JOHN JOSEPH MCGEE v. NOLD (HK) LTD AND OTHERS

HCA 1258/2021 [2023] HKCFI 409 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1258 OF 2021 BETWEEN JOHN JOSEPH MCGEE Plaintiff and Nold (HK) Limited 1st Defendant JUNKAN CO., LIMITED 2nd Defendant Maxsunda (HK) Supply Chain Limited 3rd Defendant Moyang Sunglasses Co., Limited 4th Defendant Gui Chuang Yi Trade Limited 5th Defendant Ahengtai Import and Export 6th Defendant Trading Limited Fong's Collection Limited 7th Defendant (方氏收藏品有限公司) Fong's Trading International 8th Defendant Company Limited (方氏貿易國際有限公司) Innovative Mould Industrial 9th Defendant (Hong Kong) Limited (創新精密制模(香港)有限公司) Jointronic Technology Co. Limited 10th Defendant (同進偉業電子科技有限公司) Haoxing Industry Limited 11th Defendant (豪興實業有限公司) Masterpiece Global Company Limited 12th Defendant (名鑄環球有限公司) Mansd Limited (聚泰斯控股有限公司) 13th Defendant Chi Yu (or the account holder(s) of 14th Defendant account no. 04350310417522) Sandtech Technology Co. Limited 15th Defendant (上大科技有限公司) ________________ Before: Madam Recorder Rachel Lam SC in Chambers Date of Hearing: 10 February 2023 Date of Decision: 16 February 2023 ______________ DECISION ______________ On 2 December 2022 I handed down a decision in this matter granting the Plaintiff summary judgment against certain defendants [2022] HKCFI 3598 (“the Summary Judgment Decision”). This decision is to be read together with the Summary Judgment Decision. Abbreviations and defined terms therein are adopted for the purposes of this decision. By summons dated 4 January 2023, the Summonsed Defendants applied to stay the execution of the Order dated 2 December 2022 pending appeal (“Stay Application”). The matter first came before me for a callover hearing on 10 January 2023, having been listed for 3 minutes. Mr James Sherry, counsel for the Summonsed Defendants (who was not involved in the original substantive hearing), urged the Court to grant the application at the callover hearing. However, I had not yet had the opportunity to consider submissions from the Plaintiff, who had not anticipated substantive argument and had not been given sufficient time to respond to the skeleton submissions of the Summonsed Defendants (which had only been served on them less than 2 clear days before the hearing). Miss Tinny Chan, counsel for the Plaintiff, also indicated that her client was considering whether to file further evidence in answer to the stay application. I thus adjourned the matter to 10 February 2023 for a short hearing. The principles governing stay of execution are trite, as summarized in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84. Briefly: The starting point is that the successful party is not to be deprived of the fruits of his success. It is always relevant to consider the prejudice that would be caused to the successful party in the event a stay is granted, and if necessary, to impose conditions so as to minimise the prejudice caused to him. The existence of an arguable appeal (that is, one with reasonable prospect of success) is the minimum requirement before a court would even consider granting a stay. However exceptional the circumstances may be otherwise justifying a stay of execution, if there exist no arguable grounds of appeal, no stay will be granted. In the event the court is satisfied that there is a strong likelihood that the appeal would succeed, that in itself would enable a stay to be granted because this would constitute a good reason for a stay. If there is just an arguable appeal instead of a strong one, the appellant has to provide additional reasons as to why a stay is justified. The demonstration of an appeal being rendered nugatory in the absence of a stay is a common example. Ultimately, the court embarks on a balancing exercise and uses its common sense, but bearing in mind at all times the starting point that the successful party is not to be deprived of the fruits of his success. Mr Sherry also refers to the case of Asparouh Ianev Dimitrov as administrator of the estate of Kaloian Ianev Dimitrov (Deceased) v Dominic Tak Ming Lau [2021] HKCA 1196, with particular reference to paragraphs 20-21 (which cite the general principles referenced above), and also paragraph 29(2) (which discusses the scenario where it would be difficult for the defendant to recover the proceeds in view of the fact that the plaintiff was a foreign plaintiff and an administrator). With reference to paragraph 29(2) of that decision, it was urged upon the Court that the additional factor of the Plaintiff in this case being resident outside the jurisdiction was a sufficiently good reason upon which a stay pending appeal should be ordered. As discussed at the hearing, however, in relation to this latter aspect, the plaintiff in the Dimitrov case was in a unique position, in that he was an administrator who “in the natural course of events, [would] most likely proceed to distribute [the proceeds of sale of the Property] to the beneficiaries, whose identities are unknown and who are also likely to be outside this jurisdiction.” (see paragraph 29(2) of the Dimitrov decision). This added wrinkle (viz. the Plaintiff being an administrator who would distribute the relevant funds, and the ultimate recipients of the funds being unknown) is not present in this particular case. As before me, Mr Sherry does not strongly push the point that his clients have strong grounds of appeal (although I understand he reserves the right to do so before an appellate court). Instead, the main thrust of his argument is that there are good grounds of appeal, and that since the Plaintiff is resident outside the jurisdiction, it is obvious that the appeal (which is bound to go ahead, since no leave is required) would be rendered nugatory if a stay is not granted. I questioned whether this meant that the proposition being suggested by Mr Sherry was that whenever a foreign plaintiff had brought the relevant proceedings, and the plaintiff had successfully obtained summary judgment, this would generally mean that a stay ought to be ordered, regardless of whether the merits of the appeal were strong or not. He confirmed that that was his proposition. In answer to the above, Ms Chan refers to the principle that an appellate court would not disturb the exercise of judicial discretion unless it is shown that the judge had made an error of law, or had misapprehended material facts, or had failed to take into account relevant matters, or had taken into account irrelevant matters, or was plainly wrong (Li Nanfeng v Wong Chun Hong [2021] HKCA 1203 at paragraph 38 per Yuen JA). She further took the point that the appeal was unmeritorious. I have borne the above principles in mind when considering the Stay Application. First, I have considered the Notice of Appeal in this matter. The points as set out in the notice are essentially reiterations of the arguments that had been placed before me for the purposes of the substantive hearing, which had been considered and rejected. For the reasons I have already discussed at length in the Summary Judgment Decision, I do not consider the proposed appeal to be meritorious. In addition, as I pointed out to Mr Sherry at the callover hearing, the Notice of Appeal contains two points which are erroneous: First, it seeks to appeal against the ancillary disclosure order (discussed in Section F of the decision), but mistakenly identifies this as having been granted in aid of the summary judgment order. In fact, it had been granted at the hearing on 11 October 2022 (i.e. prior to the Summary Judgment Decision). The ancillary disclosure order was made in support of the injunction order already in place against the Summonsed Defendants, the intention being that pending the Court’s consideration of the summary judgment, the Plaintiff should have the benefit of such ancillary disclosure in order to support the injunction that was then in place. Second, the Summonsed Defendants continue to reiterate their original argument that the Plaintiff’s comparison of the nature of their business with that of Emperor Group and Dickson Concepts is unhelpful, further stating that I had erred in accepting the Plaintiff’s submission. However, as was made clear in paragraphs 31(3)-(5) of the Summary Judgment Decision, I had accepted that there was a distinction between the alleged business of the Summonsed Defendants and that of the Emperor Group and Dickson Concepts, and had approached the Summonsed Defendants’ case with this distinction in mind. The upshot is that I did not place very much weight, if any at all, on the Plaintiff’s submission on this particular point (viz. the comparison of the revenue of Emperor Group and Dickson Concepts on the one hand, and the revenue of the Summonsed Defendants on the other). The consideration and rejection of the Summonsed Defendants’ cases was based on the factors as summarized at paragraph 32 of the Summary Judgment Decision. I was assured at the hearing on 10 February 2023 that the above would be addressed and corrected. Mr Sherry’s point was that with those anticipated corrections, the Summonsed Defendants still had good grounds of appeal, and that the various matters as raised by them in their evidence ought to be considered at trial. Notwithstanding the proposed corrections to the Notice of Appeal (which I have not seen a draft of), I continue to consider that the appeal is unmeritorious. Second, whilst it may be said that there is, in any matter involving a foreign plaintiff, a general risk that the appeal might be rendered nugatory owing to the fact that the Plaintiff is resident outside the jurisdiction, considering matters in the round, I do not consider that this Plaintiff in this particular case should be deprived of the fruits of the judgment. It is suggested that it would be unfair for the Summonsed Defendants to have to go to the United States (where the Plaintiff is resident) to seek a return of the judgment sum paid if they are successful in their appeal. This submission, however, presumes that the appeal will be successful, which necessitates the Court’s considering the merits thereof. It also assumes that the Plaintiff will not abide by the procedures of the Hong Kong Court when there is no specific evidence to suggest that he is prone to such conduct. Every given case must be considered on its own circumstances. Given that I consider the merits of the appeal to be weak, and taking all of the above factors into consideration, I do not consider this to be an appropriate case in which to grant a stay. I would further mention that I do not agree with the general proposition that once there is a foreign plaintiff involved, this would necessarily mean that a stay ought generally to be ordered. Nor do I consider that the Dimitrov case supports such a proposition. In the circumstances, the Stay Application is dismissed. At the callover hearing on 10 January 2023, there was also before the Court an application by the Plaintiff for variation of the costs order nisi, inviting the Court to perform a gross sum assessment as opposed to leaving the matter to taxation. As a matter of case management, that is an acceptable course. Save for relying on the Stay Application and suggesting that this aspect should also be stayed, Mr Sherry does not oppose the Plaintiff’s application. Having dismissed the Stay Application, I do not see any reason why the Plaintiff’s application for variation of the costs order nisi should not be granted. Thus, the costs of the Stay Application are to be to the Plaintiff. These shall be assessed on a gross sum basis in writing, together with the costs of the three applications previously determined. I thank counsel for their assistance. ( Rachel Lam SC ) Recorder of the High Court Ms Tinny Chan instructed by Robertsons for the Plaintiff Mr James Sherry and Mr David Cheung instructed by M.K. Lam & Co. for the 7th, 8th 12th & 13th Defendants