TSUI PO HING AND ANOTHER v. SK KAKEN CO LTD AND ANOTHER

HCCL 42/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 42 OF 2004

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JUDGMENT ON APPLICATION FOR STAY 
OF EXECUTION OF ORDER FOR PAYMENT
OF TAXED COSTS

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This application

1.  By this application dated 8 April 2010, a stay of execution is sought by the 1^st plaintiff, Mr Tsui Po Hing, against execution of a costs’ allocatur obtained by the defendants, after taxation by Master Ko, in the sum of HK$1,264,969.50, such costs representing the costs awarded to the defendants after the trial of this action before the Commercial Court in January 2007, judgment therein being handed down on 6 March 2007.

2.  This is the second such application by Mr Tsui for a stay of execution, and in the particular circumstances it may assist to outline the main procedural events to-date.

The procedural background

3.  The present sequence of events commenced with the trial in this action, which is HCCL 42 of 2004. 

4.  This occupied 9 days in January 2007, and resulted in the dismissal of the claim which had been brought by Mr Tsui Po Hing, together with his brother, Mr Tsui Po Cheung, against the 1^st and 2^nd defendants, a Japanese and a Hong Kong company respectively.  This judgment, of some 65 pages, speaks for itself.

5.  This dismissal of the plaintiffs’ claim was appealed to the Court of Appeal, and prior to the hearing of such appeal, Mr Tsui Po Hing, the present applicant, had taken out his first application for a stay of execution (‘1^st stay application’), which was heard on 15 June 2009. 

6.  The stay as then sought, however, was mounted on the basis that he wished to stay the process of the taxation of costs by the successful defendants until the hearing of his substantive appeal against the judgment of March 2007.

7.  This 1^st stay application was refused by this court, by written decision dated 15 June 2009; once again, this decision speaks for itself.

8.  The next relevant event was the hearing by the Court of Appeal (Hon Tang VP, Cheung and Yuen JJA) of the substantive appeal from the judgment in HCCL 42 of 2004. 

9.  This appeal was heard on 10 November 2009, and on 27 November 2009 judgment was handed down, dismissing the appeal with costs.

10.  However, the appeal against this court’s order of 15 June refusing the 1^st stay application pending appeal of the substantive judgment to the Court of Appeal had remained in the interlocutory Appeals list, and on 26 March 2010 the appellate court (Hon Tang VP and Lam J) handed down judgment dismissing that appeal also, Tang VP noting in the judgment that the substantive appeal already had been resolved, and thus this appeal (CACV 167/2009) had “been overtaken by events”.

11.  It is worth recording that at the hearing of CACV 167/2009 Mr Tsui Po Hing noted that he also had applied to the Court of Appeal for leave to take the substantive appeal to the Court of Final Appeal, that such was due to be heard on 23 April 2010, and accordingly that a stay of execution should be granted pending that application.  However this application also was declined, Tang VP noting (at para 4 of the judgment dated 26 March 2010) that the court was not then seized with an application for a stay pending appeal to the CFA.

The present summons

12.  This then is the backdrop to the present application (‘the 2^nd stay application’) for a stay of execution before this court; however, the basis of the application has changed.

13.  Whereas the 1^st stay application had sought to stay the taxation process, such taxation now has taken place; as earlier recorded, Master Ko has assessed the taxed costs originating from the trial in the approximate sum of HK$1.26 million.

14.  Mr Tsui Po Hing repeats that he does not have this sum available to effect payment of the allocatur, and by reason of such non-payment he is facing a bankruptcy petition issued against him by the defendants; I am informed that the hearing of this petition is scheduled for 4 May 2010, so that if this relief is granted at the behest of the unpaid defendants, it is probable Mr Tsui will be made bankrupt on that date.

The argument

15.  Mr Tsui’s basis for this 2^nd stay application is that there presently is before the court a High Court case, No HCA 16850 of 1998, wherein he is resisting a claim by the Japanese defendants in the original trial, and he himself is defending and counterclaiming for the sum of about HK$23 million; thus, he says, if he wins at trial before Mr Justice Anthony To – as he maintains that he is likely to do – then not only will he not be in debit to the defendants in terms of the taxed costs as now assessed at HK$1.26 million, but, to the contrary, he will be well in credit and it will be he who is owed a substantial sum by the defendants.

16.  I have no doubt that this is the gravamen of his application, although formally I should record that both Mr Tsui’s summons and his supporting affidavit are in Chinese, and were placed before me in untranslated form, although the court did its best at the hearing to ascertain the position, aided not only by skilful interpretation of Mr Tsui’s evidence, but also with the kind assistance of Mr Billy Ma, counsel instructed for the opposing parties.

17.  Mr Tsui insists that he has a good chance of winning this suit in HCA 16850 of 1998, not least because his newly Amended Defence and Counterclaim is based, in substantial part, upon the accounting material disclosed both the other side’s discovered documents and witness statements.

18.  In the substantive judgment of this court in HCCL 42 of 2004, mention was made of this other action, which therein was referred to as the ‘collateral action’ (see paragraphs 13-16 thereof), and in particular reference was made to the refusal of a Master to permit consolidation of these cases: hence this court observed in its judgment that the procedural demarcation of these cases (HCCL 42 of 2004 having been placed in the Commercial List, whilst HCA 16850 of 1998 remained within the General List) did not assist, since this court was placed in the unfortunate position of judging the case before it “absent complete knowledge of the full background of the trading between SKK Hong Kong and [the brothers Tsui, trading as] Protech Industrial, which in the ‘collateral action’ has mounted a counterclaim against SKK Hong Kong”, which counterclaim, at least in its August 2006 manifestation, “asserts a claim in the order of some $11 million, a dramatic increase upon the initial 1998 formulation of HK$1.1 million”.

19.  Now, apparently, Mr Tsui has been able to increase the counterclaim yet again, leave so to amend having been granted by A To J. on 16 December 2009, to some HK$23 million, by utilizing, as I have noted, discovered material and witness statements of SKK; whilst I have not had the opportunity of inspecting the completed pleadings, including the Reply and Defence to Counterclaim (for what that exercise may be worth), it is clear that the counterclaim he now is mounting in this other action stems from the profusion of detailed inter-corporate dealings between Protech Industrial and SKK Hong Kong/SKK Kaken during the Nineties.

20.  In essence, therefore, this ‘collateral action’ strikes me as essentially being in the nature of a mutual accounting exercise: SKK Hong Kong is suing for the price of goods sold and delivered to Protech (which on the pleading as it stood in March 2007 was in or around HK$8.16 million), which apparently now has attracted a Protech/Tsui brothers counterclaim of the order of some HK$23 million.

21.  This court has, of course, no way of determining the relative merits of these cross-claims in terms of the reconciliation of these alleged mutual debts, but at the least it appears clear that this ‘collateral’ High Court action indeed is going to proceed.

22.  I have been informed that the designated trial judge is Anthony To J., and that whilst no trial date yet has been fixed, a Case Management conference has been scheduled before the learned judge for 10 June 2010; I also have been told that pleadings, together with discovery and witness statements, have been completed, and I assume that further directions necessary for getting the matter to trial will be made at the forthcoming CMC, so that with the new Civil Justice rules in place, which are designed to achieve expedition, presumably the trial of HCA 16850 confidently can be predicted to take place at or around the end of 2010.

23.  This court also was informed during argument that in terms of a stay of execution of the sum in assessed costs, which subject apparently was raised before Mr Justice To by Mr Tsui at the last hearing before him, that the judge had inquired of the defendants in HCA 16850 whether this issue could be the subject of consent pending resolution of this ‘collateral action,’ but that such consent was not forthcoming.

24.  This hard line fits in with the instructions of Mr Billy Ma, counsel for S.K. Kaken Co Ltd and SKK (HK) Co Ltd, who has told this court that his clients wish to proceed to execute the costs’ order already obtained in their favour consequent upon the taxation in HCCL 42 of 2004, and who most definitely did not wish to grant any indulgence to Mr Tsui Po Hing in the present application, notwithstanding the claim he now makes in the counterclaim in HCA 16850 of 1998.

25.  Upon instructions Mr Billy Ma opposed the present application on three principal grounds: first, that his clients certainly did not accept that Mr Tsui was going to win on his recently-amended counterclaim in the ‘collateral action’; second, that even if this did turn out to be a strong counterclaim, the fact that by that stage Mr Tsui Po Hing may have been made bankrupt was not significant, since the trustee in bankruptcy could, if he so wished, continue with the litigation; and third, that Mr Tsui should have made this argument relating to the action in HCA 16850/1998 at the time of the 1^st stay application, and that to take this second opportunity to argue for a stay meant that effectively this was an abuse of process, particularly as this court’s rejection of the 1^st stay application had been upheld on appeal.

26.  Within the bankruptcy context, Mr Ma pointed in particular to the observation of Tang VP in dismissing the appeal CACV 167/2009 against rejection of the 1^st stay application, wherein the learned judge had noted (at paragraph 5) that whilst Mr Tsui had submitted that a refusal of a stay might have the effect of making him and his brother bankrupt, and thus stifle their intended appeal to the CFA, nevertheless that “if their application for leave to appeal to the Court of Final Appeal succeeds, the trustee in bankruptcy might not wish to put a stop to the appeal.  So I would not presume that if the plaintiffs had a meritorious appeal, it would be stifled.”

Decision upon stay of execution application

27.  I confess that I have been in two minds about this application.

28.  Mr Tsui Po Hing is, of course, known to me by reason of his participation in the trial in this action, and by virtue of his 1^st stay application.

29.  It is a matter of record that he (together with his brother, Tsui Po Cheung) failed at trial – thereby engendering the costs which now have been taxed and which form the basis of the bankruptcy petition currently filed against him, and thus necessitating this 2^nd stay application – and looking at the matter in the round it is difficult not to feel that he has not been fortunate in his dealings with the legal system.

30.  Not only was he refused leave to consolidate HCA 16850 of 1998 with the present action – which in my view was a curious and unfortunate decision, since such consolidation would have enabled this court to see, and decide upon, the entire panorama of the Tsui brothers’ relations with SK Kaken Co Ltd and SKK (HK) Co Ltd - but Mr Tsui Po Hing also appears to have been advised that his case  in HCCL 42 of 2004, which involved a claim for damages arising from a claimed (and entirely undocumented) 50 year franchise and which was based, it seemed, upon but one meeting with his putative Japanese partners, had some prospect of success – and to this end Mr Tsui and his brother had employed an extensive (and no doubt highly expensive) legal team, which had the effect of, he says, exhausting his assets, with the consequence that he now is obliged to appear in person, his application for legal aid apparently having been declined.

31.  He thus faces a position in which the taxed costs of HCCL 42 of 2004 form a crystallized demand underpinning the ongoing bankruptcy proceedings, notwithstanding that  but a few months hence he has the ‘other half’ of his dispute with these defendants due for trial, and wherein he asserts that, based on the defendants’ own disclosed information, his counterclaim – now pleaded in the sum of HK$23 million - has a real prospect of success in what appears to be, as I have observed, an action for an account of the mutual dealings between these parties over a period of years.

32.  I therefore have some sympathy with his present predicament, which is that he cannot at present find the sum to satisfy the HK$1.23 million in taxed costs, thereby buttressing the defendants’ application that he be made bankrupt and, if and in so far as the current bankruptcy petition is successful, leaving the fate of his outstanding counterclaim to the discretion of his trustee in bankruptcy, with no guarantee whatever that the counterclaim in HCA 16850 of 1998 will be pursued.  In fact, whilst the status of bankruptcy, if attained against him, probably will not achieve recovery for the defendants of the sum currently outstanding in taxed costs, it is very likely to be utilized to place some considerable pressure on Mr Tsui to drop his claim in the ‘collateral action’.

33.  I recognize, however, that any sympathy of this court is insufficient to get home on an application, and that if Mr Ma, who argued this application with great common sense, is able to land a ‘knockout blow’ in resisting this 2nd application of Mr Tsui for a stay of execution, then that is an end of the matter.

34.  However, notwithstanding Mr Ma’s attractive submissions, I do not consider that he has been able to do so.

35.  As earlier noted, Mr Ma made three bull points, but it strikes me that, with respect, none of these are sufficient to get him home, either individually or collectively.

36.  First, the fact that his clients do not accept that Mr Tsui is going to succeed on his counterclaim is, in reality, nothing to the point; they are hardly likely to accept the assertion that he is going to win, given the financial disparity in Mr Tsui’s favour between their claim and counterclaim as currently pleaded, so that at bottom this point is neither here nor there.

37.  Second, there remains the assertion that, even if Mr Tsui now were to be rendered bankrupt at the forthcoming hearing of the petition in the Bankruptcy Court on 4 May 2010, this need not be the end of his counterclaim in the ‘collateral action’ as the trustee in bankruptcy retains the option of continuing with the existing claim in HCA 16850 of 1998.  This may be so as a matter of hypothesis, but for present purposes I am unwilling in this matter to consign Mr Tsui to the unfettered discretion of a potential trustee in bankruptcy, whomever that may be, and who may be minded to take a different view of the merits of Mr Tsui’s detailed counterclaim. 

38.  It is of course true, as Tang VP pointed out in his judgment dismissing Mr Tsui’s appeal against the refusal of this court to grant his 1^st stay application (albeit in the context of a possible hearing of a substantive appeal in the CFA against the adverse judgments at first instance in the Court of Appeal in HCCL 42 of 2004), that if indeed there was a meritorious appeal, it should not be presumed that it necessarily would be stifled, but it seems to me, on reflection, that the possibility that Mr Tsui’s counterclaim in HCA 16850 of 1998 would not be stifled is insufficiently certain for present purposes, and to leave it to the discretion of a no doubt busy trustee in bankruptcy would not be appropriate (or indeed serve to do justice) in the circumstances of this particular case.  So in my view this point does not run either.

39.  Third, Mr Ma says that Mr Tsui should have made this argument at the hearing of the 1^st application, and thus, in effect, that this ‘second bite of the cherry’ is abusive of the process, and should not be countenanced.

40.  I have reflected on this argument, but once again I am unconvinced.

41.  It seems to me that the analysis as propounded is not correct; in fact, if anything, it is off-point.  The correct argument, it seems to me, is that the 1^st stay application (which was dismissed, both at first instance and on appeal) was premature, and that instead of taking out the 1^st stay application in the attempt to prevent the taxation of the defendants’ costs in HCCL 42 of 2004, Mr Tsui should have waited until, emergent from this taxation, there had appeared a costs’ sum certain as due and owing, as now is the position, and which forms the basis of the current bankruptcy petition as mounted by the defendants.

42.  Moreover, the basis of the present application is different from that of the 1^st application; in the latter, the basis for the stay as sought was that Mr Tsui was hopeful of winning the appeal against the substantive judgment of this court in this action, although, as this court observed in its judgment upon the 1^st stay application (at paragraph 12 thereof) his grounds of appeal were “profoundly weak”, a view which turned out to be well-founded.

43.  On this 2^nd stay application, however, the basis is different: it is now premised upon the prospect of success of his amended counterclaim in the ‘collateral action’, and thus I do not consider that this application is susceptible to attack upon what might be regarded as an interlocutory version of the ‘Yat Tung principle’.

44.  At the end of the day, therefore, and after some pause, I have decided to grant a stay of execution as requested by Mr Tsui, albeit in this decision I do not go as far as he would wish.

45.  Whilst I have concluded that a case is made for a stay of execution per se, in the circumstances I am disinclined to make such a stay ‘open-ended’.

46.  I am conscious of the fact that in terms of HCA 16850 of 1998 I do not have the sort of detailed grasp of the case that is the situation when cases in the Commercial List are subject to case-management by this court; to the contrary, HCA 16850 of 1998 is under the case-management and overall supervision of Mr Justice Anthony To, and, as earlier noted, there is a Case Management Conference scheduled for 10 June 2010.

47.  I therefore am minded to order that there is to be an interim stay of execution of the order for the payment of the taxed costs consequential upon HCCL 42 of 2004, and that this stay of execution is to run from the date of this judgment until the completion of the Case Management hearing on 10 June 2010 before Mr Justice To.

48.  I therefore decline to go as far an unrestricted stay pending the conclusion of the trial of the ‘collateral action’, and I anticipate that in the circumstances Mr Tsui will have to renew his application for a stay of execution of the taxed costs at the conclusion of the forthcoming hearing before To J.  I further anticipate that at this stage that Mr Justice To will have the benefit (if benefit it be) of this judgment, and that by the time of the CMC before him he will be in a better and more informed position in which to exercise his discretion as to whether or not to extend the interim stay which I now order.

49.  I do not like ‘passing the procedural parcel’ to a judge of co-ordinate jurisdiction, but in the present case I see no appropriate alternative, given that Mr Justice To will have an altogether better ‘feel’ for the plaintiffs’ claim and Mr Tsui’s counterclaim in the case that will in due course be tried before him, in all probability at or around the end of this year since I understand that the greater part of the pre-trial procedure now has been completed.

50.  The interim stay of execution order which I now make also will have the effect of rendering necessary the adjournment of the hearing of the bankruptcy petition presently set for 4 May 2010 before the judge in charge of the Bankruptcy List, since the outstanding debt underpinning the bankruptcy petition now is subject to an order for an interim stay.

51.  Once again, I trust that this judgment will serve to inform the learned bankruptcy judge of the precise position, and thus enable him to act against an informed background, given that Mr Tsui has told this court that he intends to continue to act in person, and not to appeal the decision of the Legal Aid Department to reject his application for legal aid.

52.  For my part I consider that he should reconsider this stance regarding any appeal against refusal of his application for legal aid, not only in light of this judgment, but also given the very considerable significance to him of succeeding in all or part of his counterclaim in HCA 16850 of 1998. That, however, must be a matter for him.

53.  I trust also that Mr Tsui will obtain translation of this judgment, the better fully to understand the meaning and implication of what is being said, although my memory is that although he wished to conduct this application via a Chinese interpreter, he nevertheless does have a reasonable grasp of English.

Order

54.  Consequent upon the foregoing, therefore, I make the following Order:

(i) That the application dated 8 April 2010 of Tsui Po Hing be granted in part, and that there be an interim stay of execution of the enforcement by the defendants of the costs taxed in their favour consequent upon the determination of HCCL 42 of 2004, and that such interim stay is to extend until the conclusion of the Case Management Hearing in HCA 16850 of 1998 scheduled to be held before Mr Justice Anthony To on 10 June 2010;

(ii) That the applicant herein, Mr Tsui Po Hing, be at liberty to renew his application for a stay of execution at the conclusion of the said Case Management before Mr Justice To.

(iii) There will be an order nisi that there be no order as to costs of this application.

(iv) If and in so far as may be necessary, there be liberty to both parties to apply.

Addendum

1. In this judgment I have alluded to the fact that the ‘2^nd stay’ application before this court was made by Mr Tsui Po Hing in person.

2. Accordingly, the Order as made applies solely to this gentleman.

3. However, my clerk has drawn my attention to the fact that the ‘Chinese summons’, as filed by Mr Tsui Po Hing, also mentions on its face his brother, Mr Tsui Po Cheung, as also being an applicant.

4. Mr Tsui Po Cheung did not appear before me, nor did Mr Tsui Po Hing mention him in the course of his application.

5. These two brothers were the 1^st and 2^nd plaintiffs in HCCL 42 of 2004, and I presume (although I have not been told) that the order for costs as obtained was obtained against each brother on a joint and several basis.

6. Nor have I been informed as to whether Mr Tsui Po Cheung is subject to forthcoming bankruptcy proceedings on the basis of the crystallized sum in unpaid costs; in fact, I do not recall Mr Billy Ma referring to this gentleman.

7. In these somewhat odd circumstances, I think it worth adding this addendum to make it clear that, whilst I have not heard the other side on the point, absent a significant difference in the factual situation of the two brothers, I should have been minded to have made the like Order in terms of Mr Tsui Po Cheung as that ultimately made for Mr Tsui Po Hing had Mr Tsui Po Cheung also appeared and mounted the like application to that of his brother.

8. Accordingly, whilst there is extant no interim order providing for a stay of execution in favour of Mr Tsui Po Cheung, since I have not been asked to consider his case specifically, it occurs to me that a statement of this nature may assist the defendant respondents, and the bankruptcy court, if indeed the defendants have issued a bankruptcy petition against Mr Tsui Po Cheung also.

9. I stress, however, that whilst presently I can perceive no difference in the factual situation of the brothers Tsui in term of the costs liability for HCCL 24 of 2004, absent consent of the defendants no interim stay of execution order is made with regard to Mr Tsui Po Cheung unless and until the defendants have had the opportunity to be heard upon the issue.

10.  Whilst the Order as made provides for liberty to both parties to apply, for the avoidance of doubt I also give liberty to apply to Mr Tsui Po Cheung should he consider it necessary to come to this court to apply for the relief as sought, and as now obtained, by his brother.