ACE LIFE INSURANCE CO LTD v. LIN MAN CHI ANDY

HCA 895/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 895 OF 2009

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D E C I S I O N

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1.  This is an application for stay of execution pending appeal.

2.  On 16 March 2012, Burrell DHCJ granted judgment in favour of the plaintiff against the defendant.  The defendant is not satisfied with the judgment and lodged an appeal.  In the meantime, the defendant asks the court to grant an interim stay of execution pending the result of the appeal. 

3.  According to the Court of Appeal’s decision in Caine Tai Investment Co Ltd v Ayala International Finance Ltd [1983] 1 HKC 163,  the court has an unfettered discretion in determining whether to grant a stay of execution pending appeal.

4.  It is trite law that in order not to deprive the successful party of the fruit of his success, an appeal shall not operate as a stay of execution.  Unless the defendant can justify a stay of execution, one will not be ordered.  The practice of the court is that justification can be demonstrated only if good reasons exist. 

5.  Good reasons can exist in a variety of forms. As pointed out by Ma J, as he then was, in Star Play Development Ltd v Bess Fashion Management Co Ltd, unreported, HCA 4726/2001 (decision on 28 May 2002), it is not possible for the court to set out any exhaustive definition of what would constitute good reasons, but, commonly, reference is made to factors such as whether the absence (or existence) of a stay would render an appeal nugatory (thus bringing into focus the relative prejudice that may be caused to the appellant and to the respondent by a stay of execution), and the merits of the appeal.

6.  The present action is about a claim by the plaintiff which is insurance company carrying on business in Hong Kong against the defendant, who was one of its former insurance agents, for the bonuses and special allowances due to be repaid to the plaintiff upon the determination of the defendant’s agent agreement.

7.  The key issue in dispute at the trial concerned the construction of clause 5.1 of the Addendum 1 to the appointment letter signed by the plaintiff and the defendant.

8.  Burrell DHCJ, after having carefully considered the evidence of the case, agreed with the plaintiff’s construction of clause 5.1. In fact, the literal interpretation of clause 5.1 supports the plaintiff’s case.  Unless the agent agreement is terminated for any reasons other than by reason of ill-health and disability of the defendant, he is liable to repay the bonuses and special allowances to the plaintiff.

9.  In the earlier Order 14 proceedings, the Court of Appeal held that the defendant’s construction of clause 5.1 was certainly arguable.  Further, it would be unfair for the plaintiff to reclaim all the allowances and bonuses if it just terminated the agent agreement for reasons unrelated to the work performance of the agent.

10.  Burrell DHCJ has taken into account the dicta of the Court of Appeal in reaching his decision.  At the trial, the plaintiff witness explained the rationale behind the plaintiff’s construction of clause 5.1 and why the defendant’s interpretation made no commercial sense.  The learned Judge accepted the evidence of the plaintiff on this particular issue.

11.  Despite the initial observation of the Court of Appeal, Burrell DHCJ should have considered the matter ab initio with the benefit of the important evidence from the plaintiff’s witness at the trial.  Having done so, he agreed with the plaintiff’s construction of clause 5.1 which is also supported by the literal meaning of the clause.  In my judgment, the learned judge’s reasoning cannot be faulted and I do not accept that the defendant’s appeal has any reasonable prospect of success.

12.  Further, the defendant cannot establish any other good reasons to justify the stay of execution.  The defendant claims that he would be bankrupt if the plaintiff enforces the judgment prior to the hearing of the appeal.  However, a bare assertion that execution would render serious consequences to the defendant is not sufficient.  Good evidence supporting such contention is required, and an example of such evidence is the accounting documents showing the financial status of the applicants (see: Star Play Development Ltd v Bess Fashion Management Ltd, supra, Wenden Engineering Service Co Ltd v Lee Shing Yue Construction Co Ltd [2002] HKCU 846 and Tri-Union (International) Development Ltd v Shum Lee Man [2008] HKCFI 544).  The defendant has simply failed to discharge such burden in present case.

13.  As the defendant has failed to establish good reason to justify the stay of execution, his application is dismissed.