LAM WAI LIK ERIC AND OTHERS v. TAM SUET MUI

CACV 10/2021

[2021] HKCA 1083

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 10 OF 2021

(ON APPEAL FROM HCAP 5/2015)

________________________

________________________

____________________

DECISION

____________________

Hon Chow JA (giving the decision of the Court):

INTRODUCTION

1.  This is the Plaintiffs’ application for security of costs in respect of the Defendant’s appeal against the judgment of Wilson Chan J dated 14 December 2020 (“the Judgment”) pronouncing in solemn form for the force and validity of a will made by Mr Lam Chok Wai, deceased (“the Deceased”) dated 3 September 1987 (“the 1987 Will”) and dismissing the Counterclaim of the Defendant seeking to propound 2 later wills made by the Deceased dated 13 August 1999 and 18 August 2005 (“the 1999 Will” and “the 2005 Will” respectively) in solemn form.

2.  Having read the evidence and submissions filed by the parties, we consider that it is appropriate to determine the Plaintiffs’ application on paper without an oral hearing pursuant to Order 59, r 14A(1) of the Rules of the High Court, Cap 4A.

BRIEF BACKGROUND

3.  The 2^nd Plaintiff was the wife of the Deceased, and the 1^st and 3^rd Plaintiffs were the children of the 2^nd Plaintiff and the Deceased.  The Defendant was the mistress of the Deceased, although their relationship had been known to the 2^nd Plaintiff and other members of the Deceased’s family for many years prior to his death on 21 November 2005.  During his lifetime, the Deceased made, or allegedly made, the 3 wills mentioned above.

4.  At the trial, the Defendant did not raise any issue regarding the validity of the 1987 Will, but contended that it had been revoked by the 1999 Will and/or 2005 Will, under each of which the Defendant was appointed as the sole executrix and beneficiary of the Deceased’s estate.

5.  After a trial lasting some 18 days, the Judge, in the Judgment handed down on 14 December 2020, found that (i) the Deceased did not have testamentary capacity to make the 1999 Will, and (ii) the Deceased did not have testamentary capacity to make the 2005 Will, and did not “know and approve” the contents of the 2005 Will at the time of his execution thereof. Accordingly, the Judge found in favour of the Plaintiff, pronouncing in solemn form for the force and validity of the 1987 Will.

6.  Against the Judgment the Defendant filed and served a Notice of Appeal dated 11 January 2021.

7.  On 1 April 2021, the Plaintiffs issued the present summons seeking security for costs of the appeal in the amount of HK$1,200,000.  The Plaintiffs’ application is supported by the 1^st and 2^nd Affirmations of Lai Ying Louis, a solicitor of T K Tsui & Co, filed on 1 April 2021 and 10 May 2021 respectively.  It is responded to by the Defendant by the Affirmation of Lau Wing Chi Gigi, a partner of Ivan Tang & Co, filed on 3 May 2021.

8.  As can be seen from the 1^st Affirmation of Louis Lai, the Plaintiffs’ application is based on 3 grounds: (i) the Defendant is a permanent resident in Canada, (ii) the Defendant is impecunious, and (iii) the appeal is unmeritorious.

9.  By the Affirmation of Gigi Lau, the Defendant makes it clear that while she does not accept that the Plaintiffs have made out a case for security for costs, she wishes to focus on the substantive appeal without being bogged down by “interlocutory manoeuvres”, and undertakes to provide security for the Plaintiffs’ costs of the appeal in such sum as may be deemed fit by the court in the following manner:

(1)  Ivan Tang & Co, her solicitors, are prepared to give a “surety’s guarantee” in terms similar to that used in support of an application for the sealing of a foreign grant in Form No F.13 as security for the Plaintiff’s costs of the appeal; and

(2)  the Defendant’s son-in-law (“Lam”) agrees to charge his home in Canada (“the Canadian Property”), in which the Defendant and her daughter’s family are currently residing, in favour of Ivan Tang & Co if requested.

In that affirmation, it is also mentioned that the Canadian property was purchased in 2018 for about CAD 1.34 million, has a current market value of about CAD 1.7 million, and is subject to an outstanding mortgage debt of about CAD 774,000.  Gigi Lam has also exhibited a declaration made by Lam dated 2 May 2021 as “LWCG-6” to her affirmation, in which Lam states that he is prepared to charge the Canadian property in favour of Ivan Tang & Co up to the limit of CAD190,000[1].

10.  In the Defendant’s Submissions dated 26 May 2021, the Defendant’s proposal to provide security for costs by means of Ivan Tang & Co’s surety’s guarantee in favour of the Plaintiff, backed by Lam’s legal charge of the Canadian Property in favour of Ivan Tang & Co, is repeated.  A draft form of the proposed surety’s guarantee is annexed to the Defendant’s Submissions.

11.  The Plaintiffs do not accept the Defendant’s proposal, and insist that the security be given by payment into court of the sum of HK$1,200,000 as sought in the summons dated 1 April 2021.

DISCUSSION

12.  In the Defendant’s Submissions, she does not raise any substantive opposition to the Plaintiffs’ application for security for costs.  The Defendant also accepts that she is residing in Canada and cannot offer security by way of payment into court.  We are satisfied that the Plaintiffs are entitled, as a matter of principle, to security for costs of the appeal on the basis of the Defendant’s foreign residence, in the absence of any countervailing factor to militate against the prima facie rule that a foreign appellant ought to give security for costs of an appeal.  In the circumstances, we do not consider it necessary to consider the merits of the appeal.

13.  It is also not necessary to consider the suitability or sufficiency of the Canadian property as security, in view of the fact that it is not proposed by the Defendant to be charged in favour of the Plaintiffs.  In any event, in view of its nature and location, the Canadian Property is, in our view, not a suitable form of security for the Plaintiff’s costs of the appeal.  However, we do not see why the proposed surety’s guarantee by Ivan Tang & Co is objectionable as a form of security.  Louis Lai, in his 2^nd Affirmation, has not explained why a guarantee given by a firm of solicitors in Hong Kong is not acceptable to the Plaintiffs as security for their costs of the appeal, save to state (at §10) that “given the complicated [structure] behind the proposed surety, enforcement would be difficult and inevitably the Plaintiffs would be put to extra costs and unnecessary delay”.  Neither has Mr K M Chong, in his Skeleton Submissions dated 12 May 2021, explained why the proposed guarantee is not an acceptable form of security.  At §20 of his submissions, it is said that “Insofar as the surety’s guarantee … is concerned, it is submitted that Ps have difficulty understanding how it could fortify D’s proposed undertaking”, but the Plaintiffs’ alleged difficulty is not further explained.

14.  Mr Chong’s Reply Submissions dated 2 June 2021 are equally lacking in substance as to why the solicitor’s guarantee is not an acceptable form of security.  In those submissions, the following is said:

“[6] Despite it was stated in [Gigi Lau’s Affirmation] that D would undertake to provide security, it appears that D now only seeks this Court’s approval that the security be provided in the form of a ‘third party’ surety’s guarantee by Messrs. Ivan Tang & Co., i.e., D’s solicitors (‘the Guarantee’). For avoidance of doubt, neither D’s undertaking nor the Guarantee is acceptable to Ps, and Ps maintain that the security be provided by way of a payment into court.

[7] The draft Guarantee provides that Messrs. Ivan Tang & Co. would make full payment upon a 28 days’ notice from Ps (for which there is no justification for the lengthy period required of the notice). It is submitted that if such guarantee is taken seriously by D, one cannot see why D cannot make payment into court within 28 days of the order to be made herein. The Guarantee serves no useful purpose and would simply put Ps to extra costs and time for its enforcement, and complication is foreseeable if the Guarantee is dishonoured.

[11] As for the ‘surety’s guarantee’, no explanation as to how Mr. Lam’s landed property could be utilized to fortify D’s undertaking was forthcoming, and not even a draft of the said guarantee was provided. Unsurprisingly, nothing was mentioned in the draft Guarantee in that regard.

[12] Despite that D was given the opportunity to address Ps’ concerns, she offered no explanation but wrongfully sought to place the burden of objection on Ps.  It is submitted that D’s proposed forms of security are not justified at all, and hence, they should be rejected outright.”

15.  Other than the objection relating to the time for payment (28 days upon demand in writing) under the surety’s guarantee proposed to be given by Ivan Tang & Co, none of the matters mentioned in the Reply Submissions seems to us to raise any concern of substance about the proposed surety’s guarantee as security for the Plaintiffs’ costs.  The amount of the security sought by the Plaintiff (HK$1.2 million) is not a huge sum of money.  There is no reason to believe that Ivan Tang & Co will not be able to honour the guarantee should they be called upon to do so.  We also consider the time for payment under the proposed surety’s guarantee, ie 28 days upon the Plaintiffs’ demand in writing, to be reasonable in all the circumstances.

16.  Under Order 59, r 10(5) of the Rules of the High Court, the form of security for the costs of an appeal, where it is considered that security ought to be given, is a matter to be determined by the court in the exercise of its discretion.  An order for security for costs should aim to provide reasonable, but not absolute, protection of the costs of a party which the court considers should be given by the other party.  We are of the view that the proposed surety’s guarantee by Ivan Tang & Co to be sufficient and appropriate for the Plaintiffs’ costs of the appeal.

17.  As for the amount of the security, we have considered the Plaintiffs’ Skeleton Bill of Costs.  The total estimated costs come to HK$1,285,425, the bulk of which relates to counsel’s fees (HK$750,000 and HK$350,000 for leading and junior counsel respectively).  In view of the fact that counsel also appeared at the trial before Wilson Chan J and ought to be thoroughly familiar with the legal and factual issues in the case, and the fact that the grounds raised in the Defendant’s Notice of Appeal dated 11 January 2021 and the Plaintiffs’ Respondent’s Notice dated 1 February 2021 are, we consider, straight forward, we consider the estimated counsel’s fees to be on the high side.  We fix the amount of the security at HK$800,000.

18.  In relation to the costs of the application, we note that there are some “without prejudice correspondence” in sealed envelopes included in the hearing bundle, which we believe may have some bearing on the issue of costs.  In the circumstances, we make an order nisi that the costs of the application be in the cause of the appeal, save that any application to vary the order nisi may only be made on the basis of matters disclosed in the “without prejudice correspondence”.

DISPOSITION

19.  The court makes the following order:

(1)  The Defendant (Appellant) shall within 28 days from the date of the order herein give security for the Plaintiffs (Respondents)’ costs of this appeal in the sum of HK$800,000 by providing a surety’s guarantee by Ivan Tang & Co in the form of the draft annexed to the Defendant’s Submissions dated 26 May 2021.

(2)  Until such surety’s guarantee be provided and notice thereof given by the Defendant to the Registrar of Civil Appeal, all proceedings in the appeal herein be stayed.

(3)  In default of providing such surety’s guarantee within the time aforesaid, the said appeal, upon the solicitors for the Plaintiffs certifying such default to the Registrar of Civil Appeal, do stand dismissed without further order of the court with costs to be paid by the Defendant to the Plaintiffs, such costs to be taxed if not agreed.

(4)  There be an order nisi that the costs of Plaintiffs’ application for security for costs by summons dated 1 April 2021 be in the cause of the appeal.

(5)  Liberty to apply.