DAH SING BANK, LTD v. RICH STAR INVESTMENT DEVELOPMENT LTD AND OTHERS

HCMP 1893/2016

[2020] HKCFI 2649

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1893 OF 2016

____________

____________

____________

______________

D E C I S I O N

______________

Introduction

1.  Recorder Manzoni, SC gave judgment to the Plaintiff in a mortgagee action against the Defendants.  He gave money judgment against the 6 Defendants and ordered D2, D4 and D5 to deliver up vacant possession of mortgaged properties.  He gave liberty to the Plaintiff to sell the properties.  He dismissed the Defendants’ application to convert the originating summons into a writ action.

2.  This is the Defendant’s application for a stay of execution pending appeal.  The grounds for the stay are that:

(1)  Sale of the subject properties would be costly and it would be difficult in securing a buyer and/or reasonable prices;

(2)  The Defendants have begun to seek assistance and make necessary arrangements for repaying the debts owed by D1 to the Plaintiff; and

(3)  The appeal would be rendered nugatory if no stay is granted.

3.  The Plaintiff has filed evidence in opposition. The unchallenged evidence can be summarized as follows:

(1)  The Plaintiff has sought valuations of the properties and intends to engage estate agents and/or auctioneers to sell the properties; the costs of such sale or auctions do not vary significantly in different markets or economic conditions;

(2)  None of the Defendants have contacted the Plaintiff to discuss about repayment of the judgment debts;

(3)  Notice to quit has been served by the bailiff;

(4)  The properties appear to be used as “a party room”, a martial art centre/boxing studio and domestic premises respectively.  The Plaintiff is not aware of the Defendants being in such businesses; and

(5)  One occupier has offered to pay rent for occupying 5/F, 790 Cheung Sha Wan Road.

Legal principles

4.  The principles for ordering a stay have been summarised by the Court of Appeal in Bright Gold Ltd v Mega Well Development Ltd [2019] HKCA 1440, 13 December 2019:

“13.(a) The applicant must show an arguable ground of appeal (viz. one with reasonable prospect of success) before the discretion to grant stay is engaged, see Star Play para 9(6); Sy Chin Mong Stephen v Lo Shing Kin CACV 45/2013, 13 March 2013;

(b) Even if arguable grounds exist, there must be other circumstances justifying the deprivation of the successful party the fruit of the judgment. Sometimes, the applicant may do so by showing the existence of strong ground of appeal. Sometimes, the applicant may do so by showing that the appeal would be rendered nugatory if no stay is granted. In either case, the court must also have regard to the prejudice that could be suffered by the successful party if a stay is granted. In all cases where the discretion is engaged, ultimately it is a balancing process with common sense;

(c) In assessing the strength of the appeal for the purpose of a stay application, it is impracticable and undesirable to go deeply into the merits: see Star Play para 9(5).  A broad brush approach is called for.  …  Application for stay of execution should not be a dry run of the appeal, see Ming Hsieh v Xu Zhe [2018] HKCA 390, at para 9.”

Arguable grounds of appeal

5.  The notice of appeal stated that:

(i)  the learned Recorder disregarded the established principles governing applications made pursuant to Order 28, rule 8 of the Rules of the High Court for converting an originating summons into a writ action in view of the substantial factual and legal disputes in this case (“ground 1”); and

(ii)  the learned Recorder failed fully to comprehend the evidence adduced by the Defendants, which showed genuine and substantive disputes over 3 heads of claim and the Plaintiff’s wrongful allocations of funds available for repaying the debts of D1 and D2 (“ground 2”).

6.  Applying a broad brush approach, the Defendants have not demonstrated reasonable prospects of success, let alone strong grounds of appeal.

7.  In respect of ground 1, the learned Recorder has not overlooked the principles governing applications for converting an originating summons into a writ action.  He set out the correct approach (§10 of the judgment) and his reasons for rejecting the defences one by one (§§11-42 of the judgment).

8.  In respect of ground 2, the Defendants have not demonstrated how the learned Recorder has failed to comprehend the evidence.

9.  Since there is no reasonable prospect of success on appeal, the discretion to grant a stay is not engaged.

10.  If I am wrong, the Plaintiff’s evidence summarized in paragraph 3 above rebuts the Defendants’ case.  It appears that the properties have been let out or used by third parties.  It cannot be suggested that the Defendants’ business would be affected without a stay being granted.

11.  Further, the property market may fall if the market is as poor as the Defendants describe.  It cannot be suggested that there is no additional risk or prejudice to the Plaintiff as a result of a stay being granted.

12.  Still less could it be suggested that the appeal would be rendered nugatory without a stay being granted.  The Plaintiff is a bank.  There is no suggestion that if it loses in the appeal it is not willing to return the (unsold) properties or repay any judgment sum or costs to the Defendants.

13.  The Plaintiff should not be deprived of the fruits of the judgment, especially since the Defendants have not even made a proposal on how to repay the judgment debt in the near future.

Conclusion

14.  I therefore dismiss the application for stay.

15.  I make an order that the Defendants shall pay the costs of the Plaintiff, summarily assessed at HK$57,867.00.