WONG ARLENE BEI LING AND OTHERS v. PAO ZEN KWOK PETER AND OTHERS

HCMP 1406/2018

[2022] HKCFI 2294

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1406 OF 2018

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DECISION

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1.  This is the determination of the Plaintiffs’ Summons dated 4 March 2022 for a stay of execution of the orders of this Court dated 29 December 2021 (the “Order”) pending the Plaintiffs’ appeal against the Order pursuant to the Notice of Appeal filed on 26 January 2022.

2.  The appeal is on the narrow point of whether the sale should be carried out by public tender only or by a public tender followed by a private tender as contended by the Plaintiffs.

3.  The principles governing an application for stay of execution are well established and set out in Star Play Development Ltd v Bess Fashion Management [2007] 5 HKC 84 at §§7-9 (per Ma J (as he then was)). I should not repeat the same here.

PRELIMINARY ISSUE

4.  There is a preliminary issue as to whether the 1^st Defendant has agreed to a stay of execution of the Order. The Plaintiffs submit that by the letter dated 28 January 2022, the 1^st Defendant stated, inter alia, that he would “not oppose an application for stay of execution pending appeal” on condition that the 2^nd Plaintiff pay occupational rent at the rate of 3% p.a. of the final transaction price of the Property for the period of delay allegedly caused by the appeal. As such, the Plaintiffs submit that there is an agreement on stay of execution of the Order, and the crux of the application is whether the stay of execution should be unconditional (as contended by the Plaintiffs) or conditional (as contended by the 1^st Defendant). The Plaintiffs’ position is that the imposition of the 1^st Defendant’s proposed condition requiring payment of occupational rent is thoroughly misconceived and without basis.

5.  Mr Miu for the 1^st Defendant submits that absent the agreed condition, there is no agreement on a stay of execution of the Order. The 1^st Defendant’s position is that neither in his correspondence, nor in his previous submissions, has he ever said that he would agree to a stay of execution pending appeal. What he had said was that he “would not oppose” a stay on conditions. It is plain that the 1^st Defendant opposes strongly an unconditional stay. Mr Miu referred this Court to the case of Kwan Siu Man v Yaccov Ozer (1997-1998) 1 HKCFAR 343 for the legal proposition that an agreement to agree is not a contract. The law preserves bargains; but it does not create them: that must be done by the parties themselves, if it is to be done at all.  (per Bokhary PJ at 364E).

6.  The parties have filed extensive written submissions on this point. This Court has duly considered them. I am of the view that absent an agreement on the conditions, it is hard to say that the 1^st Defendant has already agreed to a stay of execution of the Order. It is quite clear to this Court that on a proper reading of the 1^st Defendant’s correspondence and submissions, what he was saying is that unless the Plaintiffs agree with the conditions that he proposes, he will not agree to a stay of execution of the Order. It is not the case that he agrees to a stay of execution of the Order and let the Court decide on whether the conditions he proposes are “misconceived and without basis”.

7.  Hence, this Court has to proceed on the basis that there is no agreement on stay of execution of the Order. Of course, it is still open to the parties to agree on the conditions of a stay of execution of the Order to which this Court will respect the parties’ autonomy and decision.

MERITS OF THE APPEAL

8.  It is established that the inquiry into the merits limb should be a balancing process with common sense. (See Bright Gold Ltd v Mega Well Development Ltd [2019] HKCA 1440 per Lam VP (as he then was). In the present case, this Court bears in mind the narrow scope of the appeal. The Plaintiffs’ first ground of appeal is that this Court took into account an irrelevant consideration, namely, fairness to public tenderers, and is thus erroneous. However, the Plaintiffs take the consideration out of context. The reference to “fair to other public tenderers” was made in the context of considering which mode of sale will be in the best interest of all the beneficiaries. The reference to fairness to other public tenderers is immediately followed by the sentence “Hence, it does not help to secure the best price for the Property.” It can be seen that fairness to public tenderers is a factor that helps to secure the best price for the Property. A tender process which results in unfairness to other public tenderers is unlikely to secure the best price for the Property given that the Property is not the only property being put up for sale in the general market. The Plaintiffs take the Court’s reference to fairness to other public tenderers out of the relevant context.

9.  The Plaintiffs’ second ground of appeal refers to this Court’s determination that a sale by public tender followed by private tender would dampen interest in the Property and most likely, reduce the pool of interested bidders (Paragraphs 12-14 of this Court’s Judgment). The Plaintiffs refer to the case of Yeung Kwok Kin v Yeung Kwok Keung & Ors HCMP 1303/2006 (unrep., 3 July 2007) at §10 where Chu J. (as she then was) said:

“Mr Chong, in his submissions, criticized the reasons and views given by Mr Liu for recommending sale by tender. The fact, however, remains that there is no contrary expert evidence before the Court. I am unable to accept that the question of the mode of sale is only a matter of common sense such that the Court does not have to have regard to the experts’ views on it.”

10.  First, the facts of that case are very different from the present case. In that case, there were expert evidence to which the Court could take into consideration. In the present case, both parties did not adduce any expert evidence. As such, this Court could only have approached the matter as a matter of common sense to which the then counsel for the Plaintiffs, Mr Yim agreed that in such situation, namely, a public tender to be followed by a private tender, a serious public tenderer will need to add a premium or cushion to the price that he or she is going to put in for fear that his or her bid will be trumped by the 2^nd Plaintiff in the private tender stage (Paragraph 12 of this Court’s Judgment). Any additional hurdle added to the tendering process will inevitably reduce the attractiveness of the Property. It is just plain common sense. A point well set out by Tang ACJHC (as he then was) in Re Man Sham Chung Wui [2011] 1 HKLRD 427.

11.  Secondly, the fact that in a normal public tender document, it usually contains a provision that the seller of the property is not obliged to accept the highest bidder, with respect, is neither here nor there. It is different from stating positively that there will be a private tender process to which the pool of tenderers will be restricted to a handful of private individuals in the second stage. One cannot conflate a public tender with the usual provision and a public tender to be followed by a private tender. They are simply not the same.

12.  The Plaintiffs’ third and fourth grounds are inter-related and they both concern the way in which this Court approach and weighed the views of the majority and minority of the co-owners of the Property. Quite apart from Mr Miu’s submissions that in fact, the Defendants constitute the majority of the beneficial interest of the Property, this Court has not lost sight of the view of the majority as a consideration or a start point. However, the overriding consideration must be the best interest of all the co-owners of the Property. It is not a simple counting exercise. In deciding on the mode of sale, the Court’s primary consideration is which mode can secure a better price for the benefit of all the co-owners and not whether it will give the 2^nd Plaintiff a “better chance” of successfully bidding for the Property without participating in the public tender. The Plaintiffs have not identified any basis, legal or evidential, as to why a public tender to be followed by a private tender could secure a better price for the sale of the Property. That should be the end of the analysis.

13.  For the above reasons, I do not consider that there are any arguable grounds of appeal against the mode of sale. Indeed, the sale should proceed as soon as possible rather than to be further delayed.

NUGATORY APPEAL

14.  The Plaintiffs submit that unless a stay is grant, their appeal would be rendered nugatory as the Property could not be sold twice. It is true that the Property could not be sold twice at the same time. However, it does not mean that the appeal will be rendered nugatory. One must bear in mind the nature of the appeal. All the parties agree that the Property should be sold. No one ever suggests that the Property should not be sold.

15.  If the 2^nd Plaintiff really likes to purchase the Property, there is nothing to prevent him from participating in the public tender. Even if he loses in the public tender, there is nothing to prevent him to offer a higher price to purchase it from the successful bidder. It is not the function of this Court to approve a tender process that will ensure that the 2^nd Plaintiff will be able to purchase the Property. The 2^nd Plaintiff has a fair chance like all other public tenderers to put in a bid. If he chooses not to or if his bid is not successful, that does not mean that it is against the interest of all the co-owners.

16.  On the other hand, if no one from the public put in a tender. Then there is nothing to prevent the 2^nd Plaintiff from making an offer to purchase the Property.

17.  At the end of the day, if the 2^nd Plaintiff is willing to put up his highest offer for the Property, the appeal will not be rendered nugatory. 

18.  The Court has to take into consideration the best interest of all co-owners of the Property and not just the 2^nd Plaintiff’s wish to hold his card close to his chest until all other public tenderers put their cards on the table.

DISPOSITION

19.  For all the above reasons, the application for stay of execution pending appeal against the Order is dismissed.

20.  The Plaintiffs are to pay the costs of and occasioned by this application to the 1^st Defendant to be taxed, on a party to party basis, if no agreement can be reached.

21.  Needless to say, the parties are entitled to further agree on a stay of execution if they can agree on the conditions in relation to the same. Given the analysis above, this Court does not find it right to impose a condition of stay on its own volition.

22.  Finally, this Court thanks counsel for their comprehensive and helpful written submissions.