ELITE CONSORTIUM LTD AND OTHERS v. YIM WAN POR AND OTHERS

HCA 66/2022

[2024] HKCFI 1780

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 66 OF 2022

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D E C I S I O N

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1.  By a Notice of Appeal to judge in chambers dated 2 April 2024, the defendants intend to appeal against the decision of a master ordering specific discovery of five classes of documents by an order dated 15 March 2024 (“the Discovery Order”). On the same day, the defendants took out a summons for a stay of execution pending the hearing of their appeal (“the Stay Summons”). This is the first hearing of the Stay Summons. It should be noted that no hearing date of the appeal has been fixed yet.

2.  This application is supported by an affirmation of Michael Tse Ming‑him, the handling solicitor of the defendants. In his brief affirmation, Mr Tse set out his belief that the master has erred in his decision and his belief that the appeal has a strong likelihood of success.

3.  On the other hand, Mr Tse says that if a stay is not granted, the appeal will be rendered nugatory because the discovery made pursuant to the Discovery Order cannot be undone and the process will be irreversible. Ms Lin, for the defendants, further makes submissions on the merit of the appeal at the hearing and Mr Yan, for the plaintiffs, opposes this application.

4.  The principles relating to applications for the stay of execution is trite and Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 remains the leading authority.

5.  The starting point is that the applicant must show an arguable ground of appeal, ie, one with reasonable prospect of success. At the same time, an application for a stay of execution should not be a dry run of the appeal and this court can only take a broad-brush approach in its assessment of the merits of the appeal.

6.  I have gone through the pleadings, the relevant parts of the pleadings, to see the relevance of the documents in question. I have also taken into account the submissions made by Ms Lin concerning the existence of such documents, or the lack of it.

7.  For the first two classes of documents to be disclosed by the defendants, i.e., the bank statements of the 3^rd defendant and the 4^th defendant relating to the alleged payment by the plaintiff, Ms Lin submits that the burden is on the plaintiffs to prove its case and their own evidence of payment should be sufficient. There is no reason why the defendants should provide such documents to assist them, and Ms Lin also submits that such disclosure can be very intrusive.

8.  I am unable to accept this submission. Such documentary evidence is relevant to the issue in dispute and it can assist the plaintiffs to confirm their case and to destroy the case of the defendants of their non-receipt of such payments. I am satisfied that they should be disclosed.

9.  For the third and fourth classes of documents, they also relate to the alleged receipt of the payments made by the plaintiffs to the 3^rd and 4^th defendants. By the same token, I accept that they are, prima facie, relevant and should be disclosed.

10.  For the fifth class of documents, i.e, all correspondence and communication between the defendants on the one hand and Guangzhou Peishen on the other hand in relation to the set up operation and affairs of Guangzhou Peishen, first of all, the plaintiffs in their Statement of Claim made an allegation that the 1^st and 2^nd defendants established Guangzhou Peishen in or about 2013 and they, ultimately, beneficially own and control Guangzhou Peishen.

11.  This allegation is denied by the defendants in their defence. In paragraph 5 of the witness statement of the 1^st defendant, as referred to me by Ms Lin, it is alleged that the 1^st and 2^nd defendants agreed to assist Keigo in setting up Guangzhou Peishen and its management.

12.  Actually, I do not need to go further than the pleadings. I accept the relevance of such documents and they should be disclosed. As I have just said, I have already taken a broad-brush approach and I do not mean to come to any definitive view of this matter. By adopting such an approach, I fail to see that the defendants have shown to me an arguable ground of appeal.

13.  My discretion to grant a stay is not engaged at all. On the other hand, I am not convinced that the appeal would be rendered nugatory if no stay is granted. Protective measures can be taken as agreed by the parties to make sure that those disclosures would not cause unfair prejudice to the defendants by the disclosure to be made.

14.  Up till now actually, I have heard no evidence of prejudice to be suffered by the defendants.

15.  In the circumstances, for the reasons given, I refuse to exercise my discretion to order a stay for execution and the Stay Summons must be dismissed.

(Submission re costs)

16.  Costs summarily assessed at $16,000 be paid by the defendants to the plaintiffs within 14 days.

17.  So these are the two orders I have made on the Stay Summons. Summons be dismissed. Cost be to the plaintiffs.