LAU AH SUM v. JING YING SHE LTD.

CACV 358/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 358 OF 1999

(ON APPEAL FROM HCMP NO. 6497 OF 1998)

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J U D G M E N T

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1. By an originating summons, the Plaintiff applied for the removal from the Land Register of a lis pendens registered by the Defendant against a shop owned by the Plaintiff. Seagroatt J ordered that the registration be vacated. The Defendant is appealing against that order. Its appeal is due to be heard in just over two weeks' time on 18 February. The Plaintiff is now applying for security for his costs of the appeal. The application is made on the ground that the Defendant would be unable to pay the Plaintiff's costs of the appeal if ordered to do so.

2. I have decided to refuse this application. On the Plaintiff's own evidence, I am not satisfied that the Defendant would not be able to pay the Plaintiff's costs of the appeal if ordered to do so. It may be that it has not paid the Plaintiff the costs awarded against it by Seagroatt J, but it does not necessarily follow from that that it is unable to do so. It may be that it is waiting for the disposal of the appeal before paying the Plaintiff's costs because, if the appeal is successful, it is likely that Seagroatt J's order for costs will be set aside. In any event, the Plaintiff's bill of costs was only sent to the Defendant's solicitors a little over three weeks ago. It may be that the Defendant is unwilling to pay the bill without a taxation.

3. The other facts relied upon by the Plaintiff in his evidence are that the Defendant's issued share capital is $100.00 and its registered office is the office of its solicitors. These facts suggest that the Defendant started life as a shelf company, and that it may not have changed much since its formation. But these facts are not necessarily an indication that the Defendant would be unable to pay the Plaintiff's costs of the appeal if ordered to do so.

4. The evidence filed on behalf of the Defendant shows that it acquired two investment properties. That evidence, I accept, is by no means complete. For example, although the Defendant's audited accounts show that its net assets as at 31 March 1998 were $2,576,000.00, the accounts were heavily qualified, and there is no evidence as to what its net assets are today. Again, its shareholders undertook on 29 April 1999 that they would not claim any moneys advanced to the Defendant until the conclusion of HCAL 13764/97, but there is no evidence as to whether that action has now concluded or what the amount of the loans are. Again, although judgment was given for the Defendant in HCAL 5559/98 on 27 November 1998 for the sum of $2,680,000.00 and for damages to be assessed, there is no evidence as to whether the Defendant has been paid that sum, or whether the damages have yet been assessed, and if so whether payment has been made.

5. However, the Defendant's evidence is nevertheless at least some support for its contention that it has sufficient assets to pay the Plaintiff's costs of the appeal if ordered to do so. Unlike the case of Tufnell Investment Ltd. v. Thosowin Properties Ltd. [1985] 2 HKC 14, on which Miss Annie Lai for the Plaintiff relied, there is in this case some evidence of the Defendant's assets. The fact is that the Plaintiff has failed to prove to my satisfaction that the Defendant would be unable to pay the Plaintiff's costs of the appeal if ordered to do so, and it follows that this application must be dismissed.