DADRA INC. v. CHAN CHOI HAR IVY

CACV 74/2023, [2023] HKCA 707

On Appeal From [2023] HKCFI 651

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 74 OF 2023

(ON APPEAL FROM HCA NO 1756 OF 2019)

________________________

________________________

_______________

J U D G M E N T

_______________

Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  This is the Defendant’s application for a stay of execution of Master Phoebe Man’s order dated 10 March 2023 (“the Order”) that the Defendant be imprisoned for 6 weeks by reason of her wilful failure to make a full disclosure as required under Order 49B, rule 1A(2) of the Rules of the High Court, Cap 4A, pending the determination of her appeal against the Order. In what follows, unless the context indicates otherwise, references to “Order”/“rule” shall be to the Rules of the High Court.

BACKGROUND FACTS

2.  On 31 March 2021, upon the Plaintiff’s application under Order 14, Master K W Wong made an order that final judgment be entered in favour of the Plaintiff against the Defendant for the sum of HK$90,000,000 together with interest thereon and costs (summarily assessed in the sum of HK$392,400)[1].

3.  The Defendant failed to satisfy the judgment debt. On 2 July 2021, upon the Plaintiff’s application, Master Rita So ordered the Defendant to attend court on 13 September 2021 and be orally examined pursuant to Order 49B.

4.  At the first hearing on 13 September 2021, Master Dick Ho made an order (“the 1^st Disclosure Order”) requiring the Defendant to disclose various classes of documents. The Defendant, through her solicitors, disclosed some documents on 12 and 21 October 2021, but failed to make full disclosure as required by the 1^st Disclosure Order.

5.  At the next hearing on 13 May 2022, Master Phoebe Man made a further order (“the 2^nd Disclosure Order”) requiring the Defendant to disclose various classes of documents, including but not limited to those under the 1^st Disclosure Order. The Defendant failed to comply with the 2^nd Disclosure Order.

6.  On 15 August 2022, the Defendant was adjudged bankrupt in HCB 989/2022.

7.  On 14 October 2022, at a further hearing for the examination of the Defendant under Order 49B, the Plaintiff decided not to further examine the Defendant by reason of her failure to disclose documents as required by the 1^st and/or 2^nd Disclosure Orders, but indicated that an application would be made to the court for an order of imprisonment against the Defendant.

8.  On 31 October 2022, the Plaintiff issued a summons seeking an order that the Defendant be imprisoned under Order 49B, rule 1B. The substantive hearing of that summons took place before Master Phoebe Man on 27 February 2023. The Plaintiff was represented by counsel while the Defendant appeared in person at the hearing.

9.  On 10 March 2023, Master Phoebe Man gave a written decision in which she found, beyond reasonable doubt, that the Defendant had acted contrary to Order 42B, r1B(1)(c) (“wilfully failed to make a full disclosure as required under rule 1A(2) or at the examination under Order 48 or to answer any question as provided under that rule or Order”), and exercised her discretion to order the Defendant to be imprisoned for 6 weeks. In addition, Master Phoebe Man made an order nisi that the Defendant shall pay the Plaintiff’s costs arising out of the application, to be taxed on an indemnity basis if not agreed.

10.  On the same date (ie 10 March 2023), upon the Defendant’s undertaking to take out an urgent inter-partes summons before the Court of Appeal for a stay of execution of the Order pending appeal, Master Phoebe Man granted an interim stay of the Order pending the determination of the stay application.

THE PRESENT APPLICATION

11.  On 13 March 2023, the Plaintiff issued a summons seeking a stay of execution the Order pending the determination of her Notice of Appeal of the same date.

DISCUSSION

12.  The applicable principles for a stay of execution of an order or judgment pending appeal are well settled and do not require repetition (see Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at §§6-10).

13.  In the Notice of Appeal, the Plaintiff raises 4 grounds of appeal against the Order:

(1)  The Master erred in failing to recognize that the court has no jurisdiction to proceed with an Order 49B examination after the bankruptcy of the Defendant because (i) she no longer has any assets in law and ceases to have any interest in her liabilities, and/or (ii) the bankruptcy regime provides a comprehensive mechanism for the ascertainment and distribution of the Defendant’s assets (“the Jurisdiction Ground”).

(2)  The Master erred in finding that the Defendant wilfully failed to make full disclosure under Order 49B in that the Defendant had all along indicated she considered there was no need for her to make disclosure after she had been adjudged bankrupt (“the Mistake of Law Ground”).

(3)  The Master erred in exercising her discretion to make an order of imprisonment against the Defendant in that she failed to consider and/or attach sufficient weight to a number of factors (“the Discretion Ground”).

(4)  The Master erred in making an adverse costs order against the Defendant personally when the Defendant had already been adjudged bankrupt (“the Costs Ground”).

14.  Having read and considered the parties’ submissions and the authorities referred to, we consider the Jurisdiction Ground to be reasonably arguable (ie one with reasonable prospects of success). Having reached this view, it would not be appropriate for us to further discuss the merits of this ground, which will have to be fully argued at the substantive hearing of the appeal. It also becomes unnecessary for us to deal with the merits of the remaining grounds of appeal, suffice it for us to indicate that we would not be minded to grant any stay of execution of the Order on any one or more of those grounds.

15.  Without a stay, the Defendant’s appeal will likely be rendered nugatory because, by the time that the appeal is heard and disposed of, the Defendant will likely have completed serving the term of imprisonment imposed by the Master.

16.  Overall, we consider that there exist good reasons to grant a stay of execution of the Order pending appeal.

DISPOSITION

17.  We make an order that execution of the Order be stayed pending the determination of the Plaintiff’s appeal herein. The costs of the stay application shall be in the cause of the appeal.

18.  In addition, we grant leave to either party to fix date for the hearing of the appeal in consultation with counsel’s diary, with 1 day reserved.