XCHRX PACIFIC TELECOMMUNICATIONS LTD. v. BB TELECOM LTD. AND ANOTHER

HCA19538/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.19538 OF 1998

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D E C I S I O N

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The starting point is, of course, that the Plaintiff should not be deprived of the fruit of the judgment, but at the same time, the Court should also consider that the appeal is not rendered nugatory if the stay of the judgment is not granted at the meantime.

In this case, I would stay the execution of the order of the Master for the following reasons.

(1) Without finally deciding on this issue, the defence of set-off or the counterclaim for damages by the Defendants by reason of the breach of contract of the Plaintiff is obviously an issue to be considered. The Agreement for Transfer of Business Assets ("the Agreement") expressly preserved the rights of the Defendants for breach of the Agreement by the Plaintiff. There is a further issue to be determined whether the so-called admissions contained in the two letters by the Defendants were the subject matter of without prejudice negotiations. In the worst scenario, if judgment was to be entered against the Defendants, the question of stay of execution of the judgment pending the determination of the counterclaim has to be considered at the appeal. To require the Defendants at this stage to pay the full sum into Court will in effect deprive them of the opportunity of raising this matter on the appeal.

(2) The question and extent of the condition to be imposed should be fully argued at the appeal. When the Master imposed the condition of requiring the whole of the claim of the Plaintiff to be paid into Court, the suggested procedure in MV Yorke Motors v. Edwards was not observed. The Defendants were not given an opportunity to show whether the condition in fact could be met. The Defendants had since filed an affidavit of means and stated that the business activities would come to an halt if the amount was to be paid into Court. It would be inappropriate at this stage of the proceedings to disregard this claim on the basis that full disclosure of the financial situation had not been made.

Accordingly I will allow the application.