BEST & BEST INTERNATIONAL INVESTMENT LTD. v. RICHARD TAI & CO., SOLICITORS (A FIRM) AND ANOTHER

CACV 168/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 168 OF 2001

(ON APPEAL FROM HCA 20335 OF 1998)

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REASONS FOR JUDGMENT

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Hon Woo JA (giving the judgment of the Court):

At the conclusion of the hearing yesterday, we dismissed the application with costs. We said we would give our reasons later. They appear below.

2. The application was by summons dated 24 August 2001 as amended by another summons dated 14 September 2001 made by Non-No Fashion Wholesale Limited ("Wholesale Limited") and Kwan Sing Kwong ("Kwan") for stay of execution of the money order in the judgment of Cheung J (as he then was) given on 12 January 2001and for stay of the insolvency proceedings referred to below, pending determination of their intended appeal to the Court of Final Appeal from our judgment handed down on 8 August 2001.

3. By our said judgment of 8 August 2001, we dismissed the appeal brought by Wholesale Limited and Kwan against the judgment of Cheung J. Wholesale Limited and Kwan had on 13 August 2001 made an application for leave to appeal from our judgment to the Court of Final Appeal. That application for leave to appeal has been fixed to be heard on 14 December 2001. The hearing date of the application for stay of execution pending the intended appeal was originally fixed to be heard on 9 November 2001. Upon application made by Wholesale Limited and Kwan on 11 September 2001, that hearing date of 9 November 2001 was advanced to 19 September.

4. In the 11 September notice of application to vary the hearing date, the reason given by Wholesale Limited and Kwan was that company winding up (HCCW 688 of 2001) and bankruptcy (HCB 4904 of 2001) proceedings taken out by Chung Kam Wing ("Chung") and Shu Man Lee ("Shu") against Wholesale Limited and Kwan respectively had been scheduled to be heard on 26 September 2001 and 4 October 2001 and that if the winding up and bankruptcy orders are made, it would stop the right of appeal to which Wholesale Limited and Kwan are entitled at law.

5. The petitions in these insolvency proceedings were based on the statutory demands on Wholesale Limited and Kwan respectively for the payment of the judgment sum of $2,322,871.52 (more specifically referred to below) with interest on it not having been met.

6. In an affirmation made by Kwan on 14 September 2001, apart from the insolvency proceedings allegedly affecting the intended appellants' right of appeal to the Court of Final Appeal, Kwan sets out his grounds of the intended appeal, which involve challenges to Cheung J's findings of fact.

7. The original action that was tried before Cheung J related to a claim by Wholesale Limited against Chung and Shu, the registered owners of the premises known as Workshop B5 on the ground floor of Block B, Hong Kong Industrial Centre, Nos. 489-491, Castle Peak Road, Kowloon, Hong Kong ("the premises"), for damages for breach of a tenancy agreement allegedly made in 1996 ("the 1996 Tenancy Agreement") whereby Wholesale Limited and another associated company became the tenants of the premises. Chung and Shu counterclaimed for various relief based on their allegation that the alleged signature of Chung on the 1996 Tenancy Agreement was forged. They also counterclaimed damages for trespass. Cheung J dismissed the claim and allowed the counterclaim. He granted Chung and Shu possession of the premises against Wholesale Limited and also made the following orders against Wholesale Limited and Kwan:

(1) A declaration that the signature of Chung that appeared on the 1996 Tenancy Agreement was a forgery and was not signed by Chung and the 1996 Tenancy Agreement was null and void and of no effect;

(2) An injunction to restrain Wholesale Limited and Kwan by themselves, their agents, servants or otherwise howsoever from remaining on or continuing in occupation and/or trespassing the premises;

(3) An injunction to restrain Wholesale Limited and Kwan by themselves, their agents, servants or otherwise howsoever from using the premises or permitting or causing the premises to be used for any purpose other than as a factory;

(4) Damages for trespass in the sum of $2,322,871.52 calculated up to 12 January 2001. The damages shall continue at the rate of $150,000 per month from 13 January 2001 together with all forbearance fees and government rent that Chung and Shu are liable to pay to the government from 13 January 2001 in the event that Wholesale Limited and Kwan continue to be in occupation of the premises after 12 January 2001;

(5) An order that Wholesale Limited and Kwan indemnify and repay Chung and Shu all the forbearance fees and interest that Chung and Shu would be liable to pay to the government from 9 September 2000 to 12 January 2001;

(6) Damages for fraud to be assessed; and

(7) An account of profits made by Wholesale Limited and Kwan by reason of their use of the premises and an order of payment of such profits to Chung and Shu.

8. The Judge also ordered that Chung and Shu have their costs of the claim and the counterclaim against Wholesale Limited and Kwan, such costs to be taxed on an indemnity basis. He also ordered payment out from court of $1,300,000 to Chung and Shu forthwith. This payment out did not have the effect of reducing the amount of the damages of $2,322,871.52 referred to above.

9. Stay of execution is a discretionary matter. For an application for a stay of execution to succeed, there must be very exceptional circumstances, such as where execution would destroy the subject matter of the action or deprive the appellant of the means of prosecuting the appeal (see para 59/13/11 of the Hong Kong Civil Procedure, 2001). One of the major requirements is that the applicant must satisfy this Court that there are strong grounds in support of his appeal making it likely to succeed. See World Trade Centre Group Ltd v Anr v Resourceful River Ltd & Anr, Civ App No 70 of 1993 (Litton JA, 12 May 1993, unreported).

10. In his 32-page Reasons for Judgment handed down on 31 January 2001, Cheung J examined the evidence before him in great detail and came to the conclusion that Chung's signature on the 1996 Tenancy Agreement was forged. That was the basis for his dismissing the claim and giving judgment in favour of Chung and Shu on their counterclaim. In his judgment, the Judge also stated that the damages and quantum were not in dispute. The grounds of appeal against Cheung J's judgment were merely challenges on facts. In my judgment dated 8 August 2001, to which other members of this Court agreed, I came to the following conclusions:

"In my judgment, such arguments [raised by the appellants] do not remotely get close to the high threshold required to mount a successful attach on the Judge's findings." (p 19C)

"None of the grounds and arguments raised by Mr Yuen [for the appellants] is capable of raising any doubt in my mind that the judgment of the Judge was correct." (p 21D)

"For the reasons given above, the appeal is entirely without merit. The Judge, knowing the strong proof required, was fully satisfied that the signature on the 1996 Tenancy Agreement alleged to be Chung's was not Chung's. He was convinced that there was fraud perpetrated by Chung (sic) and Wholesale Limited on Chung & Shu. He also directed that the papers of the case be sent to the Secretary for Justice. It is obvious that this appeal has the consequence of fortifying a hope that there would be no criminal proceedings brought against the appellants. It might also be considered as another attempt to delay the delivery of possession of the premises to Chung and Shu, which possession is an avenue of profit to the appellants. The Judge ordered indemnity costs against Wholesale Limited and Kwan, and I am of the opinion that he was fully justified in doing so. This appeal does not differ. I would dismiss the appeal with an order nisi that costs be borne by the appellants on an indemnity basis " (pp 21P-22F)

11. Whilst it is difficult for a court to assess the chances of an appeal against its own decision being successful, it can be said that since there are now concurrent findings of fact in two courts, the chances of an appeal being successful are considerably reduced. Apart from arguing that Chung's signature on the 1996 Tenancy Agreement is genuine by various grounds that he emphasised before us, relating merely to questions of fact which, in our view, had been fully dealt with and correctly decided by Cheung J, and upheld by us, Kwan also tried to rely on fresh evidence, in the form of microfilm copies of Chung's signatures on documents dating from 1992 to 2000 kept by the Companies Registry allegedly recently discovered by him. He sought to impress on us the similarity of those signatures to that on the 1996 Tenancy Agreement. However, this attempt cannot possibly satisfy the conditions laid down by Ladd v Marshall [1954] 1 WLR 1489 (see para 59/10/10 et seq of the Hong Kong Civil Procedure, 2001).

12. The fact that winding up proceedings are being brought against Wholesale Limited and bankruptcy proceedings against Kwan, both of which are to be heard soon, does not, in our view, help the application in the circumstances of this case. Rather, an unsuccessful appeal to the Court of Final Appeal, which is most likely, would only increase the liabilities of both Wholesale Limited and Kwan to the unfair detriment of Chung and Shu and other creditors.

13. Having considered all the circumstances, we do not find any justification for delaying Chung and Shu in obtaining the fruit of their litigation. After all, the money judgment of Cheung J was merely to order Wholesale Limited and Kwan to pay the price for their occupation of the premises, which they, whether as a lawful tenant or otherwise, ought to have paid to Chung and Shu, especially when they had made profits from letting the premises to others for rent. The proposed appeal is entirely without merit, and for this reason alone there can be no justification for granting the stay of execution or the stay of the insolvency proceedings sought. The application must be dismissed with costs.