POLAR FURS LTD AND ANOTHER v. INTERNATIONAL FUR CO LTD AND OTHERS

HCA 2042/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2042 OF 2005

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D E C I S I O N

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Application

1. The Plaintiffs asked for the return of the security of costs paid into Court by the 1st Plaintiff. The 1st and 3rd Defendants opposed to it.

Background

2. On 18 October 2005, Polar Furs Ltd (“Polar Furs”) commenced the present proceedings against the Defendants for a sum of US$250,697.38 being outstanding sums under a fur purchase and credit facility agreement (“the Agreement”).

3. The Defendants contested the proceedings.  On 24 January 2006, they sought security for costs against Polar Furs.  Master Yu heard the application on 1 March 2006 and ordered Polar Furs to pay $200,000 up to the stage of discovery.  Payment in was duly made on 14 March 2006.

4. In the meantime, Polar Furs issued two summonses, (a) an O.14 application, and (b) a summons to amend the Writ and Statement of Claim to add, inter alia, the 2nd Plaintiff Cyril Murkin (HK) Ltd (hereinafter, Polar Fur and Cyril Murkin are referred to as 1st and 2nd Plaintiffs respectively).  The amendments were allowed on 28 July 2006.  Master Yu, on the other hand, on 10 January 2007, ordered that summary judgment be entered for the Plaintiffs against the 2nd Defendant.  Unconditional leave to defend the case was however granted to both the 1st and 3rd Defendants.  The Plaintiffs were not satisfied with the latter part of the Decision and appealed the same.  Mr. Recorder Fok, SC dismissed it on 15 February 2007.

5. The Plaintiffs are now trying to execute the Judgment against the 2nd Defendant.  Meanwhile, by a Summons for Directions filed on 12 March 2007, the Plaintiffs sought, among others, that the payment of security in the sum of $200,000.00 should be released.  On 30 March 2007, Mr. Registrar Chan dealt with all directions sought by the parties and adjourned the release of the security to be argued with costs reserved.

6. I heard the matter on 3 May 2007.  Ms. Aparna Assomull of Messrs. Jonathan Rostron acted for the Plaintiffs and Mr. Jonathan Wong of Counsel represented the 1st and 3rd Defendants.

Ruling

7. Now, upon consideration of the evidence authorities and submissions, I have decided to dismiss the Plaintiffs’ application for the following reasons.

Reasons

8. Ms. Assomull’s application is mainly premised on the fact that the 2nd Plaintiff is a company incorporated in Hong Kong and has been joined herein since 28 July 2006.  Paragraph 23/3/5 HKCP 2007 at page 417 states that:

“Foreign and Hong Kong co-plaintiffs (rr.1-3) – The ordinary rule of practice is that no order for security for costs will be made if there is a co-plaintiff resident within the jurisdiction ……”

9. However, with respect, without more, the mere addition of a local 2nd Plaintiff is insufficient to persuade this Court to release the 1st Plaintiff’s duty to provide security in the circumstances.

(a)       The said paragraph 23/3/5 HKCP 2007 does not stop at the provision cited by Ms. Assomull, but goes on to say that:

“… The ordinary rule, however, is subject to the general discretion of the court; it is not an unvarying rule.  Its application is appropriate where the foreign and Hong Kong co-plaintiffs rely on the same cause of action, where each of the plaintiffs is bound to be held liable for all of such costs as may be ordered to be paid by any of the plaintiffs to the defendants at the conclusion of the trial, and where one or more of the plaintiffs has funds within the jurisdiction to meet such liability.  Its application is inappropriate where there is a possibility that each of the plaintiffs may be ordered to pay an aliquot share of the defendant’s costs ……”

(b)       The 1st Plaintiff originally sued for outstanding sums under the Agreement made between it and the Defendants.  However, in the Amended Statement of Claim, it was changed to an alternative plead as follows:

“5.  …The Agreement was entered into by the 2nd Plaintiff as agent of the 1st Plaintiff, its disclosed principal; further or alternatively, in its own principal capacity.”

(paragraph 5 of the Amended Statement of Claim)

(c)       As pointed out by Mr. Wong, after the amendment, the Plaintiffs sued the Defendants in an “and/or” basis.  There are a variety of different choices of costs order open to this Court at the end of the trial.  As such, the 1st Plaintiff still needs to make security of costs to cover the position of the Defendants.  I therefore do not agree with the Plaintiffs that the 1st and 3rd Defendants would not be prejudiced by the return of the sum of $200,000 to the 1st Plaintiff.

Costs

10. As to costs, there seems no reason to depart from the general rule that costs should follow the event.  Although I am grateful for Mr. Wong’s assistance in the matter, a hearing for half an hour before a Master probably does not justify the need to bring in Counsel’s assistance.  I therefore make an order nisi that the Plaintiffs shall bear costs of the 1st and 3rd Defendants in relation to the application for release of the security, including costs reserved on 30 March 2007 and hearing before me on 3 May 2007, to be taxed if not agreed, in any event.