RICH VILLAGE LTD v. GRAND PRIDE HOLDINGS LTD AND ANOTHER

CACV 224/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 224 OF 2012

(ON APPEAL FROM HCA NO. 867 OF 2012)

________________________

________________________

________________________

D E C I S I O N

________________________

1.  This is the defendants’ application for stay of execution pending appeal. Leave to appeal the orders of Recorder Anthony Chan, SC (as he then was) made on 27 August 2012 was granted by the Recorder but he refused stay of his order for a speedy trial of the action pending the appeal. The defendants renewed the application for a stay to this court. The appeal is to be heard on 3^rd January 2013.

2.  The principles for granting stay of execution pending appeal are well established and require no repetition.

3.  Mr Mok, SC, who appeared with Ms Wu for the defendants in this application, took two points why a stay pending appeal should be granted.  Firstly, the merits of the appeal are strong.  Secondly, the appeal would be rendered nugatory if a stay were not granted.

4.  The decision made by the Recorder which is the subject of this appeal is that on a proper construction of the contract, the relevant clause in the share transfer agreement is a non-exclusive jurisdiction clause.  The defendants’ jurisdictional challenge that the Hong Kong court should not exercise jurisdiction in this action failed.  The shares being the subject of the dispute are the shares of a Hong Kong company with two wholly owned subsidiaries in the Mainland that are engaged in very substantial property developments.

5.  I have read the grounds of appeal in the Notice of Appeal filed on 17 October 2012, which is in substance section C of Mr Mok’s skeleton argument before me.  This Notice of Appeal is not entirely the same as the draft notice considered by the Recorder in granting leave to appeal, as some of the grounds are expanded and other grounds are added.  Notwithstanding these changes, I entirely agree with the Recorder that the merits of the appeal cannot be regarded as strong.  The appeal is arguable, and no more.  As I am not persuaded the appeal has strong merits on a provisional basis, this is not the occasion to discuss at length the merits of the case advanced by Mr Mok and no more need be said about this.

6.  Nor am I persuaded by his submission that the appeal will be rendered nugatory if no stay were granted.  In the hearing before the Recorder, the defendants’ solicitor had fairly accepted that with the plaintiff’s undertaking not to take any point that the steps taken by the defendants in the action would amount to submission to jurisdiction, the nugatory argument would fall away.  The defendants have made a volte face and now seek to argue that by participating in the procedural steps leading to a speedy trial, including the filing of a defence and counterclaim, the defendants would be construed to have submitted to the jurisdiction of the Hong Kong court.  They cited the judgment of Reyes J in Hwoo Huang Linda v Fu Being San, HCA 4888/2001, 10 April 2002.

7.  I do not think the propositions of law summarised by Reyes J at para 26 of that judgment, which are entirely correct, would provide any kind of support for the defendants’ position.

8.  Before this court, Mr Sarony, SC repeated the undertaking he gave on behalf of the plaintiff that it would not take the point against the defendants that any steps taken in preparation for the trial of this action, including filing a defence, would constitute a submission to the jurisdiction of the Hong Kong court.  He cited also Miruvor Ltd v Panama-Globe Steamer Lines SA & Ors, CACV 225 & 226/2006, 9 February 2007, in which Rogers VP stated at paras 9 and 10 whether a step which a defendant took should be regarded as a submission to jurisdiction should be looked at fairly, sensibly and realistically.

9.  Given that the defendants have taken their challenge to the jurisdiction of the Hong Kong courts on appeal, if they were to comply with the direction of the court to take such steps as ordered to bring the action to a speedy trial, I do not think it could realistically and sensibly be said this is a voluntary submission to jurisdiction.  In any event, they would be amply protected by the undertaking given by the plaintiff.

10.  As for the defendants’ argument that substantial costs would be wasted if the parties were to proceed with preparing the case for trial in the event the jurisdictional challenge should succeed on appeal, I agree with the Recorder it is clearly desirable that the dispute on the ownership of the shares, which are of very substantial value, should be resolved as soon as possible.  In the light of the great value of the shares, the amount of costs that might be wasted pales into insignificance.  The assets of the subject company are its subsidiary companies in the Mainland engaged in property development and the sales of the properties in the projects under development are proceeding apace.

11.  Both parties have filed further evidence in this application making accusation against the other of using improper means to further their own interest with regard to the Mainland subsidiaries.  This demonstrates clearly it is in the best interest of both that the dispute on the ownership of the shares should be resolved sooner rather than later.

12.  I do not accept Mr Mok’s submission that in view of the injunction obtained by the plaintiff to restrain the defendants from disposing of the shares pending trial of the action, no real prejudice would be suffered by the plaintiff in granting a stay.  As Mr Sarony pointed out, the injunction was obtained at the cost of giving fortification on the undertaking for damages in the sum of HK$10 million, so each day of delay is prejudicial to the plaintiff.

13.  For the above reasons, I dismiss this application for stay pending appeal.  I order the defendants to pay the plaintiff’s costs of this application.