MASSMUTUAL ASIA LTD v. CHAN MAN LAI

cacv 181/2005

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 181 of 2005

(on appeal from DCCJ NO. 2700 OF 2002)

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D E C I S I O N

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1.  This is an application for security for costs in respect of the appeal.

2.  The matter is not the first time this has come before me.  It came before me in May of this year on an application for extension of time to appeal and also for stay of execution of the judgment, and I granted both.

3.  I granted the stay of execution of the judgment, perhaps taking a very lenient attitude towards the defendant’s evidence because it was not particularly full and it merely said, “I’m not solvent financially and if execution of the judgment of her Honour Judge Ng is to proceed, I will not be able to satisfy the judgment and then there is a likelihood that the plaintiff will make a bankruptcy petition against me and in the event I will not be able to work as an insurance agent any more”.

4.  The plaintiff has now applied for security for costs on the appeal.  It has put it in a number of ways.  One of them is the defendant’s insolvency or inability to pay the costs, and the other is on the merits of the appeal.

5.  I agree on the merits of the appeal that the first ground of appeal looks a bit shaky to me to say the least and I will say no more about that.  The second ground of appeal is based on the evidence.  It is, however, based on allegations that there was no evidence to support certain findings and other findings are self-contradictory and so on and so forth.  These are, in my view, almost impossible for me to examine at this stage because I do not have the evidence before me.  So I have to proceed on the basis that there are grounds for appeal which are reasonably arguable.

6.  Interestingly, on this application, the defendant has now produced his financial statements from the company for which he now works, or is an agent in the way these insurance agents operate, and it shows that he is in receipt, or has been in receipt this year at any rate, of reasonable amounts of money totalling probably about $100,000 a month, or more, if one takes into account what are listed as miscellaneous credits.  They are probably loans of the type that were the subject of this action in the way that these insurance companies tend to operate.  In other words, they have made payments to their agents on the basis that they have become “golden handcuffs” to ensure that they do not leave.

7.  On that basis, it seems to me that the defendant probably ought to pay some security.  The way I look at it is that I am not altogether happy with the way the application was presented to me that the defendant was insolvent, given the figures which have now appeared on the application for stay of execution, and the impression that the papers now give me is that the defendant is not really being 100 per cent straightforward about the matter.

8.  In those circumstances, it seems to me that the defendant is not impecunious.  If he had been impecunious I might have found some difficulty in granting security for costs, because to grant security for costs on the basis of impecuniosity against an individual when the court has come to the conclusion that it cannot dismiss the merits of the appeal would be to deny the appellant the right of appeal.  That is a serious matter and I would be very reluctant to do it.

9.  The view I take on this application, however, is that the defendant will probably, at any rate given past performance, make it extremely difficult for the plaintiff to obtain any costs at the end of the day.  On that basis, I consider that I am justified in granting security. 

10.  What I see, however, is that the defendant has an income which is not particularly great and I have not been told on this occasion what his expenses were.  So what I am proposing to do is to give an extended time for provision of the security on the basis that my estimation is that the defendant should be able to find about $25,000 a month.  I propose to order security for $75,000 to be put in place in court within three months.