KENWELL LTD v. LIU KIN KWAN GARY AND LAM TAT CHOW (BOTH TRADING UNDER THE NAME OR STYLE OF 昌盛公司, A FIRM)

DCCJ 3616/2023

[2025] HKDC 1188

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3616 OF 2023

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DECISION

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1.  On 4 March 2024, this court handed down a decision which, inter alia, entered interlocutory judgment under Order 14 (“the Judgment”)  granting plaintiff’s possession of Lot 746RP in D.D. 99 (“the Premises”).

2.  The defendants’ subsequent application for, inter alia, leave to appeal against the Judgment was also dismissed by the court on 31 March 2025.

3.  According to the plaintiff, on 8 April 2025, the bailiff has served the defendants a Notice to Occupier to Quit for the Premises to be delivered to the plaintiff before 15 April 2025 but this has not been complied with (paragraphs 7 and 8 of 6^th Affirmation of Chow Sik Lun, Hearing Bundle p. 69). 

4.  On 14 April 2025, the defendants had lodged a draft Notice of Appeal with the Court of Appeal to leave to appeal.

5.  The defendants had also taken out a Summons for Stay of Execution of the Judgment (“the Summons”)  on 22 April 2025 which the court shall deal with below.

Background

6.  The background of the case was stated in paragraphs 7-23 of the decision dated 4 March 2024 and needed not be repeated here.

Legal principles

7.  The starting point is Order 59, rule 13(1):

“Except so far as the court below or the Court of Appeal or a single judge may otherwise direct-

(a)  An appeal shall not operate as a stay of execution or of proceedings under the decision of the court below;

(b)  No intermediate act or proceeding shall be invalidated by an appeal.”

8.  As such, an appeal does not automatically operate as a stay of execution. The court will only consider exercising its discretion to grant a stay of execution pending appeal if the appellant can demonstrate there are good reasons to justify a stay (Asparouh Ianev Dimitrov as administrator of the estate of Kaloian Ianev Dimitrov (Deceased)  v Dominic Tak Ming Lau and Anor CACV 568/2020, [2021] HKCA 1196)

9.  As to what constitutes good reasons, Hon Litton J.A. stated:

“Plainly the intention is that a party should not be deprived of the fruits of a judgment in his favour except on good grounds being shown. Obviously if an applicant were able to demonstrate that he has very strong grounds of appeal, that something has grievously gone wrong with the process of law in the court below, then this court would be inclined to make such order to ensure that the appeal would not be rendered nugatory in the meanwhile. In those circumstances perhaps the court may not examine very closely the financial situation of the appellant. On the other hand if the grounds appear weak then the court look more closely into the alleged impecuniosity and prospective financial ruin.”

(World Trade Centre Group Limited Baker & McKenzie (a firm)  v Resourceful River Limited and Anor CACV 70/1993)

10.  Further, Hon Woo JA stated:

“The most important consideration in respect of whether a stay of execution should be granted is whether there are strong grounds of the proposed appeal…That hurdle is higher than that of chances of success for considering whether leave to appeal should be granted.”

(ASHA HARKISHIN PREMSINGH otherwise known as ASHA HARKISHIN PREMSING nee ASHA JETHANAND KIRPALANI v HARKISHIN ISARSINGH PREMSINGH KISHINANI otherwise known as HARKISHIN ISARSING PREMSING KISHINANI otherwise known as HARKISHIN ISARSING PREMSING HCMP 3436/2000)

11.  In the Asparouh case, Hon Au JA (quoting the principles laid down by Ma J (as he then was)  in the case of Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84)  in devising the following principles:

(1)  The existence of a strong appeal will usually by itself be a good reason for granting a stay. However. If there exists only an arguable appeal, the appellant must provide additional good reasons to justify a stay, namely, the appeal would be rendered nugatory if a stay was not granted;

(2)  The court must not sat 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 of a stay is granted and if necessary, to impose conditions so as to minimize the prejudice caused to him. A fortiori, the court must also consider any contention that the appeal would be rendered nugatory to him (in the event that the appeal is dismissed)  should a stay of execution be imposed;

(3)  Ultimately, the court embarks on a balancing act and uses its 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.”

12.  Mr. K M Chong, Counsel for the plaintiff, submitted that the Court of Appeal decisions in the World Trade case and the Asha case showed that “unless there are strong grounds of appeal”, no question of successful appeal being rendered nugatory should arise. Further, he argued that such “strong grounds” necessarily means a “higher hurdle” than the test for application for leave for appeal.

13.  Mr. Chong also suggested that, as only the Star Play case (which was a Court of First Instance decision), and not the abovementioned Court of Appeal decisions, was produced before the court in the Asparouh case, “strong grounds of appeal” should remain as the minimal requirement.

14.  I disagree.

15.  In an application for stay of execution, the court is given a discretion and there has to be a sliding scale for consideration.

16.  In the Asha case, Hon Woo JA only mentioned that the most important consideration was having “strong grounds of appeal”, but he did not elaborate on other considerations. Hon Litton JA was clearly talking about this sliding scale: if there were very strong grounds of appeal, then the court need not scrutinise other (alleged)  good reasons too closely. On the other hand, if the grounds were weaker, then the court would need to do so.

17.  None of these decisions appeared inconsistent with the principles distilled down and stated in the Asparouh case.

18.  Nevertheless, what is abundantly clear is that the minimum requirement for a stay of execution upon any “weaker” grounds of appeal (before the court would scrutinise other alleged good reasons)  is “the existence of an arguable appeal (that is, one with reasonable prospect of success)” (the Star Play case and the Asparouh case).

Considerations

19.  Firstly, I am not satisfied that the defendants have persuade the court that they have an arguable appeal.

20.  I have considered this case on two occasions already. In my first decision (dated 4 March 2024), I have taken the defendants’ case to the highest and found that (paragraph 33 of that decision):

“…they cannot be lawful sub-tenants of the Wui on 22 August 2023 (the date of commencement of this action)  because any tenancy relationship between MWC (and/or Fortune)  and the Wui has been determined before that date in all circumstances.”

21.  In the subsequent application for leave to appeal decision (dated 31 March 2025), even when the court considered the new evidence attempted to be adduced by the defendants on a de bene esse basis, the court has come to the same conclusion (e.g. paragraphs 30 ad 31)  and found that there was no “reasonable prospect of success” in the appeal. Thus, the court refused to grant leave for appeal.

22.  Thus, the Summons must fail even at the first hurdle.

23.  Nevertheless, the defendants have submitted other reasons for stay (paragraphs 3-6 of the 4^th Affirmation of Liu Kin Kwan Gary, Hearing Bundle p. 62-64):

a.  they have been in occupation of the Premises for over 20 years and there is a Lands Department proposal for land resumption;

b.  they have incurred substantial investments on vehicle repair equipment and a covered structure (at the estimated costs of HK$200,000);

c.  Without a stay, there would be an inability to claim compensation from the land resumption and irreparable harm to loss of business and livelihood;

d.  To mitigate prejudice to the plaintiff, the defendant also offered to release HK$266,000 held by their solicitors on stakeholder account to the plaintiff, and would undertake to continue to pay rent to the plaintiff at HK$14,000 monthly.

24.  The defendants have not produced any financial records or other evidence to support their claim of the value of investments, income and loss of the business so the court is not in the position to scrutinise such claims. As such, these claims remain bare assertions.

25.  Further, for the defendants’ concern about the possible loss of land resumption compensation, this is a monetary loss which can be compensated by damages.

26.  Needless to say, the plaintiff has refused the defendants’ offer of the sum of money and the monthly rent. It made it clear that its position is for the use of the Premises itself and not to take rent from it.

27.  The court also needs to consider the prejudice to the plaintiff: it has been the tenant of the Premises since 23 June 2023 but without being able to enjoy vacant possession for some 2 years. A stay of execution would delay this even further.

28.  Thus, when exercising a balancing act, the balance clearly lies in favour of not granting a stay of execution.

29.  There is a final matter.

30.  One day before the hearing, the solicitors for the defendants has filed an affirmation (“Affirmation of Chung Lim Tung”)  which exhibited a Notice of Proposal for Land Resumption published by the Lands Department by G.N. 1322 on 1 March 2024 pursuant to s.2A, Land Resumption Ordinance (“LRO”).  This Notice made reference to the Premises so the defendants argued that this showed that the Government was keen for its resumption. The defendants would need to deliver vacant possession if there was no stay of execution and thus lose the compensation as a user of the Premises.

31.  Given that the Affirmation of Chung Lim Tung was very late, the solicitors for the plaintiff objected that they were not given the chance to peruse or respond to such evidence.

32.  Subsequent to the hearing, the plaintiff took out a Summons for retrospective leave to file and serve the 7^th Affirmation of Chow Sik Lun in reply to the Affirmation of Chung Lim Tung (“7^th Affirmation of Chow Sik Lun”). The defendants quite fairly consented to this Summons.

33.  The 7^th Affirmation of Chow Sik Lun exhibited a Notice of Resumption of Land under s.4, LRO dated 10 July 2025 by G.N. 4235 which did not make reference to the Premises. Of course, this Notice was published after the hearing.

34.  The plaintiff argued that this Notice would show that although the government had proposed resumption on 1 March 2024, the recent Notice of Resumption under s.4 of LRO (which concerned an order of resumption)  showed the government has decided not to resume the Premises.

35.  My view is that this may show that there is no order for resumption of the Premises up until now. However, this only goes to the degree of likelihood of an imminent resumption and thus compensation to the defendants if there was a stay. In any case, the court has already considered any degree of this possibility in coming to the decision (see paragraphs 23c and 25 above).

Order

36.  I would therefore dismiss the Summons and order that the costs of the application be to the defendants with certificate for one counsel.

37.  The plaintiff shall lodge and serve a summary bill of costs with 21 days of this order and the defendants shall lodge and serve a summary list of objections 21 days thereafter. Costs will be assessed summarily by way of paper disposal.