SY CHIN MONG STEPHEN v. LO SHING KIN

CACV 45/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 45 OF 2013

(ON APPEAL FROM HCSD NO. 17 OF 2012)

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JUDGMENT

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Hon Lam JA (giving the Judgment of the Court):

1.  By a summons of 8 March 2013, the Applicant seeks a stay of execution of the decision of Ng J of 27 February 2013 pending final determination of the appeal against that decision. Ng J [“the Judge’] dismissed the application of the Applicant to set aside a statutory demand issued by the Respondent on 8 June 2012 and served on 13 June. The Judge gave his reasons in writing on 1 March 2013. Pursuant to Rule 48(7) of the Bankruptcy Rules Cap 6A, the Judge also authorized the Respondent to present a bankruptcy petition after 8 March 2013. He also ordered that upon the presentation of the petition, the bankruptcy proceedings shall be stayed until 27 March 2013.

2.  The Applicant served a Notice of Appeal against the Decision on 8 March 2013 [“Notice of Appeal”].  Ms Lam (who appeared for the Applicant at this hearing but not below) informed this court that the Applicant intended to apply for the substantive appeal to be heard together with another appeal between the same parties in CACV 148 of 2012.  That appeal was in respect of the underlying judgment debt of $29 million odd (judgment entered in favour of the Respondent by Deputy High Court Judge Seagroatt on 7 June 2012 [“the June judgment”]) and it is to be heard on 24 April 2013.

3.  It is to be noted that the Applicant had applied for stay of execution of the June judgment.  Stay was indeed granted by the Deputy Judge on condition of payment into court the judgment sum on or before 15 October 2012.  The Applicant only paid $10 million into court.  He then applied to Cheung JA for a further stay.  On 17 January 2013, Cheung JA ordered a stay pending appeal on condition that the Applicant pays into court $5 million by 31 January 2013 and $15.9 million by 22 February 2013, failing which the $10 million already paid into court shall be paid to the Respondent.

4.  The Applicant did not comply with the conditions imposed by Cheung JA.  Instead, he made an application of extension of time which was granted by His Lordship on 31 January to the effect that he pays $20.9 million into court on or before 22 February 2013.  Payment out of the $10 million was altered in that $5 million was paid out on 31 January whilst another $5 million was to be paid out if the Applicant did not pay the money into court by the extended deadline of 22 February 2013.

5.  The Applicant did not pay the $20.9 million by 22 February 2013. Thus, at the time of the hearing of the application to set aside the statutory demand before Ng J, there was no extant stay of execution of the June judgment.

6.  At the hearing before Ng J, it was conceded by counsel for the Applicant that the application for setting aside should be dismissed as he had no ground to support that application.

7.  In the Notice of Appeal, this stance was maintained.  The Applicant did not ask for an order to set aside the statutory demand nor did he appeal against the dismissal of his application to set aside the same. He only asked for an order that the Respondent shall only be authorized to present a petition after 25 April 2013 instead of 8 March 2013. 25 April 2013 is the date of the second day of the hearing of the appeal in CACV 148 of 2012.

8.  In effect, what the Applicant wished to achieve by this appeal is a stay of execution of the June judgment up to the end of the appeal in CACV 148 of 2012 which, as explained, he had not been able to obtain from Cheung JA due to his non-compliance with the conditions imposed.

9.  There is no appeal against the decision of Cheung JA in terms of the imposition of the conditions for the stay.  Nor is there any appeal with regard to the deadline imposed by extension of time. Neither is there any application for any further extension of time.

10.  The Applicant is concerned about the consequence of the presentation of the petition.  He said he would lose the chance of getting the necessary loan to discharge the debts due to the Respondent once a petition is presented against him.  He therefore applied on an urgent basis for a stay of execution of the decision, in particular in respect of the authorization to the Respondent to present a petition after 8 March.

11.  What he now seeks to achieve by this application for stay, like this appeal, is to get a stay of execution of the June judgment by the backdoor when he had exhausted that avenue by the front door in terms of his application to Cheung JA and had not been able to comply with the conditions imposed.

12.  Looking at the matter in that way, the present application is not an attractive one.  Be that as it may, we shall examine his application by reference to established principles as regards how the discretion on grant of stay should be exercised.

13.  It is trite law that an appeal would not automatically operate as a stay.  It is equally well established that an arguable appeal is the minimum that an appellant must establish before the court would begin to consider the exercise of such discretion, see Star Play Development v Bess Fashion Management [2007] 5 HKC 84.

14.  As we have said, the Applicant does not challenge the dismissal of the setting aside application.  What he seeks to challenge is the Judge’s decision as to the authorization given to the Respondent to present a petition after 8 March 2013.  The grounds he relies upon, as set out in the Notice of Appeal, are,

(a)   The Judge failed to give sufficient weight to his ongoing loan application;

(b)   The Judge failed to consider sufficiently his appeal in CACV 148 of 2012; and

(c)   The Judge failed to consider sufficiently the prejudice and irreversible damage that the Applicant would suffer upon the presentation of petition.

15.  With respect, we do not think the appeal is arguable.  As the Judge rightly pointed out in his written Reasons, the specification of the date under Rule 48(7) is a matter of discretion.  It is well established that an appellate court would not interfere with the exercise of discretion by a primary judge unless he exercised under a mistake of law or failed to take into account of relevant matters or took into account of irrelevant matters or exercised the discretion in such a way that was outside the generous ambit of reasonable disagreement, in other words plainly wrong.

16.  The Judge plainly had given regards to the matters identified by the Applicant in his written Reasons.  He also had regard to the interest of the general creditors which is a legitimate matter to be taken into account.  He struck the balance in authorizing the petition to be presented but granted a stay of the intended bankruptcy proceedings for a short duration to give the Applicant some time to make some final efforts to pay the judgment debt.  We cannot see how it can be argued that his exercise of discretion is plainly wrong.    

17.  There is no suggestion in the grounds of appeal that the Judge made any mistakes of law.  Nor do we see any.

18.  As regards the effect of the presentation of petition would have on the Applicant, it must be borne in mind that he had been given ample opportunity and time by Cheung JA to pay the money into court.

19.  Another way to look at this application is that the Applicant is trying to restrain the Respondent from presenting a petition based on a statutory demand which he accepted he could not set aside.  In such circumstances, the usual consideration for giving time to a debtor to comply with the demand after the disposal of the application when there was an arguable dispute about the validity of the demand does not apply.

20.  Ms Lam referred to Neely v IRC [1996] BPIR 632, HSBC v Hui Shu Leung HCSD 36/1999, 26 Nov 1999, Society of Lloyds v Bowman [2003] EWCA Civ 1886 and Muir Hunter on Personal Insolvency  para 7-212and contended that the Judge should have postponed the presentation of petition when there are real prospects of the debtor being able to pay.

21.  We do not think those authorities laid down as a matter of law that a judge must grant such indulgence to a debtor so long as he could show that a loan is being arranged.  It is ultimately a matter of discretion and much depends on the circumstances and the facts of each case. The Judge was clearly alive to those authorities as he had referred to them in his Reasons. On the facts of this case, bearing in mind the background and the history, we cannot see how the Judge could be criticized as to how the discretion should be exercised.

22.  For these reasons, the Applicant has not demonstrated that he has an arguable appeal.  His application for stay of execution must accordingly be dismissed.