FBC CONSTRUCTION CO LTD v. BIG ISLAND CONSTRUCTION (HK) LTD

CACV 83/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 83 OF 2009

(ON APPEAL FROM HCA NO. 1363 OF 2008)

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D E C I S I O N

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1.  This is an application for a stay pending appeal.  The order was made by the judge on 25 March 2009 on an Order 14 application.  Basically, what the judge did was that he gave conditional leave to defend on payment into court of a sum of $2,698,102 within 21 days.

2.  The claim was a claim by one company against another.  The two companies have been in what I might call business relationship for a long period.  The Defendant Company is 99.9 per cent owned by a Mr Ben Lee, who is also a director of the Plaintiff Company.  Essentially, the claims relate to loans which go back beyond the limitation date.  Initially, the Defendant challenged the fact that there had ever been any loans.  The judge dismissed that and there is no argument at present about that, so it can be taken that there were loans.  The defence is that the claim was made out of time. 

3.  The Plaintiff challenges that on two bases.  First, in relation to documents which Mr Ben Lee signed as a director of the Plaintiff, in which the debt was said to be recorded.  The difficulty with that is it does seem to me that there are strong grounds for saying that might be an admission by the person who owns the Defendant and controls the Defendant.  The Defendant, itself, is now probably in difficulties in denying that those loans ever existed, simply because the only person who can make any decisions on behalf of it has admitted in other respects that those loans existed.   But that does not necessarily mean that the Defendant itself has acknowledged the loan.

4.  It is a very technical argument but there it is and it seems to me that that is one aspect, but there is another reason why the Plaintiff says that those loans have been acknowledged.  That is, in the trial balances which have been produced, voluntarily in another case in which the Defendant has taken part, it is said there is an acknowledgement of the debt, because the debts are shown in the trial balances.

5.  That is a novel point.  Clearly, if it is right, then the debt has been acknowledged and the limitation defence goes.  Under those circumstances, I approach this case on the basis that the order which the judge made, that there should be a payment into court for the amount claimed, is the correct one.

6.  It is said that there are other reasons why the Defendant should have been allowed unconditional leave to defend, and that is that there is a counterclaim.  The judge assessed that and, again, he did not think very much of that, for various reasons which it is not necessary to go into now.  So again, the judge exercised his discretion.  He gave leave to defend but he made it conditional and, at this stage, I do not consider that there are such strong grounds for challenging that, that that would be a reason why I would grant a stay.  What has been said is that, given the fact that there are these defences, the Defendant is impecunious and unable to provide the money.  Against that, it is said this has been said in other cases on a number of occasions before and every time the Defendant has been told to come up with some money, it has, first of all, said it is unable to do so and, eventually, is able to do so.

7.  The Defendant’s answer to that is it had a source of money outside its own directorship and that source of money has now indicated that there is no further money coming.  So be it.  The fact remains, however, that this is a corporate defendant and, in so far as it is owned by Mr Ben Lee, Mr Ben Lee, apart from saying he has not got any money, has not indicated anything at all about his financial circumstances.

8.  On this basis, I regret that I do not see it would be right to exercise a discretion to interfere with the judge’s order.  The matter went back before the judge on the 22nd of this month and he extended time for 21 days from 22 April.  I am not prepared to interfere with that.  The appeal can go ahead but the judge’s order should remain as is in the meantime.  I decline to exercise my discretion.

(Submissions on extension of time)

9.  Time extended for provision of security to 4.30 pm, 3 June 2009.

(Submissions on costs)

10.  Costs to Plaintiff.