XCHRX DR ANDREW KEE-SUAN KOH v. DR VINCENT KAY-LO IP

HCA 699/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 699 OF 1992

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REASONS FOR DECISION

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This is an application by Dr Ip for stay of execution of judgment given by me on 13 January 2000 for $1.5 million together with interest. Dr Ip has already lodged notice of appeal against that judgment. I have not looked at the grounds of appeal. Mr Wong for Dr Koh told me that his understanding is that Dr Ip challenges certain findings of facts by me. Mr Thomson for Dr Ip has not sought to base the application for stay on any special merits in the appeal except that "there are grounds". I am, therefore, spared the embarrassment of having to look at the strength of an appeal against my own judgment.

2. The factual grounds for stay were limited to those stated in Dr Ip's affirmation in support and Mr Thomson tried to make the most of it. First, it is said that since Dr Koh is resident outside Hong Kong, it would be difficult for Dr Ip to recover money paid under judgment should the appeal be successful. Mr Wong was not bothered by this ground at all. Counsel said that Dr Koh, like Dr Ip, is a senior medical practitioner. Although Dr Koh resides in Australia, there is arrangement for enforcement of Hong Kong judgments there. Moreover, Dr Koh would be content to have stay of execution on condition that judgment sum with interest is paid into court as security pending the outcome of the appeal.

3. The other ground for stay is in Paragraph 9 of the supporting affirmation. There Dr Ip says,

".... I verily believe that a stay of execution of the Judgment is imperative since a presentation of a bankruptcy petition against me would have serious implications for my medical practice and reputation and would irreparably damage my financial standing such that I would not be in a position to run my appeal."

4. As a matter of fact, solicitors for Dr Koh have already served a statutory demand as prelude to petition for the bankruptcy of Dr Ip. And Mr Thomson suggested that I should read into Paragraph 9 quoted above a statement by Dr Ip that he does not now have sufficient means to satisfy judgment.

5. Mr Wong contended that paragraph 9 in effect means nothing. Counsel drew my attention to the unreported judgment of Litton JA (as he then was) in World Trade Centre Group Ltd v. Resourceful River Limited, Civil Appeal No. 70 of 1993. At page 3 of his judgment, the learned judge said,

" In the court below Mortimer J was invited to conclude on the basis of two bland paragraphs in an affirmation of Mr Yang You Li that if no stay were granted this would result in the financial ruin of the second defendant.

Paragraph 6 of the Affirmation is in rather equivocal terms. It says:

"If the stay is not granted to the 2nd Defendant, it will not be able to pay the said judgment sum without the need of incurring a debt in the sum of at least HK$50 million and/or the same will result in the closing down of the 2nd Defendant."

The judge was not greatly impressed by the evidential weight of this assertion, neither am I. A limited company is governed in its operations by the Companies Ordinance. The Ordinance requires directors of each company to lay before its shareholders the audited financial statements annually. One would assume that the 2nd defendant in its operations complies with the law. In these circumstances it is extraordinary that no audited accounts have not been put before the court. This was an omission pointed out in the judgment of Mortimer J. No further material has been put before me.

What I know about this company is no more than this. One, it has a paid-up share capital of $100,000 and two, that it drew a cheque dated 9 October 1992 on its account with The Yien Yieh Commercial Bank Ltd. ordering that bank to pay the 2nd plaintiff $50 million, thereby representing that when the cheque was presented on due date it would be met. What has happened between that date and now to effect such change of fortune that it would be ruined by having to pay $50 million has not been fully explained. In these circumstances, like the judge, I am by no means satisfied that if no stay were granted that would result in the financial ruin of the applicant."

Naturally, Mr Wong invited me not to be satisfied in the instant case.

6. Mr Thomson submitted that the Resourceful River Limited case is distinguishable. The court may rightly expect to see corporate accounts. But Dr Ip as an individual does not have to prepare statutory accounts. Really, I admire counsel for trying. When Dr Ip, as a medical practitioner and a natural person, claims that bankruptcy would have serious implications for his medical practice, he has to spell out and prove the implications. Is it averred that the practice would have to close? So what? Every business undertaking of an individual runs such risk when the person is adjudged bankrupt. Is it averred that the Defendant may or will be suspended from medical practice? If so, I have not been shown the relevant professional regulations.

7. Dr Ip says that his reputation would be ruined if stay is not granted. I think I may have done more damage to Dr Ip's reputation in giving reasons for the judgment against him in the action. Is that a ground for stay of execution? Of course not. Bankruptcy is based on adjudication, when a person has been adjudged impecunious, he has no cause for complaint that his reputation is thereby damaged. If the Defendant is not impecunious, he can pay security into court.

8. Dr. Ip also says that his financial standing would be damaged. I have no evidence as to how this can be the case. Dr Ip did not bother to place before the court credible materials about his financial standing. It is difficult to believe that as a doctor who owned a multi-disciplinary medical practice for so many years he has no savings. Does he own or control properties? Apparently he has controlling interest in a company that owns commercial and residential properties in Hong Kong. Any piece of property in Hong Kong is very likely to be worth more than $1.5 million. I cannot order stay of execution on bland statements.

9. Mr Thomson did draw my attention to the decision of Staughton LJ in Linotype-Hell Finance Ltd v. Baker [1982] 4 All ER 887. There the learned judge is reported as saying at p. 888:-

"It seems to me that if a defendant can say that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success, that is a legitimate ground for granting a stay of execution."

I cannot rely on this excerpt, taken out of context, for guidance. For the learned judge did go on to quote from the White Book that an applicant for stay has to show no reasonable probability of recovery upon successful appeal which is not the case here. The learned judge also found that in the case before him there was an arguable appeal. Of course counsel properly instructed can and will argue any appeal but that is not what the learned judge meant by arguable appeal.

10. In the circumstances, I granted stay of execution on condition that Dr Ip pays into court within 21 days as security $1.5 million together with interest thereon as per judgment. Mr Thomson intimated that Dr Ip will appeal against my order. So I further order that there be interim stay of the order on condition that Dr Ip files notice of appeal against the order within 7 days and to prosecute the appeal with dispatch. Costs of the application for stay must be the Plaintiff's subject to taxation in default of agreement. I so ordered too. I also gave liberty to apply.