Pacific Electric Wire & Cable Co Ltd v. Texan Management Ltd and Others
Read the full judgment text of CACV 95/2012 on BabelCite. This Court of Appeal judgment was delivered on 15 January 2013 before Cheung JA.
Civil appeal – stay of execution pending appeal – test for granting stay – constructive trust – beneficial ownership of properties – account of benefits – certificate for two counsel – civil procedure – whether appellant has strong meritorious appeal – whether appeal would be rendered nugatory – The plaintiff obtained summary judgment in three related actions (HCCL 16, 17 and 18/2009) against the 8th/4th defendant (Hu) which was reversed on appeal; at trial Reyes J found that Hu held his beneficial interests in the South Horizons and Shouson Hill Properties and PacMOS shares on constructive trust for the plaintiff, and ordered him to account for all benefits (including loan monies, rents, income, sale proceeds) received by him in connection with the properties within 28 days, with any amounts found due to be paid to the plaintiff, and to bear 70% of the plaintiff's costs of the proceedings against him – The plaintiff alleged that Hu had secretly set up a network in which its funds were used to acquire the properties and that Hu had transferred the properties to himself in February 1999 – Hu alleged that the February 1999 transfer was for value to a third party called Willi under a 'take-over arrangement' – The trial judge found that the plaintiff was aware of the acquisition of the properties but not of the February 1999 transfer, and held that the take-over arrangement was a fabrication, finding that Hu and Willi were not credible witnesses – Hu lodged an appeal against the judgment, to be heard in July 2013, and applied for a stay of execution pending appeal, which the plaintiff opposed – The Court of Appeal (Cheung JA) refused the stay – The applicable principle is that a successful party should not be deprived of the fruit of its judgment, and a stay of execution will only be granted if the appellant can show a strong meritorious appeal such that justice requires the judgment to be stayed, or an arguable appeal combined with the appeal being rendered nugatory – The court held that Hu had shown an arguable appeal but had not demonstrated a strong meritorious appeal, because the trial judge had considered the funding of the take-over arrangement, Hu's dealings with the properties after the alleged take-over, the manner in which the arrangement was carried out, and the knowledge of the other key players to the transfer – The court further held that the appeal would not be rendered nugatory: Hu had been given a 56-day extension to complete the account on 4 June 2012 and had obtained the relevant documents from the corporate defendants; apart from a vague suggestion that the plaintiff might use the information against him, Hu was unable to particularise how disclosure in the account would prejudice him if the appeal succeeded; any prejudice in costs could be met by the plaintiff, which had paid all costs orders so far and had security for costs placed in court – The application was refused with costs to the plaintiff with a certificate for two counsel, and Hu was granted a further 28 days to comply with the order for an account.
Legal issues: Test for stay of execution pending appeal · Whether the appeal would be rendered nugatory
Outcome: Application for stay of execution refused; Hu granted a further 28 days to comply with the order for an account
Cites 4 cases
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CACV 94/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 94 OF 2012 (ON APPEAL FROM HCCL 16/2009) ________________________ BETWEEN
________________________ CACV 95/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 95 OF 2012 (ON APPEAL FROM HCCL 17/2009) ________________________ BETWEEN
________________________ CACV 96/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 96 OF 2012 (ON APPEAL FROM HCCL 18/2009) ________________________ BETWEEN
________________________ Before: Hon Cheung JA in Chambers Date of hearing: 8 January 2013 Date of decision: 8 January 2013 Date of reasons for decision : 15 January 2013 ________________________ REASONS FOR DECISION ________________________ Stay of execution 1.Reyes J entered judgment against Hu Hung Chiu (‘Hu’) in HCCL 16/2009, HCCL 17/2009 and HCCL 18/2009. The Judge found that Hu holds his beneficial interests in the South Horizons and Shouson Hill Properties and PacMOS shares (‘the properties’) on constructive trust for the plaintiff (‘PEWC’). Hu was further ordered to account to PEWC for all benefits (including loan monies, rents, income, sale proceeds, and proceeds) received by him in connection with the properties within 28 days. Any amounts found to be due upon the taking of such account are to be paid to PEWC. Hu was further ordered to bear 70% of PEWC’s costs of proceedings against him. 2.Hu lodged an appeal against the judgment which will be heard in July 2013. Hu applied for a stay of execution of the judgment pending appeal which was opposed by PEWC. I refused the application and I now give the reasons. Principle 3.The principle is that a successful party should not be deprived of the fruit of the judgment and a stay of execution of the judgment will only be granted if the appellant can show that he has such a strong meritorious appeal that justice requires the judgment to be stayed or the appellant can show that he has an arguable appeal and the appeal would be rendered nugatory in the event of him being successful in the appeal. Position of the parties 4.In this case both sides have taken extreme views of the strength of their case. Hu contended that there was a serious miscarriage of justice in the Court below which calls for the execution of the judgment to be stayed while PEWC contended that the appeal is totally devoid of merits. The Judge’s finding 5.PEWC’s case is that unbeknown to it, Hu had set up a secret network in which funds of PEWC were used to acquire the properties and he transferred the properties to himself in February 1999. This was denied by Hu who specifically claimed that the transfer of the properties in February 1999 was for value to a person called Willi (‘the take-over arrangement’). 6.The Judge found that PEWC was aware of the acquisition of the properties but not of the February 1999 transfer. He found that the take-over arrangement was a fabrication and Hu is the beneficial owner of the properties. Hu’s contentions 7.Without going into details and without referring to all the grounds of appeal, Hu’s case on miscarriage of justice below can be summarised as follows :
8.Counsel for Hu, Mr. Whitehead S.C. (together with Mr. Steven Kwan and Mr. Vincent Chen) stressed Hu’s appeal is not simply a challenge on finding of fact by the Judge but rather a challenge on the process adopted by the Judge in his finding. The Judge had failed to consider the inherent improbabilities of PEWC’s case and there was a structural failure to conduct a consolidated evaluation of the evidence. My view on the merits 9.The view I take is that Hu certainly has shown that he has an arguable appeal but at this stage he has not demonstrated that he has such a strong appeal that I ought to stay the execution of the judgment. The Judge clearly had considered other evidence in reaching his finding, including the funding of take-over arrangement, Hu’s dealing with the properties after the take-over arrangement, the manner in which the take-over arrangement was carried out and the knowledge of the other key players to the transfer. He concluded that Hu and Willi were not credible witnesses. Appeal nugatory? 10.This leaves the crucial issue of whether the appeal would be rendered nugatory if Hu is successful. Hu has not relied on difficulties in providing the account. He had originally asked for extension of time to comply with the order. The Judge had on 4 June 2012 gave him a further 56 days to complete the account. He also ordered PEWC and the corporate defendants to provide Hu with the books and documents which he may require to prepare the account. Hu had requested and obtained from the corporate defendants the relevant documents. Apart from a vague suggestion that PEWC, consistent with its pursuit of a false case, may make use of the information against Hu, Hu was unable to particularise how the information that may be disclosed in the account would be to his prejudice if his appeal is allowed. Any prejudice in terms of costs may be met by PEWC who had paid up all the costs orders so far and there is fund available from the release of the security for costs placed by PEWC in Court. Conclusion 11.Accordingly the application was refused with costs to PEWC with a certificate for two counsel. Hu was granted a further 28 days to comply with the order.
Mr. Anthony Neoh S.C., Ms Barbara Wong and Mr. Jonathan Chang, instructed by Lo & Lo, for the plaintiff in CACV 94-96/2012 Mr. Robert Whitehead S.C., Mr. Steven Kwan and Mr. Vincent Chen, instructed by Haldanes, for the 8th defendant in CACV 94/2012 and 4th defendant in CACV 95 & 96/2012 |
Cases cited in this judgment
Further hearings and rulings under CACV 95/2012