CYBERLAND (CHINA) LTD v. ZHANG WEI BING

FAMV No. 20 of 2018

[2018] HKCFA 19

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 20 OF 2018 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV NO. 266 OF 2015)

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RULING

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Mr Justice Ribeiro PJ:

1.  The applicant (“Cyberland”) seeks an order staying payment out of court to the respondent (“Zhang”) of the sum of HK$51,230,137 plus accrued interest, until determination by the Appeal Committee of Cyberland’s pending application for leave to appeal to the Court. This is my Ruling made on the papers.

2.  The payment into court was made on 8 May 2013 pursuant to the Order of Harris J dated 15 April 2013 in winding-up proceedings[1] launched by Zhang against Code Agriculture (Holdings) Ltd (“Code Agriculture”) asserting a claim based on a HK$50 million convertible bond issued by Code Agriculture. 

3.  While it is common ground that Zhang is the legal owner of the bond, Cyberland commenced an action naming Zhang and Code Agriculture as 1^st and 2^nd defendants claiming beneficial ownership of the same.  Cyberland’s claim was dismissed by Chow J.[2]  Payment out of the sum in court was stayed on condition that HK$3 million was paid into court to fortify Cyberland’s undertaking in damages in support of the stay.  Cyberland then appealed to the Court of Appeal against Chow J’s judgment but was unsuccessful,[3] the Court of Appeal ordering payment out of the sums in court subject to a stay of 14 days.  The Court of Appeal then refused Cyberland leave to appeal to this Court and also refused to extend the stay of the order for payment out.[4]

4.  Cyberland then took out a motion dated 16 April 2018 for leave to appeal to this Court and made the present application by summons before myself sitting as a single Permanent Judge for a stay pending determination of the leave application (for which a hearing date has not yet been fixed).  I made an Order by consent dated 25 April 2018 granting an interim stay pending my present ruling on the papers.

5.  In support of the present stay application, Cyberland points out[5] that Zhang is a Mainland resident and submits that there is no evidence that he has any substantial assets in Hong Kong so that Cyberland fears that upon payment out, the money would be removed from the jurisdiction or dissipated.  Cyberland offers to pay an additional HK$3 million into court as further fortification for its undertaking as to damages, calculated to cover interest accruing on the sum in court pending determination of the leave application.

6.  Zhang opposes grant of a stay on the ground that the pending leave application has no reasonable prospects of success, his submission being that the grounds put forward are not reasonably arguable and do not raise any issue of great general or public importance.  He complains of prejudice due to his being kept out of the money.

7.  Whether the leave application succeeds or fails is a matter to be determined by the Appeal Committee and it would not be appropriate for a single Permanent Judge to pre-empt its determination by accepting Zhang’s invitation to decide here and now whether the leave application is reasonably arguable.  The balance of fairness clearly favours my grant of a stay on condition that Cyberland pays the further sum of HK$3 million into court by way of fortification of its undertaking as to damages, as mentioned above.  Such fortification sufficiently addresses Zhang’s complaint regarding delay.  As Cyberland seeks the Court’s indulgence it must bear the costs of this application.

8.  I accordingly make the following Orders, namely:

(a) That conditional upon Cyberland within 7 days of the date of this Order, paying the sum of HK$3 million into court by way of fortification of its undertaking as to damages in favour of Zhang; the Order of the Court of Appeal dated 19 December 2017 for payment out of the sum of HK$51,230,137 paid into court on 8 May 2013, together with interest accrued thereon, be stayed until after determination by the Appeal Committee of Cyberland’s Motion dated 16 April 2018 for leave to appeal to the Court of Final Appeal or further order; and

(b) That Cyberland do pay to Zhang the costs of this application.