ROBERT JOHN FRANCIS BROTHERS AND ANOTHER v. NEW RUI INTERNATIONAL CO LTD

HCA 1215/2024

[2024] HKCFI 3651

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1215 OF 2024

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D E C I S I O N

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1.  In this action (HCA1215/2024), on 18 November 2024, Master SP Yip gave the defendant leave to defend the plaintiffs’ Order 14 application. The plaintiffs have appealed. The appeal (“the Master Appeal”) is fixed for hearing on 6 March 2025 before DHCJ Le Pichon.

2.  The defendant wishes to stay the hearing of that appeal as a matter of case management to await the Judgment of the Court of Appeal (“CA”) in CACV433/2023 from DHCJ Le Pichon’s decision in HCA654/2023. CACV433 was heard yesterday. Judgment was reserved. Subject to PD 36, no date was indicated for delivery.

3.1.  This action (HCA1215) and HCA654 are between the same parties, and arose from the same transaction, being an Agreement for Sale and Purchase in 2021, with the plaintiffs as Vendors and the defendant as Purchaser.

3.2.  The Agreement for Sale and Purchase provided for two sums to be held in escrow : (1) a tax and warranty retention sum of $10m; and (2) a Short Term Tenancy (“STT”) retention sum of $20 million.

3.3.  The tax and warranty retention sum is the subject of HCA654 and the STT retention sum is the subject of HCA1215.

3.4.  The defendant raised a common defence in both actions of misrepresentation which entitles it to rescission (though it is not the only defence).

3.5.  The plaintiffs raised a common reply in both actions that the defendant had affirmed the contract in correspondence from its solicitors after being aware of the extent of the effect of the alleged misrepresentations, and thus it is no longer entitled to rescission.

4.  As the CA in CACV433 will decide on this argument of affirmation, which is common to both actions, it seems to me that it is only sensible for the Master Appeal to be stayed until the CA delivers Judgment. There is of course a possibility of the CA delivering its Judgment before 6 March, just as there is a possibility of it being delivered after 6 March (which is less than 3 months away) given its very heavy workload.

5.  In the absence of an indication from the CA as to when it would deliver Judgment, I do not think this application for a stay of proceedings is premature. As of today, we are less than 3 months away from 6 March, and if the proceedings are not stayed, preparation for the Master Appeal would have to start soon in the sense of booking counsel’s diaries. I note that before DHCJ Le Pichon (HCA654), leading counsel were instructed by both sides.

6.  The plaintiffs’ suggestion that the judge hearing the Master Appeal (whether DHCJ Le Pichon or another judge) could deal with only some issues (but not the affirmation issue pending the CA Judgment) would clearly lead to a waste of court time and the incurring of more costs for parties.

7.  As for the plaintiffs’ argument that the defendant has delayed in making this application, I accept Mr Cheng’s argument that it was the right balance to strike to only issue this application after the defendant had succeeded before the Master. And it was, I think, sensible for it to fix the hearing of the application for today, in case the CA was able to give an order allowing or dismissing CACV433 yesterday.

8.  As a stay of the Master Appeal now would at least save the costs of parties and the court’s resources, I would grant an order in terms of paragraph 1 of the Summons filed on 5 December 2024.

9.  There is no reason why costs of the summons should not follow the event, so I would order that the plaintiffs to bear the defendant’s costs of the summons including the hearing today which I would summarily assess at $55,700.