CHUNG PUI TONG v. QIAN ZHEN

CACV 68/2020

[2021] HKCA 1733

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 68 OF 2020

(ON APPEAL FROM HCA NO 2555 OF 2014)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the plaintiff’s application for stay of execution of the judgment of Mimmie Chan J pending his appeal. The application is made directly to the Court of Appeal without first applying to the judge. It is contended by the plaintiff that there are special circumstances to justify a direct application to the Court of Appeal. Having considered the papers, we think it is appropriate to determine this application without a hearing.

Background

2.  The plaintiff and the defendant are a divorced couple.  The plaintiff brought this action seeking declarations that the defendant held on trust for him these assets: (1)  a sum of $2.7 million odd (“the Sum”); (2)  her interest as a co-owner with him of a property known as Flat F, 9^th Floor, Nam Tin Building, No 275 King’s Road, Hong Kong (“9F”); and (3)  a property known as 4^th Floor, Nos 27A and 29A Cheung Sha Wan Road, Kowloon (“CSW”).

3.  On 16 January 2020, the judge handed down her judgment (“the Judgment”)  and granted these declarations: (1)  the defendant is the sole legal and beneficial owner of the Sum; (2)  the plaintiff and the defendant are the legal and beneficial owners of 9F; (3)  the defendant is the sole legal and beneficial owner of CSW.  The judge rejected the plaintiff’s case that the assignments of 9F and CSW to the defendant were vitiated by the defendant’s undue influence or total failure of consideration. The judge was aware that CSW was the plaintiff’s residence.  Hence, she ordered there be delivery up of vacant possession of CSW to the defendant within six months of the sealing of the orders in the Judgment.  There were also orders for payment of mesne profits of the plaintiff’s occupation of CSW from the date of service of the counterclaim and payment of half of the rental payments received from 9F.

4.  On 12 February 2020, the plaintiff served on the defendant a notice of appeal against the Judgment.  Due to the closure of the Appeal Registry during this period, the notice of appeal was filed on 17 March 2020.

5.  A sealed copy of the order for the Judgment was served on the plaintiff’s solicitors on 16 March 2020.

6.  From April to September 2020, the defendant’s solicitors wrote to the plaintiff’s solicitors demanding compliance with the Judgment and informing the latter that enforcement action would be taken.  A demand was made in September that the plaintiff should proceed with the appeal and apply to fix a hearing date.  The response of the plaintiff’s solicitors was that they wished to apply for the transcript of the trial so that counsel could advise the plaintiff and prepare for the appeal.

7.  The plaintiff deposed in his 4^th affirmation that the defendant took no enforcement action from 11 September 2020 to 30 March 2021.  We will come back to the reason the plaintiff said why he did not apply for stay of execution of the Judgment during that six-month period.

8.  On 30 March 2021, a writ of possession of CSW was issued and sealed.  By a letter dated 13 April 2021, the defendant’s solicitors again demanded compliance with the Judgment and warned the plaintiff of possible committal proceedings.  The plaintiff’s solicitors replied by letter dated 21 April 2021 refusing to comply, stating that the Judgment is under appeal, that the notice of appeal was registered against CSW in the Land Office, that it is likely the Judgment will be set aside on appeal in light of the “strong grounds of appeal”, and that the plaintiff “ought not be held liable” in any committal proceedings.  Even at that point, no application for stay of the Judgment was taken out.

9.  On 29 April 2021, the court’s bailiff issued a notice to occupier to quit, stating that possession of CSW was to be delivered to the defendant before 6 May 2021 and that any occupier who claimed a right to remain on the premises should make an application to the Court of First Instance without delay.  This elicited a response from the plaintiff’s solicitors to the bailiff by letter dated 3 May 2021, stating that a notice of appeal was filed against the Judgment, that they “just received instructions” to apply for stay of execution and they expect to issue the application with a supporting affirmation by 13 May 2021.

10.  On 12 May 2021, the plaintiff filed a supplemental notice of appeal.

11.  On 13 May 2021, the present summons for stay of execution was issued in the Court of Appeal (“the Summons”), invoking Order 59 rule 13[1]. The plaintiff’s solicitor deposed that before the Summons was issued, his firm had made enquiries with the clerk to the judge to ascertain whether she would be available to hear the stay application and was informed by her clerk that the judge was not available “for the whole week” due to other court hearings and proposed that the plaintiff should apply to the duty judge.  The plaintiff’s solicitor thought it appropriate to apply to the Court of Appeal instead, because the duty judge would be completely new to the case and the losing party in the Court of First Instance would make a further application to the Court of Appeal in any event.

12.  On 18 May 2021, the bailiff issued a final notice to occupier to quit stating that possession of CSW should be delivered to the defendant before 25 May 2021.

13.  The plaintiff’s solicitors wrote to the Registrar of Civil Appeals on 21 May 2021 seeking an urgent interim stay on or before 25 May 2021.  The Registrar made a direction to both parties on the same day stating that the directions in PD 4.1 relating to urgent interlocutory applications should be followed, in particular, there should be a certificate of urgency signed by counsel setting out the grounds for urgency with a core bundle containing all the essential documents and the certificate “must also account for any time lapse between the decision or judgment of the court below and the making of the application”.

14.  By a letter dated 24 May 2021, the defendant’s solicitors requested the plaintiff’s solicitors to provide a copy of the certificate of urgency and the skeleton submissions of counsel as soon as practicable.

15.  On 24 May 2021, the plaintiff’s solicitors provided to the Registrar a certificate of urgency.  It was signed by the solicitors not by counsel as required by PD 4.1 para 24.

16.  The Registrar wrote to the parties on 24 May 2021 pointing out the deficiency of the certificate and stating that the application for interim stay of execution would not be referred to the Court of Appeal for consideration having regard to Order 59 rule 14(4)[2] as the stay application should first be made to the court below, and if the judge below was not available, the plaintiff’s solicitors should consider an application to the duty judge.

17.  On 27 and 28 May 2021, the plaintiff’s solicitors wrote to the clerk to the Chief Judge seeking indulgence and reconsideration by the Chief Judge of the application for interim stay, notwithstanding the persistent failure to procure a certificate of urgency signed by counsel.  It was stated that the bailiff had attended CSW on 25 May 2021 and evicted the plaintiff from the premises.

18.  The papers were placed before Kwan VP, who made a direction on 31 May 2021 that the plaintiff should comply with the Registrar’s directions on 24 May 2021.

19.  In light of Kwan VP’s direction on 31 May 2021, the Registrar made a direction on 8 June 2021 that the plaintiff’s solicitors should inform the court on or before 21 June 2021 whether they have complied with the directions of Kwan VP by making an application to the court below for an interim stay of execution and, if so, how they would like to dispose of the Summons lodged with the Appeal Registry on 13 May 2021.  The Registrar also noted that the plaintiff has failed to proceed with his appeal after the notice of appeal was filed on 17 March 2020 and stated that he should proceed without further delay, otherwise the matter may be referred to the Court of Appeal for dismissal for want of prosecution.  The Registrar gave directions for the preparation of the draft bundles of appeal on or before 5 July 2021 with an application to fix a date for the hearing of the appeal.

20.  The plaintiff’s solicitors responded by letter dated 18 June 2021 stating that “the court below” mentioned in Order 59 rule 14(4)  should mean the judge who made the decision in respect of which the stay of execution is sought, and the Registrar’s proposal to apply to the duty judge (and Kwan VP’s direction to comply with the Registrar’s directions of 24 May 2021)  is “not in line” with the authorities, citing SNE Engineering Co Ltd v Chim Kee Machinery Co Ltd, CACV 101/2016, 15 July 2016.  The plaintiff’s solicitors maintained that they have instructions to proceed with the Summons for the general and interim stay of the orders in the Judgment and have prepared an affirmation to support the assertion of “special circumstances” referred to in Order 59 rule 14(4). In respect of the directions for preparation of draft bundles of appeal, they stated that they would not be in a position to do so before October 2021 as they needed to obtain the transcript (which they said in September 2020 that they would do so)  and to seek counsel’s advice thereon.

21.  On 5 July 2021, the Registrar gave directions noting that despite Kwan VP’s direction of 31 May 2021, the plaintiff’s solicitors insisted on proceeding with the Summons before the Court of Appeal instead of first making an application in the court below.  In the circumstances, the Registrar gave directions for the parties to comply with the automatic directions in PD 4.1 para 36 for interlocutory applications without delay, and granted retrospective leave to the plaintiff for filing two affirmations for the Summons on 22 June 2021 without leave.

22.  Further evidence in opposition and in reply for the Summons was filed by the parties on 19 July and 13 August 2021, pursuant to the Registrar’s directions.  Skeleton submissions were lodged by the parties in August and September 2021 for the Summons.

23.  The Registrar extended time to lodge the draft appeal bundles to 10 September 2021.  On 29 September 2021, the Registrar again extended time to do so to 1 November 2021, failing which the matter will be referred to the Court of Appeal to consider an unless order.

24.  Before dealing with the merits of the Summons, we note in the reply skeleton submission of the plaintiff’s solicitors that they contended the reason why the plaintiff was evicted on 25 May 2021 “was due to the initial unwillingness of the Court of Appeal to hear [the plaintiff’s] urgent interim stay application on 24 May 2021 by directing [the plaintiff’s] solicitors to make the application to the duty judge below”, that “[the plaintiff] suffered real prejudice by the said direction, which was subsequently rectified and [the plaintiff] was allowed to proceed later.”  The solicitors submitted that the Summons should “preferably be heard by another division of [justices of appeal] to avoid any further prejudice” and named two justices of appeal they consider appropriate to hear the Summons.

25.  If the above is meant to be a request or application that Kwan VP should recuse and not hear the Summons, this is refused. The mere fact that a judge has made directions perceived to be adverse to the interest of a party is not a valid ground for recusal, and for a solicitor to suggest his client’s preference which judge or judges should hear an application is wholly inappropriate.

Analysis and disposition

26.  It is apparent from the background which has been set out in some detail that there has been inordinate delay of the plaintiff in seeking a stay of execution pending appeal, exacerbated by a litany of errors on the part of his solicitors.

27.  An application for stay of execution of a judgment should be made within a reasonable time of the handing down of the judgment.  It is clearly provided in Order 59 rule 13(1)  that an appeal shall not operate as a stay of execution.  The judge has already given a grace period of six months from the sealing of the order for the delivery of possession. There is a gap of some 14 months after the order was sealed before an application for stay was taken out.

28.  The plaintiff’s explanation that no summons for stay of execution was taken out is one of impecuniosity.  He claimed that he had no job for 18 months until March 2021 and could not afford legal fees to make such an application.  Even though he found a job in March 2021, he still had to borrow further sums to pay for the legal fees for this application. Also, the defendant did not take enforcement action until a writ of possession was issued on 30 March 2021.  Further, he had negotiations for settlement with the defendant in May 2021 on the terms that he might continue to stay in CSW and he needed time to consider the defendant’s proposal.

29.  The above reasons do not justify the inordinate delay in seeking a stay of execution.  The plaintiff’s financial situation has always been tight, according to his testimony at the trial.  He had engaged counsel who prepared a notice of appeal which was served on the defendant in February 2020.  He is a well-educated person, having obtained a bachelor’s degree and a postgraduate diploma in economics from the University of London, and a postgraduate diploma in education from the University of Hong Kong, and he had taught English in secondary schools until 2002.  It should not be beyond his capabilities to apply for a stay even if he could not afford to engage lawyers for this application.

30.  It appears to us that the urgency of the situation in May 2021 was self-inflicted.  In the certificate of urgency required under PD 4.1, counsel would need to “account for any time lapse between the decision or judgment of the court below and the making of the application”.  We do not see how the lapse of 14 months after the order was sealed could be satisfactorily accounted for.

31.  The plaintiff’s solicitors spoke of the “prejudice” being “subsequently rectified” and apparently thought that the plaintiff was allowed by the Registrar to pursue the stay application directly before the Court of Appeal without a decision from the judge on the stay application. They have misunderstood the position.  The Registrar had inquired with the plaintiff’s solicitors on 8 June 2021 whether they would comply with the directions of Kwan VP by applying to the court below for an interim stay of execution and, if so, how they would like to dispose of the Summons lodged with the Appeal Registry.  Upon receiving the reply from the plaintiff’s solicitors on 18 June insisting that they wish to proceed with the Summons in the Court of Appeal, the Registrar gave directions on 5 July for evidence and submissions to be filed for the Summons to be disposed of by the Court of Appeal, including the question whether the court should entertain the Summons in the first place.

32.  The provisions of Order 59 rule 14(4)  are clear. Although the Court of Appeal has concurrent jurisdiction with the court below to entertain a stay application, this jurisdiction is not to be exercised in the first instance by the appeal court, except where there are special circumstances which make it impossible or impracticable to apply to the court below.

33.  The fact that the trial judge was unavailable for a whole week to hear the stay application when the plaintiff’s solicitors made inquiries on or about 13 May 2021 did not make it impossible or impracticable to apply to the court below.  An oral hearing is not the only way to dispose of the summons.  In Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 350, Lam VP (as he then was)  suggested case management procedures for stay applications to be processed expeditiously (at §§24 to 27).  One of the methods is to deal with the application on paper, to facilitate the timely, proportionate and fair disposal of such an application.  As the trial judge would be familiar with the case and the arguments advanced, it is entirely feasible for the application to be dealt with on paper without an oral hearing by considering written submissions on both sides.  The plaintiff’s solicitors did not seek a disposal on paper by the trial judge.

34.  Even if an oral hearing before the judge is really necessary, and we do not think it is, as stated by Lam VP in Tsang Wing Kwai at §28, only a limited oral hearing would be required, as the stay application is not intended to be a second run for arguments which had already been fully canvassed at the earlier hearing and the grounds of appeal should have been clearly set out in the notice of appeal or draft notice of appeal.  Lam VP expressed the view at §34 it is unlikely that a 30 minute or one-hour hearing within a reasonable time frame for hearing a stay application cannot be found in a judge’s diary.  We respectfully agree. 

35.  There is no evidence that the plaintiff’s solicitors have made any further inquiries of the judge’s availability to hear the application after they were informed of her non-availability for the whole week on or about 13 May.  To the contrary, when the Registrar asked them on 8 June whether they would make an application to the judge, they simply insisted they would proceed in the Court of Appeal for “special circumstances”.

36.  In our judgment, no special circumstances are shown by the plaintiff to justify a direct application to the Court of Appeal for stay of execution without first applying to the judge.

37.  For the above reasons, we refuse to entertain the Summons for non-compliance with Order 59 rule 14(4).

38.  In any event, we would have exercised our discretion to dismiss the Summons even if we were minded to entertain it.  We have mentioned the unjustified inordinate delay.  The plaintiff has been evicted from CSW on 25 May 2021.  Furthermore, we are not satisfied the merits of the appeal are such that there is strong likelihood of success.  The plaintiff’s grounds of appeal in the notice of appeal and supplemental notice of appeal are prolix, seeking to challenge all the judge’s findings of fact and holdings in law regarding 9F and CSW.  We do not propose to set them out.  It is neither practical nor desirable for us to go deeply into the merits and strengths except to form a preliminary view.

39.  Our preliminary view is that at best, some of the grounds may indicate an arguable appeal, which is the minimum requirement for the court to consider a stay.  It is necessary for the plaintiff to provide additional reasons why a stay is justified.  We are not persuaded that the appeal would be rendered nugatory without a stay on the plaintiff’s assertion that the defendant would probably dispose of CSW before the appeal is determined.  The notice of appeal has been registered against this property in the Land Office.  And if the plaintiff had pursued the appeal with diligence, as the Registrar had impressed on him that is what he should do, he would not have to wait long for the appeal to be heard.

40.  For all the above reasons, we dismiss the Summons filed on 13 May 2021.  We make an order nisi that the plaintiff is to pay the defendant’s costs of this application.  We direct the defendant’s solicitors to lodge a statement of costs for summary assessment within 14 days hereof, with leave to the plaintiff to respond seven days thereafter.  There will be a gross sum assessment on paper.