SHANGHAI TONGJI SCIENCE & TECHNOLOGY INDUSTRIAL CO LTD v. CASIL CLEARING LTD

CACV 365/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 365 OF 2002

(ON APPEAL FROM HCCL 140/1999)

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J U D G M E N T

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Hon Rogers VP:

1. This is an application for leave to appeal to the Court of Final Appeal, though there is no dispute that the subject matter of this action comes within the financial limits of section 22(1)(a) of the Court of Final Appeal Ordinance and accordingly leave is given without any opposition.

2. The matter at issue today is whether there should be a stay of execution. It arises in this way: the defendant, against whom judgment had been obtained in the Court of First Instance, applied to the judge for a stay of execution and that was granted on terms that the money due and owing under the judgment of the Court of First Instance should be paid into court. This court has set aside that judgment and in those circumstances the judgment has gone and the stay of execution has automatically gone because there is nothing to stay.

3. Before this court, application is made that that money should remain in court pending the appeal to the Court of Final Appeal. It is said that the application is made under the court's inherent jurisdiction. When the court is asked to exercise an inherent jurisdiction which is not covered by a section of an ordinance or the rules of court, care must be taken to see (a) that the jurisdiction exists; and (b) that it is exercised in proper circumstances.

4. Whilst I do not consider on this application it is appropriate to consider whether the inherent jurisdiction would exist in these circumstances, I approach the case on the basis that it does, but I do not see that if it did exist that it should be exercised in these circumstances.

5. The defendant is a wholly owned subsidiary of a publicly listed company in Hong Kong. That holding company, China Aerospace International Holdings Limited, is, by all accounts, a substantial company. Admittedly it has been trading at a loss for the last two years, although I have to say that the excerpts from the accounts which have been put before this court are not entirely satisfactory because if accounts are to be referred to, one really has to look at the whole accounts and tie up the notes with the accounts and so on and so forth. That has not been possible in these circumstances.

6. Nevertheless, the holding company does seem to me to be of substance and, indeed, Mr Tong SC, who appears on behalf of the plaintiff in this matter, would have been content to accept a guarantee from the holding company. What it is said, however, is that the defendant is regarded as being a treasury company for the holding company. It is said that it is not trading on its own account, but, on the other hand, Mr Tong has not averred that the defendant in this case owes a debt and from those excerpts from the accounts which are before the court, it would appear that the defendant has a fully paid up capital of $10 million. Whilst the sums in this case are substantial, I see no basis for the suggestion that the holding company may, so to speak, let go of its subsidiary and let it go into liquidation or otherwise try and defeat a judgment that would be obtained.

7. In the present circumstances, I see no justification for this court to make an order under the inherent jurisdiction which would require the money which has been paid into court as a condition for the stay of the Court of First Instance judgment remaining in court. I would therefore dismiss that application.

Hon Le Pichon JA:

8. I agree.

Hon Sakhrani J:

9. I also agree.