LEE WAI MAN v. TSO YAN

CACV 366/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 366 OF 1999

(ON APPEAL FROM HCA NO. 11301 OF 1997)

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J U D G M E N T

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1. In this action, interlocutory judgment was entered against the Defendant in default of defence for damages to be assessed. Those damages were eventually assessed at $120,000.00 plus interest. The Defendant is appealing to the Court of Appeal against that assessment. The Plaintiff now applies for security for her costs of the appeal. The application is made on two grounds. The first is that the Defendant will be unable to pay the Plaintiff's costs of the appeal if ordered to do so. The second is that, even if the Defendant will be able to pay the Plaintiff's costs of the appeal, he will do his best to avoid doing so.

2. The Plaintiff's cause of action against the Defendant related to the Defendant's breach of a provisional agreement for the sale of his flat to the Plaintiff. Instead, he sold the flat to someone else. However, the Defendant has been restrained from disposing of the proceeds of sale of the flat up to $650,000.00, and he was ordered to lodge that sum with his solicitors to secure the Plaintiff's damages and costs of the action. Mr C.P. Chan for the Defendant has confirmed to me today that that sum of $650,000.00 is still being retained by his firm. At first blush, therefore, it is not immediately apparent why the Plaintiff needs additional security for her costs of the appeal. Those costs would appear to be secured by the $650,000.00 held by the Defendant's solicitors.

3. However, the Plaintiff claims that that $650,000.00 is not sufficient. Apart from the damages of $120,000.00 plus interest, the Plaintiff claims that her costs to date are well in excess of $650,000.00. Indeed, her untaxed bills of costs up to the date when the default judgment was confirmed on appeal amount to almost $1,000,000.00. That does not even include the costs incurred in the assessment and the costs incurred on an application for a stay of execution of the judgment (which have not yet been calculated but which are estimated at $300,000.00 and $30,000.00 respectively) nor does it include the costs of the appeal to the Court of Appeal which the Plaintiff estimates at almost $800,000.00.

4. One thing is plain. The costs supposedly incurred by the Plaintiff bear absolutely no relation to the amount of money at stake in the action. Rightly or wrongly, the costs have escalated to such an extent that they appear at first blush to have got completely out of hand. Moreover, I cannot help thinking that the Plaintiff's estimate of her costs is so exaggerated that no proper reliance can be placed upon it. For example, none of the estimates to which I have referred take into account the incidence of taxation. To take just a couple of items in the bill for the costs of the appeal as illustrations, the bill includes a brief fee of $180,000.00 for senior counsel. It may be that that is the fee which has been quoted by senior counsel to the Plaintiff's solicitors, but in my opinion it is absurd to suggest that the appeal is an appropriate case for leading counsel or that a brief fee of anything approaching $180,000.00 would be allowed on taxation. Again, the bill includes a fee of $50,000.00 to counsel for advice on evidence and drafting a respondent's notice. No advice on evidence is necessary because evidence is not admissible on appeal, and no respondent's notice has in fact been filed even though the time for doing so has expired.

5. In all the circumstances, I decline to order the Defendant to provide security for the Plaintiff's costs of the appeal. In summary, my reasons are twofold. First, I am not satisfied that the sum of $650,000.00 held by the Defendant's solicitors to secure the Plaintiff's damages and her taxed costs is insufficient for securing the Plaintiff's taxed costs of the appeal as well. Secondly, it is, I think, time that a sense of proportionality was brought to bear on this dispute. On a claim worth no more than $120,000.00 plus interest, I am simply not prepared to secure the Plaintiff's damages and taxed costs in a sum in excess of $650,000.00, even if some of these costs may have been incurred as a result of unsuccessful applications or appeals by the Defendant. The Plaintiff's application for security for her costs of the appeal must therefore be dismissed.