SHAUN WINSTON JUSTIN BOWERS v. MARBURY RIDGE LTD

CACV 21/2023, [2024] HKCA 568

On appeal from [2023] HKCFI 8

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 21 OF 2023

(ON APPEAL FROM HCSD 56/2021)

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D E C I S I O N

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Hon Barma JA (giving the Decision of the Court):

1.  By a Summons filed in this appeal on 22 November 2023, the applicant purported to renew, pursuant to RHC O.59 r.13(1), his application for a stay of the bankruptcy proceedings against him in HCB 293/2023 pending the determination of the present appeal (“the CA Stay Application”). However, this appeal does not concern HCB 293/2023. Rather, it is an appeal against the decision of DHCJ Burns SC (“the Judge”)  in HCSD 56/2021, refusing to set aside a statutory demand issued against the applicant. The background to this application is somewhat complicated, but is important for present purposes. It is set out below.

The appeal

2.  On 30 September 2021, the respondent issued a statutory demand against the applicant.  By HCSD 56/2021 (“the HCSD Proceedings”), the applicant applied to have the statutory demand set aside.  The setting aside application was heard by the Judge on 1 December 2022, who dismissed the application on 3 January 2023, for the reasons given in his judgment of that date[1]. The order of the same date also authorised the respondent to serve a bankruptcy petition on the applicant forthwith.

3.  On 17 January 2023, the respondent presented a bankruptcy petition (subsequently amended on 10 May 2023)  against the applicant.  This was HCB 293/2023.  The petition was fixed for hearing on 19 June 2023, when it was adjourned by Linda Chan J to 25 September 2023.

4.  On 30 January 2023, the applicant lodged a Notice of Appeal (later supplemented by a Supplementary Notice of Appeal lodged on 24 November 2023), against the Judge’s decision in the HCSD Proceedings refusing to set aside the statutory demand.  That is this appeal, which is now fixed to be heard on 25 June 2024.

The application for stay before the Judge

5.  The applicant was understandably anxious to avoid a bankruptcy order being made against him while his appeal against the dismissal of his application to set aside was pending.  On 4 July 2023, the applicant issued a summons in the Court of First Instance, in the HCSD Proceedings, seeking a stay of the bankruptcy proceedings pending determination of this appeal (“the HCSD Stay Application”).  On 5 September 2023, DHCJ Winnie Tsui adjourned the HCSD Stay Application to a date to be fixed for substantive argument, and gave directions for the filing of evidence.

6.  On 25 September 2023, at the adjourned hearing of the bankruptcy petition, Linda Chan J further adjourned the hearing of the petition to the first Monday call-over hearing after the determination of the HCSD Stay Application.

7.  The substantive hearing of the HSCD Stay Application took place before the Judge on 8 November 2023.  At the outset, the Judge made it clear that he considered that the HCSD Stay Application should not have been issued in the HCSD Proceedings, but should have been issued in HCB 293/2023, as it was those proceedings that it was sought to stay.  In our view, he was correct to do so.  The setting aside application having been dismissed, and a bankruptcy petition having already been presented, there was nothing left to stay in the HSCD Proceedings, and the correct proceedings in which to seek a stay of the bankruptcy proceedings, pending the determination of the appeal against the setting aside order, was in the bankruptcy proceedings themselves – HCB 293/2023.

8.  Sensibly, rather than causing further delay and wasting the time reserved for the hearing, the Judge sought and obtained from the applicant (through his legal representatives)  (1)  his agreement that the existing summons the HSCD Proceedings should be withdrawn (with no order as to costs), and (2)  his undertaking to issue a summons in HCB 293/2023 seeking a stay of those proceedings, and indicated that the hearing could then proceed as if the summons in HCB 293/2023 had already been issued.  This course was agreed to by both parties.

9.  Accordingly, an order dated 8 November 2023 was made in the HSCD Proceedings, by which it was ordered that, upon the applicant’s undertaking to issue a fresh summons in HCB 293/2023.  The CFI Stay Summons be withdrawn and that copies of all affidavits filed in respect of that summons be filed in the court file in HCB 293/2023. In accordance with his undertaking, the applicant issued a fresh summons in HCB 293/2023 seeking a stay of those proceedings pending the resolution of his appeal against the refusal to set aside the statutory demand (the summons is dated 8 November 2023, and was filed on 9 November 2023)  (“the HCB Stay Application”).  The Judge proceeded to hear argument on whether such a stay should be granted on the footing that the appropriate summons (in HCB 293/2023)  had been issued.  See [8] of the Judge’s decision dated 20 November 2023[2] dismissing the application for the stay of HCB 293/2023.

10.  In summary, the application dated 4 July 2023 in the HSCD Proceedings seeking a stay of HCB 293/2023 was withdrawn, and the fresh application filed on 9 November 2023 in HCB 293/2023 seeking a stay of those proceedings pending the outcome of this appeal was dismissed.  The Judge also refused to grant an interim stay of the bankruptcy petition proceedings pending ‘renewal’ of the application for a stay before this court (see [18] - [19] of the decision dated 20 November 2023). 

11.  On 22 November 2023, the applicant filed the CA Stay Summons, purporting to renew the application for a stay of HCB 293/2023 before this court.  The HCSD Stay Application having been withdrawn, this must have been an attempt to “renew” the HCB Stay Application.

12.  By a letter dated 21 December 2023, the Registrar of Civil Appeals (“the Registrar CA”), directed that (i)  the Court of Appeal would not entertain the CA Stay Summons as it sought to stay the HCB Proceedings, which is “an altogether different set of proceedings and not relating to [the HCSD Proceedings]”; and (ii)  the applicant may instead consider pursuing an appeal (out of time)  against the CFI Stay Decision in the HCB Proceedings.  In our view, he was right to do so.

13.  However, the applicant’s solicitors sought, by their letter dated 22 December 2023, to persuade the Registrar CA that the application should be permitted to proceed, contending that the applicant was entitled to renew his application for a stay of the bankruptcy petition proceedings before this court pursuant to RHC O.59 r.13, and submitting that it was “not appropriate” for the applicant to appeal against the Judge’s decision of 20 November 2023.

14.  In the light of that letter, and having reconsidered the decision of 20 November 2023 (in particular [8] thereof), on 9 January 2024 the Registrar CA observed and directed that as the Judge had, upon the applicant’s undertaking to issue the HCB Stay Application, to hear the application for a stay “as if the summons for a stay under HCSD 56/2021 had been issued in the bankruptcy proceedings”, the Registrar CA concluded that the applicant was entitled to renew his CFI Stay Application before this court by way of the CA Stay Summons.

15.  On 15 January and 27 February 2024, the Registrar CA gave further directions to the parties as to the lodging of application bundles and the filing of evidence and written submissions in preparation for the hearing of the CA Stay Application.

16.  When the CA Stay Application came before this court, the court (Chu VP and Barma JA)  caused a letter to be sent to the parties with the following observations:

(a)  by [8] of the CFI Stay Decision made in both the HCB and HCSD Proceedings and the Judge’s order dated 8 November 2023 in the HCSD Proceedings, the CFI Stay Summons (which was filed in the HCSD Proceedings)  was withdrawn;

(b)  a fresh application for stay was to be made in the HCB Proceedings (which was in fact made by the applicant’s filing of the Fresh Stay Summons);

(c)  given that the CFI Stay Application (made in the HCSD Proceedings)  was withdrawn, it did not appear to be appropriate for the same application to be renewed in the Appeal, which is an appeal from the HCSD Proceedings;

(d)  this court was not satisfied that it has the power to make an order relating to the HCB Proceedings in the Appeal (which is against an order made in the HCSD Proceedings);

(e)  upon the filing of the Fresh Stay Summons in the HCB Proceedings and upon the Judge’s dismissal of the same, the appropriate course would have been (i)  for the applicant to seek leave to appeal against that dismissal; and (ii)  if leave is refused by the Judge, to apply for leave to appeal before this court in separate CAMP proceedings.

17.  We also directed that this appeal should be listed for hearing on an early date, in the light of the matters stated in the applicant’s Certificate of Urgency. 

18.  In the light of those observations, the applicant was invited to lodge written submissions to explain why the application should not be dismissed on the basis outlined in [16] above, and the respondent was given an opportunity to respond if it wished to do so.  Both parties subsequently filed brief submissions, with the applicant contending that the application was appropriately made and should not be dismissed, while the respondent submitted that the application to this court, in the form in which it was made, was misconceived and should be dismissed.

19.  Meanwhile, on 11 March 2024, Linda Chan J further adjourned the hearing of the Petition in the HCB Proceedings to the first Monday call-over hearing after the determination of the present appeal.

20.  Although the court files contained an order permitting the withdrawal of the HCSD Stay Application, and a copy of the HCB Stay Application was also provided, no copy of the order made on the HCB Stay Application could be located.  It transpired that this had never been drawn up, and somewhat belatedly, on 9 April 2024, the applicant provided a copy of a sealed order reflecting the Judge’s decision of 20 November 2023, which purported to have been made in both HCSD 56/2021 and HCB 293/2023.  This was, in our view, wrong, as the HCSD Stay Application had been withdrawn (there being an order in place to that effect), and the only proceedings in which the stay application was considered was therefore the HCB Stay Application in HCB 293/2023.

Discussion

21.  As noted, pursuant to this court’s directions dated 6 March 2024, the applicant and the respondent have lodged their written submissions on 13 March 2024 and 18 March 2024 respectively.

22.  Having considered the parties’ submissions and the other materials placed before the court, we consider it appropriate to determine the present application on the papers without an oral hearing.

23.  Despite the somewhat convoluted procedural background set out above, the issues before this court in the present application can be disposed of briefly. 

24.  Consequent upon the Judge’s order dated 8 November 2023 in the HSCD Proceedings, the HCSD Stay Application, made in those proceedings by the summons dated 4 July 2023 was withdrawn.  A fresh summons was issued and filed the next day in HCB 293/2023 seeking the same stay of the bankruptcy proceedings.  Thus, as from 8 November 2023, there ceased to be any application for stay in the HSCD Proceedings and therefore there was no application capable of renewal in those proceedings, from which the present appeal arises.  The applicant’s reliance, in its letter to the Registrar CA dated 22 December 2023, on the passage at Hong Kong Civil Procedure 2024 Vol 1 paragraph 59/13/7 was therefore misplaced.  In any event, RHC O.59 r.13 deals with stay of execution.  The application for a stay of the bankruptcy proceedings was not a stay of execution of the order dismissing the application to set aside the statutory demand, but (as the Judge rightly held)  was an application for a stay of different proceedings (HCB 293/2023)  which should have been made in those proceedings.

25.  It is clear that in saying what he did at [8] of the decision dated 20 November 2023, having required the summons issued in the HCSD Proceedings to be withdrawn and a fresh summons issued in HCB 293/2023, the Judge’s intention was to make use of the time available for the hearing rather than delay matters by adjourning the hearing to a later date after the procedural missteps had been rectified. Thus, when he said that the hearing would proceed as if the application (which had been made in HCSD 56/2021)  had been made in HCB 293/2023, he could only have meant that it would do so on the footing that the summons which would (pursuant to the applicant’s undertaking)  be issued in HCB 293/2023 had already been issued.  The application was therefore treated as one made in HCB 293/2023, and not HCSD 56/2021, and was disposed of on that basis.

26.  Thus, the Judge’s decision of 20 November 2023 was a determination of the summons issued in HCB 293/2023.

27.  As the present appeal with which this court is concerned is from HCSD 56/2021 and concerns only the dismissal of the application to set aside the statutory demand, we are satisfied that it would not be correct to grant a stay of HCB 293/2023 in that appeal, and do not think that the court has power to do so.  As indicated in the court’s letter dated 6 March 2024, the appropriate course would have been for the applicant to first apply to the Judge for leave to appeal against the Judge’s dismissal of the HCB Stay Application, and if that application is refused, to renew that application for leave to appeal before this court in separate CAMP proceedings.

28.  In the applicant’s written submission, the applicant sets out the procedural chronology and essentially relies on the ‘confirmation’ by the Registrar CA of his entitlement to renew the application for stay in this court.  Reliance is also placed on the fact that the Registrar CA proceeded to give directions for the hearing of this application. 

29.  With respect to the Registrar CA, however, we are satisfied that his initial view (expressed in his letter dated 21 December 2023)  was correct, and his subsequent acceptance of the applicant’s suggestion that this application should be permitted to go ahead was in error, for the reasons explained above.

30.  We note that it is also suggested (at [4] of the submission)  that this application “should be treated as if it were issued in HCSD 56/2021” and treated as a renewal of the application for a stay in HCSD 56/2021.  This is to stand the matter on its head – as explained above, the Judge required the withdrawal of the application made in the HCSD Proceedings and the making of an application in HCB 293/2023, a course which the applicant accepted to be correct.  If the application could properly have been made in the HCSD Proceedings, there would have been no need for the Judge to require those steps to have been taken.

31.  We therefore remain of the view expressed in the court’s letter of 6 March 2024, and for the reasons explained in that letter and this Decision, are satisfied that the application before us should be dismissed.

32.  In any event, having regard to the fact that the bankruptcy petition has now been adjourned until after the determination of this appeal, which will be heard shortly, no stay of that petition is required.

33.  Having dismissed the application, we can see no reason why costs should not follow the event, and we make an order nisi that such costs should be paid by the applicant to the respondent in any event.