PACRIM INTERNATIONAL CAPITAL INC. v. CHAK KAK

CACV 151/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 151 OF 2010

(ON APPEAL FROM HCB NO. 1789 OF 2010)

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DECISION

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1.  On 6 July 2010, Au J made a bankruptcy order against the debtor, Mr Chak. The event leading to and the reasons for the bankruptcy order can be found in the Reasons for Judgment which Au J handed down on 9 July 2010, and I will not repeat them.

2.  Mr Chak is appealing against the bankruptcy order.

3.  This is the application of Pacrim International Capital Inc. (“Pacrim”) for security for costs in respect of that appeal.  It is Pacrim’s case that Mr Chak is impecunious. 

4.  Mr Chak disputes that.  He has a property in Canada which he co-owns with his wife.  That is a property of substantial value. Moreover, he told me this morning that he has arranged to borrow CAD 30,000 against the property.  That would be roughly HK$200,000.  He said that would be sufficient for him to pursue his appeal. 

5.  Anyway, he says that the judgment debt, or the debt which has led to the bankruptcy order as a result of the judgment of Au J has been reduced to something like HK$30,000.  He also claims that he holds valuable security issued by Pacrim, so he says it cannot be said that he is impecunious. 

6.  But according to O. 59, and I am now reading from O. 59 r. 10/30 in the Hong Kong Civil Procedure:

“The Court of Appeal will order security for costs upon proof (or in some cases upon a presumption) that the respondent will be likely to encounter undue delay or be put to undue expense in enforcing any order for costs in respect of the appeal. Examples of security being ordered under this new head of special circumstances are: where the nature of the only asset(s) available to meet the costs of the appeal is such that enforcement may be expensive or protracted (e.g. shares in a private company or an appellant’s undivided share in a house where the person entitled to the other share is not a party to the appeal), or where the appellant’s conduct indicates that he/she is likely to resist enforcement of any costs order.” (59/10/30)

7.  I am afraid this is one such case.  No doubt Mr Chak feels strongly about the fact that wrongly, according to him, judgment has been entered against him.  He is entitled to appeal, but the question that I have to decide is, in the event of his appeal failing, whether Pacrim (the creditor) will encounter undue delay or be put to undue expense in enforcing any costs order in respect of this appeal.  I believe that is likely to happen, so this is a case where security should be ordered.

8.  I turn to the amount.

9.  The application is for security in the sum of HK$86,667.  That included HK$12,000 for a 3-hour hearing before the Court of Appeal at a rate of HK$4,000 per hour.  I doubt very much the appeal will take 3 hours.  I believe an hour is quite likely to be sufficient.  So out of the HK$12,000, HK$8,000 should be deducted.  To round off the figure, I would order the security in the sum of HK$77,000.

10.  I make an order otherwise in terms of Pacrim’s summons.  I order that Mr Chak should, within 14 days from the date of the order, give security for the costs of and occasioned by this appeal in the sum of HK$77,000.  Until the security is given, the appeal is stayed.  In default of such security being given within 14 days, the appeal will stand dismissed without further order, with costs of the appeal and this application to be taxed on an “party and party” basis if not agreed.  The costs of this application is in the cause of the appeal.