XCHRX SANWA DEVELOPMENT LTD. (in liquidation) v. CHAN KAR KEUNG AND ANOTHER

No. A7002 of 1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7002 OF 1994

____________

____________

______________

J U D G M E N T

______________

1. This is an application by the Plaintiff for a stay of the order which I made on 4th December 1998. On 4th December 1998, I ordered that the Mareva injunction granted by Rogers J. (as he then was) on the 13th June 1995 and continued by Patrick Chan J. (as he then was) on 16th June 1995 against the Defendants be discharged. I made the order on the Defendants' application to discharge the Mareva injunction on the ground of inordinate and inexcusable delay on the part of the Plaintiff in proceeding with the action.

2. The position is that since the 4th December 1998, there is no Mareva injunction against the Defendants. I am told that the Notice of Appeal has been filed on 15th December 1998. The Defendants do not object in principle to the application for stay pending appeal provided certain conditions are imposed on the Plaintiff. These are:

1) that the Plaintiff provides security for costs of the appeal in the sum of HK$183,000.00; and

2) that the Plaintiff be required to fortify its undertaking as to damages.

3. The short point is that the Plaintiff is a company in liquidation. In the absence of any evidence, prima facie it would be unable to pay the costs of the appeal or any damages that the Defendants may recover as a result of the Mareva injunction. In asking for a stay, the Plaintiff is in effect asking for the injunction to continue until the appeal is disposed of.

4. In considering whether or not to grant a stay, I have a discretion in the matter. Mr. Li, for the Plaintiff, has submitted that I should not impose a condition as to security for costs or fortification. He submitted that the question of security for costs is something that the Court of Appeal has jurisdiction to deal with. He submitted that he ought to be given a chance to oppose any application for security for costs of the appeal if an application were made to the Court of Appeal.

5. I consider that the question of security for costs is something that the Court of Appeal should deal with. There is nothing to stop the Defendants from making an application to the Court of Appeal for security for costs of the appeal. That is the proper forum for that application in my view.

6. As I have said above, the Plaintiff does not have an injunction at the moment as a result of my order made on the 4th December 1998. By seeking a stay, in effect it wants an injunction until the appeal is disposed of. The company, as I have said, is in liquidation and in the circumstances I think it is proper that it should fortify its undertaking in damages. The stay is conditional upon the Plaintiff providing fortification by payment into court of a sum of $200,000 within 21 days from today.

7. The costs of the application to be costs in the appeal.