PROSPEROUS NURSING CENTRE LTD v. CHEUNG YUK YING AND ANOTHER

CACV 159/2005

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 159 OF 2005

(ON APPEAL FROM HCA NO. 3810 OF 2002)

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D E C I S I O N

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The orders

1. On the fifth day of a trial, Deputy High Court Judge Fung gave the following orders :

1.	leave be granted to the 1st and 2nd defendants (by original action) [i.e. Cheung Yuk Ying (‘Madam Cheung’) and Yek Tak International Holdings Ltd. (‘Yek Tak’)] to add two more defendants, Mr. Wong and Mrs. Wong, the son and daughter-in-law of Madam Mak Siu Chun in the counterclaim [Mak Siu Chun (‘Madam Mak’) is the 1st defendant in the counterclaim];
2.	leave be granted to Madam Cheung and Yek Tak to adjourn sine die the original action and the counterclaim herein, with liberty to any party of the original action and the counterclaim to restore;
3.	trial be declared de novo for the original action and the counterclaim herein;
4.	costs of and occasioned by the amendment, all costs up to today and all costs thrown away (if not included in the costs up to today) be paid forthwith by Madam Cheung and Yek Tak to the plaintiff (by original action) [i.e. Prosperous Nursing Centre Ltd (‘Prosperous’)].

Security for costs of appeal

2. Madam Cheung and Yek Tak lodged an appeal against the orders.  Prosperous now seeks security for costs of the appeal on the ground that Madam Cheung and Yek Tak are impecunious and would be unlikely to pay for the costs of an unsuccessful appeal.

Madam Cheung

3. The evidence that was relied upon against Madam Cheung was that she had applied for legal aid.

4. Her application in fact was rejected by the Legal Aid Department.  In my view it is not necessary to decide whether Madam Cheung is impecunious or not because I would not order security against her in any event.  While there are paragraphs in the Defence and Counterclaim which may suggest that she was also seeking a counterclaim, the prayer confirms that it was only Yek Tak who was seeking a counterclaim.  In the absence of other evidence which may show that when counsel for Madam Cheung and Yek Tak asked for the joinder of the new parties, he was asking for Madam Cheung to be included in the counterclaim as well, then clearly it can be strongly argued that the costs order imposed by the judge should not be made against Madam Cheung.  On the merits of the appeal, I would not order security against her.

Yek Tak

5. As to the position of Yek Tak, it is a limited company with an issued capital of $2.00.  A search of its registered address showed that the premises of the registered address did not belong to Yek Tak. 

6. According to the audited accounts for the year ended 31 March 2003 disclosed by Yek Tak, its principal operation was an old age home which had stopped operation in October 2002.  The retained profit for year ended 31 March 2003 was about $66,000.  There was no other known assets of Yek Tak.  Despite the denial that it is impecunious, Yek Tak has not disclosed its current financial position at all.  In my view from the available evidence an inference can be drawn that Yek Tak is indeed impecunious.

7. It is said that Yek Tak’s impecuniosity was caused by the wrongful act of Madam Mak and Prosperous and by the two newly joined parties and the content of draft Amended Defence and Counterclaim was relied upon in support of this contention.  I should refrain from expressing an opinion on this matter as these are matters contained in the pleadings which the court has not made any adjudication.  

8. As to the merits of the appeal in question if Yek Tak only applied to join two new parties in the middle of a trial, I am not prepared to say that the orders imposed by judge was wholly wrong.

9. In my view Yek Tak should be ordered to pay security in the sum of $120,000.

10. This amount is to be paid into court within 28 days.  In the meantime the appeal is stayed.  In default of payment, the appeal will be dismissed with costs to Prosperous and Madam Mak.

Costs and other orders