INDIAN OVERSEAS BANK v. SEABULK SYSTEMS INC. AND OTHERS

HCA 846/2012

[2022] HKCFI 3363

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 846 OF 2012

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BETWEEN

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DECISION

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Introduction

1.  This Court handed down a judgment herein on 29 January 2018 after a 6 day trial (“Judgment”). By the order made pursuant to the Judgment, Ds are ordered, amongst other things, to jointly and severally pay P the sums of CAD 9,665,484.94 and USD 137,899.18 or the equivalent in HKD at time of payment, plus interest at default rate from 21 May 2012 to the date of the order and thereafter at judgment rate until payment (“Judgment Order”).

2.  In this decision, this Court will follow the abbreviations and nomenclature in the Judgment, unless otherwise indicated.

3.  Ds lodged their respective notices of appeal against the Judgment Order on 26 February 2018 (CACV 48/2018) (“Appeal”). P filed a respondent’s notice on 15 March 2018. A Supplementary Notice of Appeal was filed by D2 on 18 May 2018.

4.  At end of September 2018, P served a statutory demand (based on the Order) upon D2 in Singapore pursuant to the bankruptcy laws and procedures of Singapore (“Statutory Demand”).

5.  On 18 October 2018, D2 filed an application in the High Court of Singapore to set aside the Statutory Demand. The Statutory Demand was subsequently set aside on 1 February 2019 on the ground that the Judgment Order had not be registered as a foreign judgment in Singapore. Thereafter, P applied to register the Judgment Order against D2 in Singapore (HC/OS 1054/2019) which was granted on 21 August 2019.

6.  P served the Notice of Registration of the Judgment Order upon D2’s Singapore lawyers on 18 May 2021, and it was only then on the same day that D2 filed the summons herein for a stay of execution of the Judgment Order pending the hearing and final determination of his appeal (“Stay Summons”).

7.  On 18 October 2021, P issued a summons against Ds for security for costs for the Appeal. Although the parties were able to agree on the quantum and form of the security, they were unable to agree to the terms of the order, in particular costs relating to P’s summons. Eventually, on 22 June 2022, the Court of Appeal handed down a decision, and P was awarded security of HKD 3.6 m to be paid into Court and also costs of its summons. The security and costs were duly paid.

8.  On 3 August 2022, this Court gave directions for the Stay Summons to be dealt with on papers. So far as this Court is aware, up until to the date of this decision, no hearing date has been fixed for the Appeal.

Grounds of appeal

9.  D2’s 7 grounds of appeal are briefly :

(1) This Court erred in holding that the APGs (as defined in the Judgment) were never surrendered nor lost nor imperfected nor altered in condition by reason P’s acts [at para 347];

(2) This Court ought to have held that the operative cause of the loss of the APGs was P’s incompetence in incorrectly stating P to be the claiming beneficiary in the claim documents submitted to BOC, including P’s failure to address and/or understand the correct claiming procedure and its incompetent drafting of the claim documentations;

(3) Having refused to allow P to amend its pleadings to include a plea of acquiescence, this Court erred in ruling against D2 on the basis of acquiescence [at para 350] (“Acquiescence Finding”);

(4) This Court erred in law in upholding P’s trial “suggestion” which was not actually a trial issue and finding that D1 itself could have espoused a claim under the APGs [at paras 270(i), 333-335] (“Espousal Finding”);

(5) This Court erred in law and in fact in concluding that the lateness in P in making a demand under the APGs was caused entirely by Ds, which was also not a trial issue [see paras 83-84, 300-310, 315]

(6) Insofar as this Court’s comments that “Ds were unwilling and/or failed to assist [P] in the SH Proceedings ….”, the only defendant that could have been involved was D1 (at para 332) (“SH Finding”)

(7) This Court’s illogical decision that D2 was jointly and severally liable to indemnity P for all its legal costs in the SH Proceedings was erroneous in law.

The merits of the appeal

10.  The legal principles on stay of execution pending appeal have been set out in Star Play Development Ltd v Bess Fashio Management Co Ltd [2007] 5 HKC 84 and more recently reiterated by the Court of Appeal in Bright Gold Ltd v Mega Well Development Ltd [2019] HKCA 1440, at paragraph 13.

11.  As set out above, D2’s grounds of appeal are against findings of facts or of mixed law and fact. In relation to D2’s complaints that the Acquiescence Finding and the Espousal Finding were unpleaded, first as submitted by Mr Ng on behalf of P, not every single fact is required to be pleaded, and that it is sufficient for the pleader to state the material facts. Second, these findings were in my view not sufficiently material to undermine the conclusions of this Court. As for the SH Finding, as pointed out by Mr Ng, this Court’s finding was that Ds were unwilling and/or failed to assist P in the SH Proceedings. It was never this Court’s suggestion that D2 could participate as a party in the SH Proceedings.

12.  Having considered P’s grounds, I am not satisfied that D2 has demonstrated strong grounds of appeal.

Other circumstances

13.  As seen in Star Play and in Bright Gold, even if arguable grounds exist, there must be other circumstances justifying the deprivation of the successful party the fruit of the judgment.

14.  It is submitted by Mr Barlow SC on behalf of D2 that if no interim stay is ordered, D2 will suffer irreparable financial ruin plus professional and reputational damage (of a non-compensatable nature) if P is allowed to execute the Judgment/Order before D2’s appeal can be heard and determined, and that unless an interim stay is granted, D2’s appeal will be rendered nugatory.

15.  D2 has filed two affirmations in support of the Stay Summons. His evidence in 1^st affirmation was that if he were to be made bankrupt in Singapore, it would have a disastrous effect on him and almost certainly result in his financial ruin or at the least, in very serious and irreparable financial damage, even if he were later to succeed in the Appeal. According to D2, he has substantial business dealings in different countries around the world and that he also holds executive and management positions in more than 13 companies, and any bankruptcy order against him would have very serious deleterious effects. In his 2^nd affirmation, D2 reiterated that if the stay is not granted, the enforcement of the Judgment will have a disastrous financial effect on him and will cause irreparable harm to his business reputation. In particular, D2 said he was advised by his Singapore lawyers that under section 131(1)(b) of the Singapore Bankruptcy Act, it is a criminal offence for an undischarged bankrupt to “remain or reside outside Singapore without the previous permission of the Official Assignee”.

16.  According to P, P has not been able to locate any assets of D1 and D3, whether in or outside Hong Kong. As for D2, although P has not been able to locate any assets of D2 in Hong Kong, after genuine efforts, P believes that D2 has assets in Singapore, and that P had to incur significant costs and expenses to enforce the Judgement against D2 in Singapore.

17.  D2 has not denied what was said by P above. In fact, it can be seen in paragraph 20 of D2’s 1^st affirmation that he has businesses and available funds in Singapore. There is no documentary evidence or financial documents produced by D2 to substantiate his assertion that he will suffer irreparable financial ruin or his current financial position. D2’s allegations were bare assertions. There is no reason why D2 cannot simply pay the Judgment Debt to avoid a bankruptcy order made against him.

18.  P is a major Indian nationalized bank under the ownership of the Indian Ministry of Finance. P’s Hong Kong Branch alone is said to have deposits of over HKD 1,800 million. P is clearly able to return the Judgment Debt to D2, if D2 succeeds on his appeal. As submitted by Mr Ng, D2 will not suffer “serious hardship”.

19.  Having considered D2’s evidence and submissions, I am not satisfied that his appeal will be rendered nugatory in the absence of a stay.

Conclusion

20.  As set out in Star Play, the Court must not at any stage forget the position of the successful party. This action was commenced by P in May 2012, over 10 years ago, to recover loans advanced to D1 between 2007 and 2009. The trial took place in April 2017 and the Judgment was handed down by this Court in January 2018. D2 lodged his Notice of Appeal almost on the last day of the deadline for appeal. Yet, the Stay Summons was only issued in May 2021, notwithstanding that D2 was served with the Statutory Demand at end of September 2018. Further, up until now, no hearing date has been fixed for the Appeal.

21.  Having considered all the above and the circumstances of this case, I decline to grant interim stay. D2’s Stay Summons is dismissed with costs to P. P has submitted a statement of costs, and costs of the Stay Summons are be summarily assessed to be HKD 200,000 to be paid by D2 within 14 days.