MING HSIEH v. XU ZHE AND OTHERS

HCMP 3072/2014

[2018] HKCFI 599

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3072 OF 2014

____________

____________

_____________

D E C I S I O N

_____________

1.  This is a stay of execution application pending the appeal against my judgment dated 22 September 2017, under which the Plaintiff was ordered to pay the 2^nd Defendant a sum of $3,508,600 pursuant to an undertaking as to damages.

2.  The principles for the court in deciding whether to grant a stay of execution have been set out in the landmark case of Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, and I do not want to repeat the same here.

3.  So far as the requirement of an arguable appeal is concerned, the Plaintiff has satisfied this minimum requirement.  There are not many decided authorities on the circumstances as to how the court should assess damages after the discharge of a Mareva injunction.  In MGA Entertainment Inc v Toys & Trends (Hong Kong) Ltd & Ors (2014) 17 HKCFAR 27, the Court of Final Appeal held that damages pursuant to an undertaking as to damages should be liberally assessed and the court should approach the issue in a broad common sense way.  Despite such dicta, there is still some room for argument as to precisely how this principle is to be applied in practice.  Hence, I am satisfied that there is an arguable appeal in the present case.

4.  The next issue is whether the appeal will be rendered nugatory should there be no stay.  Here are some of the facts of this case which are relevant to the consideration on such issue.

5.  The 2^nd Defendant owns a valuable property in Hong Kong which was valued about $150 million in 2011 (“the Property”).  The 1^st and 2^nd Defendants are prepared to give an undertaking not to dispose the Property without prior notification to the Plaintiff.

6.  According to the record in the Land Registry, the Property was subject to a mortgage.  The outstanding mortgage sum as at May 2014 was about $68 million.

7.  The 1^st and 2^nd Defendants are now detained in the Mainland for criminal investigation for an alleged fraud which is related to the subject matter of this claim.

8.  Further, Mr Dawes, SC, counsel for the 1^st and 2^nd Defendants, informs the court that there will be a taxation hearing held on 6 March 2018 to tax the costs that had been ordered by the Court of Appeal to pay by the Plaintiff to the Defendants for the discharge of the Mareva injunction and the related appeal.  The costs claimed by the Defendants amount to about $5.1 million.  Taking into account that both sides had engaged senior counsel to appear in the discharge application and the related appeal, the amount of costs claimed by the Defendants is not surprising.

9.  Under these circumstances, I am of the view that, even if the 1^st and 2^nd Defendants are persons of low morality, there is only a negligible risk that the appeal would be rendered nugatory should there be no stay.

10.  The amount involved in my judgment dated 22 September 2017 is only about $3.5 million.  This is not a substantial sum as compared with the value of the Property of which the 1^st and 2^nd Defendants now undertake not to dispose without prior notification.  More importantly, the Plaintiff would have to pay substantial costs to the Defendants for the discharge application and the related appeal.

11.  The appeal against my judgment will certainly be heard in the near future.  It is unlikely that the Plaintiff will pay the taxed costs before the appeal hearing.  Taking into account the Plaintiff’s liability for costs, I am of the view that in the event of a successful appeal, the risk of the Defendants in not honouring the undertaking or to run away after the appeal is extremely small.  As there is only a negligible risk that the appeal would be rendered nugatory should there be no stay, I refuse to grant the stay application.