CHEUNG HING v. WONG CHOR CHEUNG AND OTHERS

CACV 101/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 101 OF 2014

(ON APPEAL FROM HCA NO. 925 OF 2010)

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D E C I S I O N

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1.  On 4 December 2014, the Court of Appeal (Kwan JA and Poon J) made an order for the 1^st and 3^rd defendants (“Wong” and “WF Forest”), the appellants in CACV 101/2014, to provide security for costs of appeal of $442,420 within 28 days. The last day for complying with the order falls on 2 January 2015. The order also provided that the court may extend time to comply with the order for “special reasons”.

2.  On 23 December 2014, the defendants issued a summons to extend time to give security to 25 February 2015 with an affirmation of Wong in support.

3.  I gave directions on 24 December for this application to be dealt with on paper.

4.  The plaintiff did not file evidence or submission in opposition pursuant to the directions given on 24 December.  Instead, his solicitors wrote to the court on 30 December 2014 stating his position that he is prepared to consent to extend time to 25 February 2015 subject to 7 undertakings to be given by Wong and other parties.

5.  As the defendants would not agree to give the proposed undertakings, the matter has to be determined by the court.

6.  The grounds put forward by the defendants for extending time are that Wong proposed to sell the Chi On Property and use the proceeds to pay the security ordered by the court.  He exhibited a provisional agreement for sale and purchase made by the registered owner, Landford Enterprise Ltd (“Landford”), dated 18 December 2014 for the consideration of $3,680,000.  A formal sale and purchase agreement is to be signed on 18 January 2015 and completion is to take place on 18 February 2015.

7.  Wong had deposed in an earlier affirmation that the entire issued capital of Landford is held by his son John Wong on trust for him.  He exhibited a letter dated 23 December 2014 from John Wong to the handling solicitors giving an “irrevocable letter of authorisation” to release all the sale proceeds to Wong.

8.  Wong also deposed that the encumbrances on the property are an outstanding loan to Hong Kong Finance Co Ltd of $2.3 million and a charging order of the Inland Revenue Department of $367,776.93.  And since the property is to be sold for $3,680,000, the net sale proceeds should be sufficient to pay the security ordered.

9.  I have considered the undertakings sought by the plaintiff’s solicitors.  The first three undertakings are said to be necessary to confirm the beneficial interest of Wong in the property as alleged by him.  I do not consider this necessary in light of the evidence adduced by Wong.

10.  The fourth and fifth undertakings are said to prevent Landford and Wong from diminishing the value of the property by creating any further encumbrance to ensure that the net proceeds would be sufficient to pay the security ordered by the court.  I will impose a condition but in limited terms.

11.  The sixth undertaking is to be provided by the handling solicitors to ensure that the necessary amount from the proceeds of sale will be used for paying the security for costs.  I do not find this necessary in view of the irrevocable authorisation given to the solicitors to release the sale proceeds to Wong.

12.  The seventh undertaking is to cater for the contingency that the sale should fall through prior to completion.  I think it appropriate to provide for this in the order I am to make.

13.  The order I make is in the following terms:

(1)  The time provided by the order of 4 December 2014 for giving security for the plaintiff’s costs of the appeal in CACV 101/2014 be extended to 25 February 2015, subject to the terms in (2) and (3) hereof.  Save as aforesaid, all other terms of the order of 4 December 2014 shall remain unchanged.

(2)  Within seven days hereof, the 1^st defendant is to give a personal undertaking to the court in writing and to procure a similar undertaking in writing from Landford not to create any further encumbrance against the Chi On Property prior to completion of the sale and purchase so as to reduce the net proceeds of sale below $442,420.

(3)  In the event the purchaser of the Chi On Property should fail to pay the further deposit by 18 January 2015, the 1^st defendant is to give notice in writing to the Registrar and to the solicitors for the plaintiff (such notice is to be given within two days of the event), in which case the 1^st and 3^rd defendants are to give security as ordered within seven days of the event.

(4)  The 1^st and 3^rd defendants are to pay the plaintiff’s costs of this application in any event.