Urban Property Management Ltd and Another v. Tsang Wing Lam

DCMP 2185/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 2185 OF 2004

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Coram: His Hon Judge Leung in chambers (open to public)

Date of hearing:  2 November 2009

Date of decision: 3 November 2009

D E C I S I O N

1.Tsang, the Defendant, is the registered owner of the captioned property at Flat 5, 23^rd Floor, Block C, King Tin Court, Shatin, New Territories (“the Property”). The 1^st Plaintiff is the manager and the 2^nd Plaintiff is the owners’ corporation of the building. On 11 September 2001, the manager registered in the Land Registry the captioned Memorandum of Charge against the Property for unpaid management expenses (“the MOC”).

2.In 2004, the manager commenced the present originating proceedings to recover the amount due and owed by Tsang as well as to enforce the MOC by an order for possession and sale of the Property. The owners’ corporation was subsequently joined as a plaintiff. On 4 August 2006, HH Judge HC Wong granted the order sought by the Plaintiffs (“the 4/8/06 Order”).

3.Besides this decision, I am also handing down today this court’s decision in respect of Tsang’s another appeal against the Master’s refusal to release the Property from the security constituted by the MOC. Much of the history of this case can be found mentioned in that decision. I do not intend to repeat the same here. I also refer to the terms of the DMC, the MOC and the various orders in these proceedings cited in that decision.

4.Insofar as this appeal is concerned, it suffices for me to say that pursuant to an Allocatur dated 2 July 2008, Tsang’s liability for legal costs as ordered by the court in these proceedings was taxed at the total sum of HK$411,012. Tsang has yet and, as he reiterated in this hearing, refused to pay the same. In respect of such taxed costs (together with statutory interest and costs of the application), the Plaintiffs have obtained, among others, a charging order against the Property. The order was made absolute on 27 August 2009.

5.Tsang has applied to set aside the charging order but was dismissed by the Master. Tsang appeals. The hearing of his appeal will be held on 14 December 2009. In the meantime, Tsang has applied for stay of execution of the charging order absolute pending his appeal. On 30 October 2009, the Master dismissed such application with costs. Tsang immediately filed his notice of appeal which is now before this court.

The principle

6.The law is trite. An appeal does not operate as a stay of execution of the order being appealed against: see O.58, r.3 of the Rules of the District Court. A stay has to be justified and justification is demonstrated only if good reasons exist. An important consideration is whether the proposed appeal has strong grounds. This entails the court forming a preliminary view of the merits of the proposed appeal. See World Trade Centre Group Ltd & Anor v Resourceful River Ltd & Anor, CACV 70/1993 (12 May 1993).: Star Play Development Ltd v Bess Fashion Management Co Ltd, HCA 4726/2001 (7 June 2002). See also Hong Kong Civil Procedure 2009 at 59/13/1 (or the same paragraph in the 2010 edition).

Discussion

7.As far as possible, one can deduce out of Tsang’s affirmation and submission in court the following major arguments for the proposed appeal to be heard on 14 December:

(1)  He is not liable to pay the taxed costs as the same did not form part of the amount specified in the MOC.

(2)  The possession order under the 4/8/06 Order has already been executed and he has resumed possession.  The Plaintiffs have delayed in taxing the costs and thus losing their only chance to enforce any costs order against him.

(3)  The court will not allow the creation of another charge against the same property in respect of the same debt.

(4)  The Allocatur was wrongfully obtained and for the wrong amount.

(5)  In the absence of a stay of execution, his appeal, if successful, will be rendered nugatory.

8.In respect of (1) above, I refer to the discussion in my other decision being handed down today. In summary, the costs of these proceedings, in my view, did not form part of the amount due and payable pursuant to clause 6(f) and therefore could not form part of the amount required to be specified in the notice constituting the MOC in 2001 in the present case. In other words, the costs of these proceedings are not secured by the MOC.

9.In this regard, Tsang emphasized the phrase “may be incurred” in clause 6(f)(i) and suggested that the Plaintiffs were expected to estimate the amount of legal costs to be incurred and to specify the same in the notice constituting the MOC. In view of the starting paragraph of clause 6(f), which refers to the sum due and payable as what is unpaid 7 days from the date on which the sum becomes payable, I can hardly see how this could include costs which may but are yet to be incurred by the time when the notice is served pursuant to clause 6(f)(i). The argument about somehow estimating a figure, which Tsang argued would have capped the amount of costs, simply lacks any basis as a matter of construction and logic.

10.In respect of (2) above, I concluded that the Property should be released from the security constituted by the MOC for the reasons stated in my other decision handed down today. Whether the Plaintiffs could have proceeded to tax the costs more promptly, I do not see how this affect the incidence of costs as already ordered by the court in these proceedings or Tsang’s liability to satisfy such costs orders. As mentioned above, whether the Property is released from the security constituted by the MOC is irrelevant.

11.In respect of (3) above, I agree that a creditor is not entitled to two charging orders against the same property of the debtor in respect of the same outstanding indebtedness. But no such issue arises in the present case as the costs ordered in these proceedings were not secured by the MOC at the time when the charging order was granted.

12.In respect of (4) above, Tsang argued that he was somehow taken advantage of when the Allocatur was issued by the Master. He questioned how he is required to pay any costs because he has also been awarded costs in these proceedings. None of these arguments sound compelling at all. If he has been awarded costs at any stage of these proceedings, it is for him to enforce the same against the Plaintiffs.

13.(5) above seems to be a relatively more relevant concern out of all. The court has to consider all the circumstances whether to grant the stay. The court does not make a practice of depriving a successful litigant of the fruits of litigation: see Star Play Development at para.10. Here the adverse costs orders against Tsang in these proceedings are incontrovertible.

14.It is always relevant to consider the prejudice to the successful party in the event a stay is granted and, if necessary, to impose condition as to minimise the prejudice to him: see Star Play Development at para.9(9). As Mr Ng submitted, while Tsang alleged his concern, there is nothing to suggest that a balance could be struck by imposing any condition on Tsang meaningfully for a stay of execution.

15.The appeal will be heard on 14 December 2009. To enforce the charging order, the Plaintiffs have applied for an order for possession and sale. In fact, the hearing of the Plaintiffs’ application will be heard later today. How the application will be dealt with is beyond this court. But even if the Plaintiffs manage to obtain an order in terms of their summons dated 19 October 2009, the order will give 28 days from the date of the order to be made for Tsang to settle the amount secured by the charging order. Unless Tsang delivered vacant possession voluntarily, the Plaintiffs would also have to apply for formal execution of the possession order by writ of possession. The writ will then have to be executed by the bailiff. The chance of Tsang losing actual possession of the Property by the time of the hearing of the appeal in December is not real.

16.In Star Play Development (at para.14), the court stayed the execution of an order for possession only for the actual possession of the premises in question without preventing the plaintiff from completing all procedures up to actual possession. I echo that and consider that the Plaintiffs here should not be prevented at this stage to seek to enforce the charging order by applying for the order for possession. In the event that an order for possession in granted, it will be for the court then to consider, if Tsang applies and for sufficiently good reasons, for stay of execution for the actual possession of the Property in the manner as the court did in the case cited.

17.If the court is not convinced that there exist arguable ground of appeal, no stay will be granted: see Star Play Development at para.9(6). Further considering the history of this case and what is discussed above, I am not minded to exercise my discretion to delay the Plaintiffs in reaping the fruits of the litigation without good reason.

Order

18.The appeal is dismissed and the Master’s order dated 30 October 2009 is maintained. I invited and heard arguments regarding costs from the parties at the end of the hearing. Tsang made no submission on costs save that he would leave the question of costs to this court. Mr Ng asked for costs if the appeal is dismissed. I agree and order that the Plaintiffs shall have the costs of and incidental to this appeal in any event. Costs shall be taxed, if not agreed, with certificate for counsel.

19.Tsang’s appeal against the charging order has been scheduled to be heard in this court. For the purpose of determining this appeal in respect of the stay of execution of that charging order, I have inevitably expressed my views on the merits of Tsang’s pending appeal. To ensure Tsang will have a fair hearing of his pending appeal without any concern about the court having pre-judged his arguments, I order that the appeal against the charging order to be heard on 11 December 2009 be removed from this court and re-fixed before another court.

20.As explained in the other decision being handed down at the same time as this one, I am also handing down this decision in English. If necessary, Tsang may request to arrange the assistance of the court interpreter in receiving this decision.

Mr Felix NG instructed by Messrs Leung & Wan for the 1^st and the 2^nd Plaintiffs

Defendant, in person, present