YUI CHUNG YIN v. NG KIT SUM

HCA 1826/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1826 OF 2009

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REASONS FOR DECISION

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I. Introduction

1.  On 11 January 2013, DHCJ Cheng SC handed down judgment in HCA1826/2009 (“Action”) dismissing the claim by the plaintiff Yui Chung Yin (“Yui”) and entering judgment in favour of the defendant Ng Kit Sum (“Ng”) in the sum of $730,147 for what was described as the computer claim and US$25,641 for what was described as the insurance claim with interest and costs (“Judgment”).

2.  On 20 June 2013, DHCJ Cheng SC also directed that Yui shall bear and pay Ng’s costs of the Action up to 14 December 2012 on party and party basis and Yui shall bear and pay Ng’s costs incurred from 14 December 2012 on indemnity basis, and interest on such costs shall be payable at judgment debt rate from 14 December 2012 up to the date of payment.

3.  Yui appealed against the Judgment to the Court of Appeal (“Appeal”).  The Appeal was heard on 3 November 2015.

4.  On 10 November 2015, Yui applied to stay execution of the Judgment (“Stay Application”).  The hearing of the Stay Application was returnable on 27 January 2016.  In the Stay Application, Yui sought to stay execution of the Judgment on the basis there were special reasons (including special reasons that occurred after the Judgment) and he was unable to pay the judgment debt.  On 10 November 2015, Yui filed his affirmation in support of the Stay Application (“Yui Aff”).

5.  In the Yui Aff, Yui explained the Stay Application was made pursuant to Order 59 rule 13 of the Rules of the High Court.  He explained that the Appeal was heard on 3 November 2015, but at that time judgment in respect of the Appeal was pending.  He submitted he had good grounds of appeal and there were errors and omissions in the Judgment, especially in relation to (a) the assessment of the I_MY invoices and the Jack Invoices, (b) the orientation of the company stamps on the Jack Invoices, (c) DHCJ Cheng SC’s rejection of what was described as the “red herring” arguments in relation to the agreements.

6.  In the Yui Aff, Yui submitted it was inappropriate to permit Ng to execute the Judgment when the Court of Appeal was about to hand down its judgment on the Appeal.  Yui also explained that as a result of the Action he could no longer work in the computer wholesale industry.  His legal aid ceased about 4 months before the Yui Aff.  In May 2015 he passed the examination to act as insurance intermediary, and anticipated he would become an insurance agent to increase his income.  If Ng executed the Judgment and as a result Yui was made bankrupt, Yui claimed he would suffer irreparable damage.

7.  Yui also claimed that according to his previous knowledge and experience, Ng would invest in the Hong Kong stock market.  If execution of the Judgment was not stayed, Yui feared Ng would invest the Judgment sum (if recovered from him) in the Hong Kong stock market or to improve his living condition.  Hence, if Yui were successful in his Appeal, the Judgment sum might be lost and his Appeal rendered nugatory.

8.  For the above special reasons, Yui asked the court to stay execution of the Judgment, and asked for costs of the Stay Application to be determined after judgment in respect of the Appeal was handed down.

II.  Appeal Judgment

9.  However, the Court of Appeal handed down judgment in respect of the Appeal on 27 November 2015 (“Appeal Judgment”).  Lam VP giving the judgment of the court dismissed the Appeal and ordered Yui to pay Ng’s costs of the Appeal to be taxed if not agreed. In the Appeal Judgment, the Court of Appeal explained the gist of the Action between the parties.  Yui purchased notebook computers and accessories for trade from Ng in 2008.  Yui paid a deposit of $3,000,000 as security money, and at the end of the trading relationship dispute arose as to which party was indebted to the other.  Yui sued Ng for $2,149,741 as the balance of the deposit which should be refunded and another sum of $130,000 for refund in respect of some adaptors.  But Ng claimed it was Yui who was indebted to him, and he counterclaimed for $637,108 as the outstanding amount due for computers supplied and $130,000 for the adaptors.  The above was a shorthand summary of the computer claim, and Yui appealed against the Judgment on such claim.

10.  In respect of the insurance claim in the Action, it was a dispute concerning insurance premium paid under 2 insurance policies. Yui claimed $100,000 as his contribution to the policies taken out by Ng.  Ng said the policies were taken out at Yui’s request and he counterclaimed US$25,641.  There was no appeal in respect of the Judgment concerning the insurance claim.

11.  Lam VP rejected Yui’s application to rely on some new grounds of appeal set out in his skeleton submissions lodged on 23 October 2015.  For the reasons given in the Appeal Judgment, Lam VP rejected these new grounds, and focused on the 2 grounds of appeal raised in Yui’s Notice of Appeal that concerned the computer claim.  For reasons set out in the Appeal Judgment, Lam VP found these 2 grounds of appeal had no merit and could not avail Yui.  In the circumstances, the Court of Appeal dismissed the Appeal.

III.  Legal principles: stay of execution

12.  The relevant principles for a stay pending appeal are addressed in the decision of Ma J (as he then was) in Star Play Development Limited v Bess Fashion Management Company Limited[1] and the Court of Appeal in Toeca National Resources BV v Baron Capital Limited.[2] In short, the existence of an arguable appeal (ie an appeal with reasonable prospect of success) is the minimum requirement before the court would even consider granting a stay.  Conversely, the existence of a strong appeal or a strong likelihood that the appeal would succeed would usually, by itself, enable a stay to be granted because this would constitute a good reason for a stay.  Where there existed only an arguable appeal, the appellant would need to provide the court with additional reasons as to why a stay was justified; for example, that an appeal would be rendered nugatory.  Correspondingly, if it could not be shown that an appeal would be rendered nugatory if a stay were not granted, the court would require the appellant to demonstrate strong grounds of appeal or a strong likelihood of success.

IV.  Discussion

13.  By now the Court of Appeal had handed down the Appeal Judgment and dismissed the Appeal.  The very grounds of appeal raised in the Yui Aff as support for Yui’s contention that his Appeal was on strong grounds had been dealt with in the Appeal Judgment, which was there for all to see and which I need not repeat.  In short, the Court of Appeal found there was no merit to these arguments.  Since the Court of Appeal upheld the Judgment, I see no further basis for contending there were special reasons to stay execution of the Judgment.  It could not be said that the Appeal would be rendered nugatory or Yui would suffer irreparable prejudice.

14.  The other limb of Yui’s argument was that he would suffer financial setback as a result of execution of the Judgment since he could no longer make a living in the computer wholesale trade and was on the brink of entering the insurance industry.  However, with the dismissal of his Appeal, the fact that Yui was financially constrained would not be an answer to Ng’s right to enjoy the fruits of the Judgment by execution to recover the judgment debt.  On the principles as explained above, no substantial basis to stay execution of the Judgment was shown.

15.  For all of above reasons, at the hearing on 27 January 2016, I have rejected and dismissed the Stay Application.  There is no reason why costs should not follow event.  I have also ordered Yui to pay Ng costs of the Stay Application (including all costs reserved, if any) to be taxed if not agreed.