CHIN KAM CHIU v. BANK OF CHINA (HONG KONG) LTD

CACV 167/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 167 OF 2008

(ON APPEAL FROM HCB nO. 1043 OF 2006)

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reasons for decision

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1.  On 19 August 2008, I ordered the respondent, Chin Kam Chiu, who did not attend the hearing, to provide security for the applicant’s costs of the appeal. These are the reasons.

2.  On 18 November 2005, the applicant, Bank of China (HK) Ltd, served on the respondent a Statutory Demand for unpaid judgment debts of about $6.6 million and US$ 3.76 million, which was followed by a Bankruptcy Petition on 29 March 2006, served by way of substituted service.

3.  The respondent did not appear at the hearing of the petition and a bankruptcy order was made against him. The total proofs of debt against the respondent exceeded $2.2 billion. The respondent sought, unsuccessfully, to annul the bankruptcy order.

4.  The respondent’s attempt to appeal against the dismissal of his annulment application failed, partly because he was out of time. He then sought an extension of time to appeal.

5.  On 27 May 2008, Poon J dismissed the respondent’s application for an extension of time to appeal mainly due to a complete lack of merits.

6.  The respondent then appealed against Poon J’s order, leading to the present application by the applicant for security of costs of the appeal.

7.  The applicant contended that the respondent is impecunious by reason of the bankruptcy order and there is no reason not to order him to furnish security for costs of the appeal.

8.  Order 59 rule 10(5) gives the court the power to order security of costs against an appellant where there are special circumstances rendering it just to do so.

9.  The established categories of “special circumstances” include cases where the appellant, through insolvency or impecuniosity, will be unable to pay the costs of the appeal when the appeal fails, and where the respondent is likely to encounter undue delay or be put to undue expense in enforcing any costs order against the appellant.

10.  I have considered the applicant’s allegations as revealed in the affirmation filed in support of the application. I have also considered the respondent’s case as set out in a letter dated 18 August 2008 submitted by Miss Leung Wai Chun on behalf of the respondent.

11.  The impecuniosity of the respondent is not disputed as he had been declared a bankrupt. In my view, the respondent is unlikely to be able to pay the costs of the appeal when it fails and the applicant is likely to encounter undue delay or be put to undue expense in enforcing any costs order against the respondent.

12.  I have also considered the merits of the respondent’s proposed appeal. It is not necessary to form any definite view on the issue, but I am not satisfied that there is sufficient reason to exercise my discretion not to order him to furnish security for the applicant’s costs of the appeal.

13.  Having examined the applicant’s skeleton bill of costs, I am satisfied that a proper amount of the security for costs is $150,000. The issues involved in the proposed appeal are short and simple.

14.  I therefore made the following orders:

1.   The respondent is to furnish security for the applicant’s costs of the appeal in the sum of $150,000 by making cash payment into court within 28 days of the service of this order;

2.   Until the respondent provides the security for costs aforesaid, all proceedings in the appeal will be stayed;

3.   If the respondent fails to provide the security for costs within 28 days, the appeal shall be dismissed without further order with costs of the appeal to the applicant to be taxed if not agreed; and

4.   If the respondent complies with the order for security of costs, costs of this application to be in the cause of the appeal.