BRIGHT GOLD LTD v. MEGA WELL DEVELOPMENT LTD

HCA 2194/2011

[2019] HKCFI 2175

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2194 OF 2011

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(by Original Action)

(By Counterclaim)

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D E C I S I O N

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1.  These are my succinct reasons for dismissing this application by Bright Gold for a stay of execution pending its cross-appeal against the Judgment of this court dated 9 January 2019.

2.  The applicable principles are not in dispute: see Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84. 

3.  Erring in favour of Bright Gold, I am prepared to proceed on the basis that its cross-appeal is arguable.  However, such an appeal would not justify a stay on its own.  It is necessary for Bright Gold to provide additional reason to support its application.  Bright Gold says that its cross-appeal would be rendered nugatory without the stay.

4.  Before dealing with the nugatory argument, I should say that I am not attracted by Mega Well’s contention that the cross-appeal is bound to fail because it seeks to overturn a consent order.  I am inclined to agree with the analysis of Mr Ho SC, appearing with Mr Lee for Bright Gold, that the consent order in question merely sought to vary the mechanism for the rescission ordered by the court in the Judgment, by which the sale of Duplex B by Bright Gold to Mega Well is to be reversed.  Further, in the negotiation over the variation, Bright Gold had made clear that it was without prejudice to its right to appeal.

5.  However, Mega Well did in good faith adhere to the terms of the consent order.  In accordance therewith, it had, inter alia, redeemed the mortgage against Duplex B and vacated therefrom in preparation for the rescission.  In my view, this must be a matter which should weigh in the exercise of the court’s discretion in this application.  Fundamentally, Mega Well is the winner pursuant to the Judgment.  It has so far been deprived of the fruit of the litigation. 

6.  Turning to the nugatory argument, I see little substance in it apart from the technical point that the rescission will have to be reversed if the cross-appeal succeeds.  In principle, such a reversal is no different to the case where the winner has to repay the judgment sum when the judgment is overturned on appeal.  The fact of the matter is that there is no reason to believe that there will be any impediment to such a reversal. 

7.  Mega Well has demonstrated by its ability to redeem the mortgage that it is a company with financial backing.  I see no reason to doubt that Cheng would very much like to purchase a new home for herself and her family, which was her reason for the purchase of Duplex B on the first place.  The purchase price to be refunded by Bright Gold will be injected into the new home.  The delay in compliance with the Judgment in these circumstances has resulted in real prejudice to Mega Well. 

8.  Equally, there is no reason to doubt that in the event of a reversal of the rescission, Mega Well will be able to repay the purchase price to Bright Gold.  On the evidence, the money will be invested in a new property.

9.  Further, the evidence is that the existing value of Duplex B far exceeds the purchase price paid by Mega Well.  It is therefore very difficult to see why there will be any real impediment to a reversal of rescission.  I accept the submission of Mega Well that upon rescission Bright Gold will be in a secured position concerning the recovery of the purchase price.  In the worse case scenario, it will be able to sell the property to recover the same.

10.  For these reasons, I dismiss the stay application.  I shall hear the parties on costs.