IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 10335 OF 2000
Coram: Hon Chung J in Chambers
Date of Hearing: 7 June 2001
Date of Decision: 7 June 2001
D E C I S I O N
1. This is D1’s appeal against the Master’s order dated 22 May 2001 whereby the learned Master dismissed D1’s application for a stayof execution pending the determination of D1’s appeal against the order of 20 April 2001 giving him conditional leave to defend thisaction.
2. The plaintiff brings this action against D1 and D2. According to the Statement of Claim dated 6 December 2000, the plaintiff is andwas a member of the Hong Kong Futures Exchange Limited and has been carrying on the business of dealing in futures and options contracts.D1 was the plaintiff’s former client who opened a futures/options trading account.
3. According to the plaintiff, on 13 October 2000, the plaintiff expressly told D1 he could only commence trading after sufficient margindeposits had been provided. As a result, on that day, D1 deposited a cheque in the sum of $2.5 million into the plaintiff’s bankaccount.
4. Further, on the same day, D1 instructed the plaintiff to sell 250 Hang Seng Index Futures October contracts at open (14,460 points)which instruction was executed by the plaintiff accordingly. The market moved adversely against D1 subsequently. In the afternoonof 13 October 2000, D1 telephoned the plaintiff and informed the plaintiff that all the HSI contracts were to be transferred to D2,which was also a member of the Hong Kong Futures Exchange Limited carrying on the same business as the plaintiff.
5. It is the plaintiff’s case that a binding agreement was reached between it and D2 that the plaintiff would give up and D2 would takeup the HSI contracts.
6. This appeal is not concerned with the propriety of the order dated 20 April 2001 giving conditional leave to defend but only relatedto the dismissal of D1’s stay of execution application.
7. Plaintiff’s counsel has fairly accepted that the merits of the substantive appeal are usually not of crucial importance to an applicationof this kind. I do not consider that the facts of this appeal justify a departure from that general rule.
8. The plaintiff opposes this appeal on the following main grounds:
9. As a matter of principle, the plaintiff’s point (1) above is correct. However, whether or not “good reasons” had been shown dependsultimately on the circumstances of each case.
10. In the present case, if the stay of execution is granted, the risk of prejudice to the plaintiff is that it will not be able to enterjudgment against D1 (if D1 should fail to comply with the condition) between now and 16 July 2001 (the date fixed for hearing ofthe substantive appeal). On the other hand, depending on my determination on the adequacy of D1’s evidence regarding the likely prejudiceto him, the risk of prejudice to D1 may be that judgment in the sum of about $9 million will be entered against him (with the usualconsequences regarding enforcement) if he defaults in paying $2.5 million into court.
11. D1 has argued that he will be financially ruined if he is required to comply with the said condition of payment into court. I donot understand how this can be so. However, since D1 is not legally represented, and may not be articulate in his language, I considerwhat he meant to say is that if there is no stay of execution, he will not be able to comply with the said condition. This in turnwill result in judgment being entered against him and this will bring about financial ruin to him.
12. D1 has filed 2 affirmations respectively dated 4 May 2001 and 5 June 2001 in support of this appeal. In his 4 May 2001 affirmation,D1 deposed that he would not be able to comply with the order of 20 April 2001 without depriving himself of all working capital orselling his investment in the mainland at an undervalue. In 5 June 2001 affirmation, D1 deposed to the assets he owns, especiallythe amount of available cash in the bank accounts. A number of criticisms have been levied by the plaintiff against D1’s affirmations.Despite these, I conclude that D1 has adduced sufficient evidence to show that if the order of 20 April 2001 was not stayed betweennow and 16 July 2001, he would suffer serious prejudice.
13. I have taken into account the following matters in reaching this conclusion:
14. For the above reasons, I will allow the appeal and order that there be a stay of execution of the order of 20 April 2001 relatingto the payment of $2.5 million into court until 16 July 2001 or further order (whichever is the earlier).
Mr Jat Sew Tong, instructed by Messrs Baker & McKenzie, for the Plaintiff
1st Defendant acts in person and present