XCHRX CHINA EVERBRIGHT-IHD PACIFIC LTD. v. CH'NG POH

A12837/95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12837 OF 1995

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REASONS FOR DECISION

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1. On 27 February 2001, I gave judgment in favour of the Plaintiff in this action.

2. On 2 March 2001, the Defendant issued a summons for stay of execution pending appeal.

3. On 8 March 2001, the Plaintiff issued a summons for an order that the monies standing in the joint accounts of the respective solicitors for the parties be released forthwith to the Plaintiff to satisfy part of the sum due to the Plaintiff under the judgment.

4. On 16 March 2001, on hearing both summonses, I ordered that upon the Plaintiff undertaking to provide a guarantee or guarantees from a first-class bank for the payment of sums paid by the Defendant pursuant to the judgment for repayment to the Defendant in the event that he was successful on appeal, the monies in the joint accounts be released forthwith to the Plaintiff.

5. It would appear that thereafter the solicitors were unable to agree on the time when the guarantee(s) would have to be provided, the identity of the bank providing the guarantee and the terms of the guarantee.

6. This led to the issue of a summons by the Defendant on 28 March 2001 for orders that (i) the order of 16 March 2001 be amended to the effect that the funds in the joint accounts be released "upon receipt by the Defendant of the guarantee(s) mentioned"; (ii) there be an abatement of interest with effect from 16 March 2001 to limit interest to that derived from the funds placed on fixed deposit and (iii) he be given leave to appeal my order on costs of the hearing on 16 March 2001.

(i) Application for amendment of the order

7. At the hearing of this summons on 6 April 2001, the dispute between the parties as to the identity of the bank providing the guarantee had been resolved.

8. However, there remained a disagreement as to the time for the provision of the guarantee. It appeared that at least at one stage the Plaintiff's legal advisers were of the view that it would be adequate that the Plaintiff has given an undertaking to the Court to provide a guarantee, and that the guarantee itself would not need to be in place prior to the release of funds. This interpretation of the order was somewhat curious, and at the hearing, counsel for the Plaintiff did not seek to advance this position. Apparently, the guarantee will be ready for issue when the funds are released.

9. In the circumstances, no further arguments on the need to amend the order of 16 March 2001 were advanced and accordingly, I made no order on the first part of the Defendant's summons.

(ii) Application for abatement of interest

10. As to the question of abatement of interest, counsel for the Plaintiff submitted that the disagreement between the parties as to the identity of the bank would in any event have led to a delay in the release of the funds. There were also problems to be resolved as to the terms of the guarantee. It could not be shown that the delay was due to any unreasonable conduct on the Plaintiff's part.

11. In my view, the arguments over the terms of the guarantee could not be said to be all one-way.

12. The Defendant had required that it covered also an appeal to the Court of Final Appeal, a position which I consider incorrect as leave would be required for an appeal to that court. The Defendant had also required that the bank should also guarantee the payment of interest in the event that the higher court ordered the repayment of funds to him with interest. That was not however within the terms of the order of 16 March 2001.

13. On the other hand, the Plaintiff had offered a guarantee which would lapse automatically within 36 months, as apparently some banks would only be prepared for accounting reasons to offer limited-period guarantees. That however was also not within the terms of the order of 16 March 2001.

14. In the circumstances, given the state of uncertainty as to different terms offered by different banks, I adjourned this part of the summons to a date after the finalization of the guarantee was completed, and I directed that any problems as to the identity of the bank be referred to the Registrar as he would have greater experience in dealing with funds in court.

(iii) Application for leave to appeal order on costs

15. Finally, as for the application for leave to appeal my order on costs of the hearing on 16 March 2001, it was submitted on behalf of the Defendant that according to Hong Kong Civil Procedure, the "modern practice" was that the costs of an application for stay of execution pending appeal would be costs in the appeal.

16. However, it is well-established that the fact that an appeal is pending does not automatically warrant a stay of execution. An application for a stay of execution would be justified only if it could be shown that the plaintiff might not be able to repay the sum in the event of a successful appeal. In my Decision of 16 March 2001, I had found no or no sufficient material before the Court to substantiate the Defendant's allegations about the poor financial health of the Plaintiff's holding company such as to lead to the inference that the Plaintiff might not be able to repay the sum in the event of a successful appeal. The guarantee was only to facilitate the more expeditious payment of funds in the event of a successful appeal.

17. As I saw no breach of principles in that decision, and as I have not been persuaded that the decision was so unreasonable that no judge properly directed on the principles would have made that order, I declined to grant leave to appeal the costs order of 16 March 2001.

Costs of summons

18. As for the costs of the summons, it would appear from the exhibited correspondence that the Defendant was constrained to issue this summons primarily by reason of the Plaintiff's position that under the order, it was adequate that there was an undertaking to provide a guarantee, and that a guarantee itself would not be required to be in place prior to the release of funds, a position that was no longer advanced at the hearing. In the circumstances, in the exercise of my discretion, I ordered that the costs of the summons be to the Defendant in any event.