PAU KWOK MUI MUI alias KWOK MUI CHART alias KWOK MUI PAU CHART, the sole executrix of the estate of CHART TAK SHING alias TAK SHING CHART alias TAK SHING CHAK, deceased v. CHART WING HUEN MICHAEL

HCA 762/2018

[2019] HKCFI 3012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 762 OF 2018

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DECISION

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1.  This is an application by the defendant for a stay of execution pending appeal of the summary judgment given by Master K W Wong against the defendant on 25 February 2019.

2.  In the summary judgment, the master gave judgment against the defendant and he was ordered:

(1)  to deliver vacant possession of the property at the Third Floor, No 132 Blue Pool Road, Green Lane Court, 130-140 Blue Pool Road (“the Property”); and

(2)  pay to the plaintiff mesne profits of HK$3,675,603 and that those mesne profits should continue to accrue at a rate of HK$61,100 per month from 26 February 2019 until the delivery of vacant possession.

3.  The defendant filed his notice of appeal on 11 March 2019 and vacant possession was delivered in March 2019, but the mesne profits remain unpaid.

A. BACKGROUND

4.  The plaintiff is the defendant’s mother and also the executrix of the defendant’s father’s estate, which includes the Property which used to be the family home.  The plaintiff, the defendant’s father, and their two children (the defendant and his sister, Grace) lived in the Property for many years until around 1987 when the plaintiff and the defendant’s father emigrated to Canada.  The defendant and his sister, Grace remained in Hong Kong and continued to live at the Property.

5.  In 1996, Grace emigrated to the United States of America, but the defendant remained in Hong Kong and continued to live at the Property.  Whenever the plaintiff returned to Hong Kong from Canada, she stayed at the Property.

6.  According to the plaintiff, in 2009 the defendant stopped living in the Property, although he has kept his possessions there since. 

7.  On 13 November 2013, the defendant’s father died and the plaintiff became the executrix of his will.  In March 2014, the plaintiff, then aged 84, returned to Hong Kong permanently.  The defendant asked her to live in the Property, but she declined to do so because there was no lift.  As a result, she took alternative accommodation.

8.  Relations between the plaintiff and the defendant have deteriorated, and in 2017, the plaintiff gave the defendant notice to quit the Property.  That notice ultimately led to the summary judgment of the master, and in March 2019, following the summary judgment, the defendant gave vacant possession of the Property, although without prejudice to his right of appeal. 

9.  The plaintiff has sought to enforce the monetary element of the summary judgment by taking out various garnishee orders nisi and that has prompted the defendant to seek a stay of the monetary judgment contained within the summary judgment.  The appeal against the order of the master is due to be heard on 18 December 2019 with three hours reserved.

B. THE PRINCIPLES

10.  The principles against which an application for a stay is to be assessed are well settled.  They are most conveniently set out in the often quoted decision of Ma J in Star Play Development Limited v Bess Fashion Management Company Limited [2007] 5 HKC 84 at paragraphs 8 to 10. Both parties rely upon that judgment and it is so well known that I do not believe it is necessary for me to set it out in this decision.  Essentially, the defendant must show good reason why there should be a stay. 

11.  The only issue of possible contention is that the defendant contends that the stay application should be decided on the basis of the balance of prejudice.  For this proposition, he relies on paragraphs 8 and 10 of Star Play where Ma J referred to the court conducting a balancing exercise.  I do not accept that this balancing exercise is one of purely balancing the question of prejudice.  What the judge is there referring to is an overall balance of all the circumstances having regard to all relevant matters.  It is not a pure balance of prejudice.

12.  The defendant relies upon two matters to justify the stay he seeks: the strength of his appeal and what he describes as the balance of prejudice. 

13.  The defendant sets out his grounds of appeal and contends that they are very strong.  In this context, he highlights that the appeal is an appeal against the master’s decision, it is therefore a hearing de novo and the judge will treat the matter as though it came before him for the first time.  Given that the hearing of the appeal is therefore effectively a hearing for summary judgment, the defendant contends that all he needs to demonstrate is an arguable defence on the merits.  He does not need to show that his defence is any more than that.  If he succeeds in demonstrating that his defence is arguable, then he will succeed on appeal and the summary judgment will be set aside.  Hence, he says that if I am of the view that the defence is arguable, he will almost certain win the appeal.  It seems to me that the defendant is correct in this approach.

14.  Consequently, strictly, in my assessment of the merits of the proposed appeal, what I must make in an assessment of the merits of the defendant demonstrating that he has an arguable defence to the claim.  I should not look at the merits of that defence itself. 

15.  The defendant runs essentially six arguments which he says give him a good defence to the action:

(1)  He has a proprietary interest in the Property as a result of his detrimental reliance on the alleged promise of his father and the plaintiff that he would have a proprietary interest in the Property.  He describes this as the constructive trust defence.  In this context he goes on to contend that his father was a man of traditional values and believed that males ought to have a higher priority over females in matters including property inheritance.  Grace has lived in the United States since 1996 and hence it is his case that his father, and apparently also his mother, promised that the Property would become his.

(2)  In any event the promises which were made to him give rise to a proprietary estoppel, which prevents the estate from denying the rights or benefits that he was promised.

(3)  Because the defendant is a child of the plaintiff and her husband was his father, that gives rise to a defence against eviction because the duty of a parent towards his or her child cannot be abrogated and yet it would be abrogated if the child was evicted from what used to be the family home.

(4)  The defendant had a licence to stay at the Property until at least the expiry of the notice to quit in November or December of 2017.

(5)  The plaintiff has acquiesced in the defendant using the Property and hence is estopped from claiming mesne profits against the defendant.

(6)  The quantum of the mesne profits claimed is erroneous and grossly overstated, and in terms of the evidence was based upon false assumptions made by the valuer.

16.  The plaintiff, on the other hand, has spent considerable amount of her 45-page skeleton argument seeking to articulate why these defences are hopeless.  Essentially, the plaintiff is seeking to argue the appeal before me.  In my view, that is not appropriate or necessary and I do not intend to make a detailed assessment of the merit of the various propositions.

17.  Looking at the matter in the round and with a possible exception of the defence to eviction premised upon the relationship of parent and child, I am prepared to accept that the defendant has a reasonable argument that he ought to have been given leave to defend the action.

18.  Therefore, I shall take as my starting point when assessing the stay application that the appeal is arguable.  I do not put it any higher, despite being urged by the defendant to hold that the appeal is strongly arguable.

C.THE BALANCE OF PREJUDICE

19.  The defendant says that if no stay is granted the prejudice that will be caused to the defendant is substantial.  Paragraph 39 of the defendant’s skeleton argument is in the following terms:

“ If no stay is granted, the potential prejudice that would cause to the defendant is substantial. In particular, as noted above, the plaintiff has already started making applications for garnishee orders with respect of the defendant’s bank accounts. Cash is a highly liquid asset and can be easily wired out of jurisdiction. The defendant would suffer irreparable prejudice if there is no stay of execution but the defendant eventually prevails the appeal.”

20.  I cannot understand the prejudice which is alleged in that paragraph.  There is an assertion of prejudice, but other than the possible hint that the plaintiff would move money out of the jurisdiction, which is not a suggestion which has any substantive evidence to support it, there is no prejudice alleged.

21.  In any event, the plaintiff is suing as the executrix of the estate of her husband and there is no dispute that the estate is the owner of the Property.  I have no doubt that the Property is worth significantly more than the amount which the defendant is required to pay under the judgment, and therefore I do not see any risk of real prejudice even if the money were to be transferred out of the jurisdiction.

22.  Further, the plaintiff has offered to pay the amount of the judgment into court.  The plaintiff’s counsel, Mr Chan, who has repeated that and given to the court an undertaking that in the event that the judgment is paid, it will in fact be paid into court.  That will clearly ameliorate, if not eradicate, any prejudice of the nature which the defendant seems to contend he will suffer.

23.  The only other possible prejudice which I think may be relied upon is the existence of enforcement steps being taken.  I cannot see how that is prejudice caused by the payment of the judgment sum.  If the judgment sum is paid, then there will be no other enforcement steps to be taken.

24.  However, the defendant relies upon the garnishee orders so as to demonstrate the money is frozen.  Hence, the defendant says that the amount is secured.  However, the defendant is unable to tell the court how much is secured.  The plaintiff suggests that it is at most approximately HK$2 million and hence the sum is not fully secured.

25.  The defendant seeks various ways to reduce the relevant amount by looking at the dates from which the mesne profits are payable.  I do not think that this is a permissible approach.  Judgment has been given for the full amount.  As a result, I do not think this is something which assists the defendant.

26.  Consequently, I am not satisfied that the defendant has established any prejudice at all in the event that he was required to pay the judgment sum.

27.  On the other hand, the defendant relies upon the offer made by the plaintiff to pay the judgment sum into court to demonstrate that she would suffer no prejudice if the money were not paid by him.  He contends that because she has offered to pay it into court, she clearly does not need it and she will not take any benefit from it.  Therefore, he says, there will be no prejudice if it is not paid.  I do not understand this point.

28.  First of all, she is sitting as an executrix and not on her own behalf and so no question of whether she does or does not need the money arises.  Secondly, there is clearly prejudice if money remains in the defendant’s hands rather than in court.  If it is in court, the money is safe and the plaintiff will know that she can at any stage thereafter, subject only to the permission of the court, remove the money.  If the money remains with the defendant she will only be able to recover it through the taking of enforcement steps.

29.  The defendant also relies upon the short period of time between now and the appeal being heard in December 2019.  That is not, in my view, strictly relevant.  However, whatever the position is to that, the amount is secured by the undertaking which the plaintiff has given, and which I accept, to pay the money into court.

30.  The plaintiff contends that there is no good reason for a stay.  She relies upon the presumption that judgment should be paid and states that in the context of a money judgment, the court will require evidence as to why the levying of execution will result in the appeal being rendered nugatory.

31.  She contends, correctly as it happens, that the defendant has not adduced any evidence as to why the payment of the judgment sum will render the appeal nugatory.  He has adduced no evidence that the plaintiff will be unable to repay in the event of a successful appeal.  I agree with the plaintiff that the defendant has failed in this respect and that is another reason why a stay should not be granted.

32.  She also says that the defendant has not adduced any evidence to support the contention that the payment of the sum will cause him serious financial consequences.  Again, the plaintiff is correct in that proposition.

33.  In all the circumstances, despite there being an arguable appeal, which the plaintiff says is not the case, there remains no good reason for granting a stay.  There is, in reality, nothing other than the existence of an arguable appeal and that is not enough to justify the stay.

34.  I have already indicated my views on some of the points which have been made.  However, I decline to grant a stay for the following reasons.  I accept there are reasonable prospects of the appeal being successful, therefore it is arguable, but I am not prepared to go further and say that it is inevitably going to succeed.

35.  Secondly, I am not satisfied that the defendant has shown any prejudice.  In this context it is not, as the defendant seeks to suggest, simply a question of balancing the prejudice.  The starting point is that a successful judgment creditor is entitled to the fruits of his success irrespective of an appeal.  The defendant has to show something more beyond a merely arguable appeal, the defendant has failed to demonstrate anything more.

36.  The defendant has adduced no evidence that the appeal will be rendered nugatory by the payment of the money judgment.  The defendant has adduced no substantial evidence that he will face financial ruin or indeed any form of significant financial hardship by payment of the money judgment.  The only aspect of his evidence that goes to this point is a single sentence in his reply affirmation which states:

“ On the other hand, if no stay of execution of the judgment is granted, it is likely that I will end up in financial ruin.”

This is wholly inadequate evidence for the purposes of obtaining a stay.

37.  In addition, it is clear to me that the defendant has significantly delayed the taking out of an application for a stay.  The summary judgment order was dated 25 February 2019 and the appeal was launched on 11 March 2019.  Yet, the stay application was not taken out until 12 July 2019.  That is a significant delay in the context of seeking a stay of a judgment, and in the defendant’s affirmation in support of the stay, he offers no explanation for it.

38.  In his reply affirmation, he contends that the delay is caused or contributed by the plaintiff herself in failing to take steps for enforcement.  This is not a justification for delay in taking out a stay application.  If a person is the subject of a judgment, the obligation upon him is to pay the judgment, or if he wishes to take out a stay application, then he must do so quickly.  He is not entitled to sit back and do nothing and then blame delay upon a failure to seek enforcement.

39.  In all the circumstances, I refuse the stay which is sought.  I say nothing about what should happen to the money which will be paid into court in the event that the defendant pays the judgment sum, and the appeal is successful.  That will have to be resolved on another occasion.

40.  In terms of costs, the defendant suggests there should be no order for costs or that the plaintiff’s costs should be in the cause.  He produced to the court a letter dated 16 October 2019, which is without prejudice save as to costs, in which the defendant proposed effectively that the matter should be resolved by a stay of execution, together with the amounts sitting in the HSBC, Standard Chartered and Citibank bank accounts which are now subject to the garnishee orders being paid into court.  I am told that that amounts to approximately HK$700,000.

41.  In addition, he says that the plaintiff’s undertaking to pay any amounts that she receives into court was only given after the summons for an application for a stay was issued.

42.  The plaintiff, on the other hand, has shown me a letter dated 11 October 2019 in which the plaintiff suggests that the amounts which are the subject of the garnishees should stay effectively frozen by the garnishees and the defendant should pay an additional sum of HK$1,866,000, which is the balance of the judgment sum into court as a result of which the stay application today would be adjourned.

43.  The plaintiff suggests that she has done better than that today.  I am told by Mr Chan that the same offer was made at the callover hearing back in July 2019, therefore Mr Chan asks for costs on an indemnity basis from July 2019 until today, or alternatively at least from 11 October 2019.

44.  Dealing with the defendant’s points first.  I do not think that the plaintiff’s offer to pay money into court being given after the summons for a stay application was taken out is of any particular relevance in the context of costs.  In any event, the stay application was taken out in July 2019 and it is now October 2019, and yet this matter has not settled. Therefore, I discount that as a reason to vary whatever other costs order I might make.

45.  Insofar as the letter of 16 October 2019 is concerned, I do not think that assists or protects the defendant in any way from an order as to costs because the defendant has not done better in any sense than the position that was offered in his letter.  Therefore, I discount that as a reason to vary any costs order that I would normally make.

46.  Insofar as the letter of 11 October 2019 is concerned, the defendant says that the plaintiff has not done better (by which I mean achieved a better result) than that which was offered on 11 October 2019.  I do not agree.  In my view, the plaintiff has done better because the stay application has been dismissed.

47.  I am not prepared to effectively backdate the effect of any without prejudice save as to costs letter contained in the 11 October 2019 because of what I am told was said to the court on the callover hearing.  If the plaintiff wished to protect her position on costs it was always open to her to do so by writing adequate correspondence in order to protect it.  I do not believe that comments made in court in a different context are adequate for that purpose.  It is always appropriate to confirm the position in correspondence.

48.  Therefore, the only date which it could be said as far as I can see that the plaintiff has achieved more is 11 October 2019. In my view, the defendant must pay the costs of this stay application to the plaintiff to be taxed if not agreed on a standard basis up until 11 October 2019.  Any costs incurred after that date are to be paid on an indemnity basis.