XCHRX Celestial (International) Securities & Investment Ltd. v. William Henry Woo

HCA 9659/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.9659 OF 2000

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R U L I N G

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1. This is an application by the defendant for a stay of execution pending determination and disposal of the defendant's appeal against the order of Master de Souza made on 27 August 2001 giving summary judgment to the plaintiff under Order 14.

Background of this case

2. The plaintiff's claim against the defendant is for repayment of a loan for HK$60 million granted by the plaintiff to the defendant on 24 January 2000 and which was evidenced by a written loan agreement ("the Loan Agreement") signed by the defendant, and also by a written Share Mortgage Agreement of the same date also signed by the defendant by which the defendant charged and assigned to the plaintiff by way of a first legal mortgage 100 shares in Yorkshire Development Limited in consideration for the grant of the HK$60 million loan by the plaintiff under the Loan Agreement.

3. There is no dispute that the HK$60 million has been paid over to the defendant and received by him. There is also no dispute that the defendant had paid two quarterly installments of interest to the plaintiff each of HK$1.8 million pursuant to the terms of the Loan Agreement.

4. The defence raised by the defendant to the plaintiff's claim was that one Bankee Kwan, the Chief Executive Officer of the plaintiff, had before the Loan Agreement and the Share Mortgage Agreement were signed by the defendant :

(a) agreed to enter into a joint venture with the defendant in respect of Digital Multimedia Broadcasting and for which Bankee Kwan agreed to provide the full funding of HK$60 million;

(b) requested the defendant to sign the Loan Agreement and the Share Mortgage Agreement; and

(c) represented to the defendant that the signing of these two documents were mere formalities and would not be enforced by the plaintiff.

Relying on such representations, the defendant thereupon signed the Loan Agreement and the Share Mortgage Agreement. In the circumstances, the defendant says that he is now not liable to the plaintiff for the sum of HK$60 million as claimed.

5. On 23 October 2000, which was one day before repayment of the HK$60 million loan was due under the Loan Agreement, the plaintiff solicitors by letter requested repayment of the loan from the defendant on 24 October 2000 when it fell due. When the defendant's solicitor replied by letter dated 24 October 2000 denying liability to repay the loan, the Writ in this matter was issued on 25 October 2000.

6. A defence was filed by the defendant on 13 December 2000.

7. On 12 May 2001 the Summons for summary judgment was issued by the plaintiff after the Writ and Statement of Claim was re-amended on 25 April 2001. The application for summary judgment was heard by Master de Souza who gave summary judgment for the plaintiff on 27 August 2001.

8. The defendant appealed against that Order of Master de Souza by Notice of Appeal dated 8 September 2001 in which Notice the defendant sought unconditional leave to defend. The hearing of that appeal was scheduled to be heard by a judge of the High Court on 21 November 2001, namely, in one week's time.

9. In the meantime, the plaintiff took steps to execute the judgment it obtained. Firstly, the plaintiff took out a Garnishee application. This had resulted, I am told, in the plaintiff recovering some HK$200 odd and the Garnishee order had already been made absolute.

10. Secondly, the plaintiff also applied for oral examination of the defendant as a judgment debtor under Order 48. That examination hearing is now fixed to be heard before Master Rogers on 7 December 2001 at 10 a.m. Pursuant to that application for examination of judgment debtor, Registrar Chan made an Order on 4 October 2001 that the defendant shall, as far as possible, supply to the plaintiff's solicitors by 18 November 2001 copies of bank passbooks, bank statements, bank accounts, details of banking facilities, statement of accounts of his business, tax returns and assessments, all shares or stocks certificates, title deeds and other documents showing what assets or properties the defendant has.

11. I am told by counsel for the plaintiff that apart from those steps stated above, no other steps have been taken by the plaintiff to execute the judgment obtained.

12. It is therefore against this background that the defendant now applies for a stay of execution of the judgment pending the determination and disposal of his appeal against the order of Master de Souza.

The application for stay

13. The defendant is and was at all material times a practicing solicitor in Hong Kong and the principal of his own solicitor firm by the name of William H. Woo & Co. whose offices is situated in Central.

14. There is no dispute between the parties as to the applicable legal principles for a stay of execution pending appeal. Both the plaintiff and defendant accept that the current practice is that stated by Staughton LJ in Linotype-Hell Finance Ltd v. Baker [1993] 1 WLR 321, namely, it is for the defendant to show :

(a) without the stay of execution he will be ruined financially; and

(b) he has an appeal which has some prospect of success.

15. The starting point however, must be a plaintiff must not be denied the fruits of the judgment he has obtained unless good grounds are shown.

16. Before applying these principles to the present case, I should deal with one preliminary matter concerning the evidence before me. At the start of this hearing, objection was taken by counsel for the plaintiff to the defendant relying upon the 4th affidavit of the defendant on the grounds that the 4th affidavit of the defendant was not filed in compliance with the order given by Master Kwan on 26 October this year whereby the Master gave directions as to the filing of affidavit evidence in respect of this application for stay, and that leave of the Court had not been obtained by the defendant to rely upon his 4th affidavit for this application. Counsel for the plaintiff further indicated that should the defendant seek and be granted leave to rely upon his 4th affidavit in this application, he would require an adjournment in order to file further affidavit evidence in opposition to what had been stated in the defendant's 4th affidavit.

17. Faced with that opposition by the plaintiff, Mr Hoy who appears for the defendant indicated that he would not wish for the hearing to be adjourned and that he would not seek to rely on the 4th affidavit of the defendant but to press on with this application.

Merits

18. The evidence relied on by the defendant is contained mainly in his 3rd affidavit. (There is of course the affidavit of Mr Hoy filed in this application but the matters stated therein by him were as advised by the defendant).

19. In the defendant's 3rd affidavit, he produces a copy of his firm's latest audited accounts made up of the Accountant's Report, Balance Sheet and Profit and Loss Account as at 31 March 2001. These documents show that the firm suffered a loss of HK$1.9 million odd for the year ended 31 March 2001.

20. The defendant further states in paragraph 7 of his 3rd affidavit.

"I am not presently in a position to pay the Judgment Debt. I will be ruined in terms of my reputation as a solicitor, in the conduct of my business and financially unless the stay is granted pending my Appeal."

21. The defendant has also referred to the fact that since the judgment made against him, the Law Society has been investigating into his firm's business and that investigation has disrupted the business of his firm.

22. Admittedly the judgment debt of HK$60 million is not a small amount by any standard. Having said that, I have no means of knowing what, if any, other assets or property the defendant has. Apart from the audited accounts of his firm for the year ending 31 March 2001, nothing else has been stated or produced by the defendant to show his financial position.

23. These courts have said time and again that a stay of execution will not be ordered on bland statements as what has been stated by the defendant herein.

24. As regards the defendant's prospect of success on his appeal, perhaps the less said the better since that appeal hearing will take place shortly, albeit before another judge.

25. It appears to me that the point seems to revolve around whether or not the defendant will be able to overcome the parole evidence rule which stands in his way, namely whether the defendant will be allowed to contradict the written terms of the Loan Agreement and the Share Mortgage Agreement by relying on oral extrinsic evidence of the alleged representation and/or alleged agreement with Bankee Kwan.

26. It appears to me that the prospect of success for the defendant in his appeal is not good.

27. One final matter which I take into account is that this application for stay appears to me, on the factual background of this case as stated above, to have been made with a view to delaying or postponing the examination of the defendant as a judgment debtor by delaying or postponing the disclosure of the documents ordered by the Registrar as there does not appear to be any other good reason for asking for a stay since the examination of the defendant is the only step being taken by the plaintiff at present by way of execution.

28. For all the reasons given above, the summons for stay of execution pending appeal is dismissed.

29. I shall now hear the parties on costs.