Read the full judgment text of CACV 000167/2003 on BabelCite. This Court of Appeal judgment was delivered on 15 July 2003 before Ma CJHC, Rogers VP, Cheung JA.
Civil procedure – stay of execution – inherent jurisdiction – whether court has inherent jurisdiction to stay execution of a valid, unchallenged judgment where Rules of the High Court already prescribe the circumstances of stay (RHC O.45 r.11, O.47 r.1, O.59 r.13) – held, yes, the inherent jurisdiction is cumulative with the Rules and exists to avoid injustice, prevent abuse, preserve the dignity of the court and facilitate the administration of justice, but must not expressly conflict with the Rules (High Court Ordinance, Cap. 4, ss.12(2) and 13(4)) – exercise of discretion – whether stay should be granted to enable judgment debtor to negotiate restructuring of its debts with other creditors – held, no – starting point is that a judgment creditor is entitled to enforce the judgment – a stay will only be granted to a judgment debtor in exceptional circumstances, such as where new evidence shows the judgment was not valid, or where the judgment debtor has a cross-claim yet to be determined, or where a statutory scheme for pari passu distribution of the debtor's assets (winding-up or scheme of arrangement under s.166 of the Companies Ordinance) is in place or imminent – 'reasonable prospect' test rejected as too uncertain and prejudicial to judgment creditor – court will not use inherent jurisdiction to create a moratorium regime that the legislature has not enacted, particularly given that s.166 lacks a moratorium provision – relevance of interests of non-party creditors – in an ordinary action in personam the court adjudicates on rights and liabilities as between the parties alone, and the wishes of non-parties cannot ordinarily override a judgment creditor's right to enforce – where no winding-up petition has been presented and no scheme of arrangement is imminent, the interests of other creditors are not a proper basis for a stay – the proper forum for taking creditors' interests as a whole into account is the Companies Court if a winding-up petition is presented – application of Hong Kong Approach to Corporate Difficulties guidelines (November 1999) – guidelines are not mandatory and cannot override a judgment creditor's right of enforcement – alleged breach of the guidelines and misuse of confidential information – held, neither allegation constituted an abuse justifying the exercise of the inherent jurisdiction to deprive the plaintiff of the fruits of its judgment – cases considered: Tam Ho Man v Wong Kwok Tai [1986] HKLY 705; Burnet v Francis Industries Plc [1987] 1 WLR 802; Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192; Wardley Ltd v Aik San Realty Ltd [1985] 2 HKC 695; Rainbow v Moorgate Properties Ltd [1975] 1 WLR 788; London Permanent Benefit Building Society v De Baer [1969] 1 Ch 321; In re A Company [1915] 1 Ch 520; In re International Tin Council [1989] Ch 309; Halsbury's Laws of England Vol.37 (4th ed) para 14; Halsbury's Laws of England 4th Ed Reissue Vol.17(1) para 195; Halsbury Vol.37 para 442; Law Reform Commission of Hong Kong Report on Corporate Rescue and Insolvent Trading (October 1996); Tomasic and Tyler, Hong Kong Company Law para 8151 – appeal allowed; orders of Chu J and Seagroatt J staying execution set aside.
Legal issues: Inherent jurisdiction to stay execution of judgment despite Rules of the High Court · Exercise of inherent jurisdiction where judgment debtor is insolvent and pursuing restructuring · Relevance of interests of non-party creditors to stay of execution
Outcome: Plaintiff's appeal allowed; the orders of Chu J dated 6 June 2003 and Seagroatt J dated 20 June 2003 staying execution of the judgment were set aside.
Cited by 2 cases