CHANG JUI MENG v. LONG HEALTH INTERNATIONAL LTD

HCA1822/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1822 OF 2008

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D E C I S I O N

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1.  This is an appeal against a decision of Master Roy M.K. Yu dated 25 March 2009.  By an application under Order 23, rule 1A the defendant had sought an order for security for costs on the ground that the plaintiff was a foreign national.  It was not in dispute that the plaintiff was Taiwanese.  The only ground to resist the application was therefore that the plaintiff had assets within the jurisdiction. 

2.  Security was sought in respect of two heads of costs.  Firstly, $1.1 million for costs incurred up to the exchange of witness statements.  Secondly, $1.28 million being the costs of unsuccessful injunction proceedings taken out by the plaintiff against the defendant.  The injunction proceedings had been heard by Kwan J on 10 December 2008.  She had dismissed the application and made an order for costs in the defendant’s favour, to be paid forthwith. 

3.  The master accepted that the plaintiff had failed to show that he had assets within the jurisdiction and ordered the plaintiff to provide $450,000 as security.  This sum was solely in relation to the costs incurred up to the exchange of witness statements.  He declined to make any order in relation to the costs of the injunction proceedings because :

“O. 23 r. 1 provides for security for costs of the action.  Since the costs for injunction has been ordered by Kwan J in favour of the defendant, it is no longer costs of the action.  After all, the defendant may proceed to tax the costs and execute on the order.  There is no reason to give security again.  I would not take into account this area in assessing the quantum of the order of costs.”

4.  The defendant now appeals against this part of the ruling and renews his application for a further $1.28 million in security for the costs of the injunction proceedings.  

5.  The position as at the time of this appeal, on 3 May 2009, was as follows.  The deadline for paying in the $450,000 ordered by the master was 6 May.  The costs of the injunction proceedings ordered to be paid “forthwith” are now the subject of taxation.  There will be a call-over hearing in June and it is expected that the taxation hearing will take place in about September 2009. 

6.  Since the appeal the court has been informed that the order to pay $450,000 as security was complied with, within time. 

7.  A variety of different scenarios were considered by counsel and the court at this hearing.  The more important ones seem to be as follows.  If no more security is ordered the “forthwith” order will proceed in the normal way.  At the end of the taxation hearing in, say, September, a sum will be due to the defendant.  If the plaintiff pays that will conclude the matter.  If the plaintiff does not pay the defendant will probably seek an “unless order” for payment of the injunction costs so that the action could thereafter be struck out or stayed.  In either event the defendant will have brought the action to an end with an order for costs in its favour.  However, the defendant is obviously concerned that either the “forthwith” costs order or the strike-out costs order may never actually be paid. 

8.  If, on the other hand, more security is ordered one of two things will happen.  If the further security is not paid the defendant will be in the same position as above.  The action will be stayed with costs but no costs may actually be forthcoming.  If the further security is paid in by the plaintiff it will remain at risk of being penalized for failure to pay the “forthwith” order.  Thus, Mr Harry Liu, counsel for the plaintiff submits that the plaintiff would be in “double jeopardy”.  I agree that it would be unjust for the defendant to “have its cake (more security) and eat it too (demanding payment of the forthwith order)”. 

9.  However, it would be equally unjust to the defendant to, possibly, bring this case to an end without the prospect of receiving a large proportion of its costs. 

10.  On balance I think the preferred and less complicated course, bearing in mind that this is an appeal, albeit a hearing de novo, is to let the “forthwith” costs order run its course.  It is open to the defendant to renew its application for further security in due course.  Indeed a second application for security could gather strength at time passes.  This is because (a) the trial date will be nearer and (b) the plaintiff’s response to its obligation to pay the forthwith order will be better known.  If the costs are paid expeditiously the matter will have resolved itself within a matter of a few months.  If they are not, or the plaintiff is seen to be delaying the matter, it will provide more substance to the defendant’s renewed application. 

11.  A final reason why I have decided not to interfere with the master’s decision is that, ultimately, it was a matter within his discretion.  I do not think that this is a case in which that discretion should be interfered with.  I do not think the master misdirected himself.  Neither do I think he took into account irrelevant matters when exercising that discretion.  The existence of a recent court order compelling the plaintiff to pay the defendant’s legal costs “forthwith” seems to me to be a relevant matter to be taken into consideration when deciding whether to make an order for security of those very costs. 

12.  I therefore dismiss this appeal.  The costs of the appeal shall be to the plaintiff on a nisi basis.