INTERFORM (INTERIOR AND MARBLE) CO. LTD. v. FAR EAST WAGNER CONSTRUCTION LTD.

CACV No. 59 of 1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

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J U D G M E N T

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Keith J.A. (giving the first judgment at the invitation of Chan C.J.H.C.):

1. On 27th May, the Court of Appeal upheld the decision of Yuen J. to grant the Plaintiff summary judgment under Ord. 14 against the Defendant in the sum of $2,634,246.85 plus interest. The Defendant now seeks a stay of execution on that judgment pending its application to the Court of Appeal for leave to appeal to the Court of Final Appeal. That application is due to be heard on 5th October.

2. For my part, I am uncertain as to the route by which the Court of Appeal has jurisdiction at present to determine the application for a stay. Reliance is placed by the Defendant in its Notice of Motion on Ord. 45 r. 11 and Ord. 59 r. 13 of the Rules of the High Court, and on section 26 of the Court of Final Appeal Ordinance (Cap. 484):

(i) Ord. 45 r. 11 does not help. That rule allows a party to apply for a stay of execution on the ground of matters which have arisen since the date of the judgment. It is, I think, likely that Ord. 45 r. 11 applies only to applications for a stay of execution made to the Court of First Instance and not to the Court of Appeal. Moreover, it has consistently been held that the phrase "matters which have occurred since the date of the judgment" refers to matters which relate to the validity of the judgment and which, if established, might justify the court concluding that this was not a judgment which, on the material placed before it, the court would allow to be executed. The ground on which the Defendant in this case asks for a stay of execution, namely its inability to pay the judgment debt, does not relate to the validity of the judgment at all.

(ii) Ord. 59 r. 13 does not help either. That relates to applications for a stay of execution pending an appeal to the Court of Appeal rather than to applications for a stay of execution pending an appeal to the Court of Final Appeal from the Court of Appeal.

(iii) Section 26(1) of the Court of Final Appeal Ordinance expressly provides for a stay of execution pending an appeal from the Court of Appeal to the Court of Final Appeal, but the power of the Court of Appeal or the Court of Final Appeal to grant such a stay can only be exercised "when granting leave to appeal or subsequently." As I have said, the application for leave to appeal is not due to be heard until 5th October.

However, for present purposes, for my part, I am prepared to assume, but without deciding, that by some route, perhaps the inherent jurisdiction of the Court, the Court of Appeal has the jurisdiction to determine this application for a stay, even though leave to appeal to the Court of Final Appeal has not yet been considered, let alone granted, and that the Court should apply to the application the principles which govern applications for a stay of execution under Ord. 59 r. 13. In World Trade Centre Group Ltd. v Resourceful River Ltd. (CA 70/93), Litton J.A. (as he then was) described the jurisdiction to grant a stay of execution under Ord. 59 r. 13 as "flexible". In that case, a stay of execution was sought on the ground that if a stay was not granted, the company would face financial ruin. Litton J.A. said:

"Plainly the intention is that a party should not be deprived of the fruits of a judgment in his favour except on good grounds being shown. Obviously if an applicant were able to demonstrate that he has very strong grounds of appeal, that something has grievously gone wrong with the process of law in the court below, then this court would be inclined to make such order as to ensure that the appeal would not be rendered nugatory in the meanwhile. In those circumstances perhaps the court may not examine very closely the financial situation of the appellant. On the other hand if the grounds of appeal appear weak then the court would look more closely into the alleged impecuniosity and prospective financial ruin."

3. In these circumstances, I turn to whether the Defendant has any real prospect of obtaining leave to appeal to the Court of Final Appeal. The generally accepted view is that an order will be regarded as final if it would have determined finally the proceedings whichever way the application which resulted in the order would have been decided. So an order for summary judgment under Ord. 14 is not a final order because, had the Defendant been granted leave to defend the action, the action would have continued. On that approach, the Defendant's appeal does not lie to the Court of Final Appeal as of right under section 22(1) of the Court of Final Appeal Ordinance: leave to appeal can only be granted to the Defendant if the circumstances set out in section 22(1)(b) are satisfied. That was accepted by the Defendant's solicitors because in the Notice of Motion for leave to appeal to the Court of Final Appeal it is stated that the Court of Appeal will be invited to give leave on the ground that the question involved in the appeal is one of great general or public importance, though Mr. Firoz Nasir for the Defendant today told us that that concession was to be withdrawn.

4. For my part, I do not believe that the issues which the appeal raises have any real prospect of being categorised as issues raising points of great general or public importance. On the Defendant's contention relating to the Plaintiff's delay in completing the work, the only issue on the application for summary judgment was whether the expenditure allegedly incurred by the Defendant was, as a matter of fact, attributable to the Plaintiff's delay. On the Defendant's contention relating to the colour of the tiles, the only issue on the application for summary judgment was whether the Defendant had, as a matter of evidence, showed a sufficient intention to have the remedial work done if it was paid the $925,300.00 counterclaimed. Neither of those issues have, in my opinion, any real prospect of being categorised as questions of great general or public importance.

5. In any event, there is virtually no evidence explaining why the Defendant is unable to pay the judgment debt. No audited accounts have been produced, not even a draft balance sheet giving a snapshot of the Defendant's current assets and liabilities. All that the Defendant has done has been to state that it is owed about $9m. which it expects to receive within a year or so, but that it has at present only about $20,000.00 cash in hand. If it has receivables of $9m. or thereabouts, why is it not able to borrow the amount of the judgment debt on the strength of those receivables? Even if, therefore, a point of great general or public importance was involved in this appeal, so that leave to appeal was likely to be granted, the evidence, in my opinion, falls far short of sustaining an argument for depriving the Plaintiff of the fruits of its judgment.

6. For these reasons, I for my part would dismiss this application.

Chan C.J.H.C.:

7. I agree, for the reasons given by Keith J.A., that this application must be refused. I would only add that I too entertain some doubts as to whether this court has the jurisdiction to grant a stay of execution prior to the granting of leave to appeal to the Court of Final Appeal. It may be that this question has to be addressed and considered in an appropriate case in future.

Wong J.A.:

8. I agree and would also dismiss the application. In my view, there is no real prospect of success in the Defendant's pending application for leave to appeal to the Court of Final Appeal.

Chan C.J.H.C.:

9. The application is refused with costs.