee, contending that it is not necessary to instruct counsel for this hearing. This is a hearing before a judge in chambers; counsel fee should not be disallowed unless it involves a very simple straightforward or uncontested application. As to the other items in the Statement of Costs, I have three observations. They are:

(1) Item D1: Preparation of documents

Under the amended First Schedule of Order 62, Rules of the High Court, Part 1, Item 1 provides that the charge of $4 per page for bundle of documents is inclusive of fees for collating, compiling, pagination and indexing of bundle. As the plaintiff’s solicitors had charged $4 per page for bundle of documents under item B1, separate charge for preparation of hearing bundle in item D1 cannot be allowed. The fees of TS and LS under D1 should be disallowed.

(2) Item D2: Perusal of documents

First, only one fee earner is to be allowed on party-and-party taxation. The fees of TS are disallowed.

Second, given the not very complicated nature of the application and there is not much documentation, the perusal time of 2.5 hours is too long. He had also separately charged for perusal of documents and preparation for hearing. Only 1.5 hour of SC’s time under item D2 is allowed.

16.For these reasons and rounding up the figure, I assess the plaintiff’s costs on a gross sum basis at HK$47,600.

Mr José-Antonio Maurellet, instructed by Messrs Barlow Lyde & Gilbert, for the plaintiff

The 2nd defendant, unrepresented, appeared in person.