WONG SEE YIN v. TIN WAN TUNG AND ANOTHER

CACV 160/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 160 OF 2016

(ON APPEAL FROM APPLICATION TO SET ASIDE

STATUTORY DEMAND NO. HCSD 11 OF 2016)

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J U D G M E N T

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Hon Poon JA (giving the Judgment of the Court) :

1. Pursuant to the costs orders of L Chan J dated 26 April and two allocaturs issued by Master K Lo dated 2 March 2016 after taxation, the applicant is adjudicated to pay costs to (a) the 1^st respondent in the sum of HK$560,527.07 in respect of HCA 167/2011; and (b) the 2^nd respondent in the sum of HK$306,434.11 in respect of HCA 1801/2010. When the applicant did not pay up, the respondents served a statutory demand on him in March 2016. The applicant then applied to set aside the statutory demand, which was dismissed by A Chan J (“the Judge”) summarily on 29 June 2016. The applicant appealed. On 22 August 2016, the 1^st and 2^nd respondents took out the present summons applying for security for costs of the appeal in the sum of HK$400,000.

2. Pursuant to the court’s directions, the respondents lodged their submissions in support of their application on 23 September 2016; the applicant lodged his submissions in opposition on 30 September 2016; and the respondents lodged their reply submissions on 6 October 2016.  The applicant wrote further on 7 October 2016 to respond to the respondents’ reply submission.  The application is to be disposed of on paper, which we now do.  And we can dispose of it shortly.

3. The respondents apply for security for costs on the ground that the applicant is impecunious and they are likely to encounter undue delay and be put to undue expense in enforcing any costs order against the applicant.

4. In opposing the respondents’ application for security for costs, the applicant argues, among other things, that he has a cross-demand in the two High Court Actions against the respondents which exceed the amount of costs, the subject matter of the statutory demand.  He complains that the Judge erred in not setting aside the statutory demand on that basis. He therefore says he has a good chance of success in his appeal.

5. At [3] of his decision, the Judge noted that the applicant’s ground of setting aside the statutory demand was that he had a cross-claim against the respondents.  He then went on to dismiss the application, saying that :

“ However, it is reasonably well-established that the court will not look behind a judgment or order at the stage of the Statutory Demand.”

6. While it is well-settled that that the court will not go behind a judgment or order giving rise to the judgment debt at the stage of statutory demand, where an applicant seeks to set aside a statutory demand on the ground that he has a bona fide cross-claim based on substantial grounds which exceeds the amount of the judgment debt, the court will have to examine the issue and make a determination.  It would appear from [3] that the Judge had not given separate or proper consideration to the applicant’s argument on cross-claim when dismissing the application.

7. The respondents in their submissions on the present application have not dealt with this aspect of the applicant’s grounds of appeal and arguments in opposing the application for security for costs.

8. At the stage of an application for security for costs, it is neither necessary nor desirable to undertake a detailed examination of the applicant’s case on cross-claim.  We need not express any definitive view on whether he will in the end succeed in establishing a cross-claim based on substantial grounds.  However, having regard to paragraphs 6 and 7 above, we are of the view that our discretion should be exercised against making an order for security for costs against the applicant on his appeal.

9. Accordingly, the respondents’ summons is dismissed with costs to the applicant.

10. On quantum, we have considered the applicant’s skeleton bill of costs dated 29 September 2016.  We summarily assess his costs of this application at the sum of HK$5,000.00 and order the 1^st and 2^nd respondents to pay the same to the applicant forthwith.