YIP ALICE AND OTHERS v. WONG SHUN

CACV 239/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 239 OF 2002

(ON APPEAL FROM HCA NO. 12614 OF 1999)

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J U D G M E N T

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Hon Woo JA (giving the judgment of the Court):

This is an application by the defendant for a stay of execution of the judgment given by Deputy High Court Judge Reyes SC on 19 April 2002 in favour of the plaintiff in the sum of $1,470,000 with interest and possession of the land known as No. 44 Praya Road, "C" Lei Yue Mun, Kowloon ("the Land"). The defendant was also ordered to pay mesne profits at the rate of $30,000 per month from 19 April 2002 until delivery up of possession of the Land.

2. A condition was imposed as a result of the plaintiffs' application under Order 14 that the defendant paid a sum of $450,000 into Court. The defendant did pay the sum which had remained in Court up till after the Judge gave the judgment. At the hearing before us, Mr Pun, counsel for the plaintiffs, informed us that the money in court had already been paid out to them, pursuant to the order given by the Judge.

3. By a notice of appeal filed on 15 May 2002, the defendant has lodged an appeal against the judgment. The defendant had made an application for a stay of execution to the Judge and after his refusal made another one to Mayo VP who also refused the application. Both judges made an order for costs against the defendant.

4. This appeal is brought pursuant to Order 59, rule 14(12) which provides:

"(12) An appeal shall lie to the Court of Appeal from any determination by a single judge, not being the determination of an application for leave to appeal, and shall be brought by way of fresh application made within 10 days of the determination appealed against..."

5. In Mr Pun's skeleton arguments, he drew our attention to para 59/14/26 of The Hong Kong Civil Procedure, 2002, Vol 1, which states:

"Appeal lies to the full court from a determination made by a single judge (r. 14(12)), other than a decision given in open court by a single judge on an application for leave to appeal. ...

In Wren v. Braunston Canal Services (1990) The Times, November 23, the full court held that, on an appeal from a decision of a single judge, the full court would not exercise a discretion afresh and cannot interfere with any exercise of discretion by the single judge, unless he erred in principle; ..."

6. Two points are made by the cited passages, applying them to the present case, namely, that the appeal from Mayo VP's order refusing a stay should be made to the full court of the Court of Appeal, and that when hearing the appeal we should not exercise a discretion afresh and cannot interfere with the exercise of discretion by Mayo VP unless he erred in principle.

7. The cited passages appear to have been taken from para 59/14/41 of The Supreme Court Practice 1999, Vol 1, which is in more or less the same terms. There is no mention of s 34B and s 35 of the High Court Ordinance, Cap 4. The relevant provisions in the two sections are as follows:

"34B. (4) The Court [Court of Appeal] shall, if it consists of 2 Justices of Appeal, be duly constituted for the purpose of-

(a) ...

(b) hearing and determining any appeal against a decision of a single Justice of Appeal acting by virtue of section 35(1); ..."

"35. (1) Subject to subsection (3), in pursuance of the civil jurisdiction of the Court of Appeal, any order or direction not involving the determination of the appeal may be made or given by a single judge sitting in court or in chambers, and a single judge may likewise make any interim order which he may think fit to prevent prejudice to the claims of any party pending an appeal.

(2) ...

(3) Every order or direction made or given by a single judge under subsection (1) may be discharged or varied by the Court of Appeal."

8. In view of the provisions of s 34B(4)(b), it is clear that in Hong Kong, appeals from a decision of a single Justice of Appeal can be entertained by this Court consisting of two judges instead of a full court consisting of three judges. We have therefore come to the conclusion that the first of the cited passages in The Hong Kong Civil Procedure intimating the requirement of such an appeal being heard by a full court is misleading. We do have jurisdiction to hear this appeal from the decision of Mayo VP.

9. Though the report of Wren v. Braunston Canal Services in the Times Newspaper is a very brief one, it does bear out the effect as described in the second of the passages in para 59/14/26 of The Hong Kong Civil Procedure cited above.

10. When we were attempting to consider whether Mayo VP had erred in principle in the exercise his discretion given him by Order 59, rule 13 of the RHC in his refusal to grant the stay sought by the defendant, we found that the notes written by Mayo VP during the hearing before him did not contain any reasons for his refusal. Counsel for both parties, who appeared before Mayo VP, confirmed that the Vice-President had in fact told them that he would not give any reason for his decision, so as not to affect the exercise of discretion by this Court if the defendant decided to go further. We are therefore faced with a situation where there is no material to enable us to consider how and why Mayo VP exercised his discretion. In the circumstances, without deciding whether it is necessary to consider if the Vice-President had erred in principle, we are of the view that it would be just for us to exercise our discretion afresh, without taking into account why Mayo VP had refused the defendant's application.

11. Counsel for both parties have referred us to some authorities on the considerations applicable to a stay application. The effect of such authorities has been summed up in para 59/13/1 of the Hong Kong Civil Procedures 2002, Vol 1. On the one hand, a stay should only be granted where there are good reasons for departing from the starting principle that the successful party should not be deprived of the fruits of the judgment in his favour (Winchester Cigarette Machinery Ltd v Paye & Another (No. 2) The Times, December 15 1993, CA). On the other hand, the court is likely to grant a stay where the appeal would otherwise be rendered nugatory (Wilson v Church (No. 2) (1879) 12 Ch D 454 at 458, 459, CA), or the appellant would suffer loss that could not be compensated in damages. In Linotype-Hell Finance Ltd. v Baker (1992) 4 All ER 887, Staughton LJ observed:

"... if a defendant can say that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success, that is a legitimate ground for granting a stay of execution."

12. The facts of the case can be briefly described as follows. In the 1960s, the plaintiffs and their family members were occupying the Land, which is unleased Government land, as squatters. In mid-1960, the plaintiffs' father started a restaurant business on the Land. On 4 March 1986, the plaintiffs and the defendant entered into an agreement in writing whereby the defendant was allowed to go into occupation of the Land and manage the business of the restaurant. By this agreement, the defendant agreed to make a monthly payment of $8,000, later increased to $12,000, to the plaintiffs. That agreement was for a term of about 10 years and expired at the end of April 1996. Thereafter, an oral agreement was entered into whereby the defendant agreed to pay a sum of $30,000 per month to the plaintiffs. The Judge, after hearing the witnesses and analysing the evidence, accepted the evidence given on behalf of the plaintiffs and rejected the evidence of the defendant. He found that the written agreement and its continuation by the oral agreement was to grant a licence to the defendant to operate the restaurant at a monthly payment to the plaintiffs. The action arose because as from April 1998, the defendant has not been paying the plaintiffs pursuant to the oral agreement. His case was that the plaintiffs had no title in the Land, which fact he only discovered sometime before his refusal to pay. Most important of all, he contended that both the written and the oral agreements were illegal and therefore unenforceable, but the Judge did not accept the contention.

13. A number of grounds have been set out in the notice of appeal. However, the key issue raised is whether the agreements were illegal and unenforceable. That issue relates to the true construction of s 4 of the Land (Miscellaneous Provisions) Ordinance, Cap 21 and the effect of the decisions of the Court of Appeal in Li Wing Sun v Wu Man [1978] HKLR 575 and Fong Siu Kam and Others v Lo Shun Cheung [1984] HKC 107.

14. In the affirmation of the defendant in support of the application, he states that he stands a good chance in the appeal. He also says that there are 17 persons on the payroll of the restaurant and they will join the unemployed workforce if no stay is granted. He also alleges that the restaurant business has been running at a loss for some time, exhibiting some copies of accounts for the period from 1st April 2000 to February 2002. Although he states that if no stay is granted, the appeal would be rendered nugatory, he has not set out any fact in support of this statement. He has not, for example, stated that the plaintiffs would not be worth the amount of the judgment sum if execution of the judgement is unhindered. Nor has he stated that he has difficulty in making the payment of the judgment sum. Anyway, about one-third of the judgment sum had been paid into the Court, ie, the $450,000. While he says that the restaurant business has been running at a loss for some time, he has not stated, apart from the consequence of 17 persons losing their jobs, that there is any reason why he should continue operating the business. On the other hand, the fact that he is seeking a stay of execution regarding the order of possession of the Land supports the contention of Mr Cheung, his counsel, that if the order of possession is executed, he can no longer continue with his business on the Land and his business would be closed. This would be irreversible even if the he succeeds in the appeal.

15. We have taken some time to consider the key issue on illegality involved in the appeal. Despite Mr Pun's arguments to the contrary, we are not persuaded that the contentions of the defendant are unarguable, although understandably at this stage of the appeal proceedings we do not have the benefit of full arguments from both sides.

16. What has given rise to the action is the refusal on the part of the defendant to pay the monthly sum to the plaintiffs. With judgment in favour of the plaintiffs, it is even more objectionable for the defendant not to pay. The plaintiffs have been deprived of the monthly payments since April 1998. Before the appeal is decided by the Court of Appeal, we cannot see how the defendant could justifiably say that he should be allowed to have the use of the Land without making the payment to the plaintiffs as he had all along agreed to do so. In all the circumstances of this case, we think it just to grant a stay of execution, but upon terms. Our order is as follows:

(1) Upon the defendant paying $1,140,000 (ie, $1,020,000 plus $30,000 per month for 4 months) to the plaintiffs (through their solicitors) within 21 days of the date of this Order there be a stay of execution of the judgment, save that this Order does not affect the payment out already made to the plaintiffs of the sum of $450,000 and the interest on it.

(2) The $1,140,000 in (1) above shall be offset from the judgment sum and interest thereon if the appeal fails.

(3) A further condition is imposed that the defendant has to pay a sum of $30,000 into court on the 5th day of every month from 1st August 2002 until the determination of the appeal, and in default of such payment by the due date, the stay ordered in (1) above be uplifted forthwith.

17. We also make an order nisi that the costs of this application be in the cause of the appeal. Since we are exercising our discretion afresh, we do not think it proper to disturb the orders for costs made by the Judge and Mayo VP regarding the stay applications before them.