WA LEE FINANCE CO LTD v. GOLAN LTD

CACV 195/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 195 OF 2000

(ON APPEAL FROM HCA NO. 15354 OF 1999)

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J U D G M E N T

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1. The history of this litigation is set out in the judgment of Ribeiro JA (as he then was) of 4 July 2000. On that occasion he ordered that execution of a summary judgment which the Plaintiff had obtained against the Defendant under Ord. 14 from Yeung J be stayed pending the hearing of the Defendant's appeal against that judgment to the Court of Appeal. The execution of the judgment was stayed on terms that the Defendant paid various sums into court. The Defendant failed to comply with those terms, and on 23 September 2000 Rogers V-P ordered ex parte that the stay of execution be lifted. The application now before the court is once again an application for a stay of the execution of the judgment pending the hearing of the appeal.

2. In the course of his judgment, Ribeiro JA said that the Defendant's appeal raised bona fide grounds which could not be said to be devoid of merit, at least in the context of an appeal against summary judgment under Ord. 14. Since that was Ribeiro JA's considered view on the material before him, it would, I think, be wrong for me to proceed on any other basis. I am therefore prepared to assume that the grounds of appeal originally relied upon were sufficiently arguable to warrant the court embarking on an examination of the relevant facts which an application for a stay of execution entails.

3. With that in mind, I turn to the basis on which this renewed application for a stay of execution is made. It is said that there are additional grounds of appeal, based on evidence which was not before Yeung J and which (if that evidence is permitted to be adduced on the appeal) would provide the Defendant with additional grounds of defence, namely illegality and duress. Those additional grounds of defence are said to render the Defendant's appeal more likely to succeed, and to render it more likely that the Defendant would be given leave to defend the action.

4. It is unnecessary for me to address the additional grounds of appeal on their merits, because even if they are meritorious I do not see how they can help the Defendant on this renewed application for a stay of execution. If, as I am prepared to assume, there were bona fide grounds of appeal originally, the fact that there may be further grounds of appeal now adds nothing to the question whether this renewed application for a stay of execution should succeed. Mr Jonathan Acton-Bond for the Defendant argues that the new grounds of appeal make it even more likely that the appeal will be successful, but once bona fide grounds of appeal are established, it will rarely be appropriate for the court to embark on an assessment of the likely outcome of the appeal because in most cases (of which I believe this case to be one) that exercise cannot be carried out without the hearing of the application for a stay of execution degenerating into a mini-hearing of the appeal itself. That, I think, is especially so in a case such as this, in which it is said that the fresh evidence on which the new grounds of appeal are based does not satisfy the criteria for its admissibility laid down in Ladd v. Marsall [1954] 1 WLR 1489.

5. That brings me to why Ribeiro JA granted the stay of execution in the first place. The judgment related to the rent of a seafood restaurant in Yuen Long which the Defendant had allowed to fall into arrears and which had been assigned by the Defendant's landlord to the Plaintiff. The allegation that the rent had fallen into arrears is hotly disputed. In his judgment Ribeiro JA said:

"The defendant .... has filed evidence pointing out that the restaurant operated on the suit premises employs about 104 members of staff and while the restaurant made a modest profit, it is unable to meet the judgment debt without depriving itself of its working capital and having to sell its plant and equipment so that it would have to cease its business and lay off its staff if a stay is not granted."

He granted the stay because he recognised that

"refusal of the stay would lead to the destruction of the defendant's business and consequent loss of employment to a sizeable workforce before the appeal could be determined. There is accordingly a real risk that a refusal of stay would render this appeal nugatory."

6. However, the critical point is that those considerations are no longer relevant. That is because the Defendant has now sold its plant and equipment and has sublet the restaurant. Presumably the restaurant staff have either been dismissed or their employment has been transferred to the new operator of the restaurant. Since Ribeiro JA granted the stay of execution for the very purpose of preventing that from happening, the basis on which he granted the stay of execution no longer applies. It would not, in the circumstances, be just to deny the Plaintiff the fruits of its judgment and to stay the execution of the judgment simply to save the Defendant from being wound up, when the adverse consequences of the Defendant being wound up no longer apply. The Defendant's only current business involves the receipt of the rent in respect of the restaurant, and the only reason why it is now sought to save the Defendant from being wound up is to enable the Defendant to pursue the appeal and to defend other proceedings brought against it when, if it is wound up, the liquidator might decide not to do so. In my judgment, that is not a sufficient reason for granting a stay of execution, and this renewed application for a stay of execution of the judgment must be dismissed.