XCHRX AS ELEKTRONIK v. GREAT WALL ELECTRONICS LTD. AND OTHERS

HCA442/94

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 442 OF 1994

---------------

---------

--------------------

REASONS FOR DECISION

--------------------

1. This matter involves a very simple point of law. I think I can deal with it quite briefly. This is an appeal by the 1st and the 5th defendants against the Order of Master Betts - as he then was - refusing to order further security of costs against the plaintiff.

2. The plaintiff is a foreign plaintiff and the defendants are therefore entitled to ask for security for costs. Indeed, as early as October 1995, Master Jennings had ordered that the plaintiff was to give security for the 1st defendant's costs in the sum of $325,000. The 5th defendant, of course, was entered as a party subsequent to that order.

3. In November 1997, the 1st and the 5th defendants applied for the further security of costs up to the trial. The length of the trial was then estimated by the 1st and the 5th defendant to be seven days. When the matter went before Master CHUNG, he ordered that the plaintiff was to give security in the further sums of about $196,000 and about $200,000 as further security for the costs of the 1st defendant and as security for costs for the 5th defendant respectively.

4. Apparently, despite the estimate by the 1st and the 5th defendants as to the length of the hearing or the trial, Master CHUNG was of the view that security for costs should be assessed on the basis of a five-day trial. The matter was however set down for trial with an estimate length of hearing of seven days in May 1998 by Suffiad J.

5. The order to set down the matter for trial was made against a check-list filed by the 1st and the 5th defendants in which the estimated length of hearing was also put down to be seven days. In that particular check-list, it appears that the solicitor for the 1st and the 5th defendants also warranted, by way of a check-list, that there would not be any further application for security for costs.

6. And after the matter was set down for trial, the 1st and the 5th defendants applied for further security as the case was actually set down for a seven-day trial, two days more than the estimate used by Master CHUNG to assess the amount for the further security. The application for further security was dismissed by Master Betts and hence the present appeal.

7. Security for costs is ordered at different stages of the proceeding so as to cover the reasonable costs incurred by the requisition party. By its very nature, the ordered amount cannot be absolutely precise. The court can only order such security as it considers to be appropriate to cover costs up to a certain stage of the proceeding. If there is any change of circumstances, the court can of course order further security.

8. Counsel for the appellant stressed on the use of the term res judicata. I personally do not think the term of "res judicata" is perhaps too appropriate in dealing with security for costs applications when there have been earlier orders made with regard to security for costs. Instead, I would be considering if there has been any material change of circumstances to justify the ordering of further security, bearing in mind of course that ordering security for costs involves an element of the exercise of a discretion and hence the issue is whether Master Betts had wrongly exercised such a discretion.

9. When the application for further security went before Master CHUNG, the 1st and the 5th defendants estimated the length of the trial to be seven days, whereas the plaintiff estimated it to be ten days. Master CHUNG, of course, was not there to adjudicate or to decide the length of the trial. That was not the issue before him at all. He was just trying to estimate a reasonable amount of costs to cover the trial for the 1st and the 5th defendant.

10. Initially, his estimate was based on five days as the length of the trial. But in an application for security for costs, what the Master decided, as I said, was an appropriate amount to cover the costs of the trial, and the estimated length of the trial was just one of the factors that he had to take into consideration in determining whether security for costs ought to be made and the amount that ought to be made. There were various different considerations and factors that the Master must take into consideration.

11. This was the issue before the Master. Master CHUNG, of course, must take into consideration other relevant factors. Having considered all the relevant factors, Master CHUNG ordered the plaintiff to provide the security for costs or the further security for costs in favour of the 1st and the 5th defendants, as he did. In my view, despite the fact that the case was set down for a seven-day trial, there had not been any material change of circumstances as such.

12. When the matter went before Master CHUNG, the 1st and the 5th defendant estimated the case to last seven days, and the plaintiff estimated it to last ten days. The order for further security for costs was made on such estimate. Master CHUNG ordered the further security that he considered to be appropriate on the strength of such estimate by the parties.

13. When the case was set down for a seven-day trial by Suffiad J, it was still within the estimate of the parties upon which the order for the further security was made. I must not, of course, ignore the undisputed fact that the solicitors for the 1st and the 5th defendants in a check-list hearing had warranted to the court that there would be no further application for security for costs when the estimate at that time was also seven days.

14. On the matter before the court there is no base for suggesting that the dismissal by Master Betts of the 1st and the 5th defendants' application for further security was the result of a wrongful exercise of his discretion. That being the case, I do not see any merit in this appeal. It must therefore be dismissed.