INDIAN OVERSEAS BANK v. SEABULK SYSTEMS INC. AND OTHERS

CACV 48/2018, [2023] HKCA 889

On Appeal From [2022] HKCA 908

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 48 OF 2018

(ON APPEAL FROM HCA NO 846 OF 2012)

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J U D G M E N T

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

1.  There are before the Court the following 3 applications:

(1)  the 2^nd Defendant’s renewed application by summons dated 5 December 2022 to the Court of Appeal for a stay of execution of the judgment of B Chu J dated 29 January 2018 pending appeal (“the Stay Application”);

(2)  the Plaintiff’s application by summons dated 1 February 2023 for leave to rely on the 4^th Affidavit of Fung Chi Man dated 1 February 2023 (“Fung 4”) in opposition to the Stay Application; and

(3)  the 2^nd Defendant’s application by summons dated 9 February 2023 to rely on, inter alia, a draft 3^rd Affirmation of Ramesh Vangal, which has since been affirmed before a notary public in the State of California, USA, on 13 February 2023 and filed on 9 March 2023 (“Vangal 3”), in reply to Fung 4.

BACKGROUND FACTS

2.  The basic facts leading to the disputes between the parties and the Judge’s reasons for finding in favour of the Plaintiff against the Defendants are fully set out in the written judgment of the Judge dated 29 January 2018 (“the Judgment”) and will not be repeated here. For the purpose of disposing of the present applications, the following brief summary should suffice.

3.  The Plaintiff is a banking corporation incorporated under the laws of the Republic of India, and has a branch in Hong Kong (referred to in the Judgment as “IOB”).

4.  The 1^st Defendant is a company incorporated in Vancouver, British Columbia, Canada, and is engaged in the business of design, commissioning and installation of port machinery and equipment. It was registered under Part XI of the former Companies Ordinance (Cap 32) as a non-Hong Kong company with a registered place of business in Hong Kong until December 2014 when it filed a Notice of Cessation of Place of Business in Hong Kong.

5.  The 2^nd and 3^rd Defendants are directors and shareholders (holding 32.5% and 62.5% respectively of the share capital) of the 1^st Defendant.

6.  In May 2007, the 1^st Defendant was awarded a contract by St Lawrence Stevedoring, a division of Quebec Stevedoring Co Ltd (“QSL”) for the design, supply, installation and commissioning of a bulk material handling system (“the System”) at a port in Quebec, Canada. The 1^st Defendant in turn entered into a contract (“the ZPMC Contract”) with a Shanghai company called Zhenhua Port Machinery Co Ltd (“ZPMC”) on 25 May 2007 for the purchase of one lot of newly manufactured bulk material handling equipment (“the Equipment”), to be integrated into and form part of the System, at the price of CAD 11.5 million.

7.  Under the ZPMC Contract: (i) the 1^st Defendant agreed to pay the contract price by 5 instalments, 4 of which were to be paid through an irrevocable letter of credit for the amount of CAD 9.2 million; and (ii) ZPMC agreed to provide 4 demand guarantees, consisting of 3 Advance Payment Guarantees and a Performance Guarantee (collectively “APGs”) issued by Bank of China (“BOC”), to the 1^st Defendant.

8.  By a sanction letter dated 29 August 2007 (“the Sanction Letter”), the Plaintiff, acting through its Hong Kong Branch, agreed to provide the 1^st Defendant with general banking/credit facilities up to CAD 15 million. Those facilities included the issuance of a letter of credit in favour of ZPMC for the amount of CAD 9.2 million which the 1^st Defendant required to fulfil its obligation to ZPMC under the ZPMC Contract. The 1^st Defendant’s repayment obligations to the Plaintiff were secured by, inter alia, assignments of the APGs by the 1^st Defendant in favour of the Plaintiff (“Assignment Agreements”), and personal guarantees from the 2^nd and 3^rd Defendants (“Personal Guarantee(s)”).

9.  Pursuant to the Sanction Letter, the Plaintiff extended banking/credit facilities to the 1^st Defendant as agreed.

10.  Disputes later arose between QSL, the 1^st Defendant and/or ZPMC over the delivery of, and various technical problems with, the Equipment supplied by ZPMC. On 30 April 2010, the Defendants notified the Plaintiff that ZPMC was in breach of its obligations under the ZPMC Contract. On 3 May 2010, the Plaintiff invoked the APGs and demanded payment from BOC (“the Demand Letters”). The Demand Letters were counter-signed by the 1^st Defendant as “original beneficiary” under the APGs, “confirming” that ZPMC was in breach of contract. There was no response from BOC to the Demand Letters prior to 7 May 2010, the date of expiry of the APGs.

11.  It was only on 10 May 2010 that BOC replied to the Plaintiff stating that the Demand Letters were considered not to be “valid claiming documents”. On 28 May 2010, BOC informed the Plaintiff that 4 orders had been made by the No 2 Intermediate People’s Court in Shanghai on 25 May 2010 restraining BOC from making payments under the APGs (“the Restraint Orders”). The Restraint Orders were obtained by ZPMC on the basis that (i) the demands made by the 1^st Defendant through the Plaintiff were fraudulent; and (ii) the written demands were not given in accordance with the requirements as stated in the APGs.

12.  The Restraint Orders subsequently led to a series of further proceedings in the PRC. Eventually, on 29 September 2014, the Supreme People’s Court held that under the Assignment Agreements, the Plaintiff, as the assignee of the APGs, was required to make the demands on BOC in the name of the 1^st Defendant, and the Plaintiff had no right to make the demands for payment in its own name as the “new beneficiary” of the APGs.

13.  On 21 May 2012, the Plaintiff commenced the present action against the Defendants for outstanding amounts due under the Sanction Letter/Personal Guarantees in the total sums of CAD 9,665,484.94 and USD 137,899.18.

14.  The action was tried by the Judge on various dates in April and June 2017. A number of defences, summarised in the Defendants’ Opening Submissions at the trial and recited by the Judge at §86 of the Judgment, were raised by the Defendants to resist the Plaintiff’s claim:

“(1) P misrepresented its ability to competently handle the security (‘Misrepresentation Issue’); (2) P advised Ds in relation to the security and its advice was negligent (‘Negligent Advice Issue’); (3) P owed each of Ds a duty to deal with the security in such a way as to maximize the value, and in breach of duty squandered the available security entirely; further or alternatively, P was negligent in dealing with the security (‘Breach of Lender’s Duty Issue’).”

15.  The Judge found in favour of the Plaintiff and rejected the various defences raised by the Defendants:

(1)  In respect of the Misrepresentation Issue, the Judge found that -

“… there was no sufficient evidence that the Representation as pleaded had been made by IOB to any of Ds and even if there was the Representation, I find there was no sufficient evidence that such had been an inducement to Ds’ respective decisions in accepting the terms of the Sanction Letter, or in executing and/or entering into any of the Financial Instruments[1]. There was no sufficient evidence that any of the Ds was acting upon or in reliance of the Representation or any representation in accepting the terms of the Sanction Letter and/or the GSA[2], and/or in executing and/or entering into the Financial Instruments as pleaded” (§160 of the Judgment).

(2)  In respect of the Negligent Advice Issue, the Judge found as follows -

“… I do not find that there was sufficient evidence that the scope of P’s services to Seabulk had included advising and/or rendering assistance to Ds as regards the structuring and establishing of a financial arrangement for the Project and/or handling the securities. I do not find P owed any duty of care to advise Ds, as pleaded, on the financial arrangements or financial structure in respect of the Project and/or in relation to the handling of the APGs. In any event, even if such duty of care as pleaded by Ds existed, having considered the evidence, I am not satisfied that there was any breach of that duty in that I do not find that there was sufficient evidence of any advice given by P/IOB in relation to the financial arrangements or financial structure of the Project as alleged or pleaded in AD&C under the heading ‘The Plaintiff’s Advice’ and/or the handling of the APGs as alleged upon which Ds had acted or relied in executing or entering into any of the Financial Instruments” (§205 of the Judgment).

(3)  In respect of the Breach of Lender’s Duty Issue, the Judge found that -

“… P was not in breach of any of the alleged duties to Ds as pleaded, and I see no reason why equity should intervene to protect any of Ds” (§351 of the Judgment).

16.  The Judge ordered the Defendants, jointly and severally, to pay the Plaintiff the sums of CAD 9,665,484.94 and USD 137,899.18 (or their Hong Kong dollars equivalent) together with interest thereon at the rate of 7.5% per annum from 21 May 2012 to the date of judgment and thereafter at judgment rate until payment (“the Judgment Debt”), and declared that the Plaintiff is entitled to be indemnified by the Defendants in respect of all legal costs incurred in various proceedings in the PRC as specified in §2 of the sealed judgment. The Judge also dismissed the Defendants’ Counterclaim, and made an order that the Plaintiff’s costs shall be paid by the Defendants jointly and severally.

THE APPEAL

17.  On 26 February 2018, the 1^st, 2^nd and 3^rd Defendants filed a Notice of Appeal.

18.  On 15 March 2018, the Plaintiff filed a Respondent’s Notice seeking to uphold the Judge’s rejection of the defence of misrepresentation on an additional ground.

19.  On 18 May 2021, the 2^nd Defendant filed a Supplementary Notice of Appeal, which substantially amended the Notice of Appeal. In the Supplementary Notice of Appeal, the 2^nd Defendant raised 7 grounds of appeal.

THE APPLICATIONS

20.  On 18 May 2021, the 2^nd Defendant issued a summons in the court below seeking a stay of execution of the Judgment pending the hearing and final determination of his appeal. On 8 November 2022, the Judge dismissed the stay execution.

21.  On 5 December 2022, the 2^nd Defendant filed a summons in the Court of Appeal to renew the stay application. The renewed application is supported by the 2^nd Affirmation of Ramesh Vangal (“Vangal 2”) filed on 8 December 2022, and opposed by the 3^rd Affidavit of Fung Chi Man (“Fung 3”), a partner of Holman Fenwick Willan, filed on behalf of the Plaintiff on 5 January 2023.

22.  As mentioned at the beginning of this judgment, the Plaintiff filed a summons on 1 February 2023 for leave to rely on a further affidavit of Mr Fung, namely, Fung 4, essentially to provide some updated information concerning certain related proceedings in Singapore in respect of the Plaintiff’s effort to enforce the Judgment against the 2^nd Defendant in Singapore. In response, the 2^nd Defendant filed a summons on 9 February 2023 seeking leave to file evidence “in reply to” Fung 4. The evidence proposed to be relied upon by the 2^nd Defendant, namely, Vangal 3, in fact goes beyond evidence in reply to Fung 4. We shall come back to this matter later in this judgment.

DISCUSSION

23.  The principles governing an application for a stay of execution of a judgment pending appeal are well established.

(1)  The applicant is required to demonstrate a “good reason” for a stay of execution.

(2)  Generally speaking, the existence of merely an arguable appeal cannot by itself amount to a sufficient reason to justify a stay. It is the minimum requirement before a court would even begin to consider granting a stay.

(3)  In other words, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted however exceptional the circumstances may otherwise be justifying a stay of execution.

(4)  On the other hand, the existence of a strong appeal or a strong likelihood of success will usually by itself enable a stay to be granted because this would constitute a good reason for a stay.

(5)  In most cases, where the court is faced with simply the existence of an arguable appeal, it becomes necessary for the applicant to provide additional reasons as to why a stay is justified.

(6)  Commonly, this is done by demonstrating that without a stay the appeal would be rendered nugatory, for example, because of an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal against a money judgment, or because the failure to grant a stay would have a serious deleterious effect on the applicant.

(7)  In considering an application for a stay pending appeal, it would be impractical and even undesirable for the court to go deeply into the merits or strengths of the appeal, although the court must still form a preliminary view of these aspects.

See the judgment of Ma J (as he then was) in Stay Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, at §§9-10.

24.  In the present case, the Stay Application is advanced by the 2^nd Defendant on the following basis:

(1)  The grounds of his appeal are strong.

(2)  Alternatively, even if the 2^nd Defendant’s grounds of appeal are merely arguable, his appeal will be rendered nugatory if no stay is granted because of the serious deleterious effect that enforcement of the Judgment will have on him. According to the 2^nd Defendant, if no stay is granted, he will be “financially ruined” (see §10(b) of Vangal 2).

25.  We have considered the 2^nd Defendant’s grounds of appeal in his Supplementary Notice Appeal, and the submissions advanced by his counsel (Mr Jonathan Lee) in support of those grounds as well as the submissions in response by the Plaintiff’s counsel (Mr Michael Ng). On a preliminary basis, we consider that the 2^nd Defendant has demonstrated the existence of an arguable appeal. We are not, however, satisfied that the 2^nd Defendant has shown a strong appeal or a strong likelihood of success. Having reached these views, it would not be appropriate for us to further analyse the merits of the 2^nd Defendant’s grounds of appeal in this judgment, which will have to be fully ventilated at the substantive hearing of the appeal.

26.  In our view, the question of whether to grant a stay of execution of the Judgment pending the 2^nd Defendant’s appeal turns on whether the 2^nd Defendant has shown that without a stay, he will suffer serious deleterious effect as alleged by him.

27.  The serious deleterious effect alleged by the 2^nd Defendant is elaborated by him in his 1^st Affirmation dated 18 May 2021 (“Vangal 1”) filed in support of his original application for stay of execution in the court below, at §§30-42 thereof (which the 2^nd Defendant refers to at §9 of Vangal 2). Essentially, what the 2^nd Defendant is saying is that, without a stay, the Plaintiff will serve a statutory demand on him in Singapore. A statutory demand is a precursor to the commencement of bankruptcy proceedings against him in Singapore. If he was to be made bankrupt, it would have a disastrous effect on him and almost certainly result in his financial ruin or at the very least, in very serious and irreparable financial damage, even if he was later to succeed in his appeal. This is because he has substantial business dealings in different countries around the world (including Mauritius, India, Europe, USA and Australia). He also holds executive and management positions in more than 13 companies. His business reputation has taken many years to build up. Any bankruptcy order made against him in Singapore will at a minimum have the following very serious deleterious effects:

“(a) It would obliterate [his] business and financial reputation and credit worthiness, which in turn will either curtail or seriously disrupt the businesses which [he] manage[s].

(b) It would destroy [his] relationships with banks and financial institutions and [his] ability to secure finance for [his] businesses, because the banks concerned will call in all current loan facilities and call up all other guarantees that [he has] provided.

(c) It would prevent [him] from continuing as a director of any of [his] businesses.

(d) [He has been] advised by [his] Singapore lawyers and believe(s) that, under Section 131(1)(b) of the Singapore Bankruptcy Act, it is a criminal offence for an undischarged bankrupt to ‘remain or reside outside Singapore without the previous permission of the Official Assignee’.

(e) In those circumstances, all of [his] current businesses would collapse.”

28.  In short, the serious deleterious effect that the 2^nd Defendant says he will suffer if no stay of execution of the Judgment is granted is the prospect of bankruptcy in Singapore together with the consequences or potential consequences arising from such bankruptcy. However, whether the 2^nd Defendant will face bankruptcy depends on whether he is truly unable to pay off the Judgment Debt. In this regard, the 2^nd Defendant has singularly failed to provide any information, details or breakdown of his assets (with reasonable supporting evidence) in Singapore or elsewhere. At §20 of Vangal 1, the 2^nd Defendant admits that he had some “funds”, but says that he “had to focus upon preserving all available funds [for his businesses] and mitigating the impact caused by the COVID-19 pandemic”. At §15(d) of Vangal 2, the 2^nd Defendants says that if he were to devote all his available funds to his businesses, he would not be able to pay the Judgment Debt, which will very likely lead to a bankruptcy order being made against him in Singapore, and he would then be grounded in Singapore until the discharge of the bankruptcy order. In those circumstances, says the 2^nd Defendant, “whatever assets [he] may have elsewhere in the world would not do [him] any good” [emphasis added]. It would thus appear that the Defendant has assets in Singapore and other part(s) of the world. However, he has not disclosed the nature of his assets, their locations or values, whether those assets can readily be turned into money to discharge the Judgment Debt, or any information concerning the financial needs of his businesses. Without such information, it is not possible to judge whether the 2^nd Defendant is unable to pay off the Judgment Debt, and whether there is any truth in his assertion that “if [he] were to devote all [his] available funds to [his] businesses, [he] would not be able to pay the Judgment Debt”.

29.  It needs to be emphasized that compliance with the Judgment is a matter of legal obligation, not a matter of choice or preference. Mr Ng submits that -

“D2 clearly has funds but he prefers preserving them for his own alleged ‘business’ purpose. This cannot be a justification for a stay. D2 is not allowed to deprive P of the fruit of its success to serve his own preferences. If this is permitted, most (if not all) monetary judgments would be stayed”. [emphasis omitted]

There is force in this submission.

30.  Mr Lee relies on Caine Tai Investment Company Limited v Ayala International Finance Limited [1983] 1 HKC 163 and submits that it stands as a “binding” authority for the proposition that “a stay was granted in the absence of documentary evidence because [the] Court was satisfied that the uncontradicted affidavit evidence shows that a failure to grant [a] stay might have a seriously deleterious effect”[3]. He relies, in particular, on the following statement by Roberts CJ at 166:

“The affidavit of the third defendant, which has not been contradicted, establishes in our view that the failure to grant a stay of execution might have a seriously deleterious effect on the defendants, if they were to succeed in the appeal and, subsequently, in the action, for the reasons which are set out in that affidavit, particularly in relation to those properties owned by the defendants which are concerned in the joint ventures listed in the third defendant’s affidavit.”[4]

31.  In that case, the evidence filed in support of the application for a stay of execution of a monetary judgment in the sum of about HK$24 million pending appeal was that if the application was refused, there was every likelihood that the defendants might be forced to dispose of their major assets and, in the then prevailing state of the property market, the defendants would suffer great loss if the properties were to be disposed of in distress sales and the defendants might suffer irreparable loss and harm should the court later set aside the judgment, because even if the plaintiff could repay the sums paid by the defendants, the defendants having sold the properties or interests in them would have lost the opportunity of participating in various property developments. The Court of Appeal considered the evidence to be sufficient to show that a failure to grant a stay of execution might have a seriously deleterious effect on the defendants. The decision of the Court of Appeal was based on an assessment of the evidence before it. In our view, Caine Tai Investment Company cannot be read as establishing any general proposition that the court is bound to accept at face value bare statements or assertions made by a judgment debtor that without a stay of execution pending appeal, he is or will likely suffer a serious deleterious consequence.

32.  What evidence is sufficient to enable the court to reach such conclusion must depend on the circumstances of the case. In the present case, the 2^nd Defendant has, according to him, substantial business interests or dealings in many parts of the world, and apparently has assets in Singapore and overseas. Nevertheless, his position is that without a stay of execution pending appeal, he will or is likely to be made bankrupt in a foreign jurisdiction. As earlier mentioned, this eventuality presupposes that the 2^nd Defendant does not have sufficient financial resources to satisfy the Judgment Debt (without sacrificing his other business interests). To make good this proposition, we consider that it is incumbent on the 2^nd Defendant to provide reasonable evidence concerning his assets and the financial needs of his businesses. Such matters are peculiarly within the knowledge of the 2^nd Defendant. There is no suggestion that relevant evidence of those matters cannot be readily adduced if the 2^nd Defendant wishes to do so. In this regard, the following observations by Ma J (as he then was) in Star Play, at §9(2)-(3), are apposite:

“(2) That said, whatever the nature of the order or judgment appealed from, the court will still require evidence as to why an appeal will be rendered nugatory in the event of a stay not being granted. The requisite quality of the evidence will, of course, depend on the nature of the order or judgment appealed against.

(3) I now deal with a common facet relied on in any argument relating to an appeal being rendered nugatory, namely that of financial ruin or serious financial consequences. Where, as in the present case, it is said that the levying of execution would result in financial ruin or serious financial consequences for the appellant, the court will require good evidence to support this contention, such as the production of accounts or other documents to justify the assertion. A bare assertion is unlikely to meet with much sympathy where more substantial evidence is available…”

33.  In Vangal 3, the 2^nd Defendant attempts to make good the gap in the evidence by producing evidence of, inter alia, 2 personal guarantees that he has given as security for various credit facilities granted to companies in which he has interests[5]. The first is a guarantee dated 8 January 2018 (“the ECL Guarantee”) to ECL Finance Limited to secure a loan in the sum of INR 30 crores (approximately HK$28.5 million) granted to Kerala Ayurveda Limited (“KAL”), a publicly listed company in which the 2^nd Defendant holds a 62% shareholding interest, and the second is a guarantee dated 28 September 2022 (“the SBM Guarantee”) to SBM Bank India Ltd to secure cash credit and a loan in the sum of INR 20 crores (approximately HK$19 million) granted to Katra Phytochem (India) Pvt Ltd (“KPI”), a company in which the 2^nd Defendant holds a 94% shareholding interest.

34.  The 2^nd Defendant relies on the following provisions in the 2 guarantees:

(1)  Clause 6 of the ECL Guarantee - “The Guarantee herein contained shall be enforceable against the Guarantor notwithstanding that the Security that the Lender may have obtained or may obtain from the Borrower or any of the Security Providers under and pursuant to the Security Documents and at the time when proceedings are taken against the Guarantor hereunder be outstanding and/or remain unrealized”; and

(2)  Clause 4(e) of the SBM Guarantee - “The Guarantor represents and warrants to and for the benefit of the Bank on a continuing basis that: There is no litigation, action, suit, proceeding or investigation pending and/or continuing or to the knowledge of the Guarantor threatened by or against the Guarantor or the property of the Guarantor before any court of law or Authority which may have an Adverse Effect”.

He further says that, once called on, he would become immediately liable to pay nearly HK$50 million upfront, and “if [he] were to devote all his available funds to pay the Judgment Debt, [he] would not be able to meet [his] liabilities under the ECL Guarantee and the SBM Guarantee, which is highly likely to lead to a bankruptcy order being made against [him]”[6].

35.  We do not consider that these two guarantees, whether taken on their own or in conjunction with other evidence before the Court, are sufficient to prove that the Defendant will face bankruptcy or the prospect of bankruptcy without a stay:

(1)  There is no evidence, or suggestion, that the borrowers (KAL and KPI) have defaulted, or the lenders (ECL and SBM) have called, or threatened to make a call, on the underlying loans or the guarantees.

(2)  There is insufficient evidence before the Court to show that the 2^nd Defendant does not have sufficient resources to pay off the Judgment Debt and satisfy the potential liabilities under the two guarantees.

(3)  The effect of Clause 6 of the ECL Guarantee is merely to preserve the right of the lender against the guarantor even if, at the time when proceedings are taken against the guarantor, there is any security which the lender has obtained or may obtain which is outstanding and/or remains unrealized. We do not consider this provision can assist the 2^nd Defendant’s Stay Application.

(4)  In so far as Clause 4(e) of the SBM Guarantee is concerned, it is unclear whether there has already been a breach of the relevant representation or warranty by the 2^nd Defendant by reason of the legal proceedings taken against him by the Plaintiff in Hong Kong and/or Singapore (including the Statutory Demand previously served on him in Singapore in September 2018[7], the registration of the Judgment in Singapore in August 2019, and further legal proceedings arising out of the registration of the Judgment which appear to be on-going at present). The 2^nd Defendant has failed to show how a refusal of the present Stay Application would make any difference to his position under that provision.

36.  In passing, we should mention that in Vangal 3, the 2^nd Defendant also refers to a loan agreement dated 30 May 2022 from Kotak Mahindra Bank Ltd to KAL in the sum of INR 974 lakhs (approximately HK$9.26 million), and the loan agreement refers to a personal guarantee having been given by the 2^nd Defendant[8]. The 2^nd Defendant has not been explained how the existence of such guarantee can assist his Stay Application, and we are unable to see how it may advance his case.

37.  We also take into account the fact that if execution of the Judgment is not stayed pending appeal and the 2^nd Defendant pays the Judgment Debt to the Plaintiff, having regard to the fact that the Plaintiff is a licensed bank in Hong Kong under the ownership of the Ministry of Finance of the Government of India and its Hong Kong Branch alone had deposits of over HK$1.8 billion as at 31 March 2021[9], we do not see any appreciable risk that the Plaintiff may not be able to repay the 2^nd Defendant in the event of his appeal being successful.

38.  Overall, we are not satisfied that the 2^nd Defendant has shown that without a stay of execution, his appeal would be rendered nugatory, or that the failure to grant a stay would have a serious deleterious effect on him. We also do not see any other good reason to grant a stay of execution pending appeal in the present case.

39.  In passing, we observe that although it is stated in the 2^nd Defendant’s summons dated 9 February 2023 that he is seeking leave to file and serve evidence “in reply to” Fung 4, it is obvious that the evidence contained in §§27-32 of Vangal 3 cannot properly be regarded as evidence in reply to Fung 4. It seems clear to us that the said evidence is put forward by the 2^nd Defendant in support of his case that the refusal of a stay of execution pending appeal will, or will likely, have a serious deleterious effect on him. In our view, if the 2^nd Defendant wishes to adduce further evidence in support of the Stay Application, he should clearly state so in his summons. Be that as it may, we have taken into account the evidence proposed to be adduced by the 2^nd Defendant in Vangal 3 in our consideration of the Stay Application.

DISPOSITION

40.  Leave is granted to (i) the Plaintiff to file and serve Fung 4, and (ii) the 2^nd Defendant to file and serve Vangal 3, on the ground that the matters contained therein are relevant to the Court’s consideration of the Stay Application, and we do not consider that either party is prejudiced by the admission of the proposed additional evidence.

41.  The Stay Application is dismissed.

42.  The Plaintiff shall have the costs of the 2^nd Defendant’s summonses dated 5 December 2022 and 9 February 2023 and the Plaintiff’s summons dated 1 February 2023. Having considered the Plaintiff’s costs statement dated 22 March 2023, we summarily assess the Plaintiff’s costs in the sum of HK$250,000. The above order as to costs (including the assessment of the Plaintiff’s costs) is an order nisi, which shall become absolute unless an application is made to vary it within 14 days from the date of this judgment.