WONG YUK TUNG v. WONG PO LING AND ANOTHER

HCA 899/2012

[2018] HKCFI 1482

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 899 OF 2012

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D E C I S I O N

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1.  I handed down judgment (“Judgment”) after trial in this action on 30 September 2016.  In this decision, unless otherwise stated, I shall continue to use the definitions and abbreviations adopted in the Judgment.

2.  To recap, I gave judgment for Father (the plaintiff) on his claims against Clara (the 1^st defendant) and the Company (the 2^nd defendant), of which Clara has always been the sole shareholder and director, as follows:

(1)  that Clara should account for the Kam Fai Proceeds;

(2)  that Clara and the Company (“Defendants” collectively) should account for the St Louis Flat 1D Proceeds;

(3)  that the Defendants should pay Father the sums found to be due on the taking of such accounts; and

(4)  that the Company should transfer St Louis Flat 25C to Father.

3.  Neither of the Defendants has taken any step to satisfy any part of the Judgment. 

4.  Father now applies by summons issued on 27 April 2018 for:

(1)  directions for the taking of the accounts for the Kam Fai Proceeds and the St Louis Flat 1D Proceeds; and

(2)  an order that the Company do execute an assignment of all its rights and interests in St Louis Flat 25C to Father absolutely within 28 days.

5.  In response, the Defendants have by Clara’s affirmation filed herein on 13 June 2018 “applied” for a stay of execution of, or all further proceedings on, the Judgment pending (1) the Defendants’ appeal from the Judgment and (2) the determination of DCMP 878/2018.  I propose to deal with such application despite the absence of a summons.  Clara’s affirmation, however, contains incomplete information about the proceedings used to justify a stay.  With a view to obtaining a better understanding of the bases of the Defendants’ application, I have accessed and reviewed the files kept by the courts in respect of HCMP 620/2017 (see paragraph 9 below) and DCMP 878/2018.

6.  Dealing first with DCMP 878/2018, as noted in paragraph 46 of the Judgment, St Louis Flat 25C was acquired in the name of the Company in March 2007 with the assistance of an instalment loan from SCB secured by an “all monies” mortgage of the property.  DCMP 878/2018 was commenced by SCB on 23 March 2018 against the Company as borrower and mortgagor and Clara as guarantor for payment of all principal and interests outstanding on the loan and for delivery of vacant possession of St Louis Flat 25C.  According to the supporting affirmation filed on 20 April 2018 on behalf of SCB, monthly repayment of the loan had stopped since December 2017 and the total amount of principal and interest outstanding stood at HK$885,593.05 as at as at 19 April 2018.  A further affirmation filed on 18 May 2018 discloses that SCB is considering about obtaining Counsel’s advice on inter alia the Judgment and its implications.

7.  Upon being advised of the nature and contents of DCMP 878/2018, especially SCB’s claim for delivery of vacant possession of St Louis Flat 25C, Mr Paul H M Leung, counsel for Father, (rightly in my view) invites the court to adjourn Father’s application relating to St Louis Flat 25C sine die to enable Father to be advised of, and consider, whether he should as beneficial owner of St Louis Flat 25C take any step in respect of DCMP 878/2018.

8.  This leaves only Father’s application for directions for the taking of the accounts for the Kam Fai Proceeds and the St Louis Flat 1D Proceeds and the Defendants’ counter-application for a stay pending appeal.

9.  To put the application for stay pending appeal in context, on 17 March 2017, the Defendants applied to the Court of Appeal by a summons issued in HCMP 620/2017 for (1) an extension of time to appeal against the Judgment and (2) a stay of execution of the Judgment (“Time and Stay Applications”).  

10.  While Clara appeared in person for herself and represented the Company at the trial of this action before me, the Defendants are represented by both counsel and solicitors in HCMP 620/2017.  In particular, the Time and Stay Application was supported by a draft notice of appeal containing 5 grounds of appeal drafted by counsel for the Defendants.

11.  The Court of Appeal (Yuen and Poon JJA), on the basis of the parties’ written submissions (signed by counsel on behalf of the Defendants), dismissed the Time and Stay Applications with costs to Father on 28 February 2018 (“28.2.2018 Decision”). 

12.  Insofar as it is material for present purposes, the Court of Appeal held that:

(1)  The time for the Defendants to appeal the Judgment expired on 28 October 2016 so that they had, by the date of the summons for the Time and Stay Applications, been out of time for 4½ months, which is a substantial delay.

(2)  Such substantial delay is also inexcusable, the Defendants having failed to disclose any good reasons for the time taken.

(3)  The chances of success of the proposed appeal are not such that the court would exercise its discretion in the Defendants’ favour to extend time for appeal following a substantial and inexcusable delay.

13.  In light of these findings, it was unnecessary for the Court of Appeal to consider either the prejudice that would be caused to Father if the time for appeal by the Defendants were extended or the application for stay pending appeal.

14.  By a summons/notice filed on 6 March 2018 pursuant to Order 59, rule 2A(7) of the Rules of the High Court (Cap 4A), the Defendants apply to the Court of Appeal for a reconsideration of the 28.2.2018 Decision at an oral hearing inter partes, which application is at the moment pending.

15.  An appeal (not to mention an application for leave to appeal out of time) would not operate as a stay of execution of proceedings: Order 59, rule 13(1).  The principles governing an application for a stay of execution of a judgment pending appeal are well established.  A summary of such principles can be found in, for example, Anderson Chow J’s judgment in Astro Nusantara International BV v PT Ayunda Prima Mitra (No 2) [2016] 1 HKLRD 591 at [15] as follows, following the decision of Ma J (as the Chief Justice then was) in Stay Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84:

“(1)  The applicant is required to demonstrate a “good reason” for a stay of execution.

(2)  Generally speaking, 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 even begin to consider granting a stay.

(3)  In other words, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted however exceptional the circumstances may otherwise be justifying a stay of execution.

(4)  On the other hand, the existence of a strong appeal or a strong likelihood of success will usually by itself enable a stay to be granted because this would constitute a good reason for a stay.

(5)  In most cases, where the court is faced with simply the existence of an arguable appeal, it becomes necessary for the applicant to provide additional reasons as to why a stay is justified.

(6)  Commonly, this is done by demonstrating that without a stay the appeal would be rendered nugatory, for example, because of an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal against a money judgment, or because the failure to grant a stay would have a serious deleterious effect on the applicant.

(7)  In considering an application for a stay pending appeal, it would be impractical and even undesirable for the court to go deeply into the merits or strengths of the appeal, although the court must still form a preliminary view of these aspects.”

16.  Applying these principles, while the Court of Appeal is yet to rule on the Defendants’ application for reconsideration of the 28.2.2018 Decision, in light of the conclusions that it has reached on the basis of the parties’ written submissions (see paragraph 12 above), the prospects of the Defendants’ proposed appeal against the Judgment or of obtaining leave to appeal out of time are not strong, or even arguable.

17.  Even if the Defendants’ proposed appeal should be arguable, the Defendants have not alluded to any additional reasons as to why a stay of proceedings on the orders for account is justified.  The mere fact that there is a pending application to the Court of Appeal for reconsideration of its dismissal of the Defendants’ application for leave to appeal the Judgment out of time is insufficient.

18.  The reason advanced by the Defendants before the Court of Appeal to justify a stay is that it would be very difficult to undo what Father has obtained from them under the Judgment in the event that they should succeed in their intended appeal.  As explained by me to Clara at the hearing this morning, further proceedings on the orders for account, which would take considerable time, are required to first determine the amounts payable by the Defendants to Father for the Kam Fai Proceeds and the St Louis Flat 1D Proceeds.  In other words, the Defendants would not be compelled to pay Father any amount any time soon.  Any procedural steps taken in the meantime for the enforcement of the orders for account would be reversible even if the Defendants should prevail at the end of the day, to no one’s prejudice that could not be compensated by an appropriate costs order.

19.  In contrast, granting the stay sought by the Defendants would potentially cause serious further delay to Father’s recovery of the Kam Fai Proceeds and the St Louis Flat 1D Proceeds should the Defendants fail to persuade the Court of Appeal to reconsider the 28.2.2018 Decision or, if leave be given, should the Defendants fail to prevail on appeal. This is prejudicial to Father, particularly given his advanced age, relative uncomfortable personal financial circumstances and the facts that he started this action 6 years ago and obtained the orders for account almost 2 years ago.

20.  For these reasons, I will start the ball rolling by giving directions for the taking of the accounts that I have ordered. 

21.  I therefore direct that:

(1)  Clara shall file with the court and serve on Father’s solicitors an account of the Kam Fai Proceeds as well as an affirmation verifying the account and exhibiting supporting documents within 60 days from today;

(2)  Father shall file with the court and serve on Clara his list of objections to the account (if any) and the grounds therefor by affirmation exhibiting supporting documents (if any) within 28 days thereafter;

(3)  Clara should file with the court and serve on Father’s solicitors her response to the list of objections (if any) by affirmation exhibiting supporting documents (if any) within 28 days thereafter;

(4)  there should be no further affirmation without leave of the court, the application for which must be supported by a draft of the further affirmation sought to be adduced;

(5)  the account should be taken before a Master;

(6)  any application for further directions should be made to the Master.

22.  I also give the same directions against the Defendants for the taking of the account for the St Louis Flat 1D Proceeds.

23.  The Defendants have, through Clara’s submission this morning, asked for at least 90 days (as opposed to the 28 days sought in Father’s summons) to prepare the accounts.  I am prepared to give the Defendants 60 days, giving allowance for their unrepresented status in this action.  I am however not convinced by Clara’s general and vague reference to anticipated difficulties arising from the long lapse of time, the volume of the materials to go through and the possible needs for the Defendants to obtain documents and information from third parties such as banks and go to professionals such as accountants for assistance.  Despite the passage of time, the accounts ordered are of a relatively straightforward nature.  The accounts were ordered back in September 2016.  Despite their application for leave to appeal out of time and stay of execution, the Defendants should have been prepared to be called upon to produce the accounts since the last quarter of 2016. 

24.  I further make an order nisi that the Defendants should pay Father’s costs of and occasioned by Father’s summons dated 27 April 2018, to be taxed if not agreed on a party and party basis with certificate for counsel for the hearing this morning.  Father’s own costs should be taxed in accordance with the Legal Aid Regulations (Cap 91A).