HONG KONG TOPKEY LTD v. WINTAC (HONG KONG) LTD AND ANOTHER

HCA 667/2022

[2023] HKCFI 2029

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 667 OF 2022

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BETWEEN

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D E C I S I O N

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1.  By a summons dated 18 July 2023 (“Ds’ Summons”), Ds make two applications:

(1) an application for leave to appeal from the judgment of this court dated 4 July 2023 (“the Judgment”), by which I have affirmed the summary judgment granted by Master Alexander Tang on 4 January 2023 (“the Leave Application”); and

(2) an application for stay of execution of the Judgment pending the determination of the appeal (“the Stay Application”).

2.  On 19 July 2023, I directed that Ds’ Summons be determined on paper without an oral hearing. I also informed the parties that my provisional view (“the Provisional View”) is that by reason of Order 59 rule 21(1)(a) and (2)(a), leave to appeal from the Judgment is not necessary, and Ds may lodge an appeal from the Judgment as or right. I directed that the parties shall address the Provisional View in their respective written submissions.

3.  This decision should be read together with the Judgment. For ease of reference, the abbreviations used in the Judgment are adopted herein.

LEAVE APPLICATION

4.  Mr Edward KH Ng (together with Ms Lily Yeung) for Ds, in their written submissions, informed me that Ds accept that leave to appeal in fact is not required, and Ds have already filed and served an Amended Notice of Appeal to lodge an appeal against the Judgment in CACV 230/2023. Mr Joseph Wong for P, in his written submissions, has expressed an agreement with the Provisional View. Having considered the matter again, the Provisional View now becomes my final view.

5.  That being the case, the Leave Application in Ds’ Summons is in fact misconceived and should be dismissed. For avoidance of doubt, the dismissal would only have an impact on the costs of Ds’ Summons and would not affect Ds’ right to lodge an appeal against the Judgment, which is a right conferred by the statute.

6.  In Mr Ng’s written submissions, Mr Ng seeks leave to appeal against the dismissal of the New Evidence Application in the Judgment (“the 2^nd Leave Application”). With respect, the 2^nd Leave Application is not an application in Ds’ Summons. Ds cannot simply make an application by written submissions without issuing a summons. Further, as submitted by Mr Wong, the 2^nd Leave Application is misconceived. Leave to appeal is in fact not required. The principles have been set out by the Court of Appeal in R Stahl Inc v AJ Development Ltd [1], in which Kwan VP said:

“7. …… Although the order refusing leave to adduce affidavit evidence is interlocutory in nature, it was made in a judgment in respect of which the defendant has a right of appeal and the defendant has exercised that right by filing the notice of appeal.

8. An analogy may be drawn with the situation where leave to amend pleadings is refused in a trial and an appeal is lodged against the final judgment. It was held that there is no need for a separate appeal because the refusal of leave to amend pleadings is simply part of the trial and as the whole judgment is appealed from the whole case will be open on the appeal (Laird v Briggs (1881) 16 Ch D 663; Zhang Hong Li & Ors v DBS Bank (Hong Kong) Ltd & Ors [2018] HKCA 435 at §§103 to 106; Hong Kong Civil Procedure 2020 vol 1, §20/8/15).

9. In this instance, the application to adduce Zhong 4^th was made in the course of opposing the plaintiff’s application for final judgment. The refusal to allow the admission of this affirmation was part of the hearing of the plaintiff’s application. Once the defendant has lodged an appeal against the judgment on the plaintiff’s application as of right, it opens up the question of the evidence that should have been admitted or excluded in the application. The defendant is not required to apply for leave separately in this situation regarding the refusal to admit Zhong 4^th.” (emphasis added)

7.  In Ds’ written reply submissions, Mr Ng has agreed that leave to appeal against the dismissal of the New Evidence Application is not necessary. Mr Ng said that Ds would not pursue the 2^nd Leave Application. Notwithstanding the withdrawal of the 2^nd Leave Application, costs have already been incurred. Costs relating to the 2^nd Leave Application should be borne by Ds.

Stay Application

8.  I would refuse to grant a stay of execution of the Judgment pending appeal, for I am of the view that Ds have failed to demonstrate an arguable appeal.

(1) The existence of an arguable appeal (that is, one with reasonable prospects of success) is the minimum requirement before a court would even consider granting a stay. If there is no arguable appeal, no stay would be granted, however exceptional the circumstances may be otherwise justifying a stay of execution.^[2]

(2) Having considered Ds’ Grounds of Appeal as stated in the Amended Notice of Appeal and Mr Ng’s written submissions, with respect, Ds are merely re-running the arguments advanced in the hearing before me, which have already been rejected by me in the Judgment. In my view, Ds have not raised any arguable ground of appeal upon which Ds may have a reasonable chance of success in the appeal hearing. In particular, I am not persuaded that Ds have demonstrated that arguably I have erred in interpreting the Kaefer case and in construing [12.2] of the Defence. In my view, no arguable appeal has been shown.

(3) Since Ds have failed to show an arguable appeal, the Stay Application must be refused.

9.  Further or alternatively, I would refuse the Stay Application on the ground that Ds have not adduced any reasonable evidence showing that their appeal would be rendered nugatory if a stay is not granted.

(1) Very recently, in Indian Overseas Bank v Seabulk Systems Inc[3], Chow JA said:

“32. …… [the 2^nd Defendant]’s 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…’ ” (Emphasis added)

(2) In D2’s 4^th Affirmation, D2 said:

“6. …… I respectfully say that it is unjust to proceed with execution when [Ds]’ impecuniosity was caused by the non-satisfaction of the Award. [P] has now launched bankruptcy and winding-up proceedings against me and [D1] respectively. However, we are unable to pay the judgment debt simply because the valuable shares had not been returned, despite more than one year had passed since the date of the Award, in the first place.”

(3) With respect, apart from the bare assertion of D2, not a single document has been produced to show that Ds are in fact unable to pay the judgment debt as stated in the Judgment. In the circumstances, there is no good or reasonable evidence showing that the appeal would be rendered nugatory without a stay.

10.  For the reasons above, the Stay Application must be dismissed.

Disposition

11.  I dismiss Ds’ Summons. Costs should follow the event. I order that costs of Ds’ Summons be paid by Ds to P forthwith, and those costs be summarily assessed on paper without an oral hearing. There be leave to P to file and serve a bill of costs for summary assessment within 7 days, and leave to Ds to file and serve a written reply to the said bill within 7 days thereafter. Time shall run during the Summer Vacation.

12.  I thank counsel for the assistance provided to the court.