THE JOINT & SEVERAL LIQUIDATORS OF KONG WAH HOLDINGS LTD v. THE GRANDE HOLDINGS LTD AND OTHERS

FAMV No. 17 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 17 OF 2006 (Civil)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV No. 306 of 2005)

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FAMV No. 18 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

 MISCELLANEOUS PROCEEDINGS NO. 18 OF 2006 (Civil)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV No. 307 of 2005)

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Between:

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 D E C I S I O N

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Mr Justice Ribeiro PJ:

1.  On 4 August 2005, upon the application of the Liquidators made in reliance on s 221 of the Companies Ordinance, Kwan J ordered the first four respondents named in the summons to supply certain documents and information to the Liquidators as specified in her Ladyship’s orders.

2.  The respondents lodged an appeal to the Court of Appeal and, pending that appeal, Kwan J granted a stay of execution.

3.  On 26 April 2006, the appeal was dismissed subject to a variation in relation to the scope of Kwan J’s order.  The Court of Appeal subsequently rejected both an application for leave to appeal to the Court of Final Appeal and an application for a stay of execution pending determination of the respondents’ application to the Appeal Committee for leave to appeal. 

4.  The last day for complying with the relevant orders (which are those of the Court of Appeal sealed on 25 May 2006) is 22 June 2006 and evidence has been filed indicating that the Liquidators have threatened to take out contempt proceedings without further notice if there is non-compliance.

5.  Three of the four respondents who are subject to the orders (being the first three named respondents) have filed applications for leave to appeal  and now apply for a stay of those orders pending determination of the leave application.

6.  Section s 26(1) of the Court’s statute contains a provision relating to stays of execution in the following terms:

(1)  Where a judgment appealed from requires the appellant to pay money or perform a duty, the Court of Appeal or the Court, as the case may be, shall have power, when granting leave to appeal or subsequently, either to direct that the judgment shall be carried into execution or that the execution shall be suspended pending the appeal.

7.  It is to be noted that while s 26(1) expressly deals with the position where leave to appeal is granted, nothing in the Ordinance addresses the situation where an application to the Appeal Committee for leave to appeal is pending.

8.  Ms Linda Chan submits on the Liquidators’ behalf that there is no jurisdiction to grant a stay.  She argues that the power to grant a stay only arises “when granting leave to appeal or subsequently”, which is obviously not the situation this morning. 

9.  There has been a division of opinion in the Court of Appeal in this context. 

10.  In The World Food Fair Ltd v Hong Kong Island Development Ltd CACV 398/2003, 30 August 2005, Ma CJHC took the view that given the statutory silence, the court has an implicit power to grant a stay pending the application for leave. 

11.  But Rogers VP, refused a stay in the present case (CACV 306 and 307 of 2005, 2.6.06), holding that this Court’s Ordinance deliberately omitted to give a power to grant a stay pending the leave application.  His Lordship added that he would in any event have refused a stay on the merits.

12.  However, Bokhary PJ, sitting as single permanent judge in Secretary for Justice v To Kan Chi and Others (2000) 3 HKCFAR 264 had taken the same view as Ma CJHC, holding not only that this power is inherent but that it is one which, by virtue of s 46(2) of the Court’s statute, is exercisable by a single permanent judge.  I expressed agreement with this view in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR pp 79 – 82 when sitting as a single permanent judge.

13.  Moreover, in my view, the decision of the Court of Final Appeal in PCCW-HKT Telephone Limited v Telecommunications Authority (2005) 8 HKCFAR 337 is applicable.  It was there held that a power, such as a power to suspend operation of an order, may be implied where it is necessary in the sense of being reasonably required for the effective exercise of the statutory jurisdiction conferred on the court or tribunal in question.  In my view, the present case comes within that principle since a power to grant interim stays is reasonably required to ensure the effective exercise by the Appeal Committee of its jurisdiction in relation to applications for leave to appeal.  Accordingly, in agreement with Bokhary PJ and applying the PCCW decision, I hold that I have jurisdiction to entertain the present application for a stay of the orders in question.

14.  Ms Chan also opposes the application for a stay on its merits.  She does so on three grounds.  First, she contends that the leave application is not arguable.  Secondly, she attacks the grounds advanced in favour of a stay as vague and unconvincing, describing the applicants’ conduct as contumelious.  Thirdly, she argues that a stay would deprive the Liquidators of use of the documents at adjourned oral examinations of the 5^th and 6^th respondents fixed for 1 August 2006.  I ought to add, however, that these were points made before it became known to the Liquidators that the Court was in a position to offer early dates for hearing of the leave application.

15.  While I can readily accept that the Liquidators are anxious to have access to the documents sought, I think the question of whether the applicants’ case is arguable should be determined by the Appeal Committee and not in the context of an application for an interim stay.  The merits of any further stay application can also properly be raised before the Appeal Committee to be heard if, but only if, leave to appeal is then granted.  I do, however, consider that the application for leave to appeal is properly fixed to be heard with expedition.

16.  Having heard the parties on conditions in relation to a stay, I am inclined to grant the stay subject to an early date and subject to the conditions sought.

17.  In the circumstances, the Court has arranged for the application for leave to appeal to be fixed for hearing on Friday 30 June 2006 at 9.15 am, but I have indicated to the parties that the alternative of 29 June would also be available if that date better accommodates the parties. A message should be sent to the Registrar shortly to indicate which of those dates should be the effective date. 

18.  I order that pending determination of an application for leave to appeal that the orders sealed on 25 May 2006 by the Court of Appeal be stayed subject to the following condition, which I understand from counsel, will be met, namely, the giving of an undertaking by the solicitors for the applicants to preserve the documents within the scope of the Orders contained in the 70 lever arch files of documents described in the affidavit of Mr John Budge filed in support of the application for an interim stay and any other such documents as may come into the said firm’s possession, unless otherwise agreed in writing with the Liquidators and subject to the order of the Court.

19.  I will leave it to the applicants to draw up the order for my approval.  The costs of this application are reserved to the Appeal Committee.