ALDO TRADING LTD v. PARTNER DECORATION ENGINEERING LTD

HCA1199/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1199 OF 2005

--------------------------

-----------------------

D E C I S I O N

-----------------------

1. On 13 December 2007 a judgment in favour of Partner Decoration Engineering Limited (“Partner”) in the sum of $812,980.49 against Charlie Lee Chun Kee (“Mr Lee”) was handed down by this court.  The sum was payment for work done by Partner under a renovation contract at 98 Repulse Bay Road, premises owned by Mr Lee.  The court found Mr Lee to be the employer in the renovation contract.

2. Mr Lee seeks a stay of execution pending appeal.  In this application the sole ground of appeal being argued is that Mr Lee was not the employer.  It is submitted that his BVI company, the 1^st defendant in the counterclaim and the plaintiff in the claim, Aldo Trading Limited (“Aldo”) was the employer.  Mr Kenneth C.L. Chan, counsel for Mr Lee, acknowledges that for a stay to be granted he must demonstrate more than “merely arguable” grounds of appeal.  In addition, Mr Chan contends that if the appeal succeeds it is unlikely that Partner will be financially capable of repaying the judgment sum or of paying any costs order against it.

3. The legal principles applicable to an application to stay the execution of a money judgment are well known.  This is not a case in which Partner has won damages against Mr Lee.  It is a judgment for the payment for work done and materials supplied.  Aldo’s claim for damages against Partner was unsuccessful at trial.

4. Ma J in Wenden Engineering Service Company Limited v. Lee Shing Yue Construction Company Limited, HCCT 90/1999 encapsulated the legal principles in the following observations :

“The existence of merely an arguable appeal cannot by itself amount to sufficient reason to justify a stay.  It can be put this way : the existence of an arguable appeal (that is, one with reasonable prospects of success) is the minimum requirement before a court would even consider granting a stay. …

…

… Often, it will be faced with simply the existence of an arguable appeal.  Here, it becomes necessary for the appellant to provide additional reasons as to why a stay is justified. …

…

… It is important to stress that the court must not at any stage forget the position of the successful party.  It is always relevant to consider the prejudice that would be caused to the successful party in the event a stay is granted …

10.  Ultimately, the court embarks on a balancing exercise and uses common sense, but bearing in mind at all times the starting point that the successful party is not to be deprived of the fruits of his success : see Winchester Cigarette Machinery, per Ralph Gibson LJ.”

5. Through his solicitors Mr Lee has offered to pay the full sum plus interest into court pending the appeal.  As yet no date has been fixed for the appeal; it has not yet been set down.  A hearing towards the end of 2008 is a possibility.

6. The sole issue under consideration at this stage is who should have been ordered to pay Partner, Mr Lee or his BVI company, Aldo?  Both counsel (Mr Samuel Wong appearing for Partner) have directed the court’s attention to various aspects of the evidence in support of either “Mr Lee” or “Aldo” being the true contracting party with Partner.  I accept that there was some evidence for either position.  As to the correct weight that should have been attached to that evidence, it is as matter for argument on the appeal.  I am not persuaded that Mr Chan has demonstrated that Mr Lee’s position is sufficiently strong that a stay should be granted for that reason.

7. Neither am I persuaded that there is cogent evidence in support of the contention that if the money is paid over to Partner now, it will disappear never to resurface should Mr Lee succeed on appeal.  At best it is a speculative contention.  The fact that Partner has not undertaken any projects since this trial is neither here nor there.  One explanation could be (although there was no evidence on the matter either way) that it is waiting for this judgment sum to be paid. 

8. The difficulty in this case is created by Mr Lee’s offer to pay the money into court pending appeal.  In the absence of that offer I would not hesitate in dismissing the application.  In my judgment it is a straightforward situation in which the principles laid down in Wenden (above) would be applied in Partner’s favour.

9. However, Ma J in Wenden stressed the need for the court to use common sense and undertake a balancing exercise.  I must ask myself, does Mr Lee’s offer to make a payment in affect the balancing exercise when, without the offer, the scales are firmly weighted in Partner’s favour?

10. I have come to the conclusion that the position should remain the same regardless of the offer to pay-in.  The factors which cause me to so rule are these :

11. For these reasons I am persuaded that the application should be dismissed regardless of the offer of the payment in.  There will be a costs order on the application to Partner, to be taxed if not agreed.