LAL IMP. EXP. S.A. v. UTANIKO (HONG KONG) LTD

DCCJ1907/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1907 OF 2010

________________________

________________________

D E C I S I O N

________________________

1.  By summons dated 23 July 2010, the defendant seeks security for costs from the plaintiff. By the order of Mr Registrar S. Lo dated 17 September 2010, it was ordered that the defendant’s summons be heard immediately after the plaintiff’s summons dated 26 August 2010 seeking summary judgment.

2.  The plaintiff’s application for summary judgment was heard  before Her Honour Judge H. C. Wong on 16 December 2010.  In the Judgment of the learned Judge delivered on the same day (the “Order 14 Judgment”) the learned Judge ordered that the defendant be given conditional leave to defend on the condition that the defendant should pay the full sum claimed by the plaintiff into court within 14 days.  At the end of the hearing of the plaintiff’s summons seeking summary judgment, the learned Judge adjourned the hearing of the defendant’s summons for security for costs sine die, to be restored after payment in by the defendant.

3.  The dispute between the parties today revolves around the question as to whether the plaintiff has a “genuine and strong” case. 

4.  Counsel for the defendant, Mr Nigel Bedford, urged the court to adopt a broad-brush approach.  Mr Bedford further submitted that if a broad-brush approach is adopted, it is clear that the plaintiff’s bona fide claim is met by the defendant’s equally bona fide defence and it is not necessary or appropriate for the court to reach any conclusion on the merits of the case. He cited Sunchase International Group (China) Limited v Vincorp Group of Companies (Investment) Limited [2004] 1 HKLRD 731 in support.

5.  Counsel for the plaintiff, Mr Herbert Leung, submitted that the Sunchase case is not applicable in the present case for the following reasons:

(a) the Court of Appeal in the Sunchase case only set out generally how a court should approach with an application for security for costs;

(b) unlike the present case, it is not apparent from the Sunchase judgment that the plaintiff there had attempted to obtain summary judgment against the defendant;

(c) the court in the Sunchase case was faced with large volume of documentary evidence which were complicated in nature; and

(d) without a preliminary run at the ultimate success or failure of  the claim, the Court of Appeal upheld the lower court’s approach to assume that both the plaintiff has a bona fide claim and the defendant has a bona fide defence.

6.  Mr Leung went on to submit that in the present case, the court has already dealt with the plaintiff’s application for summary judgment.  By disposing of the application, the court had an opportunity to consider the evidence and the parties’ cases.

Discussion

7.  The present case is a simple goods sold and delivered case.  It is not disputed that the full purchase price has been paid by the plaintiff (see: paragraph 2 of the Order 14 Judgment). 

8.  The defence, as summarised by Her Honour Judge H. C. Wong, is that the plaintiff,

“...had an agent who gave a different set of instructions for the payment the plaintiff sent to the defendant. As the plaintiff was silent on those new instructions, the defendant went ahead and applied the plaintiff’s payment to settle Shadi Farhat’s goods.”

 (see: paragraph 4 of the Order 14 Judgment)

9.  In disposing of the plaintiff’s claim for summary judgment, the learned Judge made an express finding that the defendant’s defence is “shadowy”.  (see: paragraph 6 of the Order 14 Judgment) 

10.  The learned Judge went on to note that,

“there were direct communications between the plaintiff and the defendant’s staff, yet many of the emails exchanged between Shadi Farhat, Kaswani and the defendant’s staff were not copied to the plaintiff, from what has been disclosed in the exhibits in the defendant’s affidavit.”

(see: paragraph 6 of the Order 14 Judgment)

11.  It is trite law that on an application for summary judgment, a condition of paying some or all of the money or damages claimed into court, or giving security, is imposed only where there is a good ground in the evidence for believing that the defence set up is a sham defence or the court is prepared very nearly to give judgment for the plaintiff, otherwise unconditional leave to defend would be given (see: for example, Hong Kong Civil Procedure 2011, Vol. 1, Practice Note 14/4/16 at page 246).

12.  In the present case, there is no appeal from the Order 14 Judgment of Her Honour Judge H. C. Wong.  There is nothing to gainsay the express finding by the learned Judge that the defence put forward by the defendant is “shadowy”. Using the language of  Rogers VP in the Sunchase case, supra, I cannot approach the defendant’s case on the basis that the defendant has a bona fide defence.  At best, it can only be described as “shadowy”. 

13.  This is similar to the situation in the case of Policyd S A De CV v Kwan Kim Hung trading as King Tai Company, HCA11225/1997 (Judgment dated 9  December 1998) where Suffiad J dismissed the defendant’s application for security for costs after he had been granted conditional leave to defend.

14.  Having considered all the relevant factors in this case and, in particular, the strength of the plaintiff’s case, in the exercise of my discretion in the matter, I have come to the view that no order for security should be ordered in this case.

15.  In the light of the view that I have taken, I have not gone into the details which both parties have submitted to me insofar as the amount of security is concerned.

16.  Accordingly, I make an order that the application by the defendant by summons dated 23 July 2010 be dismissed.

(Discussion re costs)

17.  I order that the costs of this application be paid by the defendant to the plaintiff in any event (with certificate for counsel), such costs to be taxed if not agreed.