XCHRX WAH NAM HOLDINGS CO. LTD. AND OTHERS v. EXCEL NOBLE DEVELOPMENT LTD. AND OTHERS

1999, No. A8974

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8974 OF 1999

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J U D G M E N T

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1. By summons dated 20th September 1999, the 1st-7th Defendants applied for an order that (1) the Plaintiffs do within 14 days provide security for the Defendants' costs in the action in the sum of HK$5,701,727.00 or such other sum as the Court may consider just in a form acceptable to the Defendants or alternatively, the Court, and (2) all further proceedings be stayed until such security is given.

2. That summons came before Master Cannon on a call over hearing on 13th October 1999. She ordered that the application for security for costs be adjourned for argument with two hours reserved. She also gave directions for the filing of further evidence by the parties. And, as I understand it, all the evidence for that hearing has not yet been filed. However, she also ordered that there be an interim stay of the proceedings to take effect from the close of pleadings. It is that part of the order made by Master Cannon that is the subject matter of this appeal before me.

3. It is usually the case that where an order for security for costs is made, the order will usually provide that the proceedings shall be stayed until the security is given (23/3/27 White Book). The question of whether or not security for costs should be ordered has yet to be determined. The evidence in support of the application and in opposition to the application has not yet been finalised and has not yet been put before the Court. It would be wrong, in my view, to prejudge the question as to whether or not security for costs would be ordered by the Court. That is a question to be determined and I understand that a date has already been fixed for the hearing of that application, namely 15th December 1999. That is only about 6 weeks away from today.

4. Yuen J. in an interlocutory proceeding in July this year was of the view that on the state of the evidence before her the financial circumstances of the Plaintiffs were extremely grim. That no doubt encouraged the 1st-7th Defendants into taking out the application for security. I would, however, observe that insofar as the 2nd Plaintiff is concerned, he is an individual. Whilst it may be proper in a proper case to order security against a corporation under the Companies Ordinance, it is doubtful that the poverty or insolvency of an individual would lead to an order for security for costs being made against him (23/3/19 White Book).

5. It was submitted that if the Plaintiffs take steps in the interim which the 1st-7th Defendants have to comply with, they will have to incur further costs which may not be recoverable from the Plaintiffs. But the very question as to whether or not the Plaintiffs should, in the first place, be required to provide security for costs has yet to be determined.

6. In the circumstances, in the exercise of my discretion, I do not think it is proper to order an interim stay as was ordered by Master Cannon in the Court below.

7. I should add that the 1st-7th Defendants have also before me sought to apply for a variation of the interim stay. What they now seek is that there be a stay in favour of the 1st-7th Defendants save for: (a) close of pleadings; (b) the 1st-7th Defendants issuing a summons to amend the summons for security; and (c) a hearing before Yuen J. scheduled to be heard on 26th November 1999 in respect of a costs application arising from the order made by Yuen J. in July 1999. I am not prepared to accede to that application. I do not think it is proper in this case to grant an interim stay pending full argument on the question of whether or not security should be ordered in the first place and if so, for what amount. The appeal is allowed and the interim stay is lifted.

[After hearing submissions]

8. Costs should follow the event. The application for stay made before Master Cannon was opposed. The Plaintiffs have succeeded on the appeal and I think costs should follow the event. Costs of the appeal to the Plaintiffs in any event.