XCHRX NG KING WAI, TERENCE AND ANOTHER v. QING YUAN ENTERPRISES LTD.

1998 M.P. No. 748

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. On 30th September 1998, the parties came before me for trial on a vendor and purchaser summons. By my judgment handed down on 22nd October 1998, I ordered the defendant company to refund the deposit paid by the plaintiffs under the contract for sale and purchase. On 15th December 1998, the parties came before me again on the defendant's summons for stay of execution pending appeal.

2. Mr. Cotterell for the defendant company contended that there are four factors on which I should grant stay of execution. First, he said that there are merits in the appeal. My judgment treated the illegal structure in the suit premises as an encumbrance whereas both parties treated it as a matter affecting title. My decision, therefore, went beyond the basis on which the parties fought the case. Secondly, those acting for the defendant company estimated that hearing of the appeal may come as soon as 6 to 8 weeks from filing of the notice of appeal. So there would be no prejudice to the plaintiffs for stay. Thirdly, the plaintiffs, despite requests from the defendant company, have disclosed they own only one property in Chung King Mansion of uncertain value. There is a risk that if the deposit money is returned to the plaintiffs the defendant company may not be able to enforce judgment by the Court of Appeal favourable to the defendant company. Fourthly, the defendant company is willing to pay money into court as security to meet first instance judgment and that therefore in the exercise of my discretion I should order stay of execution.

3. Mr. Chan for the plaintiffs referred me to paragraph 59/13/2 of the White Book and the cases of Monk v. Bartram [1891] Q. B. 346 and World Trade Centre Group Limited and another v. Resourceful River Limited HCA 70 of 1993. If appears quite clear from all authorities that stay of execution is not a matter of course. There must be special circumstances before the court should consider stay of execution pending appeal. In any event, whether to stay or not is a matter entirely at the discretion of the court. I believe Mr. Cotterell did not dispute these principles.

4. I am in the unenviable position of having to assess the prospects of an appeal against my judgment. I do not think I can or should say much. However, I think I can deal with what is essentially a pleadings point as the or one of the grounds of appeal. At the trial, the defendant company sought to forfeit the deposit on the ground that there was no defect in title and that the plaintiffs failed to complete. There was a cross application for refund of the deposit. My function, as I saw it, was therefore not just to determine whether there was defect in title. In fact I held that the issue was not defect in title. Then I had to decide what order to be made regarding disposal of the deposit. That order must take into account the respective rights and obligations of the parties. I came to the view, rightly or wrongly, that the plaintiffs had better rights.

5. The Court of Appeal may very well come to a different conclusion. But it would be a matter of difference of opinion on a point of law. I do not think the defendant company can at this stage say that their appeal has a better than even chance over the plaintiffs.

6. As to the second factor, that is only an optimistic estimate. The appeal may not be heard after a considerable period of time. The plaintiffs were buying a property. They have had their money, a substantial amount of some $500,000.00, held up by this case. We all know how the Hong Kong property market has fluctuated. If the plaintiffs have their money back now, they may well use it to buy a property at comparatively lower price. The property market is edging up. I do not know if the plaintiffs buy in 2 to 3 months' time from now they would have the same bargain as they can get today. If stay of execution is granted, and then the Court of Appeal finds for the plaintiffs too, who is to bear liability for the loss suffered by the plaintiffs for not being able to seize a bargain price property now? After all, the plaintiffs have judgment in their favour already.

7. As to the third factor, I do not think it is right to put the burden on the plaintiffs to show means to satisfy judgment. They have already got judgment. It seems to me to be an invasive exercise to require the plaintiffs to disclose their means and assets. In any event, they have disclosed that they have a flat unit in Chung King Mansion. Their equity in that flat unit, I am sure, cannot be worth less than $500,000.00.

8. As to the fourth factor, it is irrelevant. The issue here is not whether the defendant company would be able to satisfy judgment against the company.

9. In the premises, I found that there were no special circumstances and the application for stay of execution pending appeal was dismissed.

10. On the matter of costs of the application for stay of execution, Mr. Cotterell said that the practice is to order costs in the appeal. Mr. Chan submitted that the practice applies only if stay is granted. If stay is not granted, costs should be awarded and Mr. Chan asked for a penal type of order, i.e. costs on common fund basis.

11. I think Mr. Chan is at least partly right. Costs should be awarded. But there is no need to penalize the defendant company over and above the normal consequence for an unsuccessful applicant. Hence, I ordered costs to the plaintiffs to be taxed on party and party basis, if not agreed.