THE BANK OF EAST ASIA, LTD v. LABOUR BUILDINGS LTD AND OTHERS

cacv 33/2008

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 33 of 2008

(on appeal from HCMP NO. 769 of 2002)

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D E C I S I O N

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1.  I regret that sometimes one has to take a tough decision.  Much though I would have liked to have taken the easy way out this afternoon and granted a further extension, as I indicated to counsel, I have been persuaded by Mr Whitehead SC that that would not be the right thing to do in these circumstances.

2.  One has to bear in mind that the judge gave a very lengthy and detailed judgment on 23 January.  The case was in essence quite a simple case.  It was a case where the Bank wanted its money back that it had lent.  Mr Whitehead says it mushroomed into quite a complicated thing and, seemingly justifiably, it was made complicated because the Defendants made it complicated by raising all sorts of things which fell apart when it came to the trial.

3.  In any event, the judgment was given on 23 January, which was four months ago now.  The parties went to the judge and asked for a stay.  That was heard in April.  He refused it.  Then they came to this Court, before me, on 5 May and counsel said:

“… following the hearing before Gill DJ on the last application in April, and the upshot is that after a certain toing and froing between various banks, potential lenders and the defendant, subject to being provided with the relevant accounting material, which we anticipate could take place on Wednesday of this week, the banks have said that they ought to be able to come back with an answer, either an offer of financing or presumably not, within one or two weeks thereafter.”

4.  That was fairly specific.  Accounting material which was not shown to the court on that occasion - and I was a little surprised about that - was said to be available on Wednesday of that week and then the banks were going to come back within two or three weeks.  So the matter was adjourned till today.  Later on in the transcript, Mr Coleman said this:

“My Lord, the situation is that if the refinancing that is proposed does go ahead within the next week or two, then it ought to be that the plaintiffs’ position is either wholly or very substantially secured pending an appeal by the payment of the money which, if necessary, can be returned should the appeal succeed.”

5.  Far from the accounting records, it seems, being available by Wednesday of that week, they were rushed out last Thursday, on 22 May, and that is the date that they are date stamped.

6.  There has been a lengthy affidavit which has been filed from Miss Lin Pai-ching, who is the senior manager of the 2nd Defendant.  That really, as Mr Whitehead properly pointed out, takes the matter absolutely no further than it was three weeks ago.  All she says is, “Well, we’ve been going round the banks, now we’ve got a meeting tomorrow, something might come up,” and so on and so forth.

7.  I am afraid that one cannot go on like that.  I was tempted to say that this matter should be left for another couple of weeks to see what we come up with but, having heard submissions of counsel, the more one went into it, the more I considered that this was right.  There are indeed serious questions which arise out of the accounts themselves.  The reason why there is a deficit in the accounts of some $6 million over the last couple of years, it is said, is because legal fees were paid.  But there seems to be very strong evidence, including that which has just been shown to me, namely, payments from a subsidiary, that the money actually did not come from the Defendants, it came from a company called Yan Hei.

8.  In my view, now the time has come when payment should be made.  Although I had originally considered that I would take what might be termed a soft approach on this matter, I regret that I feel that it would be wrong to do so.  Really, the Defendants are not in a position to show that they can get financing at the moment.  All they have is hope and, the more I look at it, that hope is pretty thin.

9.  I have to say that another matter I have taken into consideration is there seems to be a vast change in attitude as to what the Defendants want to do with this building anyway.  Their evidence, right up until the applications before this Court, was that this building was of some sentimental value, one could say, and should be used in a historical context, with its connection with the Kuomintang.  That, apparently until very recently, has caused some difficulty with certain of the banks.  But be that as it may, it does seem that this building was only converted into a hotel in order to try and finance the litigation in some way or another.  Whether or not that actually happened, one does not know but, certainly, looking at the documents which have been filed in Miss Lin’s affidavit, it does not seem as though this is any more than a two and a half star hotel, with all the connotations that that might have.  The amounts charged per night do not indicate anything other than that.

10.  I regret that I feel constrained to refuse this application for any further stay.