CHINA NONFERROUS METALS (HONG KONG) FINANCE CO LTD (In Liquidation) AND ANOTHER v. SOUTH-EAST ASIA INVESTMENT HOLDING CO LTD AND ANOTHER

HCCL 20/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 20 OF 2002

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BETWEEN

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D E C I S I O N

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1.  In determining whether to grant a stay of execution, the parties are not in dispute that, in applying the principles set down in Star Play Development Ltd v Bess Fashion Management Company Ltd [2007] 5 HKC 84, the starting point is that a successful party is not to be deprived of the fruits of his success, and that a defendant must justify a stay of execution by showing that good reasons exist for a stay. An appeal itself does not operate as a stay.

2.  On 1 November 2012, I granted leave to the defendants to appeal against my Decision of 31 July 2012, refusing to strike out the plaintiffs’ action. Since 31 July 2012, dates have been fixed for the trial of the action to take place commencing 3 June 2013.

3.  I am not satisfied that the defendants’ appeal has strong likelihood of success, it being an appeal against the exercise of a judge’s discretion. Where there exists only an arguable appeal, the appellant would need to show that there are additional good reasons as to why a stay is justified. The only reason put forward by the defendants for a stay is that the plaintiffs are in liquidation, and there are no reasonable prospects of the defendants being able to recover damages or costs from the plaintiffs, in the event that they are successful on their appeal. They argue that the appeal will be rendered nugatory even if they should succeed.

4.  Since the trial dates have been fixed for June 2013, and the appeal will not be heard until 24 April 2013, the defendants claim that they will have to incur two sets of costs at the same time, one for the appeal and one for the preparation of the trial, and that if the appeal is successful, the costs of the preparation for the trial will be wasted with little chance of their recovery from the plaintiffs.

5.  If a stay of execution is granted until 24 April 2013, and the defendants’ appeal fails, the parties’ preparation for trial to commence on 3 June 2013 may be prejudiced in terms of time and the briefing of counsel, which may lead to an application for the trial to be adjourned, and that will cause further delay which, as I had emphasized in my decision of 31 July 2012, should be avoided. If a stay is refused, and the defendants should succeed on their appeal, the action against them will be struck out. I do not see how the appeal would be rendered nugatory.

6.  I am not satisfied by the defendants’ assertion that any costs, wasted for the preparation of the trial, would be irrecoverable from the plaintiffs. Despite their being in liquidation, the liquidators have been able to pay into court security for costs of $700,000, as ordered by the Court on 24 May 2012, and further security of $500,000, as I ordered on 31 July 2012 to cover the costs to be incurred up to the case management conference. The burden is on the defendants to adduce good evidence to support their contention of serious financial consequences, or of serious deleterious effect on them, and I cannot find such evidence.

7.  The defendants apply at the same time, as an alternative to the stay, for the trial dates in June to be vacated. Trial dates are milestone dates, and I am not satisfied that there is any good reason shown, by virtue of the appeal, for the 5 days of trial to be vacated.

8.  The defendants’ application for stay is accordingly dismissed, with costs to the plaintiffs.