LIU XIAN FENG SAM AND ANOTHER v. LIU BO AND OTHERS

HCA5474/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5474 OF 2001

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

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

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

R U L I N G

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

1. It has been said in Ostrich Farming Corporation Ltd v. Brian Phillip Ketchell et al [1997] EW CA Civ 2953 that the decision I have to make is a difficult decision.  Difficult as it is, I must make a decision today and on the basis of all the evidence I have heard so far and now put before me.

2. The easier decision in respect of the living expenses is just a minimal sum of $23,800.  I said minimal because I am comparing that with the size of the money now in the bank, in the sum of about US$2.5 million.

3. Whilst I do not encourage the defendant (and their lawyers who have drafted his affirmation) under oath, saying one thing and then I was informed in fact that certain parts of his affirmation is not quite correct. I have to deal with his situation now : i.e. he was actually not gainfully employed since September 2005.  He got a job but I was told just now he actually has not received any salary yet.  I do not quite understand why that is so.  It was said that he had to prepare his defence in this case.  But he came to Hong Kong only shortly before the trial and if he was in Singapore all the time since September, why he was not working since September, in October and for the better part of November.  I was also told that his family was in Singapore.  I was not told when and if they have started to live in Singapore since September where their living expenses come from.  All these were quite unknown to me.

4. The affirmation gives me the impression that he has been receiving a salary for September, October, and the better part of November.  But of course if he has a family there and he only has S$5,000 to live on for months for a family of three, then it would not be surprising now he only got HK$3,000 with him in Hong Kong, not to mention how much money his wife has at the moment for the purpose of her and their child’s living before he is gainfully employed.  It is not disclosed to me whether his wife is working at all.  But $23,800 is not a large sum of money and he needs the money to survive until the end of the trial, so I allow the applicant to withdraw $23,800 from the bank accounts under dispute.

5. The difficult decision as stated in Ostrich Farming is that the plaintiff is claiming proprietary rights over the money in those accounts.  In short, the plaintiff is saying that “this is my money” and in the case cited as decided by the English Court of Appeal, Lord Justice Roch said that there are two stages, one of course is whether he has no other funds to pay for his legal expenses and two, whether the court should exercise its discretion in favour of the defendant.  It has been said in respect of the second stage that the power in the court is a discretionary power.  The court in deciding whether to exercise that power, must weigh the potential injustice in the plaintiff for permitting the funds which may turn out to be the plaintiff’s property to be diminished so that the defendant can be legally represented, against the possible injustice to the defendant of depriving him of the opportunity of having the assistance of professional lawyers in advancing what may, at the end of the day, turn out to be a successful defence.

6. In order to perform this process, it has been said that it required a “careful and anxious judgment”, and the judge must have evidence so that he can consider all the relevant circumstances, so that he can weigh the relative strength of the plaintiffs’ claims to the property in the funds held by the defendant and the defendant’s defence to that claim.  In the Ostrich Farming case, the English Court of Appeal decided that the judge did not have that required evidence for either stage and therefore they allowed the appeal and disallowed the defendants’ application.

7. In the case before me, of course, I have the benefit of having heard evidence to the stage when the one and only one witness for the defence, the 1^st defendant himself has given evidence-in-chief.

8. Now I want to deal with the first hurdle first.  There is no other funds from which the 1^st defendant Liu Bo can derive $600,000 he required for his legal fees.  The only thing he has is the agreement with the solicitors, and that is his solicitors have graciously, gratuitously and charitably agreed with his client that his client would pay him $20,000 a day until the end of the case and the counsel fee.  If after the case is over, he could not pay those fee within three months thereafter, that would become a debt liability and the liability would attract an interest of 5% per annum.

9. Mr Chain for the plaintiffs submitted strongly that if that is the arrangement, then the court should just allow that arrangement to go on.  He was not in need of any fund.  But to my mind, I do not think this court should rely on the charitable attitude of a firm of solicitors who has bravely agreed to conduct the case for a foreigner so that he could be legally represented in this court in this jurisdiction, in order to ensure that he would get the best possible result through the due process of the law.

10. If I just rely on this agreement because of the charitable attitude of this firm of solicitors, then this will discourage solicitors from taking up cases on liability basis only.  There are solicitors who would not move a finger without costs on account, but there are solicitors who would exercise their discretion on case-to-case basis in order to assist poor litigants and for that kind of charitable attitude, to my mind, it should be encouraged rather than discouraged.

11. Solicitors would be liable to pay counsel fee even though he has no costs on account.  It is not an answer to counsel to say “it’s too bad, I haven’t got costs on account, I can’t pay you”.  Once the brief is marked then counsel is entitled to be paid, and this firm of solicitors have so charitably agreed to represent Liu Bo on that basis.  In other words, they would have to pay counsel fees themselves out of their own pocket first and wait for three months after the case is over and sue Liu Bo for the outstanding amount together with interest if their fees and expenses are not paid.

12. Therefore, in respect of the first hurdle, I would not say that Liu Bo has fund to turn to because of this agreement with solicitors.

13. The second hurdle is the merit of the case.  Obviously, I am in a much better position than the judge in the Ostrich Farming case.  Evidence has been given by the plaintiff, evidence-in-chief has been given by the only defence witness and of course there may be a rebuttal evidence from Prof. Cheung.

14. My difficulty at this stage is on the assessment of the merit of the defence.  I really have to see how the 1^st defendant would fare under cross-examination.  I cannot, at this stage, say he has no merit in his defence at all.  I cannot prejudge at this stage without the cross-examination, and I cannot prejudge the case without hearing the final submissions.  Of course, if I have the chance of hearing the cross-examination, I will be in a much better position to assess the merit of the defence case.  But my duty here is to make an assessment, rightly or wrong of course just on the tentative basis, I say “tentative” because counsel have not made their closing speeches and if cases could be decided after hearing evidence, of course then there is no need to hear counsel submissions.  My task, however is just a preliminary assessment on the available evidence.

15. All in all, I would not say the defence has no merit on his defence, and therefore, at this stage, I would consider that he is entitled to this application in respect of the legal costs incurred and to be incurred until 13 January 2006.  Obviously, this is just an assessment of the evidence so far, it is not prejudging the case, it is not even an assessment which would not be changed at the end of the day.

16. For those reasons I have given, I allow the application and therefore vary the injunction order by providing that the injunction previously re-granted by Fung DJ dated 24 October 2005 does not prohibit the 1^st defendant from withdrawing from those accounts in Hang Seng Bank maintained by him up to a total of $623,800 towards his living expenses in Hong Kong and legal advice and representation expenses according to schedule A and B annexed thereto.

17. I think costs should be in the cause because it has something to do with the merit of the case.