LAU TIN CHEUNG v. TIANJIN DEVELOPMENT HOLDING LTD

HCA 422/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 422 OF 2011

(Transferred from Labour Tribunal Case No. LBTC 331/2011)

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D E C I S I O N

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1. This is the plaintiff’s application for leave to appeal against my decision on 18 February 2015. My decision was to grant an interim stay of execution in favour of the defendant pending the defendant’s renewed application for stay of execution to the Court of Appeal.

Background

2. The defendant lost the trial of this action on 12 December 2014 before DHCJ Sakhrani and was ordered to pay damages to the plaintiff at HK$2,046,000.

3. The defendant then lodged an appeal and applied for stay of execution of the judgment pending appeal.

4. The application for stay was dismissed by DHCJ Sakhrani on 27 January 2015. 

5. The defendant then issued a summons on 29 January 2015 to renew its application for stay before the Court of Appeal.  The renewed application will be heard on 28 April 2015.

6. On 30 January 2015, the plaintiff served a statutory demand on the defendant pursuant to section 178 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32).

7. On 11 February 2015, the defendant issued a summons for an injunction to enjoin the plaintiff from presenting a winding up petition against the defendant for its failure to satisfy the statutory demand.  The summons was before me on 18 February 2015.

The hearing

8. At the start of the hearing, I told Mr Shum, counsel for the defendant that the summons for injunction was misconceived but the proper application to make, as pointed out in the written submissions of Mr Douglas Lam, who was counsel for the plaintiff, was for an interim stay of execution pending the disposal of the renewed application for stay by the Court of Appeal.

9. Mr Shum, having had the benefit of this argument in Mr Lam’s written submissions, immediately agreed.  The hearing then proceeded on the basis that it was an application for interim stay without spending any time on the injunction summons.

10. Since the nature of the application was changed, I asked Mr Lam whether he would like to have an adjournment or at least to have the matter stood down for a while for him to prepare for the new application.  If he should have accepted the offer of adjournment, the plaintiff would logically be given the costs of and occasioned by the adjournment.  However, Mr Lam declined the suggested indulgences and chose to argue against the application for interim relief right away.

11. In opposing the interim stay, he relied on the principles in Wenden Engineering Service Co Ltd v Lee Shing Yue Construction Co Ltd, HCCT 90/1999 (17 July 2002).  Those principles are applicable to an application for stay of execution pending appeal, but are not for an interim stay pending an application for stay.  If I should apply those principles to the application for interim stay, I would be treating the application for interim stay as an application for stay.  But the application for stay is for the Court of Appeal and not before me.  Hence, the principles in Wenden are inappropriate. 

12. I also consider that the principles applicable to the interim stay should be less stringent than those for an application to stay. It is illogical for both applications to have the same hurdle as the hurdle of application for interim stay is to filter out those applications that have no chance of success at the hurdle of stay.  Those that pass through the hurdle of interim stay may proceed to but will not necessarily pass through the hurdle of the application for stay.

13. Since nobody suggested any other test, I adopted a slightly lower hurdle than that for an application for stay.  I was of the view that the defendant’s offer of paying the full judgment sum into court was a change in the circumstances as there was no such offer when the defendant applied for stay before DHCJ Sakhrani.  I also regarded that the defendant had a respectable argument on a ground of appeal.  I therefore granted an interim stay on condition of the payment of the judgment sum with up-to-date interest into court within 14 days.

Ground of appeal on the merits of the decision

14. In this application, Ms Ho, counsel for the plaintiff in this application referred to Lam Regerio Sou Fung v Tan Soon Gin George, HCA 2576/2005 (27 July 2011).  Chu JA in paragraph 29 of that decision declined an oral application for interim stay as she did not regard the applicant as having a reasonable prospect of success on his renewed application for stay before the Court of Appeal.  The learned Judge therefore did not see any justification for depriving the other party the fruits of the litigation.

15. In the present case, I am of the view that the defendant has a reasonable prospect of success on his renewed application for stay before the Court of Appeal.  The reason being that it has a respectable argument on a ground of appeal which the plaintiff has not demonstrated to be unarguable in an open and shut manner and that it is going to secure the judgment sum by paying the same into court.

16. The reasonable prospect of success in the application for stay before the Court of Appeal is a justification for putting the judgment on hold until the disposal of the application for stay by the Court of Appeal.

17. On this ground, the application for leave to appeal should be dismissed.

Appeal is academic

18. Furthermore, Mr Shum for the defendant also relied on the Court of Appeal decision in Tele-Art Inc (In Liquidation) v Tam King Ching Kenny & Shum Lap Chi, the Joint and Several Liquidators of Tele-Art Ltd (In Liquidation) & Ors, CACV 234/2007 (13 March 2008) and the Court of Final Appeal decision in Luck Continent Ltd v Cheng Chee Tock Theodore & 8 Ors, FACV 4 of 2014 (10 December 2014).  These decisions made it plain that an academic appeal should not be pursued even if the costs order would have been different had the CFI held in favour of the appellant.

19. Mr Shum then submitted that the plaintiff’s proposed appeal is academic as it would only be heard by the Court of Appeal after 28 April 2015.  By the time when this appeal is heard, the Court of Appeal would have decided the application for stay one way or the other.  I think Mr Shum is right.  The application for leave to appeal should also be dismissed on this ground.

The costs order of the original application

20. The plaintiff also seeks alternative leave to appeal against the costs order I made in my decision.

21. Since the defendant’s summons was for an injunction rather than an interim stay, I therefore ordered the defendant to pay the costs of the summons to the plaintiff.  However, I ordered the plaintiff to pay the defendant the costs of the hearing including the brief to counsel as the plaintiff had chosen to argue against the interim stay and lost it.  It is this part of the costs order that the plaintiff wishes to appeal against.

The first ground on costs

22. The plaintiff’s 1st ground on costs argues that the costs of the injunction summons should include the costs of the hearing.  They should follow the event and the event was the injunction summons which the plaintiff had prepared for and attended the hearing to oppose.

23. This argument would be correct if the plaintiff should have argued against the injunction summons only but not the application for interim stay.  In that case, the application for interim stay would have been allowed by consent.  The plaintiff would have been given all the costs of the injunction summons including the costs of the hearing.  However, that was not what happened. What actually happened was that the plaintiff had chosen to argue and argued fully on the application and lost.  Hence, I ordered him to pay the costs of the hearing.

The second ground on costs

24. The 2nd ground says that the defendant had not issued any summons for the interim stay and interim stay was only raised by the court.  Further, it was for the purpose of saving time and costs that Mr Lam for the plaintiff indicated that it was unnecessary to adjourn the hearing for a proper summons to be issued subject to the question of costs.

25. In a nut-shell, this ground says that Mr Lam had for the purpose of saving costs and time chosen to argue against the interim stay there and then despite the absence of a proper summons.  This attitude is indeed virtuous.  If the plaintiff should have opted for an adjournment for the defendant to issue the summons, he would have been given the costs of that day as those costs would have been wasted by the defendant.

26. I would also say that if the plaintiff should have succeeded in opposing the interim stay there and then without any adjournment, he would likewise be given the costs for that day. 

27. However, it turned out that his opposition was unsuccessful. I therefore ordered the costs of the argument to follow the event of the argument. Though the plaintiff had chosen to argue the matter there and then to save costs and time, it does not mean that he can be relieved of the consequence of losing the argument.  He could not have the cake and eat it.

The third ground on costs

28. The 3rd ground says that I should have dealt with the costs of the application for interim stay independently of the costs of the injunction summons.  Further, the costs of the injunction summons should include the costs of the hearing though not that part for the interim stay.  The application for interim stay only took about 45 minutes.  Hence, the costs for the period could either be in the cause of the stay application before the Court of Appeal or alternatively be paid by the plaintiff to the defendant.

29. I have mentioned above that Mr Shum for the defendant agreed at the start of the hearing that the application to make was not for an injunction, but for an interim stay.  Hence, practically no time was spent on the injunction summons and no argument made on it.  I therefore did not see it necessary to effect any apportionment of the costs for the hearing.

30. I also note from the court record that the hearing started at 10:04 am and concluded at 10:55 am.  The 51 minutes included the time I took to write up and read out my short decision.

Should costs be in the cause of the application for stay of execution?

31. Regarding the question of whether the costs of the argument for the interim stay should be in cause of the stay application before the Court of Appeal, I am of the view that if the defendant should have issued a summons for interim stay, the costs of that summons could be in the cause of the stay application.  If the plaintiff should consent to that summons, then all costs of that summons could be in cause of the stay application. 

32. If the plaintiff should instead choose to oppose that summons and do so successfully, then he should get all the costs of that summons including the costs of the hearing. 

33. However, if the plaintiff should choose to oppose the summons but lose the opposition, then he should pay the costs of the argument whilst the costs of the summons could still be in the cause of the stay application. 

34. Now that the plaintiff has opted to contest the interim stay and lost it after full argument, he should likewise pay the costs for it. Such costs of course include the brief to counsel as counsel is briefed to conduct the argument.

In re Elgindata Ltd (No 2)

35. Ms Ho for the plaintiff in this application further referred to In re Elgindata Ltd (No 2) [1992] 1 WLR 1207 per Nourse LJ at 1214B in her written submissions.  She submitted that the court could order a successful party to pay costs only if that party had raised or made improper or unnecessary allegations.  Alternatively, a successful party could be deprived of the costs on failed issues if such were discreet issues that caused significant increase in the length or costs of the proceedings.

36. I do not think these submissions as derived from In re Elgindata (No 2) can support the grounds of appeal.  Furthermore, my costs order was not made on the basis that the plaintiff had made any improper or unnecessary allegation.  Nor was it based on any time consuming discreet issues that the plaintiff had raised and lost.  My order simply reflected that the plaintiff had chosen to contest an application by the defendant and lost the contest.  Hence, he should pay the costs of the argument to the defendant.

Decision

37. In the light of the above analysis, I cannot see any reasonable chance of success of the plaintiff’s proposed appeal whether on the merits of the decision and/or on costs.  I therefore dismiss this application. I also make a costs order nisi that the plaintiff do pay the defendant the costs of this application.