FU SAU KWOK BARRY v. FOO SAU CHUN RICHARD

HCCL 20/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 20 OF 2004

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R U L I N G

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1.  In the exercise of the court’s discretion as to whether or not to grant a stay of execution pending appeal against judgment after trial, the starting point is that the successful litigant should not be deprived of the fruits of his judgment unless the appellant can justify a stay of execution; that is, that there are good reasons for doing so.

2.  Although what amounts to good reasons will be determined by the particular circumstances, commonly those put forward are that the absence of a stay would render the appeal if successful nugatory, and that there are arguable grounds that the appeal will succeed.

3.  A useful commentary on how these matters should be assessed was set out by Ma J (as he then was) in the unreported case Wenden Engineering Service Company Limited v Lee Shing Yue Construction Company Limited, HCCT 90/1999.

4.  A feature Ma J averted to was that the mere existence of an arguable appeal is generally not by itself considered to be a sufficient reason for a stay; conversely, where there is a strong likelihood that an appeal will succeed, in the normal course this alone will amount to good reason.  And he concluded:

“	Ultimately the court embarks on a balancing exercise and uses its common sense but bearing in mind at all times the starting point that the successful party is not to be deprived of the fruits of his success.”

5.  The facts of this case are unusual though straightforward.

6.  The plaintiff Barry Fu is the younger brother of the defendant Richard Foo.

7.  Richard as executor of their late father’s estate had title to shares in the Hong Kong Stock Exchange Limited which he held in trust for Richard, for he was the sole beneficiary in respect of the shares.  Without Richard’s permission or knowledge he sold the shares and put the proceeds to his own use.

8.  When Barry came to learn of this and confronted his brother, Richard had insufficient resources to buy back the equivalent shares.

9.  The parties then entered into what was called the Settlement Agreement, by whose terms Richard was over a passage of time to restore to Barry what he had wrongfully deprived him of.

10.  But he defaulted almost immediately.  Barry brought this action to recover his entitlement.

11.  The issue at trial was not one of liability for there was no defence.  After trial I found in favour of Barry to the tune of a bit more than $15.5 million.  Judgment was handed down in May 2007.

12.  Richard appeals that order upon the grounds that the amount in damages was founded on the wrong premise.  It is said of that that the sum should be no more than $5.661 million.

13.  The appeal is to be heard in March 2008.

14.  In evidence in support of this application, Richard has deposed that Barry is pursuing execution and has a charging order in the amount of the judgment sum over the flat that Richard owns and lives in with his wife.  This is worth according to a recent valuation about $14.5 million.  There is a mortgage of $5.37 million, leaving an equity of $9.13 million.  There is also a charging order over shares worth he says about $70,000.

15.  He deposes that there would be serious hardship if Barry were permitted to enforce judgment which would include the loss of the family home, if he were to have to pay the whole of the judgment debt.

16.  What he does not record is what his assets and liabilities are, how he proposes to pay the $5.661 million about which there is apparently no dispute, or why he has not taken any steps to pay or reduce this sum.

17.  He deposes further that as Barry now lives in Indonesia with no assets in Hong Kong, he will likely take the money out of Hong Kong, which will render a successful appeal nugatory.

18.  This is a somewhat ironic stance to adopt given that this action would not have been necessary but for what he did in the first place which amounted to a most serious breach of trust and failure to make good his wrongdoing.

19.  And he does not address an open offer made on behalf of Barry that he was prepared upon recovery of such of the judgment debt as was available to pay the balance in excess of the sum of $5.661 million into a holding account pending the outcome of the appeal.

20.  Mr Barlow SC leading Mr Soo submitted that on balance Barry’s position is safe and secure given that he has a charging order over Richard’s flat, as well as security over less valuable assets.  If the appeal results in a significant reduction of the judgment debt, prospectively to $5 million or a little more, it may be open to Richard to preserve his home by refinancing.  He pointed out that Richard had been co-operative in not opposing the imposition of the charging order over the flat.

21.  But that said, the burden falls squarely on Richard to give justifiable reasons for a stay to be granted.

22.  What he has not done is pay any of the judgment debt or part of it or demonstrate attempts to raise what is due or part of what is due, particularly as to that sum for which on the papers there is apparently no contest.  And the security of a 2^nd charge over real estate does not however apparently sound give a judgment creditor payment of his judgment debt.

23.  Richard has not stated on oath what he is worth in Hong Kong and abroad.

24.  He has not demonstrated that the absence of a stay will render nugatory a successful appeal.

25.  He has not demonstrated that there is a strong likelihood that the appeal will succeed, as to warrant a stay based on this ground alone.

26.  He has, finally, not demonstrated any other good reason for denying Barry the fruits of his judgment.

27.  In all the circumstances I exercise my discretion by refusing the application for a stay and I dismiss the application.

28.  Costs are nisi.  The plaintiff shall have his costs.