WELLFIT INVESTMENTS LTD v. POLY COMMENCE LTD

1990 No. A8737

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. I grant a stay of execution until the hearing of the confirmor's appeal on that part of my judgment of 8th January by which I ordered specific performance of the agreement for the sale of the flat. There are four reasons why I have decided to grant a stay:

(i) Wellfit does not oppose such a stay, provided that there is no stay on the order for the payment of damages, interest and costs.

(ii) It is not going to be all that long before the appeal is heard. It is fixed for hearing in less than 4 months time on 5th November.

(iii) If the flat was to be assigned to Wellfit before the appeal is heard, Mr. Cheung and his family would have to move out of the flat. If the appeal is eventually allowed, that disruption to their lives should never have occurred.

(iv) If the flat is sold in the meantime by Wellfit, then it will not be possible to put the confirmor back in the position in which it would have been entitled to have been if the appeal is allowed.

I appreciate that a stay of execution on the order for specific performance prevents Wellfit from dealing with the flat as it chooses, but that is what the damages are there to compensate Wellfit for.

2. I turn to whether there should be a stay of execution on the order which I made for the payment of damages, interest and costs. The total amount of damages, interest and costs is not yet known. I propose to take the sum of $5.25m. as the best estimate, which is, broadly speaking, half-way between Wellfit's estimate and the confirmor's estimate. On the face of it, a stay of execution is not appropriate. The confirmor can be protected from the possibility of Wellfit spending the money before the appeal is heard, thereby preventing the confirmor from recovering it if the appeal is allowed. That protection can be afforded in a number of ways, the most appropriate, in my view, being an undertaking from Wellfit's solicitors (which Mr. Denis Chang Q.C. for Wellfit told me the solicitors are prepared to give) that the money once paid will be held by them in an interest-bearing account as stakeholders.

3. Accordingly, the only ground for staying execution on the part of the order which I made relating to the payment of damages, interest and costs is that not even Wellfit can assert that the confirmor will be obliged to pay the whole of the damages, interest and costs. If the appeal is allowed, the confirmor obviously will not have to pay anything. If the appeal is dismissed, the confirmor will have to pay damages, interest and costs, but less the $4.27m. which is the balance of the sum payable by Wellfit when the property is assigned to it.

4. The problem is that if the $4.27m. is paid to the confirmor before the total amount of the damages, interest and costs is paid to Wellfit, and if the $4.27m. or part of it is used to pay off the debt which is admitted is owed by the confirmor to Mr. Cheung, there might be nothing left in the confirmor's kitty to discharge its liability for damages, interest and costs to Wellfit. I accept that Wellfit needs to be protected against that. Various suggestions have been made to me as to the best way in which that protection for Wellfit could be achieved, but Mr. Chang needs time to consider what is the most appropriate way, and whether the particular suggestion which Miss Maria Yuen for the confirmor makes is indeed appropriate. Having decided the issue of principle which divides the parties, the course I propose to take is to adjourn the question as to the extent to which there should be a stay of execution on the order for the payment of damages, interest and costs pending the hearing of the appeal so as to enable the parties to agree terms. I give the parties liberty to restore the summons in the event of them being unable to do so.