HCA 1826/2011
[2020] HKCFI 1838
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1826 of 2011
________________________
BETWEEN
NG YUK PUI KELLY
Plaintiff
and
DUNG WAI MAN
1st Defendant
THE ESTATE OF NG BING KUEN, DECEASED
2nd Defendant
SINO LEADING LIMITED
3rd Defendant
NG KWOK WAH, VINCENT
4th Defendant
NG KWOK KEUNG, JAMES
5th Defendant
NG LAI LING, WINNIE
6th Defendant
________________________
Before: Deputy High Court Judge Jat SC in Chambers
Date of Written Submissions: 6, 9, 10 July 2020
Date of Decision (Paper Disposal): 5 August 2020
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D E C I S I O N
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Application
1. This is an application by the Defendants for stay of execution of the judgment of L Chan J handed down on 24 January 2019 (“Judgment”).
2. The present action concerns the beneficial ownership of two properties, ie Flat B on the 1st Floor & Portions of the Flat Roof of Winner Building, Block A, No 37 D’Aguilar Street, and Flat C on the 1st Floor & Portions of the Flat Roof of the same building. For convenience, the two properties will be referred to as “Flat B” and “Flat C” respectively, and collectively the “Flats”.
3. The Plaintiff’s claim is essentially that the 1st Defendant, who was the registered owner of the Flats, held the same on trust for her husband (“Kuen”, who was the Plaintiff’s late brother) since their purchase in 1973 until September 1985, when the Plaintiff entered into an oral agreement with Kuen to purchase the Flats from him for HK$1,000,000. The Plaintiff claims that from 1985 onwards, the 1st Defendant held the Flats on trust for his benefit. The 2nd Defendant is the estate of Kuen, represented by his and the 1st Defendant’s son.
4. After a 21 days’ trial, on 24 January 2019, L Chan J handed down the Judgment holding in the Plaintiff’s favour, and ordered the 1st Defendant to forthwith assign and transfer the title of the Flats to the Plaintiff.
5. The Defendants filed a Notice of Appeal against the Judgment on 21 February 2019 (CACV 86/2019). Notice of Setting Down an Appeal was filed on 4 March 2019. No hearing dates have been fixed until late July 2020, after the parties have filed written submissions in respect of this application. The appeal is now fixed for hearing in April 2021.
6. By summons dated 28 February 2019, the Defendants applied for stay of execution. By an order dated 29 March 2019, and by consent, Au-Yeung J gave directions for the filing of evidence in support of and opposition to the summons, and ordered the summons be adjourned to a date to be fixed for disposal on paper. Affirmations in support and in opposition have been filed by the parties by 24 May 2019.
7. Apparently neither side took steps to progress the matter for over a year. Eventually, on 22 June 2020, Au-Yeung J gave directions for the lodging of written submissions.
8. In the meantime, the 1st Defendant passed away on 15 January 2020. I understand that probate of her estate is being applied for.
9. In the circumstances, skeleton submissions have been received from the 2nd Defendant and the Plaintiff only (the 3rd to 5th Defendants are the 1st Defendant’s children and they were joined for the purpose of costs only). However, there is no suggestion that a distinction should be drawn between the 1st and 2nd Defendants for the purpose of this application, and I would treat the submissions advanced on behalf of the 2nd Defendant as applicable to the 1st Defendant.
Legal Principles
10. The parties are in agreement over the applicable principles. These are conveniently set out by Ma J (as the Chief Justice then was) in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at [6] – [10], and have been consistently applied, see: for example, Ngan Pui Chu v Bao Quan [2018] HKCFI 1383 at [19].
Grounds for Stay
11. Mr Victor TS Lui, counsel for the 2nd Defendant, relied on the following grounds in support of the application:-
11.1 If a stay is not granted, the appeal would be rendered nugatory and ineffectual as the Plaintiff will proceed to enforce the judgment before determination of the appeal.
11.2 There are arguable grounds of appeal.
11.3 The prejudice that may be caused to the Plaintiff in maintaining the status quo pending the determination of the appeal is minimal.
11.4 The delay on the Plaintiff’s part in dealing with the summons reflects upon the lack of urgency and lack of conviction from the Plaintiff in seeking to enforce the judgment prior to the determination of the appeal.
11.5 In any event, as a matter of practicability there will be significant difficulty in executing the judgment at this stage given the 1st Defendant’s passing.
12. Mr Justin Ismail, counsel for the Plaintiff, opposed the application. He submitted that no good reason has been put forward to justify a stay.
Arguable grounds of appeal
13. I do not consider it necessary to go into the details of the merits of the appeal for the purposes of this application. Mr Lui submitted that the grounds of appeal (which are said to be still under review by leading counsel) demonstrate that the appeal is arguable. I have considered the Judgment and the Notice of Appeal. I am satisfied that the appeal is arguable, but this is not a case where the Defendants have demonstrated that the appeal is very likely to succeed.
Appeal rendered nugatory?
14. Mr Lui submitted that if no stay is granted, the appeal would be rendered nugatory even if the Defendants succeed in the appeal. He submitted that since the Judgment is one for possession of premises, the observations of Ma J in Star Play [9(1)] (citing Ketchum International plc v Group Public Relationships Holdings Ltd [1997] 1 WLR 4 at 10H) applies.
15. Mr Lui submitted that if a stay is not granted, the Plaintiff would be at liberty to sell the Flats to third parties, mortgage the Flats or lease them out, so that even if the Defendants succeed on overturning the Judgment, they would not be able to recover possession of the Flats from third parties or would only recover possession subject to encumbrances or tenancies. There would be “serious deleterious effect” if a stay is not granted.
16. The situation is further complicated, submitted Mr Lui, because the 1st Defendant had agreed to sell Flat B to Sino Leading Ltd, who is suing the 1st Defendant for specific performance of the sale in HCA 2064/2011. Currently that action is stayed pending determination of the appeal.
17. I am not persuaded that the Defendants have demonstrated that not staying execution would render the appeal nugatory. Although the Judgment concerns ownership of the Flats, this is not a case where the Defendants are required to deliver up possession of their home. The Flats are not used as residential premises. Both Flats have been used – and I understand are still being used – by the 1st Defendant’s children (Flat B) and the Plaintiff (Flat C) as offices for many years. Flat B is currently leased to a company run by two of the 1st Defendant’s children. That being the case, transferring the title of the Flats to the Plaintiff would not by itself upset the status quo. If the 1st Defendant’s children wish to continue using Flat B as their office, they will have to negotiate a rent with the Plaintiff. Failing that they could move their offices to other premises. That may entail some practical inconveniences, but there is nothing in the evidence to suggest that moving to other premises would cause a “serious deleterious effect” on the Defendants.
18. On the other hand, Mr Ismail reminded me that the Plaintiff is 85 years old now (he was 83 years old when he filed his affirmation in April 2019), and the litigation has taken almost 10 years to date. The appeal is likely to take months before it could be heard and determined. Currently the Plaintiff is not even receiving rent for Flat B. Mr Ismail pointed out that the Judgment was emphatic in his client’s favour, and it would not be fair and just for an elderly man like him to be kept away from the fruits of his success for an indefinite period of time. In my view there is force in that submission.
19. Additionally, the Plaintiff is prepared to give an undertaking that he will not sell the Flats until further order. That would allow him to rent out the Flats (including to the 1st Defendant’s children) or use them in the meantime. There is, of course, still the possibility that the Plaintiff could mortgage or encumber the Flats. Although Mr Ismail has pointed out that there is no evidence that the Plaintiff intends to sell or charge the Flats in the near future, it is fair to say that there is no evidence from the Plaintiff that he has no such intention either. I therefore take into account that the Plaintiff’s proposed undertaking would not prevent him from encumbering the Flats, but I consider that the risk of that happening is relatively low because the current proceedings (including the Judgment) and Sino Leading’s action have been registered against the Flats and the Plaintiff is likely to face difficulty in charging or encumbering the Flats.
20. I am therefore not satisfied that staying execution of the Judgment would render the appeal nugatory.
Lack of prejudice to Plaintiff and delay
21. Mr Lui submitted that the Plaintiff has not taken steps to enforce the Judgment for over a year, and there is minimal prejudice if a stay is granted now. Mr Lui suggested that the Plaintiff’s inaction indicates that there is no urgency to enforce the Judgment and “lack of conviction” on his part.
22. I am not sure that is the correct way to look at the matter. If there is no urgency to enforce, there is no urgency for stay. The simple fact is that both sides have not moved expeditiously since May 2019. The question is whether a stay should be ordered now. I don’t think there is much in this point.
1st Defendant’s passing
23. Mr Lui submitted that as a matter of practicality, because of 1st Defendant’s passing and that obtaining probate would take time, there would be significant difficulty in executing the Judgment at this stage.
24. I am not sure this is a weighty factor in the Defendants’ favour. If, as Mr Lui submitted, the Plaintiff would have difficult in executing the Judgment in the near future, there is less reason to grant a stay. Indeed, as Mr Ismail has submitted, if the 1st Defendant’s passing means that the time needed to obtain probate and prosecute the appeal would take longer, the Plaintiff would be deprived of the fruits of his success for an indefinite time if a stay is granted.
Balancing exercise
25. Given my views above, I think this is a case where there is potential prejudice to both sides either way, and the matter ultimately boils down to a balancing exercise.
26. Taking into account all relevant considerations, and given the undertaking offered by the Plaintiff, I am not persuaded a stay of execution should be granted.
27. I would therefore order that, upon the Plaintiff undertaking not to sell the Flats until further order, the Defendants’ summons be dismissed.
28. I will also make an order nisi that the Defendants shall pay the Plaintiff’s costs of this application, to be taxed if not agreed.
29. Finally, I thank counsel for their assistance.
(Jat Sew-tong SC)
Deputy High Court Judge
Mr Justin Ismail, instructed by Ernest Li & Co., for the plaintiff
Mr Victor T.S. Lui, instructed by Li & Partners, for the 2nd defendants