LIPERS ENTERPRISE CO LTD v. REALINE TECHNOLOGY LTD

HCA 4214/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4214 OF 2003

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J U D G M E N T

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1. This is an application by the defendant for a stay of execution following the judgment given by Master Woolley on 23 February 2004 under O. 14 r. 1. The defendant asks that the execution of the judgment be stayed pending the appeal which will be heard on 7 April this year.

2. The main point made by the defendant is that the plaintiff is a foreign company. It is a company registered in Taiwan and the defendant says that if the judgement is executed, it might be difficult to recover the amount due should the appeal be allowed and unconditional leave to defend given.

3. Miss Fan, for the plaintiff, points to the fact that whilst the company is a foreign company, it has a Hong Kong subsidiary, and it has net assets in Hong Kong totalling $5.8 million. It is necessary however to carefully examine those assets. They are not real estate, they are not fixed assets, but are made up of current assets of inventory, trade and other receivables, deposits from prepayments, cash in bank balances and an investment in the subsidiary, less an amount due to a related party, giving net asset of $5.8 million. She does not offer to me any undertaking on the part of the subsidiary that it will be responsible to repay the amount of the judgment should the appeal succeed and it is right that the subsidiary is not a party to this litigation and is accordingly not subject to any orders that I may make.

4. In the absence of those circumstances, I am reluctant to see the judgment sum passing to the hands of the plaintiff in circumstances where I cannot be sure that a foreign company will actually have the assets in Hong Kong to be able to make repayment.

5. On the other hand, this is a judgment on dishonoured cheques and it is only in the rare circumstances that leave would ever be given in relation to dishonoured cheques. I am concerned at the conduct of the defendant's company. Not only has it dishonoured the cheques, it has then resisted payment on them, raising new arguments when the matter comes before the judge for O. 14 judgment. Then it has taken steps, which at first blush at least, indicate it is doing everything to ensure that it will not ever be in a position to meet any judgment that is made. The fact of the filing of the writ was registered in the Land Office against the title to a property owned by the defendant which the defendant proudly says to me is worth $10 million, the plain inference being that the property being worth $10 million, it must ultimately be able to meet the judgment.

6. What the defendant carefully does not say however is how much is borrowed against the security of that property. There was all monies mortgage to a bank, I have no idea, and nothing is said to me, and the solicitors are carefully not instructed as to how much is owing to the bank. But even a more suspicious circumstance follows that. On 6 February 2004, two weeks before the O. 14 hearing, a second mortgage, an all monies mortgage, was registered against the property. Solicitors for the plaintiff has produced to me a search of the Company to which that mortgage had been given. The Company is called United Technology Limited. On its face not a financial institution but a company engaged in apparently similar trade or related trade to that of the defendant. It is a company that was registered only on 20 March 2003, it is barely one year old. Now it is plainly not a financial institution and there is no apparent good reason why it should grant and all monies mortgage to the defendant. The circumstances are at best suspicious, at worst they may constitute criminal offences.

7. I am satisfied that this is a case where if execution is to be stayed, the amount of the judgment must be paid into court. There will be an order in terms of the summons staying execution of the judgment upon the defendant paying into court, within 48 hours of today, the amount of the judgment together with the costs thereon, that sum to remain in court pending the hearing of the appeal. If sum is not paid into court, the plaintiff will be free to execute the judgment. Costs will be reserved pending the hearing of the appeal.