MASTER YIELD LTD v. HO FOON YUNG ANESIS AND OTHERS

CACV 67/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 67 OF 2012

(ON APPEAL FROM HCA NO. 866 OF 2008)

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BETWEEN

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JUDGMENT

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

1.  The Appellant is the Plaintiff in HCA 866 of 2008 claiming against the Respondents/Defendants for misrepresentations. The case was tried before Deputy High Court Judge M Chan (as she then was) in December 2011 and February 2012. On 5 March 2012, the Judge dismissed the Plaintiff’s claims. She also ordered the Plaintiff to pay the costs of the Defendants.

2.  The Plaintiff lodged an appeal on 2 April 2012.  The appeal is due to be heard on 29 May 2013.

3.  On 10 May 2013, the Plaintiff issued a summons seeking a stay of execution pending the determination of the appeal.  However, the affirmation in support of that application was not filed until 20 May 2013. No explanation was given in the affirmation as to why the application for stay was not made earlier.  The affirmation simply referred to the appeal and asserted the belief that the Plaintiff had a strong appeal.  The deponent also asserted that the Defendants would not suffer any prejudice if a stay is granted as the Defendants could be compensated by interest on the costs order.  No information was given as to the financial position of the Plaintiff.

4.  It appears that the Defendants have applied for the taxation of their costs pursuant to the judgment and the Plaintiff wished to have taxation proceedings stayed.  However, the Plaintiff did not recite the progress of such proceedings in the supporting affirmation.  We were told by counsel this morning that the Plaintiff had been given an extension of time up to 17 June 2013 to file a list of objections.  It is clear that no allocator has been issued and, at the moment, the Plaintiff is not required to pay any sum of money to the Defendants on account of costs below.

5.  In the skeleton submissions of the Plaintiff of 20 May 2013 (which was not signed by counsel), it was said that the application for stay is made because the Plaintiff has strong grounds of appeal and no prejudice would be caused to the Defendants.

6.  The principles guiding the exercise of discretion as to the grant of stay pending appeal are set out in Star Play Development v Bess Fashion Management [2007] 5 HKC 84.  Whilst the strength of an appeal is a relevant consideration, it is important that the court should not allow an application for stay to become a test run of the substantive appeal, see MKKWH v RKSH CACV 197 of 2012, 27 Feb 2013.  In the present context, this is particularly important in view of the proximity in time of this application with the hearing of the substantive appeal and the listing of this application before two members of the court who will also hear the substantive appeal next week.  The court has to be vigilant to guard against litigant using an application for stay as a testing ground for arguments to be run in the substantive appeal.

7.  Bearing these in mind, we would not say more than necessary on the merits of the appeal in this judgment.  Having reviewed the judgment below and the grounds of appeal, including those set out in the supplementary notice of appeal, and the Respondent Notice, we do not think the appeal is of such strength that a stay should be granted without anything more.  We are of the view that this is a case falling within the category described by Ma J (as the Chief Justice then was) at para 9(8) of  Star Play Development v Bess Fashion Management, supra.,

“In most cases, the court will not be dealing with extreme situations I have referred to. Often, it will be faced with simply the existence of an arguable appeal. Here it becomes necessary for the appellant to provide additional reasons as to why a stay is justified. The demonstration of an appeal being rendered nugatory is one example, albeit a common one. Here, where it is demonstrated that an appeal would be rendered nugatory if a stay was not granted, the court may require no more than the existence of an arguable appeal. Correspondingly, where it cannot be shown that an appeal would be rendered nugatory if a stay were not granted, the court will require, in the absence of any other factors, the appellant to demonstrate strong grounds of appeal or a strong likelihood of success …”

8.  His Lordship then referred to the need to consider the position of the respondent at para 9(9).  Lastly, at para 10, the overall position was stated as follows,

“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 …”

9.  We have already said that we do not regard this appeal as having a strong likelihood of success.  Thus, we must examine whether the Appellant has demonstrated other factors which tilt in favour of granting a stay.

10.  The Appellant is not saying that without a stay the appeal would be rendered nugatory.  As mentioned, there is no question of the Appellant being required to pay any sum of money to the Respondents at this stage.  What it tries to prevent is the commencement of taxation proceedings.  Though we have not been told of the details, bearing in mind that the appeal will be heard next week, there is every possibility that the result of the appeal will be known before an allocator is to be issued.  Thus, what the Appellant tried to avoid is to incur the costs of the taxation proceedings at this stage.

11.  Since we have not been given the details of the taxation proceedings, we do not know how much costs is to be incurred between now and next week when the appeal will be heard. If the appeal is allowed after the hearing, the Appellant will be able to recover such costs from the Respondent, see Active Profit v Nissho Iwai Hong Kong Corp Ltd [2005] 3 HKC 499.  We have no reason to believe that the Respondents are not financially sound enough to meet such liability if it arises.

12.  Whilst it may be said that a stay would only cause some delay in the taxation proceedings, we do not think it can be said that such delay would not cause any prejudice to the Respondents.  We have not been given any information about the financial position of the Appellant and it is a limited company.

13.  In those circumstances, we do not find it appropriate to grant a stay in this appeal and the summons is dismissed with costs.