TSUNG TSIN ASSOCIATION AND ANOTHER v. LAI KWOK WAI AND OTHERS

HCA 516/2021

[2022] HKCFI 2280

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 516 OF 2021

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BETWEEN

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DECISION

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THE APPLICATION

1.  This is the plaintiffs’ application (made by virtue of their summons filed on 22 June 2022 (“the Stay Summons”)) for stay of execution of the following orders of Deputy High Court Judge Le Pichon pending the final determination of their appeal against her Ladyship’s order dated 22 March 2022, by which the interim-interim injunction granted on 9 April 2021 (“the 2021 Interim-interim Injunction”) was discharged:

(1) The order dated 20 May 2022 pursuant to which the plaintiffs shall pay the 3^rd defendant’s costs of and incidental to the plaintiffs’ summons filed on 1 April 2021 (“the Injunction Summons”) summarily assessed at $300,000;

(2) The order dated 20 June 2022 under which the plaintiffs shall pay the 3^rd defendant’s costs of the plaintiffs’ summons for leave to appeal summarily assessed at $70,000.

PROCEDURAL HISTORY

2.  For the purpose of this application, I only need to state the procedural history of the present action very briefly as follows.

3.  On 9 April 2021, the 2021 Interim-interim Injunction was granted on the basis of various undertakings given by the parties pending the adjourned hearing of the Injunction Summons.

4.  The plaintiffs discontinued their claims against the 2^nd defendant on 27 January 2022 upon an undertaking given by him.

5.  The adjourned hearing of the Injunction Summons came before Deputy High Court Judge Le Pichon on 24 February 2022.

6.  By a Decision dated 22 March 2022 (“the Decision”), her Ladyship discharged the 2021 Interim-interim Injunction, and ordered the plaintiffs to pay costs to the 1^st, 3^rd and 4^th defendants. The costs payable to the 3^rd defendant were summarily assessed in the sum of $300,000.

7.  The plaintiffs then filed a summons on 12 April 2022 and applied for leave to appeal. According to the draft Notice of Appeal attached to the said summons (“the first draft Notice of Appeal”), the plaintiffs asked that, upon their successful appeal, the 2021 Interim-interim Injunction be continued against the 1^st, 3^rd and 4^th defendants.

8.  By a decision dated 12 May 2022, her Ladyship dismissed the plaintiffs’ application for leave to appeal, and held that, among other things:

(1) The plaintiffs have no prospect of a successful appeal in relation to her finding that there was no serious issue to be tried against the 3^rd defendant;

(2) The plaintiffs do not have realistic prospects of succeeding in their argument that she had erred in law in ruling that the balance of convenience is against the continuation of the 2021 Interim-interim Injunction.

9.  Her Ladyship further ordered the plaintiffs to pay costs of the application for leave to appeal to the 3^rd defendant whose costs were summarily assessed at $70,000.

10.  By a summons filed on 26 May 2022, the plaintiffs applied to the Court of Appeal and sought leave to appeal against the Decision. It can be seen from the draft Notice of Appeal attached to the said summons (“the second draft Notice of Appeal”) that the plaintiffs are now seeking the following orders from the Court of Appeal:

(1) The 2021 Interim-interim Injunction be continued against the 1^st and 4^th defendants until trial or further order;

(2) The plaintiffs’ costs of the appeal and the costs of the Injunction Summons be paid by the 1^st and 4^th defendants.

11.  Then the plaintiffs took out the Stay Summons on 22 June 2022.

THE PLAINTIFFS’ GROUNDS

12.  In support of the Stay Summons, the plaintiffs have filed the 5^th Affirmation of the 2^nd plaintiff, in which he gave the following grounds for stay of execution:

(1) The plaintiffs have a meritorious case in overturning the Decision.

(2) Levying of execution will render the appeal nugatory in the event that the Decision is overturned. There is a real risk that the 3^rd defendant will not be repaying the costs to him.

LEGAL PRINCIPLES

13.  The legal principles governing stay of execution are trite. In Star Play Development Limited v Bess Fashion Management Co. Ltd. [2007] 5 HKC 84, it was held by Ma J (as his Lordship then was) that the existence of an arguable appeal (that is, one with reasonable prospect of success) is the minimum requirement before a court would even consider granting a stay. However exceptional the circumstances may be otherwise justifying a stay of execution, if there exist no arguable grounds of appeal, no stay will be granted.

14.  In the event the court is satisfied that there is a strong likelihood that the appeal would succeed, that in itself would enable a stay to be granted because this would constitute a good reason for a stay.

15.  If there is just an arguable appeal instead of a strong one, the appellant has to provide additional reasons as to why a stay is justified. The demonstration of an appeal being rendered nugatory in the absence of a stay is a common example.

DISCUSSION

16.  I regret to say that the present application taken out by the plaintiffs is a non-starter, because it is now clear (as demonstrated by the second draft Notice of Appeal) that they are not seeking to overturn Deputy High Court Judge Le Pichon’s decision as far as the 3^rd defendant is concerned. Hence, even if the plaintiffs succeed in their appeal, that would have no impact on the costs order made in favour of the 3^rd defendant.

17.  Even if they are also appealing against the decision made in relation to the 3^rd defendant, given her Ladyship’s ruling (as to which I respectfully agree totally) that the plaintiffs have no reasonable prospect of success in their intended appeal, they cannot meet the minimum requirement for getting an order for stay of execution.

18.  Mr Chan for the plaintiffs submitted that although the plaintiffs are no longer seeking an injunction against the 3^rd defendant in the appeal, the plaintiffs will be arguing that the plaintiffs should not pay the 3^rd defendants’ costs given that there was clear evidence that the 3^rd defendant was substantially involved in denying the plaintiffs from accessing the school premises in question.

19.  This is a very bold submission because I cannot see any independent ground of appeal appearing in the second draft Notice of Appeal lodged with the Court of Appeal which challenges the costs order made by Deputy High Court Judge Le Pichon in the circumstances where the 2021 Interim-interim Injunction against the 3^rd defendant was rightly discharged.

20.  When the plaintiffs applied for leave to appeal before the learned Deputy Judge, it was not contended as an independent or alternative ground of appeal in the first draft Notice of Appeal that the costs order made vis-à-vis the 3^rd defendant was wrong even if the 2021 Interim-interim Injunction against the 3^rd defendant was rightly discharged. In such circumstances, I am of the view that it is not open to the plaintiffs to argue this new ground now without raising it with the first instance Judge, unless the plaintiffs could satisfy the Court of Appeal that there are exceptional circumstances and extreme urgency. In Singh Arjun v Secretary for Justice [2014] 2 HKLRD 678, Lam VP (as Lam PJ then was) had the following to say:

“5. We should reiterate that in general a party intending to appeal against an interlocutory judgment or decision should apply to the lower court for leave to appeal before coming to this Court. Further, this general rule should apply even in cases with some urgency. Though there can be cases with exceptional circumstances and extreme urgency which calls for the exercise of the power under O.58 r.2(6) of the Rules of the District Court (Cap.336H, Sub.Leg.) (the equivalent of O.59 r.2B(4) of the Rules of the High Court (Cap.4A, Sub.Leg.)) by this Court to permit an application to be made directly to this Court, this must be confined to the very exceptional cases.

6. There are a number of reasons for the general rule (viz application should first be made to the court below). First, the Court of Appeal is entitled to have the benefit of the views of the lower court on an application for leave. An important consideration for deciding whether leave should be granted is the merits of the grounds of appeal. Another important consideration is how an interlocutory decision may affect the conduct and progress of the action. At the court below, the judge hearing the leave application should usually be the same judge who has heard the original application, see O.58 r.2(5) of the Rules of the District Court, the equivalent of O.59 r.2B(2) of the Rules of the High Court. Thus, that judge would usually be familiar with how the parties argued the application before the court in the original application (including concessions made, which might not be apparent in a judgment) and the impact of a case management decision or other interlocutory order on the general conduct of the case and the trial thereof. The judge’s views on these matters will assist this Court in weighing whether leave to appeal should be granted.”

21.  Bearing in mind the rationale as explained in the said authority, I do not think the Court of Appeal would allow the plaintiffs to rely on a new ground of appeal which had never been raised before.

22.  Even in the unlikely event that the plaintiffs are allowed by the Court of Appeal to argue this new ground, I do not think the intended appeal on costs would have any reasonable prospect of success. It is trite that the Court of Appeal would not interfere with the exercise of a Judge’s discretion in the award of costs unless it can be shown that the Judge has failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially”[1]. This is a heavy burden. In the circumstances of the present case, I do not think the plaintiffs have a reasonable prospect in discharging this burden.

23.  As an alternative, Mr Chan informed the Court that the plaintiffs are prepared to pay the sum of $370,000 into Court as a condition for stay to be granted. It was submitted that this should alleviate the 3^rd defendant’s objection to the stay and/or to avoid further arguments.

24.  With greatest respect, this suggestion has totally missed the point that the Court does not deprive a successful party of the fruits of litigation lightly. It is for the plaintiffs to justify why the 3^rd defendant should be kept away from the costs which he had been awarded with, even when there is a pending appeal vis-à-vis the 3^rd defendant, not to mention the pending appeal, properly analysed, seems to have nothing to do with the 3^rd defendant.

DISPOSITION

25.  By reasons of the aforesaid, I dismiss the Stay Summons taken out by the plaintiffs.

COSTS

26.  Costs should follow the event. The plaintiffs shall bear the 3^rd defendant’s costs of the Stay Summons.

27.  The 3^rd defendant’s costs are summarily assessed at $80,000, which shall be paid by the plaintiffs on or before 8 August 2022.