WUI FU DEVELOPMENT CO LTD. v. TAK YUEN CONSTRUCTION CO. LTD.

CACV321/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 321 OF 1999

(On appeal from Construction & Arbitration Proceedings No. 40 of 1998)

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J U D G M E N T

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Wong, J.A. (giving the judgment of the Court) :

1. This matter comes before us by way of an appeal under s. 35(3) of the High Court Ordinance, Cap. 4 in relation to an order made by Keith J.A. on 1.12.99 pursuant to an application by the appellant/plaintiff for a stay of execution of the judgment of Findlay, J.

2. The background which gives rise to these proceedings can be very briefly summarised. The appellant/plaintiff, Wui Fu Development Co. Ltd., who is the owner of a piece of land, entered into a contract with the defendant/respondent on 12 April, 1997 for the construction of the superstructure of a building on the land. Subsequently dispute arose and both sides alleged breaches of contract resulting in the termination of the contract by the appellant/plaintiff. In the statement of claim, the plaintiff alleged that the defendant suspended works or failed to proceed with them regularly and diligently. The defendant counterclaimed in its defence that the plaintiff was obliged to appoint an architect willing to discharge the functions of an architect under the contract, but failed to do so and the plaintiff had also failed to make payment of monies due to them. Findlay, J. found for the defendant on the counterclaim and awarded a sum of $2,678,276.78.

3. On 11.11.99 the appellant/plaintiff lodged a notice of appeal against the judgment of the judge. The appeal has now been set down for hearing. An application for stay of execution of the judgment was filed on 16 November 1999 which was heard before Keith J.A. on 1.12.99. It is common ground that there is a bank guarantee dated 8.1.99 issued by the HK Chinese Bank Ltd. as security to abide by the result of the judgment of Findlay, J.

4. The order of Keith J.A. provides :

1. there be no stay of execution up to the sum of $1,884,312.78 of the judgment herein of the Honourable Mr Justice Findlay handed down on 9th November 1999 ("the judgment"), and the Defendant be permitted to draw on the bank guarantee dated 8th January 1999 issued by The Hong Kong Chinese Bank Ltd ("the guarantee") in satisfaction thereof;

2. execution of such part of the judgment as exceeds the sum of $1,884,312.78 be stayed until the determination or other disposal of the appeal therefrom or further order on condition that :-

(i) the Defedant be permitted to draw on the guarantee up to the sum of $515,687.22, being the difference between (a) the sum of $2.4 million being the amount of the guarantee and (b) the sum of $1,884,312.78 admittedly due to the Defendant by the Plaintiff;

(ii) in the event of the Defendant drawing the sum of $515,687.22 on the guarantee, the Defendant shall pay that sum into Court within 14 days of the receipt thereof;

(iii) the Plaintiff do pay into Court within 14 days from the date of this Order the sum of $863,999.35, being the difference between (a) the judgment debt together with interest calculated up to 1st December 1999 and (b) the said sum of $2.4 million.

5. Mr Chain who appears for the appellant/plaintiff accepts in principle the conclusion of Keith J.A. But he seeks to argue that what the judge should have done was to order a stay of execution of a sum of $1,379,676.57 from the bank guarantee of $2.4 million. His reason is that there will be little or nothing left for the appellant/plaintiff in the event of a successful appeal. We do not accept this argument. The respondent has obtained judgment for nearly $2.7 million and the total amount is now in excess of $3.2 million including interest on the judgment up to 1 December 1999.

6. The amount on which the judge has ordered no stay, and that is the amount of $1.88 million, has not been challenged and it is admitted that this amount is indisputably due to the respondent/defendant who is entitled to this sum in any event even if they fail in the appeal.

7. This is an appeal against an order of a single judge and the appellant/plaintiff must satisfy us that the judge was demonstrably wrong in the exercise of his discretion before we will intervene. This the appellant has failed to do and accordingly the appeal is dismissed.

8. We have considered submissions on the question whether the appellant/plaintiff should pay the costs of the respondent/defendant forthwith on indemnity basis. It is not necessary for us to decide whether this appeal is rendered incompetent in view of the order of Keith J.A. for security for costs in the appeal. In the circumstances, we consider that the appropriate costs order is an order for cost to the respondent/defendant to be taxed and paid forthwith by the appellant/plaintiff.