MAN SUN TRADING LTD v. LAU WING KEUNG STEPHEN

DCCJ 4410/2017

[2019] HKDC 1541

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4410 OF 2017

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DECISION

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APPLICATIONS

1.  This is the hearing for the following three applications:

(1) The plaintiff’s application by summons dated 30 May 2019 for an order that unless the defendant do pay the plaintiff the following sums pursuant to the Order made by Master Simon Ho dated 4 October 2018 within 7 days from the date of the order to be made herein:

(a) A sum of HK$150,000 for the period from 1 August 2017 to 31 October 2018;

(b) A monthly sum of HK$10,000 on the first day of each calendar month commencing from 1 November 2018 until further order;

(c) Costs summarily assed at HK$50,000,

 the whole of the defendant’s Re-Amended Defence and Counterclaim be struck out and the plaintiff be at liberty to enter judgment in the terms set out in the Statement of Claim filed on 6 October 2017 against the defendant (“Plaintiff’s Unless Order Application).

(2) The defendant’s application by summons filed on 16 September 2019 for stay of execution and enforcement of an order made by Master Simon Ho dated 4 October 2018 until the final outcome of his right to appeal to the Court of Appeal (“Defendant’s Application for Stay of Execution”).

(3) The defendant’s application by letter dated 10 October 2019 to vary the costs order nisi in my decision dismissing the defendant’s application for leave to appeal to the Court of Appeal (“Defendant’s Application to Vary Costs Order Nisi”).

HISTORY

2.  I repeat and adopt paragraphs 4 -18 in my decision dated 30 September 2019 (the “1^st Decision”) as background to the present applications. 

3.  In terms of procedural history, in gist, the plaintiff applied by summons dated 28 May 2018 for interim payment during the pendency of the action against the defendant.  By Order dated 4 October 2018, Master Ho ordered the defendant to pay as interim payment: (i) HK$150,000 for the period from 1 August 2017 to 31 October 2018 within 30 days of the Order; and (ii) HK$10,000 on the 1^st day of each calendar month starting from 1 November 2018 until further order of the court.  The defendant was also ordered to pay costs of the plaintiff’s application.  The defendant appealed against the learned Master’s decision.  I dismissed the defendant’s appeal in the 1^st Decision.  The defendant then applied for leave to appeal to the Court of Appeal.  I dismissed the defendant’s application in a decision dated 17 December 2018 (the “2^nd Decision”).

4.  The defendant has applied to the Court of Appeal for leave to appeal.  The result to such application is pending.

DEFENDANT’S APPLICATION TO VARY COSTS ORDER NISI

5.  The defendant applies to vary the costs order nisi made in the 2^nd Decision: “costs of the application for leave to appeal are to be paid by the defendant to the plaintiff, with certificate for counsel, on a party and party basis, to be taxed if not agreed.”  The costs order followed the result that the defendant’s application for leave to appeal was dismissed.

6.  The defendant essentially says that because he is applying for leave to appeal to the Court of Appeal, he should not be ordered to pay costs.  In effect he is asking to stay the execution of the costs order rather than disagreeing with the principle that costs should follow the event.  I do not see any special circumstances to vary the costs order nisi. The Defendant’s Application to Vary Costs Order Nisi is dismissed.

DEFENDANT’S APPLICATION FOR STAY OF EXECUTION

7.  The legal principles for an application are trite.  The starting point is Order 59 rule 13(1)(a) of the Rules of the High Court:

“Except so far as the court below or the Court of Appeal or a single judge may otherwise direct an appeal shall not operate as a stay of execution or of proceedings under the decision of the court below.”

8.  Order 45 rule 11 of the Rules of the District Court provides:

“Without prejudice to Order 47, rule 1, a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks fit.”

9.  The principles governing the grant of a stay of execution of a judgment or order have been set out in Star Play Development Ltd v Bess Fashion Management Co Ltd[1]:

(1) Unless the defendant can justify a stay of execution, one will not be ordered.  Justification can be demonstrated only if good reasons exist.

(2) Good reasons refer to factors such as whether the absence of a stay would render an appeal nugatory and the merits of the appeal.

(3) In determining whether an appeal would be rendered nugatory, the Court must first have regard to the nature of the order that was the subject matter of the appeal.  If the order appealed against was a money judgment, it is insufficient for the appellant to say that the levying of execution would result in financial ruin or serious financial consequences for the appellant.  The Court would require good evidence to support the contention.  A bare assertion is not enough.

(4) It is impractical and even undesirable for the court to go deeply into the merits and the strengths of an appeal.  It must however form a preliminary view of these aspects.

(5) The existence of merely an arguable appeal cannot by itself amount to a sufficient reason to justify a stay.  It is the minimum requirement before a court would consider granting a stay.  On the other hand the existence of a strong appeal or a strong likelihood that the appeal would succeed will usually by itself enable a stay to be granted.

(6) It is always relevant to consider the prejudice that would be caused to the successful party in the event a stay is granted and if necessary, to impose conditions so as to minimise the prejudice caused to him.

10.  The defendant relies on the following grounds to support his application for stay of execution:

(1) The plaintiff’s solicitors have covered up the deception action of receiving rents by its employee Yam Chu Fai against the defendant’s counterclaim.

(2) New evidence has been submitted to the Legal Aid Department to appeal against the refusal of his legal aid application.

(3) The defendant is seeking leave to appeal to the Court of Appeal.

(4) The plaintiff’s solicitors were trying to deprive the defendant of his right to counterclaim against the plaintiff and of his right to appeal.

(5) A case management summons has been taken out.

(6) The validity of the order for interim payment was wrong.

(7) The fairness in the civil action should not be obstructed by the plaintiff’s solicitors.

11.  As stated in the 1^st Decision and the 2^nd Decision, grounds (1), (4), (5) and (7) of the above grounds are misconceived.  Regardless of an order for interim payment, the trial still continues and he still can run his case as alleged against the plaintiff.  Any case management summons can also be proceeded with.

12.  Ground (2) is also irrelevant.  Whether the defendant eventually obtains legal aid has no bearing on the merits of his application for stay of execution.

13.  As seen in the principles set out, an appeal does not operate as an automatic stay. Ground (3) is irrelevant.

14.  Ground (6) seems to suggest the strength of the appeal.  As seen from the 1^st Decision and the 2^nd Decision, and by virtue of the fact of the defendant’s continuous occupation of the Premises for zero payment, I am of the view that no strong likelihood of success for the appeal has been demonstrated. 

15.  I am not satisfied that the defendant has satisfied the test for a stay of execution.  The Defendant’s Application For Stay of Execution is thus dismissed.

PLAINTIFF’S UNLESS ORDER APPLICATION

16.  On the defendant’s own admission, he has stopped making any payment since 15 August 2017 (more than 2 years up until date of hearing) to the plaintiff and yet he still remains in possession of the Premises.  It is clear that the defendant has refused to comply with the Order for interim payment made by Master Ho on 4 October 2018 and will continue to do so.  It has been more than a year since Master Ho gave the order for interim payment.

17.  The plaintiff says that the Court ought to grant an unless order in the present case based on the principles set out in the case of Hytec Information Systems Ltd v Coventry City Council[2]:

(1) An unless order was an order of last resort, not made unless there was a history of failure to comply with other orders.  It was the party’s last chance to put its case in order.

(2) Because it was the last chance, a failure to comply would ordinarily result in the sanction being imposed.

(3) The sanction was a necessary forensic weapon which the broader interests of the administration of justice required to be deployed unless the most compelling arguments were advanced to exonerate the failure.

(4) It seemed axiomatic that if a party intentionally flouted the order he could expect no mercy.

(5) The interests of justice required that justice should be shown to the injured party for procedural inefficiencies causing the twin scourges of delay and wasted costs.  The public administration of justice to contain those blights also weighed heavily.  Any injustice to the defaulting party, though never to be ignored, came a long way behind the other two.

18.  The defendant had refused to comply with the Order of Master Simon Ho despite the 1^st Decision and the 2^nd Decision.  Although the defendant has been appealing against orders which require him to make interim payment, such appeals do not operate as a stay of execution.  This means that pursuant to Court order, the defendant has been under an obligation to pay since 4 October 2018.  As I have dismissed the defendant’s application for a stay of execution, the defendant’s liability to pay remains.

19.  It is clear that the defendant is unwilling to comply with the interim payment order.  I am of the view that an unless order in these circumstances is appropriate.  Mr Tang, solicitors for the plaintiff agreed that a time limit of 2 calendar months is appropriate.

20.  Accordingly, I will make the following orders:

ORDERS

(1)     The defendant’s application by summons dated 16 September 2019 for stay of execution is dismissed.

(2)     The defendant’s application to vary costs order nisi by letter dated 10 October 2019 is dismissed.

(3)     The plaintiff’s application by summons dated 30 May 2019 is allowed.  Unless the defendant do pay to the plaintiff the following sums pursuant to the Order of Master Simon Ho dated 4 October 2018 (as set out in subparagraphs (a)(i) (ii) and (iii) below) on or before 15 January 2020, the whole of the defendant’s Re-Amended Defence and Counterclaim be struck out and the plaintiff be at liberty to enter judgment in the terms set out in the Statement of Claim filed on 6^th October 2017 against the defendant:

(a)     In the premises (Commercial Units A and B on 6^th Floor, Bai Yun Building, No 10 Wai Ching Street, Kowloon, Hong Kong), the defendant do pay the following interim payments to the plaintiff: -

(i) a sum of HK$150,000 for the period from 1 August 2017 to 31 October 2018;

(ii)     a monthly sum of HK$10,000 on the first day of each calendar month commencing from 1 November 2018 until further order;

(iii)    costs summarily assessed at HK$50,000.

COSTS

21.  As costs follow the event, I make an order nisi that the defendant ought to pay for the plaintiff’s costs of and occasioned by:

(1) the defendant’s application for stay of execution by summons dated 16 September 2019;

(2) the defendant’s application to vary costs order nisi by letter dated 10 October 2019 and

(3) the plaintiff’s application by summons dated 30 May 2019. 

Such costs to be taxed on a party and party basis, if not agreed.  Unless the parties make an application to vary the above costs order nisi within 14 days from the date of this order, the costs order nisi will be made absolute after the expiry of the said 14 days.