DBS BANK (HONG KONG) LTD v. YOUNG & FORTUNE LTD AND OTHERS

HCMP 1838/2014

MISCELLANEOUS PROCEEDINGS NO1838 OF 2014

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D E C I S I O N
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1.  This is D3’s application for stay of execution pending appeal against the judgment dated 15 January 2016 (“the judgment”). I shall not repeat the contents of that judgment here.

Legal principles

2.  The applicable principles have been set out in Star Play Development Ltd v Bess Fashion Management Co Ltd, HCA 4726/2001, 7 June 2002, §§6-10, Ma J (as he then was). 

3.  The starting point is that under Order 59, r.13(1), Rules of the High Court, Cap 4A, an appeal shall not operate as a stay of execution of proceedings under the decision of the court below.  No intermediate act or proceedings shall be invalidated by an appeal.  Unless the applicant can justify a stay of execution, one will not be ordered.  Justification can be demonstrated only if good reasons exist.

4.  There is no exhaustive definition of what would constitute good reasons, but, commonly, reference is made to factors such as whether the absence of existence of a stay would render an appeal nugatory and the merits of the appeal.

5.  The court should form a preliminary view of the merits of the appeal. Existence of an arguable appeal is a minimum requirement for stay but that is not, in itself, sufficient to justify a stay.

6.  Where the appeal is arguable, some additional reason for a stay must be provided and this may be done by demonstrating that the appeal will be rendered nugatory if the stay is not granted.  Where it cannot be shown that an appeal would be rendered nugatory if a stay was not granted, the court will require, in the absence of other factors, the appellant to demonstrate strong grounds of appeal. 

7.  It is also relevant to consider the prejudice to the successful party if a stay is granted.

8.  Ultimately, this is a balancing exercise for the court, bearing in mind the starting point that the successful party should not be deprived of the fruits of his success.

The grounds for applying for stay

9.  The grounds of appeal are that:

(1) There is a pending appeal;

(2) Due to the Chinese New Year, it was difficult to look for rented property; and

(3) It is difficult for D3, who is raising 7 dogs, to look for a suitable rented property.

10.  I have considered the grounds of appeal.  Under the ground of economic duress, D3 purports to dispute this court’s finding of facts of whether there had been economic duress.  It is trite law that the Court of Appeal will not interfere with conclusions reached by a judge on the facts unless it was plainly wrong. It has not been so demonstrated.

11.  Under the ground of fiduciary duty, D3 relies on the Trade Descriptions Ordinance, Cap 362. That was not something relied on before this court at the substantive hearing.  Further, it is said, in answer to paragraph 36 of the judgment that the investor gave $500,000 and the bank promised at the meeting that it would not take legal action for the time being but the court did not honour its promise.  That piece of evidence was not put before the court, and that was why this Court found that Shum had not asserted any compromise reached or promise to withhold litigation.  It is not open to D3 to adduce new evidence on appeal.

12.  D3 has not shown arguable grounds of appeal.  Ground (1) fails.  That is sufficient to refuse the application for a stay.

13.  If I am wrong, existence of arguable grounds of appeal is not sufficient, I do not think Grounds (2) and/or (3) justify a stay.

14.  The usual period for delivery up of vacant possession is 28 days in the case of a residential property, which the subject properties are.  I have already taken into account the Chinese New Year and have given 45 days from the date of judgment for delivery of vacant possession (§15 of the Judgment). 

15.  D3’s love for her dogs is not a sufficient ground to deny the successful Bank of the fruits of its judgment. 

16.  At this hearing, D3 mentioned that her mother (aged 70 odd) is residing with her. As this fact was not mentioned in D3’s supporting affirmation, I place no weight on it.

17.  The originating summons was taken out on 29 July 2014.  There had been several adjournments to accommodate the defendants who were acting in person. The substantive hearing was on 7 December 2015. The property market is experiencing a downturn.  Delay in obtaining vacant possession and hence sale of the subject properties will harm not only the Bank’s interest but also the defendants (should there be surplus sale proceeds arising). 

18.  Balancing Grounds (2) and (3) against the potential prejudice to the Bank, I am not satisfied that there should be a stay of execution pending appeal.  I dismiss the application.

19.  I order D3 to pay costs on indemnity basis (as for the judgment). I reduce the costs of photocopying and related costs of perusal and preparation of documents as only about 28 pages in the bundle are relevant to the appeal. The case simply does not warrant having 2 fee earners. I summarily assess the costs at $20,000.