PACIFIC ELECTRIC WIRE & CABLE CO LTD v. HARMUTTY LTD AND OTHERS

cacv 208/2008
CACV 210/2008
CACV 211/2008
CACV 212/2008
(Heard Together)

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 208 of 2008

(on appeal from HCA NO. 2763 of 2004)

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REASONS FOR JUDGMENT

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Hon. Yuen JA:

1.  On 2 October 2008 there were before me summonses issued by the appellants in CACV208/2008, 210/2008, 211/2008 and 212/2008 for orders that there be a stay of execution of orders made by Saunders J in HCA2203/2004, 2746/2004 and 2763/2004 pending the hearing of their appeals from orders made by Rogers V-P refusing a stay of execution of Saunders J’s orders.  I asked the parties to address me first on the nature of these summonses to see if I had jurisdiction to hear them and if so, whether they were an abuse of the process.  At the conclusion of those submissions, I dismissed the summonses with costs and indicated that I would hand down my reasons.

The actions

2.  It may be helpful to set out briefly the history of the litigation and to introduce the parties.  In 2004 Pacific Electric Wire & Cable Co Ltd (“PEWC”) instituted 3 actions in the High Court against various defendants (some in common) arising out of the use of its money by some of its directors for the acquisition of assets by companies over which PEWC had no control. 

-        HCA2203/2004 is an action against 15 defendants, including 4 corporate defendants represented by Mr Westbrook SC on the instructions of Laracy Gall.  The subject matter of the action is shares in a company called Pacmos Technologies Holdings Ltd (“Pacmos”). 

-        HCA2746/2004 is an action against 8 defendants, including 4 corporate defendants represented by Mr Westbrook and Laracy Gall.  The action involves a property in Shouson Hill.

-        HCA2763/2004 is an action against 21 defendants, including 9 corporate defendants represented by Mr Westbrook and Laracy Gall.  The 18^th and 19^th Defendants are 2 BVI companies, Blinco Enterprises Ltd (“Blinco BVI”) and Patagonia Ltd.  These 2 companies are represented by Mr Smith SC on the instructions of Tanner de Witt.  The action involves properties in South Horizons which are held by companies of which Blinco BVI and Patagonia are the parent companies.  PEWC claimed that it owns the shares in Blinco BVI and Patagonia, but it has been asserted by a person by the name of R.M. Willi that he is the ultimate beneficial owner of these BVI companies.

Order 14 applications

3.  These 3 actions were commenced in 2004.  In 2007, Saunders J heard Order 14 summonses issued by PEWC in each of the 3 actions.  Rather unusually the hearing took 12 days spread over a period of 7 months between March and October 2007.

Saunders J’s orders for summary judgment

4.  In a judgment handed down on 18 January 2008, Saunders J gave summary judgment in favour of PEWC in all 3 actions.

5.  Consequential to giving summary judgment, Saunders J gave orders for the transfers of shares, including the shares in Pacmos, and the shares of Blinco BVI and Patagonia.  I have been told that the date of compliance is now 15 October 2008.

Applications for stay pending proposed appeal

6.  All the defendants represented by Mr Westbrook and Mr Smith filed summonses for stay of execution of Saunders J’s orders pending their proposed appeals.  In an effort to strengthen their proposed appeals, Mr Westbrook’s clients indicated that they would seek to adduce further evidence.

Saunders J’s orders refusing stay pending proposed appeal

7.  The summonses for stay were heard by Saunders J on 23-24 June 2008.  In a decision handed down on 4 July 2008, the judge held that the appellants were unlikely to obtain leave to adduce the further evidence, rejected their argument that the refusal of a stay would render the appeals nugatory, and refused the applications for stay on PEWC’s undertaking that (without the prior approval of the court) it will not deal with underlying properties and will not exercise any shareholders’ rights in respect of the shares, until the determination of the appeals.

8.  However, Mr Westbrook having indicated to Saunders J that should he refuse the stay an application would be made to the Court of Appeal and he having asked the judge for an interim stay to permit such an application to be made, the judge granted an interim stay for a period of 14 days from the date the orders were sealed.  

Notices of appeal

9.  On 31 July 2008, all the defendants represented by Mr Westbrook and Mr Smith lodged notices of appeal (in CACV210, 211, 212/2008 and CACV208/2008 respectively) against Saunders J’s judgment and his consequential orders for transfer of shares etc.  These appeals will be heard on 2 March 2009 with 5 days reserved.

Summonses in the Court of Appeal for stay pending appeal

10.  On 31 July 2008 Mr Smith’s clients Blinco BVI and Patagonia filed a summons in the Court of Appeal for stay of execution of Saunders J’s orders pending appeal.  Mr Westbrook’s clients filed similar summonses the next day 1 August 2008.

11.  Although the applications were made to the Court of Appeal, pursuant to s.35(1) High Court Ordinance Cap. 4, a single judge of the Court of Appeal has jurisdiction to make an order not involving the determination of the appeal.  The applications were consequently listed before a single judge of the Court of Appeal. 

Rogers V-P’s order refusing D18-19's application for stay pending appeal

12.  On 25 August 2008, the summons filed by Blinco BVI and Patagonia was heard by Rogers V-P (Mr Westbrook’s clients having declined to have their summonses heard at the same time).  After hearing Mr Smith’s submissions, the Vice-President dismissed the application and gave a reasoned judgment citing well-established principles for stay pending appeal and applying the facts to them. 

13.  The Vice-President’s decision was firmly expressed.  He held: “I do not see that any ground that this appeal would be rendered nugatory has been made out” (para. 6), and further, “[t]he second ground is that the 18^th and 19^th Defendants say that they have strong grounds for appeal.  I do not see that at all” (para. 7).  The Vice-President concluded with the statement “I have no doubt that this application should be refused”.

Rogers V-P’s order refusing the other appellants’ application for stay pending appeal

14.  On 17 September 2008, Rogers V-P heard the summonses filed by Mr Westbrook’s clients.  These were also dismissed, although a reasoned judgment has not yet been handed down.

Appeals from Rogers V-P’s refusals of stay

15.  On 3 September 2008 Blinco BVI and Patagonia filed a summons to appeal Rogers V-P’s refusal of stay pending appeal.  On 26 September 2008 the other appellants also filed similar summonses.  At the parties’ request, the appeals were fixed to be heard together and scheduled to be heard on 5 December 2008 with one day reserved.

Applications for interim stay

16.  On 22 September 2008 (nearly a month after Rogers V-P’s decision) Blinco BVI and Patagonia filed a summons for an order that the execution of Saunders J’s orders be “stayed until 5 December 2008 being the date of hearing of the application ... to the Court of Appeal for the Order of ... Rogers VP ... dated 25 August 2008 to be discharged and substituted by an order that execution of the Judgment of Saunders J ... dated 18 January ... 2008 be stayed pending the determination of the appeal ... to the Court of Appeal from the said Judgment ...”.

17.  On 26 September 2008 the other appellants filed summonses couched in slightly different language but asking for similar orders.

18.  It was not suggested by either group of appellants that there has been any change of circumstances since Rogers V-P’s orders. 

Rejection of offer for advancing appeal hearing

19.  The applications were resisted by the Plaintiff.  The applications were listed to be heard by myself as a single judge of the Court of Appeal on 2 October 2008. After perusing the papers a few days before the hearing, I considered that proceedings could be simplified if the appeals fixed to be heard together and scheduled for 5 December 2008 were advanced to 2 October. Inquiries were made by the Court with the parties as to whether they wished to advance the hearing in that way.  However this offer was in effect declined by Mr Westbrook’s clients on the grounds of leading counsel’s inavailability and the need for further evidence.   Consequently the hearing on 2 October was for an “interim stay” only.  

Discussion

20.  At the hearing before me, I considered first the nature of these summonses.  Insofar as they were applications for me to discharge or vary the orders of Rogers V-P refusing to stay execution of Saunders J’s orders, a single judge of the Court of Appeal has no jurisdiction: see s.35(3) High Court Ordinance Cap. 4 which provides that “every order ... made ... by a single judge under subsection (1) [of s.35] may be discharged or varied by the Court of Appeal”.  A judge of the Court of Appeal has refused a stay of execution of orders made by the Court of First Instance pending appeal.  That decision can only be overturned on appeal at which the appellants would have to satisfy the Court of Appeal that the appellate judge’s discretion had been wrongly exercised.

21.  Further it seemed to me that these applications were an abuse of the process.  In effect the appellants were asking me to grant a stay of execution of Saunders J’s order (albeit for a shorter period) even though an appellate judge had already decided against them on the same issue.

22.  It was argued by the appellants that these were applications for “interim orders” under s.35(1) HCO which Rogers V-P himself could have made.  However there was no evidence to explain why the parties did not ask Rogers V-P himself for these “interim stays” at the time - even though they had done that when applying to Saunders J for a stay (see para. 8 above).  Instead in Blinco BVI and Patagonia’s case, they waited nearly a month before applying for “interim stays” and in the case of the other appellants, for more than a week.  In any event, given the firm conclusions which the Vice-President gave in his reasoned decision, it is clear to me that he would not have granted interim stays to the appellants.

Order

23.  For these reasons, I dismissed the summonses and ordered the appellants to pay the Plaintiff’s costs to be taxed if not agreed.