DYNASTY LINE LTD v. SUKAMTO SIA AND ANOTHER

CACV 180/2008
CACV 184/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 180 OF 2008

(ON APPEAL FROM HCA NO. 2057 OF 2007)

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D E C I S I O N

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1.  This is an application for security for costs for an appeal which is coming up in two months’ time.  The appeal was launched last July.

2.  I have to say that, in the course of the argument this morning, I have changed my mind as to the order that I should make.  Looking at the whole thing back to front - my initial reaction on reading the papers was that security ought to be given because the defendants are outside the jurisdiction, but the amount asked for was way over the top and far too high, in respect of both defendants, it comes to well over a million dollars, which is quite unnecessary.

3.  However, it seems to me, having heard the argument, the first defendant has been made bankrupt in the United States.  That causes a complication.  Essentially, what is at issue is whether there should be a Mareva injunction.  The second defendant seems to be pretty substantial and has a house, which is empty, of undoubted high value and I have absolutely no doubt that it could be rented out for a very substantial sum.  Albeit it is owned jointly by the second defendant and his wife, nevertheless, as Miss Tong has pointed out, a Receiver could be appointed, the property could be rented out, or at any rate, and I have no doubt that in a very short space of time, no more than a few months, any costs that have been run up could be paid out of the incoming rent, even including the appointment of a Receiver and the costs that involved.

4.  Looking at the matter realistically, however, I would have thought that probably the threat of that happening would be enough to extract the costs out of the second defendant who does not appear to be short of money, albeit he is probably overseas.

5.  I also bear in mind that Mareva injunctions are in place and so the plaintiff is secured to a very large extent.  It seemed to consider it worth obtaining a Mareva injunction against the first defendant despite the fact that he has been made bankrupt overseas.  That is another matter.

6.  All in all, the other matter which has weighed slightly heavier on my mind as a result of what I have heard this morning than it otherwise might have done, is the fact that the whole application has been delayed.  I think in a circumstance such as this, if the plaintiff wants to obtain security for costs, because it has obtained a Mareva injunction, that causes complications to the defendants.  The fact that an application for security would be made should have been made clear very early.  The three months it took the law costs draftsman to come up with a bill of costs is just ridiculous.  That could have been done in a few minutes.

7.  In my view, it is not appropriate on this occasion to order security for costs.  The application is late.  It would cause the first defendant considerable difficulties, in view of his present status.  It has been said that he has to show he cannot raise the money through other sources.  That is something which, given the time involved, I think would be putting too great an onus on him.  The matter has been allowed to get to this stage.  I think it should just go ahead and, in my view, the plaintiff is secured enough against the second defendant that security need not be ordered.

8.  I will decline this application and I am inclined to make it costs in the appeal.