XCHRX MING HSING DEVELOPMENT CO. LTD. v. MING SHIU TONG

1995 No. A671

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The two actions to which these appeals relate are identical for all practical purposes. In both of them, the Defendants failed to comply with orders for discovery of documents, and on 1st July judgment was entered against them. On 15th August, they both applied by summons for the judgments against them to be set aside, and for a stay of execution on the judgments in the meantime. However, on the same day that the Defendants filed their summonses to set aside the judgments, prohibition orders were made against them.

2. The Defendants' summonses to set aside the judgments came before Master Chu on 19th August and Master Cannon on 20th August. The question as to whether the judgments should be set aside was adjourned to a date to be fixed. As for whether there should be a stay of execution on the judgments in the meantime, both Master Chu and Master Cannon granted the Defendants a stay of execution until the issue of whether the judgments should be set aside had been determined. However, they both did so on conditions. The condition imposed by Master Chu on the Defendant in 1995 No. A671 ("671") was that the Defendant had to provide details of all his travel documents to the Plaintiff through his solicitors. The condition imposed by Master Cannon on the Defendant in 1995 No. A672 ("672") was expressed as follows:

"There be an interim stay of execution conditional upon the Defendant's solicitors undertaking to provide in writing by hand to the Director of Immigration the Defendant's name, number and country of issue of all his current travel documents by 12 noon on Thursday 22nd August 1996."

Although that condition was expressed in the form of an undertaking, I rather doubt whether that was what Master Cannon really intended. I think it much more likely that Master Cannon was intending to make an order which had the same effect as the order made by Master Chu. To achieve that, all that Master Cannon needed to order was that the judgment would not be stayed until the condition had been complied with. That would have left it to the Defendant in 672 to decide whether the price which had to be paid for the interim stay of execution was too high.

3. I mention all this because Mr. Nigel Kat for the Plaintiff has argued that the Defendants' appeals which are now before me should be dismissed without a consideration of their merits because of the breach by the Defendant in 671 of the condition imposed by Master Chu, and of the breach by the Defendant's solicitors in 672 of the undertaking supposedly given to Master Cannon. I cannot go along with that argument. For the reasons I have already given, I propose to treat the Defendant in 672 as being subject to a similar order to that made by Master Chu in 671. As for that order, to treat the Defendants as being in breach of condition simply because the details of their travel documents have not been provided is wholly fallacious. They were not being required to provide details of their travel documents. The position merely was that, if they did not provide details of their travel documents, the interim stay of execution would not take effect.

4. The appeals which are now before me are the Defendants' appeals against the imposition of the conditions on the interim stay of execution. The appeals came before me yesterday morning. They were adjourned part heard to this afternoon because there was not sufficient time for them to be argued in the half-hour which had been allotted to them yesterday. What the Defendants want is for the interim stay of execution either to be unconditional or subject only to a condition that they give security for the Plaintiff for the whole amount of the judgment debts. Three things, though, have happened since the orders of 19th August and 20th August:

(i) The hearing of the summonses to set aside the judgments has now been fixed for 5th November.

(ii) The Defendants applied by summons to discharge the prohibition orders. On 6th September, those applications were adjourned by Master Chu pending the outcome of these appeals.

(iii) On 13th September, the prohibition orders were extended for a further month on the ex parte application of the Plaintiff.

5. There can be no doubt as to why the conditions were imposed. They can only have been imposed to police the prohibition orders. It follows that if the prohibition orders are no longer in force, the rationale for the imposition of these conditions disappears. For my part, therefore, I am surprised that the Defendants' application to discharge the prohibition orders were adjourned pending the outcome of these appeals. I believe that it would have made much more sense for the issues to have been determined the other way round. On all of that, both Mr. Kat and Mr. P.H. Wong for the Defendants agree.

6. It follows that, in order to determine these appeals, I have to decide whether it is appropriate for the Defendants now to be subject to the prohibition orders as extended. Although Mr. Kat recognises the logic of that, he contended yesterday that, as a matter of procedure, it simply was not open to me to do that while Master Chu's orders of 6th September were in force. Until her orders are set aside on appeal, it would not be right, said Mr. Kat, for me to discharge the prohibition orders, because Master Chu has ordered that whether they should be discharged should only be decided after the appeals have been heard. I see the technical force of what Mr. Kat argues, but in my view there is an answer to it. The original prohibition orders continue to be in force only because they were extended for a further month on 13th September. Since those extensions were made ex parte, I have power under Ord. 32 r. 6 to set them aside, apart, of course, from the express statutory power to discharge them given to me by section 21B(4)(a) of the Supreme Court Ordinance (Cap. 4). Mr. Wong asks me today to discharge them. Mr. Kat is not taken by surprise because he was told during the hearing yesterday morning what Mr. Wong would be seeking today. I therefore propose to take that course, and to decide whether the extensions of the original prohibition orders should now be set aside.

7. The original prohibition orders, and the extensions to them, were made to assist the Plaintiff to enforce its judgments. However, if the judgments can be enforced without the drastic remedy of forcing the Defendants to continue to remain in Hong Kong, then the extensions to the prohibition orders were unnecessary. The uncontroverted evidence before me is that the Defendants have a beneficial interest in shares in the Plaintiff under their mother's will, that one of the co-executors of that will is the Managing Director of the Plaintiff, and that the co-executors assert that those shares must be sold and their proceeds distributed to the beneficiaries. The Defendants' share of those proceeds are (doing the best I can on the limited evidence before me) likely to be worth at least as much as the judgment debts, if not the judgment debts plus interest and costs.

8. In those circumstances, I do not think that the Plaintiff's ability to enforce the judgments (if they are set aside) will be significantly affected if the prohibition orders are discharged. It follows that the Plaintiff's need to police the prohibition orders is unnecessary. The rationale for the conditions imposed by Master Chu and Master Cannon disappears, because the prohibition orders themselves are unnecessary. Indeed, in my view, it is unnecessary for there to be any conditions at all on the stay of execution: apart from anything else, there is evidence adduced by the Plaintiff that the Defendant in 671 has other assets in Hong Kong, namely a credit balance of about $8m. with Prudential-Bache Securities (HK) Ltd.

9. There is another reason why I do not think that these are appropriate cases for conditions to be imposed on the stay of execution. I have not read all the documents on the court file, but from those which I have read, I think it very likely that the judgments will be set aside when the Defendants' summonses to set aside the judgments are heard. I do not think that it would be right for me to give my reasons for that view, because I do not want to influence unduly Findlay J. who is due to hear the summonses. But since my view as to whether the conditions should be lifted has been coloured in part by my belief as to the likely outcome of the summonses to set aside the judgments, it would have been wrong for me not to disclose that. I am fortified in that view by Mr. Kat's pessimism as to the ultimate outcome of the summonses.

10. In all the circumstances, these appeals are allowed, and for para. 2 of the orders of Master Chu of 19th August and Master Cannon of 20th August, there will be substituted orders that there be an unconditional stay of execution on the judgments entered on 1st July pending the determination of the Defendants' summonses to set aside the judgments. I also order that the extensions to the prohibition orders for a further period of one month ordered by Master Woolley on 13th September be set aside.