XCHRX RE HY & HT LEE BROTHERS & CO. LTD.

HCCW 275/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO. 275 OF 1998

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REASONS FOR DECISION

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Introduction

1. After hearing the parties on 21 November 2000, I dismissed the 2 applications taken out by the petitioner respectively in these 2 sets of proceedings. The following are the reasons for the decision.

2. The nature of the applications is the same and they asked for a stay of the taxation of the respondents' costs alternatively a stay of execution of the taxed costs pending the outcome of the appeals in CACV 307 of 1999 (on appeal from HCCW 275 of 1998) and CACV 328 of 1999 (on appeal from HCCW 467 of 1998).

3. These applications arose from 2 Judgments of Le Pichon, J (as she then was) respectively dated 28 September 1999 (HCCW 275 of 1998) and 29 October 1999 (HCCW 467 of 1998) when she dismissed both petitions with costs on a common fund basis. Notices of Appeal were given on 3 November 1999 (CACV 307 of 1999) and 19 November 1999 (CACV 328 of 1999) respectively.

Were the Applications Made Pursuant to Ord. 59 r. 13?

4. The first issue between the parties was whether the applications were made pursuant to RHC Ord. 59 r. 13. The petitioner contended that they were not whereas the 1st and 2nd respondents ("the respondents") argued that they were. The Notices of Appeal themselves do not express ask for the costs orders to be set aside. Despite this, I conclude that the applications before me must have been made pursuant to Ord. 59 r. 13. Alternatively, even if they were strictly not made under those rules, the manner in which they should be determined should not be different than if they had been brought thereunder. This is because if in fact no appeal was intended to be brought against the costs orders, there would simply be no valid reason to ask for a stay.

5. There are several provisions in the Rules of High Court empowering the court to stay execution of judgments and orders: Ord. 45 r. 11 (matters occurring after judgment), Ord. 47 r. 1 (stay of execution by writ of fieri facias) and Ord. 59 r. 13 (stay of execution pending appeal). These applications clearly do not fall within Ord. 47 r. 1. Ord. 45 r. 11 provides:-

"... a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order ... " (emphasis supplied).

If it should be argued that they were brought pursuant to Ord. 45 r. 11, in the factual context of these applications, the "matters which have occurred since ... order" were the giving of the Notices of Appeal (and the pending appeal). Hence, the matters relied upon are in effect those provided for under Ord. 59 r. 13.

6. For the above reasons, I conclude that Ord. 59 r. 13 applies to these applications. Even if that rule does not apply, the Court should adopt the principles applicable thereunder when determining these applications.

Jurisdiction

7. Mr Fung for the respondents argued that since I was not the original trial judge, I do not have the jurisdiction to determine these applications. He relied on Ord. 59 r. 14(4) for this argument. This rule says:-

"Wherever under these rules an application may be made either to the court below or to the Court of Appeal, it shall not be made in the first instance to the Court of Appeal, except where there are special circumstances which make it impossible or impracticable to apply to the court below" (emphasis supplied).

An application made pursuant to Ord. 59 r. 13 is one of the applications falling within Ord. 59 r. 14(4):-

"Except so far as the court below or the Court of Appeal or a single judge may otherwise direct ... an appeal shall not operate as a stay of execution ... under the decision of the court below" (emphasis supplied).

8. Mr Coleman for the petitioner submitted that the phrase "the court below" refers to the level of court and not a particular judge of that level of court. Thus, even though the 2 Judgments were given by Le Pichon J (as a Judge of the Court of First Instance), an application for stay of execution of her orders can still be properly made to another judge of the Court of First Instance. On the other hand, Mr Fung contended that "the court below" refers to the particular judge who made the order against which an appeal has been brought.

9. Despite counsels' diligence, no authority directly in point has been found. It appears that there are at least 2 purposes for enacting Ord. 59 r. 14(4):-

(1) it is likely that the court below is more readily available (in terms of manpower) to hear an application than the Court of Appeal. Thus, this rule was enacted with judicial administrative efficiency in mind;

(2) the court below which dealt with the matter under appeal should have a better understanding of the issues involved (and/or the prospect of the appeal) than other courts which have not previously dealt with the matter.

10. Mr Coleman argued that there is no good reason why another judge of the same level of court cannot determine an application falling within Ord. 59 r. 14(4). He submitted that judges can become unavailable for a number of reasons, for example, they may retire, resign, pass away or (as in the present case) be promoted to a higher level of court. To adopt the respondents' argument would lead to great inconvenience to the parties as well as to the court. Mr Fung submitted that no inconvenience would be caused since any impossibility or impracticability of the court below only means that the application should be made to the Court of Appeal.

11. I consider that this issue can be resolved by a construction of Ord. 59 r. 14(4). This rule refers to "special circumstances which make it impossible or impracticable" to apply to the court below. The word "impossible" indicates that , when referring to "the court below", this rule intends to refer to the particular judge who made the decision rather than that level of court. If (as the petitioner contended) "the court below" merely refers to a level of court, such as the Court of First Instance, I do not see how it will ever be impossible to make an application to that level of court.

12. For the above reasons, I agree with Mr Fung that these applications should either be brought before Le Pichon J or (if it is impossible or impracticable to do so) the Court of Appeal.

Merits of the Applications

(1) The Application to Stay Taxation

13. Having disposed of these applications as a matter of jurisdiction, there is strictly no need to deal with them on their merits. I shall nevertheless do so for completeness.

14. Mr Coleman argued that whether a stay should be granted is ultimately a balancing exercise, relying on the observations made by the English Court of Appeal in Malliez v. Redland Plasterboard Overseas Ltd. & Another, unrep., 22 Sep 1992. That appeal also dealt with an application for stay of execution pending appeal of an order for interim payment. It was stated in the judgment that the appeal was originally not to be heard until at least a year after the order made by the first instance court. However, as a result of the Court of Appeal's intervention, the appeal could be heard about 2 months after the date of the judgment. The Court of Appeal in Malliez observed (at the 2nd page of the transcript) a balancing exercise should be made as between:-

(a) the undoubted delay which will be caused to the successful party if further proceedings (pursuant to the court order against which an appeal has been brought) are stayed pending the appeal and the appeal fails;

(b) time and money wasted by the said further proceedings if they are not stayed pending the appeal and the appeal succeeds.

The Court of Appeal also observed (also at the 2nd page of the transcript) that the exercise would involve taking a view as to the prospects of the appeal.

15. The parties have (correctly in my view) not taken me through the 2 Judgments and the Notices of Appeal in order to persuade me as to the merits or demerits of the pending appeals. Such an undertaking would be quite impracticable in the context of these 2 cases: in HCCW 275 of 1998, the hearing lasted some 14 days and the written Judgment is about 45 pages long whereas the hearing in HCCW 467 of 1998 lasted some 6 days and the Judgment is about 18 pages.

16. I consider that the following matters are relevant to the determination of this aspect of the 2 applications:-

(1) according to the petitioner, the 2nd respondent is either a person of no means or, if he is a person of means, he does not have assets within the jurisdiction which can be readily realized;

(2) the costs involved in the 2 cases respectively amount to about $7 million and $9 million (according to the respondents' bills of costs) or $3.7 million and $4.5 million (according to the petitioner). In short, quite substantial sums are involved whether according to the petitioner or the respondents;

(3) the bills of costs were lodged with court in June 2000 but an appointment for taxation (to last for 5 days) will only be available in early December 2000;

(4) despite the giving of the Notices of Appeal in November 1999, the applications to fix a date for the hearing of the appeals were not made until November 2000.

17. Having taken these matters into account, I consider that the balance points to refusing the application to stay the taxation.

(2) The Application to Stay Execution

18. In the course of his submissions relating to this aspect, Mr Fung informed me that the respondents' solicitors are willing to give the usual undertaking "to repay the costs if the appeal should succeed": see Shaw v. Holland [1900] 2 Ch 305, 313-4.

19. Mr Fung submitted that in order to succeed in an application for stay of execution pending appeal, an applicant has to show:-

(a) "special grounds" which warrant a departure from the general rule that the proceedings under a judgment should not be stayed pending an appeal: the Shaw case, p 313;

(b) "irreparable injury": Coleman & Co. v. Stephen Smith & co. [1911] 2 Ch 572, 580;

(c) "real hardship": In re JB Palmers Application (1883) 22 ChD 88, 90.

20. There is a dispute raised by the parties' respective affidavit evidence as to whether the 2nd respondent is a person of means. That factual dispute cannot be properly resolved at this stage. However, bearing in mind the matters set out above under the sub-heading "The Application to Stay Taxation" and the undertaking given by the respondents' solicitors, I agree with Mr Fung that the petitioner has not been able to establish the various matters referred to in the decisions set out above. Further, I agree with him that my discretion should be exercised in dismissing these applications.

21. The petitioner further argued that the 1st respondent has passed away and no one has yet been appointed to represent his estate. There is therefore a technical defect in representation. The evidence filed on the 1st respondent's behalf shows that the 1st respondent left behind a will. An application for a "carry on" order has been made by the executors named in the will. There is no basis (evidential or otherwise) to think that the 1st respondent would be unable to obtain a "carry on" order by early December 2000. I do not find any substance in this argument regarding a technical defect.