PAK FAH YEOW INVESTMENT (HONG KONG) CO LTD v. PROPER INVEST GROUP LTD

HCA 2589 / 2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2589 OF 2007

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DECISION

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I.   Introduction

1.  On 12 September 2008, I handed down written judgment (‘the previous judgment”) granting in favour of the Plaintiff’s application for summary judgment, and dismissing the Defendant’s application to strike out the Plaintiff’s claim.  I also answered the Defendant’s two O14A questions in the negative.  

2.  Granting the reliefs sought by the Plaintiff, I ordered (a) that the Defendant was not entitled to rename the Building as “Silver Base Centre銀基中心”, (b) that the Defendant be compelled to obliterate the Inscriptions and remove the Plaque at its own costs and expenses, and (c) the Defendant to withdraw the 1^st and 2^nd Notices of Change.

3.  This is the Defendant’s application for a stay of execution of the above Order pending the determination of its appeal against it to the Court of the Appeal, which was lodged on 25 September 2008.

4.  The Plaintiff opposes this stay application.

5.  This decision should be read in conjunction with earlier judgment. I shall also adopt in this decision the abbreviations used in the earlier judgment.

II.  Applicable principles

6.  Both parties agree that the principles governing an application for stay pending appeal are those set out by Ma J (as he then was) in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at 87D-90A, paras 6-10.  They can be summarized as follows:

(1) The burden is on the appellant to justify a stay of execution by showing that there are good reasons for stay.

(2) The existence of a strong ground of appeal or strong likelihood of success on appeal is by itself a good reason for stay.  But in the majority of cases, it is undesirable and unnecessary to go deeply into the merits and strength of an appeal.

(3) If an appellant only has an arguable appeal, he will have to provide additional reasons as to why a stay is justified.

(4) A commonly recognized good reason is that an appeal will be rendered nugatory if no stay is granted.  To determine that question, the court may have regard to the nature of the order being appealed against.

(5) An appeal being rendered nugatory does not mean in all cases that without a stay, the appellant will face financial ruin or the loss of all his property.  Demonstrating that the failure to grant a stay will have a serious deleterious effect on the appellant is sometimes sufficient.

(6) However, in considering whether to exercise to grant a stay, the Court must also not forget the position of the successful party, and it is always relevant to consider the prejudice would be caused to the successful party in the event a stay is granted.  Thus, a fortori the court must consider any contention that the appeal would be rendered nugatory to the successful party (in the event the appeal is dismissed) should a stay of execution be imposed.

(7) Ultimately, the court embarks on a balancing exercise and uses its common sense, with the starting point that the successful party is not to be deprived of the fruits of his success.

III.    The present stay application

Grounds in support of the stay

7.  In summary, Mr Chong, counsel for the Defendant, submits that a stay pending the appeal should be granted for the following reasons:

(1) The Defendant has an arguable appeal before the Court of Appeal, and a strong ground of appeal when the matter is taken to the Court of Final Appeal.

(2) On balance, the scale tilts in favour of granting a stay as there would be inconvenience caused to the Defendant and other third parties if without a stay.

Discussion

Merits of the appeal

8.  As a start, I do not accept that for the present purpose, I should consider and speculate on the merit of a potential appeal to the Court of Final Appeal.  What I have before me is an appeal to the Court of Appeal, and I should only be concerned with its merits (subject to the observations of Ma J set out in Star Play).  There is simply no basis for me to even start to consider what merits the Defendant may have if an appeal is to be made to the Court of Final Appeal.  Least to say, one does not know what are the reasons the Court of Appeal is to rely on if it is to dismiss the appeal.   Further, it would be for the Court of Appeal (or the Court of Final Appeal) to assess the merits of any appeal from the Court of Appeal’s decision.

9.  Regarding the merits of the appeal to the Court of Appeal, it is the Defendant’s own submissions that it has an arguable appeal before the Court of Appeal.    I am prepared to proceed to deal with this application on that basis.

10.  With an arguable appeal, the Defendant must show to me that there are other good grounds why a stay of execution should be granted.

Other good grounds to support a stay

11.  The Defendant does not contend, I believe rightly so, that without a stay, the appeal would be rendered nugatory or that it would suffer a deleterious effect or a financial ruin. 

12.  Mr Chong says the Order is in the nature of a mandatory injunction and that should per se support the grant of a stay. 

13.  In my view, that is not entirely correct. There is no suggestion that the Order even if carried out is not reversible if the Defendant succeeds in its appeal. 

14.  Mr Chong further submits that if the Order is enforced and the Defendant succeeds in the appeal, the name of the Building would have to be changed three times (the first time being the one made by the Defendant which has led to the dispute), which would cause the Defendant and the other owners (who have voted in favour of the Defendant’s change of name) greater inconvenience, than to any inconvenience caused to the Plaintiff if there is a stay.  The inconvenience suggested includes matters such as confusion of the name of the Building to be caused to the tenants, other owners and the public. As such, in the balancing exercise, the Court should act in favour of granting a stay.

15.  I do not accept that this constitutes a good ground to stay the Order pending the appeal.

16.  The starting position is that the successful party should not be lightly deprived of its fruits of success.   

17.  In my view, the mere fact that without a stay may have caused more inconvenience to the losing party, the Defendant in the present case, does not constitute a weighty factor to “tip” (to use Mr Chong’s word) the balancing exercise in favour of granting a stay.  In the present case, I have concluded that the Defendant’s change of the name of the Building was carried out in breach of the DMC and is invalid.

18.  In relation to the suggestion that there would also be inconvenience caused to third parties (that is, the other owners of the building and the public) if without a stay, there is no evidence from any of these owners to suggest the same.  This is but only the Defendant’s own assertion of the position of the other owners.  Mr Chong says one must apply some common sense here.  Even so, however, there is certainly nothing in the evidence to suggest the degree of such inconvenience to be caused to these other third parties, which is a matter relevant to the exercise of the discretion.

19.  In any event, even if there might have been inconvenience to be caused to the third parties as suggested by the Defendant, for the same reasons I mentioned above regarding the position of the Defendant, I do not accept that this should tip the balance of my exercise of discretion in favour of granting a stay.

IV.    Conclusion

20.  For these reasons, I refuse the Defendant’s application for stay of execution of my Order dated 12 September 2008, pending the determination of an appeal therefrom by the Court of Appeal.

21.  Costs of this application be to the Plaintiff to be taxed if not agreed.