INTELLIGENT HOUSE LTD v. CHAN TUNG SHING AND OTHERS

LDCS 11000 / 2006

IN THE LANDS TRIBUNAL OF

THE HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE

APPLICATION NO. 11000 OF 2006

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NOTES OF REASONS FOR DECISION

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I.  Introduction

1. This is the application by the 13th Respondent (“China Superior”) for a stay of paragraph 2 of Order for Sale made by this Tribunal on 23 June 2008 under section 4 of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“the Ordinance”), pending the determination of its appeal against the Order for Sale to the Court of Appeal (“CACV 190/2008”).

2. In the meantime, Intelligent House has scheduled an auction for the sale of the subject buildings under the Order for Sale on 28 August 2008 (i.e., next Thursday).  CACV 190/2008 is however scheduled to be heard on 1 April 2009, with three days reserved.    Hence the application for a stay by China Superior.

3. At the end of this hearing, the Tribunal granted the stay, with reasons to follow. 

4. However, Mr Mok, counsel for Intelligent House, indicates that as he has instructiond to proceed with an urgent appeal to the Court of Appeal against the stay before 28 August 2008, he asks if this Tribunal could at least provide him with a short note of the reasons for the decision, so that he could start working on the appeal preparation.

5. This is now what we do by providing herein a short note on the reasons for our decision to grant the stay.

China Superior’s grounds for stay

6. In support of the stay application, China Superior submits that:

(1)  The appeal before the Court of Appeal is an arguable appeal.

(2)  If a stay is not granted, it would have rendered the appeal nugatory, since the buildings would have been sold under the auction, and any appeal from the Order for Sale will become academic.  Moreover, the Court of Appeal is unlikely to entertain any such appeal.  See:  Hong Kong Civil Procedure 2008, para 59/1/28.

(3)  Thus, in the exercise of its discretion, the Tribunal should grant the stay.  See:  Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, para 9  per Ma J.

Intelligent House’s grounds of opposition

7. In summary, the Applicant (“Intelligent House”) opposes the application effectively on the following main grounds:

(1)  The pending appeal is of no merits and does not amount to any arguable appeal, with reasonable prospect of success.

(2)  In any event, Intelligent House would suffer incompensatible or serious prejudice if a stay is to be granted because:

(a)  Since the appeal is to be heard more than 6 months away from the date of the Order of Sale, under s 5(4) of the Ordinance, the Order for Sale would be deemed cancelled and of no effect.  As such, Intelligent House would have lost the benefit of the Order even if the appeal is to be dismissed.

(b) Taking into account of the appeal time and all the consequential logistics time needed for the implementation of another auction of the buildings, Intelligent House would suffer significant financial loss in the tune of HK$29million, in the form of loss of interest on the capital it has put into the purchase of the buildings.

(3)  As such, in balancing the interest on both parties, in particular with reference to the prejudice to be suffered by Intelligent House if a stay is to be granted, the Tribunal should exercise its discretion to refuse a stay.    Mr Mok in particular relies on the observation made by Ma J at paragraph 9(9) of Star Play, supra.

Discussion

Arguable appeal

8. Notwithstanding Mr Mok’s submissions, we come to the view that we cannot say that the appeal lacks any merits and does not at least amount to an arguable appeal.  This is particular so as:

(1)  One of the fundamental aspects of the pending appeal is on the proper construction of s 4(2) of the Ordinance, in particular as to whether it permits the Tribunal in adopting the test it has decided to adopt in its decision in granting Order for Sale. 

(2)  As accepted by Mr Mok, this is a novel point of law which was argued only for the first time before the Tribunal. 

(3)  Although from the Notice of Appeal, China Superior us effectively running again the same arguments it had advanced at the trial before this Tribunal, at this stage, we cannot say that there is no or only a little chance that the Court of Appeal may come to a different view from that of this Tribunal on the interpretation. 

(4)  In the premises, it cannot be said that the pending appeal does not carry an arguable prospect of success.

Appeal would be rendered nugatory

9. We accept China Superior’s submissions that if a stay is not granted, its appeal is to be rendered nugatory: 

(1)  If no stay is granted, by the time the appeal is heard in April 2009, the Order for Sale is very likely to have been effected and the buildings been sold in the auction (this likelihood is not challenged by Intelligent House). 

(2)  Thus, the very subject matter of the appeal (i.e, whether it is correct to grant the Order for Sale by this Tribunal) will no longer be a live issue before the Court of Appeal.  This would have rendered the appeal of no practical effect for China Superior. 

Prejudice to be caused to Intelligent House

The effect of s. 5(4) of the Ordinance

10. Mr Mok submits that, on a proper construction, the effect of s. 5(4) of the Ordinance is that if there is any delay of more than 6 months from the date of the Order, where the buildings are not sold for whatever reasons (including for the reason of a pending appeal), the Order for Sale would be automatically deemed to have been cancelled and have no effect.   He thus submits that a stay if granted would have an incompensatiable prejudice caused to intelligent House.

11. Mr Mok submission, if correct, would mean that this provision would have effectively taken away the right to any appeal to the higher courts, including appeal to the Court of Final Appeal, unless all these appeals could have been heard and decided within 6 months from the date of an order for sale, a prospect which is highly unlikely and exceptional in our procedural system and in light of the court’s packed diaries.

12. We do not accept this submission.  We prefer the submissions of Mr Edward Chan, leading counsel for China Superior that, to give a proper construction of this s 5(4)(b) of the Ordinance, coupled with the effect of s. 39 of Cap 1, the provision should be interpreted to give the effect that owners of the subject property (majority or minor) and the trustees for sale can repeatedly apply to the Tribunal for extension of the effect of an order for sale, each time for a period of 3 months.  It is of course up to the tribunal to decide whether to accede to each of these applications based on the facts and circumstances of each case and each application.

13. We believe this interpretation does not fall foul of the language of s. 5(4) of the Ordinance, and instead of leading to the absurd consequence on the rights and effect of any pending appeal from the order as discussed above, would also reconcile the rights of a party to appeal on points of law an order on for sale made under the Ordinance.  We are of the view that this must be the objective intention of the legislature in enacting the provision.

14. In the premises, we do not accept that if a stay is to be granted, Intelligent House would suffer the kind of prejudice by reason of s 5(4) of the Ordinance as submitted by Mr Mok.

Prejudice on financial loss

15. China Superior has not challenged Intelligent House’s case on its potential financial loss if the appeal is unsuccessful.

16. Mr Chan for China Superior however submits if the enforcement of the order for sale is delayed due to the due process of the law for an appeal, Intelligent cannot legitimately complain.

17. In our view, in the balance exercise, after weighing this potential financial loss of Intelligent House in the event of an unsuccessful appeal against the effect of the appeal being rendered nugatory if a stay is not granted, coupled with our conclusion that there is an arguable appeal and the fact that the possibility of appeals are an integral part of every litigation, we come to the view that the discretion should be exercised in favour of granting a stay in the circumstances of this case. 

Conclusion

18. For the above reasons, in the exercise of our discretion, we would grant an order to stay paragraph 2 of the Order for Stay pending the outcome of the appeal under CACV 190/2008.