LIBERTARIAN INVESTMENTS LTD v. THOMAS ALEXEJ HALL

HCA 2533/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2533 OF 2006

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BETWEEN

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REASONS FOR DECISION ON APPLICATION FOR
STAY OF EXECUTION

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The application

1.  This action already has attracted two judgments: first, a substantive judgment in the dispute dated 25 February 2011, and second, a decision of this court dated 25 March 2011 on the defendant’s application to vary the original costs’ order nisi.

2.  These judgments speak for themselves, and the court now is seized with a yet further (and presumably final) application on the part of the defendant, pursuant to a summons dated 21 March 2011, for a stay of execution of the Amended Judgment of this court, as sealed and filed on 22 March 2011.

3.  The defendant’s summons for stay of execution is in two parts: first, a general stay of execution is sought pending the defendant’s appeal to the Court of Appeal; and second, and more pertinent, it seeks an extension of time until 26 May 2011 in which to make payment of the sum of £5,474,247.35, as per paragraph 1 of the sealed Order.

4.  Several matters of detail require to be noted at this stage: first, it appears that a payment of some £450,000 (less bank charges) already has been remitted to the plaintiff’s solicitors in part-payment of this sum; second, the date of 26 May is sought because such a date is said to provide the defendant another 90 days in which to realize assets in order to pay the balance of the amount of £5.474 million; and third, whilst on the materiels provided the defendant appears to have a NAV of approximately £30.5 million (calculated at the approximate current exchange rate of HK$12.5 to £1.00), and whilst there are presently enjoined assets said to be of the value of approximately £21.424 million, it seems that the illiquidity of such assets requires an additional period of grace in which to realize the same (albeit given that some of these assets appear to be shares, I am unsure why such illiquidity now is alleged).

The Order as made

5.  At the conclusion of the hearing of this summons, at 5.15 pm on 28 March 2011, the court made the following Order:

The defendant’s summons dated 21 March 2011 be dismissed with costs, such costs if not agreed to be taxed and paid, SAVE THAT the sealing of this Order reflecting such dismissal be deferred for a period of 7 days from 28 March 2011 in order to enable the defendant (if so advised) to make application to a single Justice of Appeal. Further, that the application was not certified as fit for two counsel.

6.  I now provide brief reasons for this dismissal in the foregoing terms.

7.  For the defendant, Mr Colin Wright (who had appeared for the defendant on all previous occasions) made it clear at the outset of the argument that he did not seek to persuade the court that it should halt the formal taking of the account as ordered on the basis of wilful default on the part of the defendant.  If I may say so, Mr Wright divined, entirely correctly, that in the circumstances reflected in the substantive judgment any such general stay to a proposed (and presently unfixed) appellate date was unlikely to succeed, and the court made it clear at the outset of argument that in its view paragraph 1 of the summons was a non-starter.

8.  Instead, Mr Wright sensibly focused on the payment of the sum of £5.474 million (less the amount as now already advanced), and submitted with his usual persuasiveness that this was a not insignificant sum of money which could not simply be produced out of a hat, notwithstanding his client’s overall asset position.

9.  Mr Wright also indicated that if and in so far as his client could obtain the court’s temporal indulgence – in at least some period ‑ in which to make the balance of such outstanding payment, he wished to be permitted to make this payment into court and not directly to the plaintiff: were this eventuality to occur, he argued, his client would be safeguarded should his anticipated appeal on the substantive issues prove successful, whilst the plaintiff itself also would be safeguarded with the monies standing in court.

10.  At the outset I saw merit in this approach – indeed, in terms of a proposed payment into court of the relevant sum, and even permitting another, say 21 days in which to do so, I very much doubt that Mr Barlow SC and Mr Chan (who together appeared for the plaintiff in all previous hearings) ‑ would have cavilled.

11.  However, the court’s thinking on the matter was substantially altered within a few minutes of Mr Barlow getting on to his feet in opposition to the application.

12.  This was because, as leading counsel had pointed out in a footnote to his useful skeleton argument – a footnote hitherto unread by this court ‑ that on 25 March 2011 the plaintiff had issued a statutory demand on the defendant for the sum of £6,311,038.38, which amount represented the judgment sum, together with compound interest at the rate as ordered; in fact, I apprehend that this statutory demand now will require amendment given the payment of £450,000 (less bank charges) as already effected.

13.  Be that as it may.  Mr Barlow’s point, in a nutshell, was: ‘What are we doing here?’  Because it now was clear that supervision of this matter had been placed in the hands of the Bankruptcy Court, and that at the end of the 21day statutory period allotted for compliance with the statutory demand, a Petition thereafter would issue and the full bankruptcy jurisdiction of the High Court thus would grind into operation.

14.  Hence, leading counsel said, the issue of a stay of execution would be dealt with in normal course by the Bankruptcy Court; indeed, given the date of issuance of the 21 day statutory demand, Mr Barlow opined that it was almost inconceivable that even a first date for the hearing of the proposed Bankruptcy Petition – if indeed it proved necessary so to issue – would be fixed prior to mid-May 2011, so that as the current matter was to be dealt with through the bankruptcy procedure, under the supervision of the Bankruptcy Court which would have complete control of the process, de facto there would be the stay of execution as sought by the existing summons.

15.  I agree.  To be fair Mr Wright recognized the point, and contented himself merely with the observation that this statutory demand had been but recently served on his client.  That may well be, but in the circumstances it would have required but a minute’s thought to recognize the implications, and to pull the summons.  As matters stood, however, the summons was subjected to argument which, for all practical purposes, was unnecessary.

16.  Accordingly, whilst in normal course I may have been sympathetic to a brief stay of execution of, say, 21 days, or possibly 14 days – with respect I am at a loss to see why a gentleman of the obvious means of this defendant should find it so difficult to raise £5 million to pay into court – in the event I dismissed the summons in the terms expressed above, and for the reasons as now outlined.

17.  If and in so far as the defendant wishes to take the matter of a stay to the appellate court, which presumably in such circumstance would take the form of a single Justice of Appeal sitting in chambers, the 7 day deferral in sealing the foregoing Order dismissing the summons should be sufficient to enable Mr Wright and those instructing him to obtain the relevant appointment.

18.  In summary, therefore, this case has now attracted 3 written judgments/decisions: the substantive Judgment of 25 February 2011, the Decision on the defendant’s application to vary the costs’ order nisi, dated 25 March 2011, and this Reasons for Decision dated 28 March 2011dismissing the defendant’s summons, and presumably if and in so far as there is an appeal against this Decision refusing a stay of execution, these three documents thus will be available to the appellate court.