RE H. Y. & H. T. LEE BROTHERS AND CO. LTD.

CACV 307/1999 and CACV 328/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 307 AND 328 OF 1999

(ON APPEAL FROM HCCW NOS. 275 AND 467 OF 1998)

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J U D G M E N T

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The history of the litigation

1. H. Y. & H. T. Lee Brothers and Co. Ltd. ("HYHTL") and M. W. Lee & Sons Enterprises Ltd. ("MWL") are two family companies. The Petitioner, Samuel Tak Lee, is a shareholder in and a director of both companies. In 1998, he presented petitions for the companies to be wound up on the ground that it was just and equitable that they should be. The two companies were the nominal respondents to the petitions, but the Petitioner's brother, Lee Tak Yan ("T. Y. Lee"), and his uncle, Lee Chai Cheong ("C. C. Lee"), were the real respondents to the petition to wind up HYHTL ("the first petition"), and T. Y. Lee was the real respondent to the petition to wind up MWL ("the second petition").

2. The petitions were heard by Le Pichon J (as she then was). The hearing relating to the first petition lasted 14 days, and Le Pichon J's reasons for dismissing the petition were handed down on 13 October 1999. The hearing relating to the second petition lasted six days, and Le Pichon J's reasons for dismissing that petition were handed down on 29 October 1999. On 3 December 1999, she made various orders for costs, but effectively she ordered the Petitioner to pay the Respondents' costs of the petitions. Those costs are due to be taxed next week. On 4, 5 and 6 December, the Respondents' costs of the first petition are due to taxed, with the Respondents' costs of the second petition due to taxed on 7 December.

3. The Petitioner is appealing to the Court of Appeal against the dismissal of the petitions. However, there has been considerable delay in bringing on those appeals. The notices of appeal were served on 3 November and 19 November respectively, but it was not until a year later, namely on 10 November 2000, that the Petitioner's solicitors wrote to the Respondents' solicitors inviting them to agree estimates of the length of the hearings. That prompted the Respondents' solicitors to file summonses on 13 November seeking orders that the notices of appeal be struck out for want of prosecution. Those summonses are due to be heard by the Court of Appeal on 20 December. The Petitioner's solicitors then applied on 14 November for dates to be fixed for the hearing of the appeals. As yet no dates have been fixed.

The current applications

4. The current applications relate to the dates fixed for the taxation of the Respondents' costs. On 10 November, the Petitioner issued summonses seeking the stay of the taxations pending the outcome of his appeals against the dismissal of the petitions. If the court was not prepared to stay the taxations, the Petitioner sought in the alternative a stay of execution, in other words a stay of the enforcement by the Respondents of the costs found to be payable to them on the taxations, pending the outcome of the appeals. Those applications were heard by Chung J on 21 November. He dismissed the applications. According to the reasons which he handed down on 23 November, he dismissed the applications for want of jurisdiction, because he thought that, in the circumstances, the applications had to be made to the Court of Appeal or to a single judge of the Court of Appeal. However, in case he was wrong in that view, he considered the applications on their merits. He concluded that, had he had jurisdiction to hear the applications, he would have dismissed them. The Petitioner now applies to the Court of Appeal for the orders which Chung J declined to make.

The stay of the taxations

5. The only argument in favour of staying the taxations is that, if the Petitioner's appeals succeed, the orders relating to the Respondents' costs will almost certainly be set aside, and the considerable time spent and the large amount of costs incurred on the taxation of the Respondents' costs will have been wasted. Many cases have stressed the importance for the courts to take a procedural course which avoids the expenditure of unnecessary time and expense involved in the unnecessary taxation of costs: see, for example, Roselodge Ltd. v. Castle [1966] 2 Lloyd's Rep 113 at p. 141, Malliez v. Redland Plasterboard Overseas Ltd., unreported, 22 September 1992, and Re Schindler Lifts (Hong Kong) Ltd. [1993] 1 HKLR 45. As Woolf LJ (as he then was) said in Malliez:

"The balance is between wasted money on the one hand and the delay to the plaintiff in being kept out of his money on the other .... that involves this court at least taking a view as to the prospects of the appeal."

In Roselodge, a stay was ordered without any argument on the point. So too was a stay ordered in Malliez, but in Schindler a stay was not.

6. I wholly ignore the merits of the appeals. It would, I think, be quite impracticable for me to form even a provisional view of the merits without this hearing generating into a mini-hearing of the appeals themselves. To be fair, neither Mr Russell Coleman for the Petitioner nor Mr Johnny Mok for the Respondents wished to make any submissions to me on the merits. But in the balancing exercise which I have to conduct, I regard as critical the Petitioner's delay in prosecuting the appeals. Despite his litigious character as summarised by Le Pichon J in her judgment dismissing the first petition, the Petitioner did nothing for almost a year to get the appeals on. He gives no explanation for that. What inference is the court to draw from that? At the very least, the court is entitled to be sceptical as to whether he really wishes to pursue his appeals. Was the filing of the notices of appeal simply a procedural device to delay the taxation of the orders for costs which he must have realised would almost certainly be made against him? In that connection, it is noteworthy that although the dates for the taxations were fixed on 8 September, it was only on 10 November that the summonses seeking the stay of the taxations were filed. Again, no explanation for that delay has been given. The fact of the matter is that if the appeals had been prosecuted with diligence, it is very possible that they would have been heard and disposed of by the date when the taxations are due to take place. I do not think that the Petitioner can be heard to complain about the possibility of wasted time and expense when that possibility has arisen as a result of his own unexplained delay in pursuing his appeals.

The stay of execution

7. The conventional wisdom is that a stay of execution will not be ordered unless there are good grounds to do so. The court does not "make a practice of depriving a successful litigant of the fruits of his litigation, and locking up funds to which prima facie he is entitled": the Supreme Court Practice 1999, Vol. 1, para. 59/13/2. That seems to me to apply just as much to orders for costs where considerable costs have been incurred. However, a stay of execution may be appropriate if there is a real chance that, in the event of the appeals being successful, a litigant would not be able to recover from the other party the costs which he has had to pay to that other party following a taxation of those costs. That might well occur when the order for costs is made in favour of a party who does not live in Hong Kong.

8. No problem, in my view, arises in relation to C. C. Lee. Although he died earlier this year, there is no reason to suppose that his estate would not repay the costs paid to it (once a carry-on order has been obtained) if it has to do so. The position of T. Y. Lee is potentially different. The Petitioner's evidence is that T. Y. Lee left Hong Kong in early 1997 and now lives permanently in Boston. According to the Petitioner, he told the Petitioner before he left Hong Kong that he intended to move as many of his assets as possible to the United States prior to the resumption of sovereignty over Hong Kong by the People's Republic of China. And there is some evidence that T. Y. Lee has indeed disposed of some of his shares in HYHTL, and that some of his other assets may not be all that easily realisable.

9. Having considered the matter with care, I accept that there is, in theory at any rate, a possibility that, in the event of the appeals being allowed, the Petitioner might not be able to recover from T. Y. Lee some or all of the taxed costs which he may by then have had to pay T. Y. Lee pursuant to the taxations. However, the evidence is that T. Y. Lee is a very rich man indeed with significant assets in Hong Kong, whether immediately realisable or not, and I simply cannot say that the possibility of the disposal of T. Y. Lee's assets in Hong Kong is sufficiently likely so as to justify the making of an order staying the execution of any order for taxed costs, and thereby depriving T. Y. Lee for the time being at any rate of the benefit of the order for costs in his favour.

Conclusion

10. For these reasons, the Petitioner's application for a stay of the taxations, alternatively for a stay of execution of the orders to be made on the taxations, must be dismissed.