COPYTRON (HONG KONG) LTD v. LEE CHIN LEONG

HCA 1345/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1345 OF 2003

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R U L I N G

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1.  This is an application for a stay pending an appeal to the Court of Appeal by the Defendant from that part of my order dated 20 January 2006 which requires the Defendant to pay into court the sum of $1.2 million as a condition of my setting aside a judgment in default.

2.  For the purposes of this application, I do not need to set out, at all, the history of this matter which can be obtained from my judgment of 20 January (pages 4-15).  This is a familiar situation.  Now that I have set aside the judgment on terms [on appeal from the Master, I having made some adjustments to her order] the Defendant says that he cannot possibly afford to raise the $1.2 million required of him with the consequence that if I do not stay this part of my order, judgment will be entered against him.

3.  I have been much assisted by full argument on both sides.  The Defendant has filed an affirmation which he says amply demonstrates that he simply does not have the financial wherewithal to comply with my order.  He earns HK$45,000 and all of this is committed to his reasonable living expenses as well as repaying loans incurred to pay his solicitors in defending these proceedings.

4.  Mr Chan for the Plaintiff submits that this is yet another delaying manoeuvre on the part of the Defendant.  He paid no attention to the writ, served personally on him in Singapore, and only got going, as it were, after judgment had been entered and bankruptcy proceedings had been started against him in Singapore, when he applied to have the judgment set aside.  The Master allowed his application on terms of a large payment in but before doing so she had, very correctly, given him time to make representations as to his means before imposing the terms that she did.  None were made on his behalf and on appeal before me none were made, although they could have been in the course of the appeal.  The Defendant had the carriage of appeal and he should have realised that he was always going to be at risk of a conditional order of the type made by the Master and then made by me on appeal.

5.  It is only now that the application is made, with the appeal some way off.  It has been listed for 5 October this year.  There is therefore much force in Mr Chan’s submission. 

6.  The principles to be applied can be derived from the judgment of Ma J (as he then was) in Wenden Engineering Services Co. Ltd v Lee Shing Yue Construction Co. Ltd, HCCT 90/1999 where he reviewed the authorities both here and in England, citing extensively from his own previous decision in Star Play Development Ltd v Bess Fashion Management Co. Ltd, HCA 4276/2001.  I only need to observe, for present purposes, that I will respectfully adopt what Ma J has set out in Star Play Development which he reproduced at para. 5 of his judgment in Wenden Engineering.

7.  I think, doing my best to be as objective as I can be when my own judgment in the case is under appeal, that the appeal based on the premise that leave should have been unconditional is arguable.  As to the part of the appeal which proceeds on the basis that I was wrong to have held the judgment to have been regular, I am unable to feel at all sanguine about the Defendant’s prospects on this aspect.  As I held in the judgment, I am entirely satisfied that this had not been an irregularly obtained judgment. 

8.  It all really comes down to whether the Defendant should have been put on terms of $1.2 million.  In another judgment of Ma JA (as he then was) in Kwong Kee Construction and Engineering Ltd v Sunlink Ltd, CACV 457/2002 (an appeal from a decision of mine) the Court of Appeal held that the burden is on the Defendant to adduce sufficient and proper evidence of his means and in this regard he must make full and frank disclosure of his ability, or lack of it, to meet the condition.  And also, he needs to demonstrate that it is impossible, not just difficult, to comply with the condition.

9.  Of course today, the Defendant says that it is impossible.  This sort of evidence is frequently very difficult for the Plaintiff to refute.  This information is, after all, peculiarly within the Defendant’s possession and therefore knowledge but, that does not mean that it cannot be critically scrutinised.

10.  Mr Chan says that despite it all, it cannot be said that he cannot raise a short-term loan of $1.2 million when he is earning $45,000 a month.  He lives rent free himself in Shanghai where he works although he, of course, needs to provide a home for his family in Singapore.  This comes down to a balancing exercise.  I have found, as had the Master, that the Plaintiff’s were in possession of a perfectly good default judgment.  The Defendant had done just about enough to set it aside, but, on terms.  The Defendant has his undoubted right to appeal against my judgment which he has exercised.  I do not believe that he cannot now raise $1.2 million by short-term loan if he wishes to.  He has not discharged the severe test of showing this to be ‘impossible’.  That expression of course needs to be interpreted sensibly and reasonably.  Impossibility should not be taken literally.  In this matter, given his level of income, I am satisfied that he can meet this obligation by borrowing commercially and/or from family and friends.  This being my view I will dismiss the application but allow a further 14 days to enable the Defendant to bring the money into court.  The judgment I am told has been entered but has yet not sealed.  I direct that it should not take effect for a further 14 days. 

11.  The Plaintiff will have its costs.  It is agreed between counsel that if I were to dismiss the application, as I have, that the Plaintiff would have its costs grossed-up.  The amount claimed is in the order of $29,450,  I will say that the grossed-up order should be in the sum of $29,000.